Retailer's growth in organics a worry in state
By TOM DAYKIN
Posted: Sept. 27, 2006
Plans by Wal-Mart Stores Inc. to increase its offerings of organic foods could create a competitive threat to smaller organic farms and food producers, according to a briefing paper released Wednesday by a Wisconsin-based group.
Wal-Mart already is buying milk and other organic products from large-scale dairies and other large, conventional food producers that have little experience with organic production, creating what the Cornucopia Institute calls "corporate organics." The non-profit group is an advocate for what it calls "family-scale farms."
"This competitive challenge has the potential to destroy healthy markets for other retailers, distributors, manufacturers/processors, and family-scale domestic farmers," the paper says.
Wal-Mart, which is Wisconsin's largest private employer, is the world's largest retailer, with annual sales of $312 billion. Its continued development of Supercenters - combined discount stores and supermarkets - has made it the nation's largest supermarket chain. Wal-Mart operates dozens of supercenters throughout Wisconsin, and last week disclosed plans for its first Milwaukee Supercenter.
Wisconsin has a large presence in organic farming, including the Cooperative Regions of Organic Producer Pools, headquartered in La Farge. The co-op, which sells milk, cheese, meat and other products under the Organic Valley brand, represents more than 800 farmers in 24 states, and in 2005 posted sales of $245 million.
The Cornucopia Institute, in its briefing paper, says Wal-Mart is already the nation's largest retailer of organic milk through its relationship with Dean Foods Co., which owns Horizon organic milk. The paper says Wal-Mart's business strategy of buying large amounts of products at low prices from conventional food producers like Dean will shut out small- and medium-sized organic food producers "who cannot compete on price with these industrial behemoths."
The group also questions whether large-scale conventional food producers such as Dean truly reflect what the paper calls the "organic movement." It said Dean and another Wal-Mart organic milk supplier, Aurora Organic Dairy, have confined their cattle in feedlots with little access to pasture, as required by federal organic standards.
In a statement, Wal-Mart spokeswoman Karen Burk said the company believes organic standards must not be compromised.
But the statement did not address the specific allegations made against Dean and Aurora, which are being investigated by the U.S. Department of Agriculture.
"We believe that both organic and conventional agriculture provide safe, healthy and sustainable products for customers," Wal-Mart's statement says. "It is up to our customers to choose which type of product they want to buy, and we want to give them the choice."
That freedom to choose will determine whether Wal-Mart's organic strategy will succeed, said Mark Kastel, Cornucopia Institute co-founder.
That's why the group is publicizing what it considers Wal-Mart's practice of "cutting corners" when it buys organic products from companies like Dean and Aurora, Kastel said.
Armed with that information, Kastel said, consumers can better "partner with companies that share their values."