Daddy Greenbucks

When an E.coli outbreak killed three people and sickened more than 200 last September, initial reports pointed to organic spinach as the carrier. Although Dole’s brand of conventional baby spinach was eventually identified as the source of the contamination, the story bared a shift in the organic market. Industrialized farms are consolidating into large brands at the same time that large corporations are buying out independent farms and small operations. Corporations are also crafting their own organic product lines. Is organic food in danger of becoming another link in the industrial food chain it was meant to oppose?

The organic movement began in the 1940s as a backlash against the growth of industrialized agriculture and the accompanying spread of synthetic pesticides and fertilizers. Sir Albert Howard, called the father of organics, created the philosophical foundation for the burgeoning movement in his 1940 book, An Agricultural Testament. Howard advocated natural pest control and fertilization, including using animal manures, compost, and mulches, methods used successfully for thousands of years. But most farmers subscribed to the higher yield promise of better-living-through-chemistry, and organics remained a fringe movement until the ’60s, when Rachel Carson and others exposed the ecological and biological dangers of pesticide use.

The organic movement gained an increasing number of followers in the ’80s as consumers began to understand the health risks of pesticides. Finally in 1990, amidst calls for standardization and regulation of the growing organic market, Congress passed the Organic Foods Production Act. The act divided organics into three categories: 100 percent organic; organic, with 95 percent organic content; and made with organic ingredients, with at least 70 percent organic content.

Organic food contains “little or no chemicals, synthetics, irradiation, genetically modified organisms, or sewage sludge.” Farmers, processors, and distributors have to certify their operations through an accredited agent before using the “organic” label. Since 1997, organic food sales have grown annually by 15 to 21 percent, by far the fastest rate in the food economy. Recent reports of the potential health and ecological benefits of organic food continue to stimulate this growth. Several studies, the most recent by professors at the Swedish University of Agricultural Sciences, have shown that organic foods have higher content of vitamins, minerals, and antioxidants.

Organics may even provide protection from pesticides in the body. A report published last year in Environmental Health Perspectives concluded that the frequency of detection of two pesticides, malathion and chlorpyrifos, “varied significantly between conventional and organic diet phases,” and that after only a five-day organic diet, these chemicals were no longer detectable in urine.

A recent study of apple orchards in Washington, published in the Proceedings of the National Academy of Sciences, concluded that the use of nitrogen-based fertilizers, a staple of conventional agriculture, is the leading cause of global nitrogen pollution and ecological damage. By contrast, “organic fertilizers in orchards significantly reduce harmful nitrate leaching.” The Fourth Assessment Report released earlier this year by the Intergovernmental Panel on Climate Change indicated that global increases in the concentrations of two potent greenhouse gases, methane and nitrous oxide, can be attributed to agriculture. Organic farmers employ natural farming techniques such as crop rotation systems, beneficial plants and insects, and soil covers.

Don’t Depend on the Feds

Organic agriculture is more labor-intensive than conventional agriculture, because it does not benefit from efficiencies gained by controlled, homogeneous crops and synthetic fertilizers and pesticides. Farmers who have transitioned to organic agriculture often report lower initial crop yields and high rates of second grade or unmarketable products. These factors contribute to the higher prices of organics, usually a 20 to 30 percent premium over conventional equivalents. The higher price of organics is also affected by government subsidies to crops that fuel the conventional agriculture economy, especially corn, wheat, and soy.

The federal government provides limited funding for organic agriculture through research and cost-share programs. Cost-share programs are minor, compensating the farmer for up to $500. The budget allocation—and the program is limited to 15 states with “historically low participation in the crop insurance program”—only totals $1 million dollars annually. The 2002 Farm Bill appropriated another $5 million for cost-share programs in all states. According to Thomas Beswick, horticulture program leader for the USDA’s Cooperative State Research, Education, and Extension Service, the total invested in research directly related to organic agriculture in 2004 amounted to $11.5 million.

“The bottom line is that historically there has not been much investment in organic agriculture,” says Beswick. This January, Secretary of Agriculture Mike Johanns announced the administration’s recommendations for a $10 million increase for organic agriculture research in the 2007 Farm Bill. “That may not be as much as for other initiatives, but it is the first time the administration has recommended anything for organics,” says Beswick. To put the Farm Bill in perspective, out of a total proposed $618 billion allocated over five years, the administration is budgeting $61 million over 10 years to all organic program initiatives, including cost-share programs, research, and data collection and publication (see page 11).

Enter Wal-Mart

So the government is not fond of organics, but no retailer can ignore a double-digit annual growth rate. In 2005, organic food sales grew by 16.2 percent to total $13.8 billion, according to a survey by the Organic Trade Association. Mass-market channels such as supermarkets, club stores, and mass merchandisers are seizing an increasingly larger portion of this market. According to the survey, these venues accounted for 46 percent of the organic food dollar, while independent natural food stores and other sources such as farmers’ markets represent less than 25 percent.

