Organic Big Fish, Organic Little Fish

In the wake of the All Things Organic™ show, I have a lingering, thorny topic to vivisect before giving organics a bit of a rest (well, I'll at least try to hold off for a week or two…). I can sum it up in two words: Wal-Mart organics.

First: the status quo. Everyone already knows today that organic is more than an emerging niche, and it's getting bigger all the time. For years, large manufacturing companies have been acquiring the formerly independent players in the game (see http://www.certifiedorganic.bc.ca/rcbtoa/services/corporate-ownership.html). Now, Wal-Mart, already the world's largest retailer of organic milk (see http://go.reuters.com/newsArticle.jhtml?type=healthNews&storyID=11449999&src=rss/healthNews), wants a bigger piece of the action.

Many groups on the left have a shadowy, looming fear of big business. I spent some time in Oregon following organic, alternative, sustainable--sometimes soilless--agriculture and met some amazing, creative, wildly intelligent people, including writers, farmers, agricultural scientists, manufacturers and retailers. I discovered that this distrust of big business runs deep--especially with some left-coast radicals and activists (read: aging hippies) who came of age in the '60s (conspiracy theories abound--and some of them even make sense). Many of these folks spearheaded, supported and otherwise grew the organic movement.

Organic is now a viable industry. Companies started in the basement and family-farm barn accepted offers from the biggies (Kraft, ConAgra, Cargill, etc.) now grace retail shelves and frozen-food sections from coast to coast. And a National Organic Program (NOP) defines "organic" for a nation of consumers.

But here is where we must present the age-old paradox of the chicken and the egg. Would the organic industry exist in its current state without the attention and participation of the nation's largest, most-influential food companies? I doubt it.

Yes, Wal-Mart will likely change the organic industry in several ways (see http://www.nytimes.com/2006/05/12/business/12organic.html?_r=1&th=&adxnnl=1&oref=slogin&emc=th&adxnnlx=1147440892-Qe2nMkreQFn2OhuyCA55og). With the company pressuring manufacturers to drive prices down, those companies in turn will demand lower prices from ingredient suppliers. Considering the current costs associated with organic agriculture, this will prove akin to squeezing blood from a turnip (see http://www.businessweek.com/bwdaily/dnflash/mar2006/nf20060329_6971.htm). Lower-cost organic ingredients will continue to come from producers outside the United States--like Mexico, South America and, increasingly, China.

This will likely instigate a stratification of the organic industry. Someday soon, organic-ingredient country-of-origin labeling (COOL) might inform the consumer, and they can make their decisions accordingly. For some consumers, domestic--and, dialed-down further, regional and local--products will hold more appeal. If the predictably fierce lobbying against organic COOL wins out, niche organic producers might have to find another way to advertise their pedigree. It's my contention that we should inform consumers to the best of our ability--including COOL for all raw materials and GMO ingredients in general--and then let each consumer make educated decisions.

Pressure from hugely influential businesses like Wal-Mart might also chip away at existing NOP legislation. We have to expect them to try, like the recent Horizon Organic flap, which is working toward resolution (see http://www.madison.com/tct/business/index.php?ntid=82973; then see http://www.ams.usda.gov/nop/Newsroom/HarveyvJohanns4_06.pdf; and finally http://www.organicnewsroom.com/2006/04/ota_proposed_rule_offers_clear.html).

This type of healthy debate is typical in our big fish and little fish, left and right society. Our free-market economy dictates such scenarios throughout the course of business development and constantly emerging markets. We've just hit the latest growing pain for organics.

And much benefit will arise from the continued attention of our industry giants (as long as these straws don't break the camel's back … but I think organic is strong enough to sustain the weight). For one, an ever-wider range of consumers will have access to organic products. Lower prices will possibly attract more middle-income consumers to the products, hopefully educating them in the process. This would then feed more organic-industry growth and diversification. Even upper-middle-class "soccer moms" will likely be sneaking into Wal-Mart to load up on organic baby formula until competition in that product category diversifies available offerings (see http://biz.yahoo.com/prnews/060501/dcm086.html?.v=3).

Big fish and little fish continually coexist in every ocean. That's just a law of nature. Without one, the other would cease to exist. The intriguing aspect is trying to figure out which little fish will grow into the next big fish--or which little fish suddenly look attractive. Climates shift, and new species and patterns emerge. We just have to keep swimming.

It's all part of what makes this industry so exciting.