Walmart Goes Granola?

The big-box behemoth plans to start selling a line of organic foods:

The world’s largest retailer announced Thursday that it would be partnering with Wild Oats, a prominent health food label, to expand the organic offerings in its grocery section and drive down the price of organic foods across the country. … Starting later this month, the Wild Oats label will begin to appear in the retailer’s grocery sections on approximately 100 USDA certified-organic products, including canned goods, salsa, and spices, among others. On average, those offerings will be 25 percent cheaper than organics sold by competitors, according to the company. Prices on Walmart’s existing organic offerings apart from the Wild Oats products, including produce and milk, will not be reduced.

In light of this news and a similar announcement by Target, Jenny Hopkinson wonders how the country’s organic farmers will cope with the demand shock:

The expansion of organic offerings by both companies are “a validation of what we know, which is that organic foods are attractive to consumers and they are attractive to young consumers and consumers from all walks of life,” said Laura Batcha, CEO and executive director of the Organic Trade Association, the industry’s leading lobbying organization.

However, “there are issues with supply currently in the U.S. — we see it particularly in the livestock and dairy production” side, though there also are problems in other commodities as well, she said. “The growth in the demand is outpacing the acreage.”

If that’s a problem now, the recent announced moves by Wal-Mart and Target look to make matters worse.

And Eve Andrews relays concerns that Walmart can’t turn a profit on organic food without damaging the industry:

[Coach Mark Smallwood, executive director of The Rodale Institute,] explains that the concept of a “premium” associated with organic food is misleading, because the price of an organic good reflects the true cost of its production.

“The issue is that there aren’t the subsidies available to organic farmers that there are [for conventional farmers.] So there’s a question in my mind about how Walmart is going to pull this off and be able to make profit,” Smallwood said. “And for them to even come out and make that statement before they’ve started is a huge question mark. Somebody’s going to have to pay, and my hope is that it’s not the organic farmer.”

Smallwood also shared his concern that if Walmart were to incentivize large-scale organic production, industrial organic practices would become more widespread. In this model, farmers adhere to just the bare minimum of organic standards and ultimately end up depleting soil health on a piece of land, abandoning it, and moving on to another.