Last summer, Wal-Mart announced an expansion of its organic options. Chief marketing officer John Fleming pledged the retailer would sell organic products at just 10 percent more than their conventional equivalents; this, he said, was the “democratization” of organics.

One might call it the globalization of organics instead. Wal-Mart must inevitably turn to foreign producers, like China and Brazil, to meet its quantity and cost demands. According to a USDA report, imports of organics are already valued at $1.0 to $1.5 billion: “The US was at one time a net exporter of organic food, but as a result of strong domestic growth over the last 10 to 15 years, it is estimated that the value of US imports now exceeds exports by a ratio of approximately eight to one.” Is all of that imported organic food organic by US standards? There is not one USDA certifying agent in all of China and only one in Brazil.

From farm to plate our food travels approximately 1,500 miles, using 10 calories of fossil fuel energy for every one calorie of energy we get as food. In fact, 20 percent of our total fuel consumption is expended on food shipments. “The reason consumers feel so good about paying higher prices for organics is because they think they are supporting a different environmental standard,” says Mark Kastel, co-founder of the Wisconsin-based Cornucopia Institute, a farm policy research group. “Burning fossil fuels to ship frozen vegetables from China is not environmentally sound and not organic.”

Meanwhile, Wal-Mart’s management of its organic products is already under review. Last year, Kastel notified the retailer that several of its non-organic foods, including sugar, yogurt, and produce, were mislabeled as organic. After Wal-Mart failed to correct the labels, Kastel filed complaints with both the USDA and the Wisconsin Department of Agriculture.

Dairy Dilemma

Wal-Mart is the biggest seller of organic milk in the country, but its dairy suppliers are large, industrialized operations with questionable standards. Organic Valley, the largest organic farmer cooperative in North America, initially supplied organic milk to Wal-Mart. When Wal-Mart continued to push for lower prices during a milk shortage two years ago, Organic Valley canceled its contract with the retailer. Horizon and Aurora dairies replaced Organic Valley.

Horizon is the largest organic dairy in the nation, with 55 percent of the market. In a not-so-pleasing symmetry, Horizon is owned by Dean Foods, Inc., the largest conventional milk producer in the nation. Dean Foods also owns 41 other brands, such as the Organic Cow of Vermont, Garelick Farms, Brown’s Dairy, and WhiteWave/Silk, the soymilk producer. According to Horizon’s web site, its milk comes from two company farms and “family farms.” The bucolic scene of cows grazing on lush green fields is not consistent with reality. Horizon’s dairies have been accused of confining their cows in feedlots and providing limited access to pasture, spurring a boycott by the Organic Consumers Association (OCA), PCC Natural Markets in Seattle, and several other co-ops across the country. Feedlot cows are fed a grain diet to increase milk production. Due to lack of fiber, grain-fed cows often develop sub-acute rumen acidosis, resulting in chronic diarrhea and hoof hemorrhages.

Vander Eyk Jr. Dairy, one of the “family farms” that provides milk for Horizon, is a split conventional/organic dairy with 8,000 to 10,000 cows. Kastel’s Cornucopia Institute has filed a complaint against both the Vander Eyk Dairy and Horizon. “These dairies do not afford their animals proper access to pasture,” says Kastel. “This impacts the health and longevity of the animals and affects the competitiveness of other farmers that are farming ethically.”

Unlike Horizon, Aurora produces all of its own milk on two large farms, with 4,000 cows in St. Vrain, Colorado and 3,300 cows in Dublin, Texas. It has plans for a third farm in Kersey, Colorado with 3,200 cows. Aurora accounts for 10 percent of the organic milk market, and it supplies the private labels of several supermarkets, including Wal-Mart’s Great Value, Safeway’s O, Costco’s Kirkland Signature, and others, according to the OCA.

Aurora is also facing allegations of poor feedlot conditions and limited access to pasture for its herds, and it too is part of the OCA milk boycott. The scale of its farms makes it difficult, if not impossible, to allow the cows grazing time, and the farms are located on semi-arid land. According to Kastel, who has filed a USDA complaint against Aurora, the dairy not only fails to provide its herds with adequate access to pasture, but it has also purchased cows from a breeder who is not certified organic. “People buy the story behind the organic label, but that story may not be what they are actually getting,” says Kastel.

Kastel believes the USDA is to blame for the lapse in organic dairy conditions. Historically, the agency has been lenient in its organic regulations, initially allowing the use of genetically modified organisms, sewage sludge, and irradiation, until public outcries demanded their repeal. The USDA’s current standards for organic ruminants only mandate “access to pasture,” without specifying what “access” entails. The USDA is supposed to vote on new grazing standards by the end of this year, but Kastel believes the agency is delaying enacting stricter regulations. “The National Organic Standards Board has considered new grazing standards since 2005, with five different proposals,” he says. “USDA bureaucrats have become complacent to the agribusiness representatives.”

