October 17, 2006
Wal-Mart Goes Green
Posted by Fred Tung

Let me jump on Gordon's Wal-Mart bandwagon for a minute.  Big news in the organic world is that Wal-Mart has gone green over the past year, and now it will carry organic milk (NYT).  Organic milk farmers must be whooping it up over this development, right?  Not exactly.  Wal-Mart's entry into the market has merely accelerated the corporatizing of organic food, which critics argue has lowered organic standards and may drive down prices for suppliers (BW).  The dairy that supplies Walmart (and also Safeway, Costco, Target, and Wild Oats) is under fire from organic activists and competing organic dairies for cutting organic corners and "diluting the principles of organic agriculture."  Its cows do not spend significant time roaming pastures and eating fresh grass.  Instead, these cows live on a high grain diet.  According to competing organic farmers, grass-fed cows produce more nutritious milk.  Whole Foods won't buy organic milk from Walmart's supplier.

Now, this raises an interesting conundrum . . .

Demand for organic milk is strongly increasing--sales last year were up 25% from the year before.  But higher standards must mean higher prices as well.  Wal-Mart has made no bones about its desire to bring organic foods to the masses.  Other giant food companies are also exerting downward pressure on organic standards, as corporate food lobbyists (for Kraft, Dole, and others) have gotten Congress to weaken some rules on organics. 

Should we cheer or deride these efforts?  Should organic foods remain "pure," but only within the reach of more affluent shoppers?  Or can some corners be cut in order to make healthier foods more affordable and thus more widely available?  At some level, this is just another manifestation of the tension that is Wal-Mart --achieving lower prices but paying its workers less and driving local competitors out of business.  OTOH, for organic foods, there may be a way around this specific conflict (which doesn't address Wal-Mart's labor practices or effects on competing retailers).

The fight over organics seems to me essentially a labeling or "truth-in-advertising"  problem.  Perhaps an "organic" either-or is too restrictive, given the probability that consumer demand is more nuanced.  Perhaps organic grading would be useful, in the same way the USDA grades beef.  Let consumers decide.

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