Last May, when Wal-Mart announced its decision to significantly ramp up its offerings in organic food, it offered a noble justification:
Wal-Mart says it wants to democratize organic food, making products affordable for those who are reluctant to pay premiums of 20 percent to 30 percent. At a recent conference, its chief marketing officer, John Fleming, said the company intended to sell organic products for just 10 percent more than their conventional equivalents.
Who can argue with that? After all, more organic food means less pesticides and a healthier planet, right? Isn’t the idea of more people eating organic food what the whole organic food movement has been about from the beginning? The lower the price, the more people will buy it, yes?
The counterargument, which I’ve made before here, is that Wal-Mart’s big push into organic food will destroy organic standards:
Wal-Mart’s new push worries Ronnie Cummins, national director of the Organic Consumers Association, an advocacy group that lobbies for strict standards and the preservation of small organic farms. He said Wal-Mart did not care about the principles behind organic agriculture and would ultimately drive down prices and squeeze organic farmers.
“This model of one size fits all and lowest prices possible doesn’t work in organic,” Mr. Cummins said. “Their business model is going to wreck organic the way it’s wrecking retail stores, driving out all competitors.”
Part of the problem, Mr. Cummins said, is that Wal-Mart is making a push into organics at a time there is already heavy demand and not enough supply.
“They’re going to end up outsourcing from overseas and places like China,” he said, ” where you’ve got very dubious organic standards and labor conditions that are contrary to what any organic consumer would consider equitable.”
So far, the critics have been proven right. Wal-Mart has already been sued for mislabeling conventional products as organic. Yet even if you ignore the fact that Wal-Mart is an untrustworthy convert to the organic cause, it turns out that this price/quality tradeoff that they are building their presence in the market upon is a false dichotomy.
I just finished reading one of my Christmas books, Organic Inc., by Samuel Fromartz. He includes some rather startling information about the market for organic food. Published April 10, 2006, Fromartz’s book reflects the situation BEFORE Wal-Mart’s big announcement:
When the Hartman Group surveyed more than twenty-six thousand households in 1999 it found organic food consumption closely reflected the breakdown of society . . . Surprisingly, more than half of self-defined “heavy” buyers of organic food earned less than $30,000 a year.
“When we do organic studies, income is about the only thing that doesn’t skew at all by user and nonuser,” said Laurie Demeritt, president of the Hartman Group. “You get little skews in age, little skews in geography, little skews in education, but there’s nothing at all for income, so we don’t even look anymore. She said organic shoppers’ median incomeâ€“that is, the figure at which half the incomes fell above and half belowâ€“was usually within $2,000 of the national median. “It’s not something we can use to pinpoint whether someone’s an organic user or not.”
The Food Marketing Institute reported similar findings in a 2004 survey. “Shoppers who buy organic food, even those who buy foods from three or more categories of organic products, look pretty much the same as other shoppers,” the survey said, attributing this to the increasing availability of the food.”
The fact that Wal-Mart, the nation’s largest grocer, is selling more organic food is an unabashed good thing because it increases this availability and increases the amount of acres devoted to organic products worldwide. However, the fact that Wal-Mart is in the process of performing its patented shake-down operation on its organic suppliers is a bad thingâ€“not just because it will put small organic growers out of business, but because the inevitable loosening of organic standards that will accompany Wal-Mart’s hyper-active penny-pinching is totally unnecessary. As Fromartz explains,
“Even those at the very bottom of the economic ladder will buy organic if it’s available.”
In other words, there is no need to sacrifice quality for price. Organic food is already democratized.
I realize that those of you who have had sticker shock inside a “Whole Paycheck” store may find this statement hard to believe, but try thinking of it this way: Some people (me included) at all income levels have decided that they are willing to pay more for safer, healthier, tastier food because this is important to them no matter what the cost. As Fromartz explains:
“This selective buying pattern for premium-priced goods fits into a larger trend, as shoppers pay up for products they care aboutâ€“whether golf clubs, big screen television sets, Nike basketball sneakers, body-care products, iPods, SUVs, or organic foodâ€“and buy at rock-bottom prices for everything else. It’s the only way you can afford a premium good if you aren’t rich. Retailing has bifurcated between value outlets where price rules and premium niches “driven more by cultural and lifestyle patterns than abject utility,” Hartman points out.”
You would think Wal-Mart would stand great benefit from this bifurcation. Hartman quotes a Whole Foods shopper who told the NYT, “Anyway I make up some of the [price] difference at Wal-Mart.” However, an informed organic shopper will not make up that difference buying organic food at Wal-Mart if they realize the corners that had to be cut in order to make that jaw-droppingly low price point.
So you still think you can’t afford organic food? To quote Michael Pollan:
Yes, good food, healthy food, organic foodâ€¦you can say thatâ€™s expensive and maybe thatâ€™s the mystery, or maybe you can look at it the other way around and say â€œWhy is conventional food so cheap?â€ . . .
I do feel strongly that weâ€™re not paying enough for food. That it is an issue, in part, of priorities. We only pay 11% of our disposable income on food in this country. That is less than anywhere else on Earth and that is less than any other civilization that has ever been on this Earth. For some reason we do not want to spend moreâ€¦.I think when people see that the quality of food can be an incredible boon and blessing in their lives when itâ€™s better, people will spend more.
Anybody who can afford food can afford organic food if the quality of the food they eat is important to them. And if the quality of food is important to them, there’s no way they would ever buy it at Wal-Mart.