Better Living Through Upscaling

Last September’s E.coli outbreak startled health-savvy consumers with its revelations of the consolidation of large-scale organic farms. The final report about the outbreak, published by the USDA and the California Department of Health Services, concluded that the contaminated spinach was packaged in a San Juan Bautista plant by Natural Selection Foods (NSF). NSF is a packager and distributor of organic and non-organic produce. The company supplies spinach to 34 different brand names including Trader Joe’s, Green Harvest, Nature’s Basket, Ready Bac, Emeril, and national distributor Sysco. NSF is also known as Earthbound Farms, the largest organic produce company in the US.

Founded in 1984 by Drew and Myra Goodman in Carmel Valley, Earthbound Farms began as a 2.5-acre farm selling organic raspberries. Within a decade the company’s trademark prepackaged salad mixes were regularly sold at large retailers. In 1995, after merging with Mission Ranches, an established conventional grower in California, Earthbound became Natural Selection Foods, though the Earthbound name remained. In 1999, Tanimura & Antle’s, the largest independent grower of conventional lettuce, became a third partner. Organic produce for the Earthbound brand is grown on 30,000 acres in four states and in Mexico, Canada, New Zealand, and Chile. The only difference between Earthbound and conventional mega brands is that no pesticides are used in its production.

Meanwhile, few of the original organic brands remain independent. Coca-Cola bought Odwalla, famous for its organic beverages, for $181 million in 2001. Kraft owns Boca Foods, maker of meatless burgers and sausages, as well as Back to Nature, a maker of organic cereals, snacks and dinners. Kellogg’s has scooped up two organic cereal brands, Kashi and Morning Star/Natural Touch. General Mills owns Muir Glen, maker of organic tomato products like sauces and purees, and Cascadian Farms, best known for its cereals. Cascadian Farms is another good example of organics buyouts: originally a small, organic farm in Washington State in the ’70s, it became a part of Small Planet Foods in 1998, which was bought by General Mills in 2000.

Despite the acquisitions, the above-named brands have no links on their packaging to their corporate owners. Their web sites, with the exception of Cascadian, don’t mention who owns them; their sites tell stories of tough beginnings and organic idealism.

Several billion-dollar companies and large retailers also produce organic versions of their own products. Con Agra, the second largest food company in the nation (behind Altria) now makes PAM Organic, Hunt’s Organic Canned Tomatoes, and Orville Redenbacher’s Organic Microwave Popcorn. Kraft offers Organic Macaroni & Cheese, Organic Honey Bunches of Oats, Organic Zesty Italian Dressing, and Organic Planter’s Cashews. Safeway created its own O organic brand, with 150 products. Costco sells its brand of organics as Kirkland Signature.

Corporations and retailers entering the organic market pledge a wider choice of cheaper products. And indeed, less expensive organic food offers healthier choices to a larger population. Putting more land into organic production decreases the use of synthetic pesticides and fertilizers as well as genetically engineered and irradiated ingredients. Importing organic produce may aid overseas farmers, who receive higher wages and avoid exposure to synthetic pesticides.

Despite early concerns, Wal-Mart’s greatest contribution to organics may be its impact on public perceptions of the movement itself. Organic consumers are already responding to the industrialized expansion of organics. An April article in Business Week, “Wal-Mart and Organics: Big Promises, Little Delivery,” revealed that the retailer may be scaling back its organic expansion. The writer surmised that lower prices are not sufficient to lure organic consumers to Wal-Mart, and the retailer’s core customer base may be unwilling to pay more for organics.

Money Talks

Public concern over the environmental impact of organic imports and industrialized organic farms may be behind Whole Foods’ recent push to increase its stock of local products. According to Justin Jackson, the North California/Pacific Northwest grocery coordinator for Whole Foods, “locally grown products come from farms with 200 acres or less, with some exceptions.” The products also cannot travel for more than seven hours from farm to the Whole Foods facility. “Customers may feel it is disingenuous to call anything else local,” says Jackson. Jackson says the chain has traditionally supported local growers. “We are trying even harder now to get back to our roots, before we became more centralized,” he says. The retailer also recently committed to exclusively sourcing its 365 brand organic and conventional milk from family farms.

In the winter local produce accounts for 30-35 percent of the stores’ stock, but in the summer it rises close to 60 percent.ÊWhole Foods imports 25 percent of its produce in the winter, and 10 to 15 percent in the summer, according to Jackson. The retailer’s efforts to localize are impacted by customers: Chilean grapes and Mexican avocados crowd the shelves because customers want them. “Are we not going to carry organic blueberries in the winter just because we can’t get them locally?” asks Jackson.

Once processed foods and consolidated farms came into the equation, the organic designation lost some meaning. The growth of farmers’ markets and community supported agriculture (CSA) programs nationwide is an indication that people want more connection with their food. There are approximately 1,500 CSAs and 4,385 farmers’ markets in the US, up from 1,755 farmers’ markets in 1994. In some areas, neighbors are forming groups to buy direct from nearby farmers and ranchers. Bypassing industrial agriculture takes energy and commitment, and consumers have more power than they often realize. Money dictates the direction of food production—and the consumer casts a vote with every dollar.

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