NYT on Preserving the Purity of the Organic Club

Thom Lambert —  14 May 2006

The New York Times is worried about Wal-Mart’s plan to sell organic food. One would think that fans of organic would be happy about this development. It means that organic products will be available more cheaply at Wal-Mart, which is planning to sell organic products for just 10% more than conventionally grown food, and it’s almost certain to lower organic food prices elsewhere. First, competition with Wal-Mart will lower prices. In addition, Wal-Mart’s entry into the organic sector will expand organic production, thereby permitting producers to achieve greater economies of scale.

The Times, though, worries that Wal-Mart’s entry into the organic food market will pollute the label “organic.” It’s concerned that Wal-Mart will affix the organic label to foods that, while produced using organic methodologies, are grown on large, non-local farms. In other words, it’s not enough that the food be produced without chemical fertilizers, insecticides, pesticides, etc. Those factors — the ones that might have some environmental and/or health effect — are only part of what organic means. The Times explains: “People who think seriously about food have come to realize that ‘local’ is at least as important a word as ‘organic.'”

So let me get this straight. The Times wants to insist on an organic standard that (1) has nothing to do with the environmental effects of producing the food or the health effects of eating it and (2) cannot be met cheaply (i.e., by obtaining economies of scale). Wonder why that is. One possibility is that the Times wants to protect the small farmer and sees the organic label as a means of doing so (although one assumes that people concerned about small, local farmers could just buy foods labeled “locally produced.”) A more plausible theory is that the Times wants to preserve the organic label as a status symbol. After all, if you can reserve the organic label for food products that can’t be cheaply produced, then you can ensure that those products are reserved for “people who think seriously about food” — i.e., not the commoners who shop at Wal-Mart.

Thom Lambert

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I am a law professor at the University of Missouri Law School. I teach antitrust law, business organizations, and contracts. My scholarship focuses on regulatory theory, with a particular emphasis on antitrust.

14 responses to NYT on Preserving the Purity of the Organic Club

  1. 

    Chris 2 wrote, “eating locally is a basic human right”

    -That strikes me as a profoundly unserious comment, the kind one sees on MTV specials.

  2. 

    I have to add my own thoughts to the comment from Chris–“What is the moral imperative that small farmers need to survive? Farmers are just like any other business, if you can’t become efficient enough to compete you should go out of business.”

    By that logic, we will push the production of food off shore to the cheapest, lowest cost provider. Apparently we have not learned from the experiences of 9/11 and our current debacle in Irag–rooted I would argue in our dependency on foreign oil and our inability to foster our own energy independence.

    Our cheap food is subsidized and supported by government policies that favor the industrial food economy over the small, local producer. Whether it be the hidden subsidies to ensure the continued flow of fossil fuels upon which industrial agriculture depends, the trade in undocumented workers who contribute to the labor force in the fields and slaughter houses, or the direct subsidies to farmers and agri-business to support the low price of #2 corn, upon which the industrial food economy depends, the system relies on inefficiences masked by government subsidy in one form or another. Can anyone sensibly argue that using 50+ calories of energy to move 1 calory of lettuce from the field to the table is “efficient?” Not to mention the unseen costs of erosion, pollution, etc. that are the direct result of agri-industrial farming processes.

    It has also been suggested that the ‘cheap food’ provided by the agri-industrial system has helped eradictate under nutrition, ironically at the same time contributing to obesity and other health problems endemic in our society whose cheap food is not the healthful produce or fresh foods, but rather the imense quantities of heavily processed foods sold by fast food outlets or found in the many isles of the supermarkets.

    Eating locally will become more important than eating organically if we are to maintain the indepence of our food supply from disruptions in the global economy. The cheap labor in the 2nd and 3rd world will not continue to blithely toil to provide cheap food to US consumers while under-nutrition plagues there own contries. We will only breed legions more who view us with the contempt seen through out too much of the Islamic world.

    Eating locally is not elitest or a symbol of status–it is a basic human right whose relevance and importance we are only now beginning to recognize.

  3. 

    As a certified organic farmer, I am concerned with the focus of mass distributors, Kraft and others, to define what is organic. Eroding the standard is the unspoken goal.

  4. 

    Y’all remember when Wal-Mart’s thing was “Buy American?” That went the way of the dinosaurs.

    “Organic” in this sense is a marketing tool and Big Business has figured out that it’s a very successful marketing tool (annual growth of 20+% in organics, compared to 2-4% conventional foods).

    Organic as a philosophy is a very different animal. It will be very difficult for agribusiness to ‘go organic,’ without watering down the organic standards. This is mainly because agribusiness is reliant on the practices organic agriculture rules out.

    A great example is occurring right now in organic dairy. Cows are ruminants, and ruminants eat grass. You would think that Dairy farms then need pasture. Organic dairies are supposed to incorporate pasture into their systems. However modern industrial dairies confine 1000s of cows on feed lots, feed them more grain than grass, and couldn’t begin to provide enough pasture. This issue is currently being debated by the National Organic Standards Board, with (surprise!) big business coming out against requiring pasture. This is a great example of business trying to bend or change the rules to suit their production models, rather than following the agreed upon standards.

    I haven’t even gotten into food miles here, which is the 800 lb gorilla beating on all of us when all we look for is cheap. You get what you pay for!

