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When Wal-Mart brings its giant food stores to Canada starting sometime this year, the amount of food labeled as organic sold in Canada will likely jump exponentially. While the world's largest retailer already sells organic products at its U.S. Sam's Clubs and in the so-called "pantry" section of its Canadian Wal-Mart stores, it has decided that offering more organically grown food will spiff up its image as a socially conscious retailer, bring in a more upscale customer-and fatten the bottom line.
Wal-Mart says it wants to "democratize" organic food by making it more affordable. Right now, the premium on organic foods is around 30%, sometimes much higher. But Wal-Mart chief marketing officer John Fleming said in the spring that the retailer hopes to sell organic products for somewhere around 10% more than their non-organic counterparts. Where the company gets this figure, and how it relates to the real cost of growing organic food, remain unexplained.
Wal-Mart's decision to get in on the organic fad has, to no surprise, come under fire from critics. Groups like the U.S.-based Organic Consumers Association — which advocates on behalf of small organic farmers and lobbies for strict standards on foods that are labelled organic — say the retail behemoth will hurt smaller farmers by driving down prices and loosening standards. Organic Consumers also argues that Wal-Mart will have to import food from countries like China, where standards for defining organic might be less strict.
The first point to be made on Wal-Mart's push into the organic market is that lowering the cost of more naturally produced foods is a good thing. If the market muscle of Wal-Mart can do that, it will help take away the elitist taint that now surrounds organic food. The image of the typical organic food shopper has certainly come a long way from the days of hippies wearing Earth Shoes and munching on granola and brown rice. Today, fans of organic food are more likely to be wearing Jimmy Choos and feasting on wild salmon served with fiddleheads. Indeed, Whole Foods, the largest seller of organic products in North America, has made huge profits by building up its image as the au courant supermarket chain, selling organic produce and other foods at high prices. (Some media wags have referred to Whole Foods as "Whole Paycheck," offering "wholesome and healthy" to the self-indulgent wealthy.) Wal-Mart could do a noble thing by expanding the organic market, bringing in economies of scale that would, when added to a more competitive market, drive down prices.
With the other criticism — that somehow Wal-Mart will dilute the principles most people associate with the term "organic" — the retailer's naysayers are on somewhat firmer ground. Right now, the standards for certifying a product as organic are nebulous, at best. The U.S. Department of Agriculture has an organic certification program, with standards that say organic food must be free of antibiotics, most pesticides, hormones and genetic engineering, while poultry and cattle must be free-range. But the U.S. media has reported that the Department of Agriculture doesn't know how often the rules are broken, and doesn't always take action when violations are pointed out. Will Wal-Mart's decision to increase its organic offerings strain the existing standards even more?
In Canada, definitions for organic are voluntarily regulated, with standards published by the Standards Council of Canada. While there is a movement for mandatory national standards, the current system — characterized by a large number of accreditation agencies, all with different organic logos — leads to confusion and the risk of fraud. Just to throw another variable into the mix, how do the existing standards in the US (where much of the organic food in North America is grown) jibe with the voluntary ones already here? Will they be compatible with any mandatory standards developed in Canada? At this point, it's anyone's guess.
These are no small issues. In the U.S., the New York Times reports that nearly two-thirds of consumers bought organic products in 2005, up 50% from the previous year. It's one of the fastest-growing categories in the food industry, growing at about 20% annually. In Canada, a 2005 Agriculture Canada and Canadian Food Inspection Agency report says sales of organic food at "farm gate prices" came in at $200 million in 2003, and organic retail trade stood at $986 million the same year. The report adds that domestic consumption of organic food is expected to grow by 20% annually between now and 2015.
But as the organic industry goes big-time, there are already signs of mounting pressure to ease up on definitions. For example, last year an amendment to US regulations began allowing 38 synthetic ingredients-including baking powder, pectin, ascorbic acid and carbon dioxide — in some organic products. And a few years ago, a chicken producer in Georgia, Fieldale Farms, persuaded a congressman to slip a provision into an appropriations bill that would have allowed organic chicken growers to use conventional feed if the price of organic feed exceeded a certain level. Huh? At least this ridiculous and contradictory provision was repealed following an outcry from consumers and other members of the organic industry.
If Wal-Mart proceeds responsibly, the retailer's jump on the organic bandwagon could do much to democratize this latest food trend, which is in danger of creating a two-tiered system — healthier organic food for the rich and less healthy food for the poor. The retail giant's market clout could do much to bring down prices. But for Wal-Mart to categorically say that it plans to bring in organic food at prices only 10% higher than non-organic products stretches the boundaries of credulity, and could probably be achieved only if standards for certifying organic foods are similarly expanded — or if organic farmers, especially the smaller ones, are squeezed out of a living.
If that's the case, "organic" food might be a boon to Wal-Mart's bottom line, but of little consequence to the socially-conscious shopper who wants to eat healthier.
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