Organic industry in shock as Whole Foods pushes new rating system that promotes chemical agriculture as better than organic
For some time, food chain Whole Foods Market and organic farmers have had a cooperative, mutual relationship. The retail grocer has enabled organic farmers to gain a sizable foothold in the food market at a time when Americans’ passion for healthier alternatives to the GMO-laden, processed foods market is rising.
As The New York Times reported, Whole Foods’ stores were more like “showcases” for organic products – fruits, vegetables and flowers that are labeled with the names of the farmers who grow them.
However, this mutually beneficial relationship is beginning to fade, thanks in large part to changes by Whole Foods as it faces new competition from other mainstream grocer chains and organic farmers are able to find additional markets for their produce.’
Increasingly, organic farmers are alleging that the Whole Foods brand is using its rather formidable marketing skills behind the scenes, along with its credibility among many consumers, to send the message that conventionally grown produce is just as good as — or better than — organically grown products also featured in stores. Shoppers are being given the option of choosing fruits and vegetables that carry the designations “good,” “better” or “best.”
Competition causing Whole Foods to lower organic standards?
Longtime Whole Foods suppliers are complaining that the program, which is called Reponsibly Grown, can give a farmer who does not meet stringent requirements for federal organic certification the same rating as true organic farmers.
As the Times further reported:
Conventional growers can receive higher rankings than organic farmers by doing things like establishing a garbage recycling program, relying more on alternative energy sources, eliminating some pesticides and setting aside a portion of fields as a conservation area.
“Whole Foods has done so much to help educate consumers about the advantages of eating an organic diet,” five farmers said in a recent letter to John Mackey, co-founder and co-chief executive of Whole Foods. “This new rating program undermines, to a great degree, that effort.”
Tom Willey, an organic farmer for some four decades in and around Madera, California, is one of many who believe the Whole Foods program is just a subtle attempt at shifting the cost of a market program onto food producers.
“The reports we’re getting from speaking to farmers around the country are that they are spending anywhere from $5,000 to $20,000 to comply with this program,” Willey, one of the farmers who signed the letter, told the Times.
Thae fact that Willey and other organic farmers, all of whom had major roles in helping to determine the federal regulations governing organic foods, are going public with their concerns is another sign that Whole Foods is facing a great deal of new competition from other established grocery chains such as Walmart, Costco and Safeway, in addition to local farmers’ markets and food cooperatives, which are growing dramatically in popularity around the nation.
If you can sell regular produce, why would you go organic?
As the Times further reported, farmers aren’t the only ones who are concerned about the impact competition is having on Whole Foods:
The company’s stock is trading near a 52-week low after falling 14 percent in May, when Whole Foods announced that comparable-store sales were up 3.6 percent, lower than Wall Street anticipated.
In addition, its gross profit margin dipped below 36 percent, which is still better than Costco’s at 13 percent and Kroger’s at 21 percent, but considered a sign of competition’s damage.
Costco has emerged as Whole Foods’ biggest organic competitor, selling about $4 billion worth of organic produce last year compared with Whole Foods’ $3.6 billion, the Times reported.
“Becoming organic is a big investment of time and money,” Jeff Larkey of Route 1 Farms, who grows a number of organic crops near Santa Cruz, California, told the paper. “This ratings system kind of devalues all that — if you can get a ‘best’ rating as a conventional farmer using pesticides and other toxic substances, why would you grow organically?”
Sales of organic food have skyrocketed in recent years as more Americans seek out better food choices amid rising health concerns about obesity-causing processed foods.