    Perhaps this all boils down to who decides the value of a product – the producer, or the consumer? Walmart trying to say organic costs conventional plus 10% is an interesting starting point, but it’s too simplistic. It doesn’t cost conventional plus 10% to create all the organic products.

    I’m sure Walmart will have an effect on the debate, but their mission is quite a different mission than the typical organic producer, and most importantly what the organic consumer wants.

  5. 

    The issue is that in its drive to force lower prices down onto organic producers, Wal-Mart and its big suppliers will increase the pressure on the FDA to dilute the organic standards which have been agreed upon. They will push to allow more non-listed non-organic ingredients to be included in products that can be labeled “organic”. They will push for relaxation of standards for access to pasture for livestock. In the interest of holding down costs, they will push back on the organic standards and in the end, “organic” will become as meaningful as “newly improved”. This was the point of the editorial.

  6. 

    Lisa Ann Nero, you may be right. But luckily, there is a fantastic test we can run to figure out whether consumers really care simply about putting organic food in their bodies or whether they also strongly prefer to eat from local farmers. The test is competition.

    If consumers are willing to pay for organics from small farmers and have the preferences you describe, rather than “simple” preferences for lower prices for equivalent quality goods, than this sounds like a profit opportunity for small farmers. Surely such farmers will survive in equilibrium by appealing to those preferences.

  7. 
    Lisa Ann Nero 15 May 2006 at 10:39 am

    Many consumers who opt to eat organically may have more concern than just putting organic food into their bodies.
    I eat organically for my health and the health of our planet. The more who eat organically, the less pesticides and other chemicals are added to the earth which inturn polutes our water systems through run-off and ultimately end up in our planets ecosystem.
    I also prefer to eat locally grown food for the same reasons = less fuel consumption during transportation = less pollution generated and added into our ecosystem.
    To lose local growers due to lower profits with the growth of large corporate farms and farms overseas may drive down prices on organic food but will ultimately add to the price we pay by continuing to ruin our planet’s health.

  8. 

    What is the moral imperative that small farmers need to survive? Farmers are just like any other business, if you can’t become efficient enough to compete you should go out of business.

  9. 

    Certainly organic food *consumers* will not view it a “problem” that organic food goes the way of “another rootless commodity circulating the global economy.”

  10. 
    Lynne Koester 14 May 2006 at 10:05 pm

    Like Ms. Knopf, I agree that “standards for organic labeling are more likely to erode” with Wal-Mart’s entrance into the organic food niche. Large companies—such as Kraft and General Foods, as I recall—have already been pushing for a relaxation in standards—or a “redefinition” of organic. But there’s another problem too. If Wal-Mart offers “organic food at just 10 percent over the cost of conventional food,” we’ll see an increase in imported organic produce and products. For as Michael Pollan correctly predicts, “Like any other commodity that multinational companies lay their hands on, organic food will henceforth come from anywhere in the world it can be produced most cheaply, because the land and the labor there is cheaper than it is here. Organic food will go the way of sneakers or consumer electronics — yet another rootless commodity circulating in the global economy” (“An Organic Chicken in Every Pot,” The New York Times, May 12, 2006). If you don’t believe this will happen, just browse through Wal-Mart’s current products to see where they’re manufactured.

    Secondly, I don’t believe “the Times wants to preserve the organic label as a status symbol.” If you consider how many family-owned small- and medium-sized farms have become corporate-owned mega-farms during the last 50 years, you’ll understand what the Times means by claiming ” ‘local’ is at least as important a word as ‘organic.’ ” Survival, not “status,” is the operative word when it comes to American family farmers.

  11. 
    Lindsey Knopf 14 May 2006 at 8:13 pm

    My husband and I live off the land. We farm with my husband’s brother and father in the Heartland. We are not organic farmers, but have thought about changing some of our acres into organic production. It is just not possible to grow food with the same efficiency and output levels using organic methods. Many small farmers are choosing to grow organic food, not only because they believe in the importance of it, but also because it is a niche that allows them to survive as farmers. With Wal-Mart offering organic food, it will push the organic market to more large scale production, thus driving out family farms. Of course as more land and power rests in a smaller number of hands and as a greater push exists to produce organic food in a more efficient manner, the standards for organic labeling are more likely to erode.

  12. 

    Well, the Times conflates the two separate issues of “organic” and “local” production — and by the latter, a better word would be “small-scale”. For the first term, it clearly makes no difference to health, etc, if the organic food you eat was grown on a 2000 acre organic agribusiness or a 100 acre farm. The second issue is trickier, and I think boils down to the question of “is it better for our food and for our society to have small farms”, and there are a long line of people from Thomas Jefferson on down who are firmly convinced of the importance of small farming in maintaining our national character.

    There are, of course, many advantages to those agribusinesses, most of which boil down to an easily-understood bottom line: cheaper food. Cheaper food isn’t a trivial thing, though: it has led both to the near-eradication of under-nutrition as a public health problem in the US and to its replacement by obesity.

    The question really is “what is the true price of Wal-Mart-style production and distribution?” whether of food or anything else.

  13. 

    Nice post Thom. The Times’ objection is nonsensical. Competition from Wal-Mart can only help consumers of organic food. As you point out, if consumers were willing to pay for “local” produce (after “thinking seriously about food”), they can and presumably would still search for labels signalling local origin of the produce. Why would they take such a backwards stance about this? Perhaps this is just an extension of the “Wal-Mart is bad for consumers” sentiment?

Trackbacks and Pingbacks:

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