Here's a video link to a public conversation I had recently at the Library of Congress, with Jim Crawford, an organic farmer from Pennsylvania who I featured in my book, Organic Inc. We talk about the organic method, pest control and competition within the organic market between big and smaller growers.
Jim and Moie Crawford of New Morning Farm
- Samuel Fromartz
By Samuel Fromartz
The Case Vander Eyk Dairy, which reportedly said it was seeking recertification of its 3,500 head organic herd, has decided not to pursue it after all.
The controversial dairy in the Central Valley of California had been certified by Quality Assurance International, but QAI suspended the company's organic dairy operations in May for failing to meet regulatory standards. The dairy then approached California Certified Organic Farmers about beginning the recertification process.
Photo and caption: Cornucopia Insitute
Peggy Miars, executive director of CCOF, one of the oldest organic certification agencies in the nation, said in an email the dairy was in "the initial review stage" for recertification. "Obviously, CCOF holds all applicants to the same strict standards and would ensure that all previous noncompliance issues are resolved."
"However, that seems to be a moot point based on my conversation with our contact at Vander Eyk," Miars continued. "He said that the Vander Eyk family is pulling out of the organic dairy business indefinitely."
Vander Eyk plans on getting CCOF to recertify its pasture as organic but run the dairy as a conventional operation. Presumably, this would give Vander Eyk flexibility to return to organic in the future, since a farm must prove that its pasture was farmed organically for three years before it can win certification. Certifying a conventional dairy herd as organic, however, only takes one year.
The farm had what was known as a "split operation," with 10,000 organic and conventional cows. The operation had been criticized by the Cornucopia Institute, among others, for minimizing pasture on its farm.
To recertify its pasture, it will have to submit a "farm plan" that lays out its organic practices in detail, correct any non-compliance issues, pass certification inspections, and be reviewed by the USDA.
Chilean farmed salmon has increased more than 10-fold in thepast 15 years, but it is not without problems. The World Wildlife Fund reports that the production is taking a toll on the nation's inland lakes, where salmon smolts, or juvenile fish, are produced. Oxygen-free dead zones in the lakes are growing, fish are escaping and invading rivers and lakes and pollution is mounting. WWF estimates that switching production to contained ponds would would cost around $43 million -- just 2 percent of the money the country makes from salmon exports each year. This is just one of the criticisms of farmed salmon, which also rely heavily on stocks of wild fish to feed salmon, depleting wild species.
A fascinating NPR report on how one agricultural commodity - gum arabic, which is used in everything from newspaper inks to Coke - has become a political football in Sudan's humanitarian crisis.
"These are payments we can't afford, going to people who don't need them - and for what public purpose?"
- Senator Tom Harkin, chairman of the Senate Agriculture Committee, on subsidies to wealthy "farmers
But, in the House at least, no one's listening and it was the same-old, same-old, at the subsidy feed bin, EWG's Ken Cook tells us in this post on the dysfunctional farm bill.
In my book, Organic Inc., I argued that the 'organic community' is made up of various strands, often in conflict. But the best way to go forward is to maintain discussion among these often conflicted parts of the community. (I touched on this too in a recent column in a trade journal). In that spirit, I am reprinting the following letter based on a conference-call summit this week with more than 100 participants.
The Organic Community Summit
June 18, 2007Dear Organic Stakeholders,
Approximately a hundred diverse members of the extensive organic community met on Monday, June 18, in an effort to reach consensus on issues of deep concern to members of the organic movement that includes a wide range of commercial entities, consumers, advocates, and farmers. The teleconference was quickly put together in response to the highly exclusive nature of the so-called Organic Summit due to meet this week in Boulder, Colorado.
When many of us first heard of that meeting, we assumed that the term summit was indicative of an all-inclusive gathering of the whole organic industry/community. However, due to a limit on the number of participants, high fees and hotel costs, transportation expenses to Colorado (far from where the majority of organic production takes place), as well as scheduling the event during the busy farming season, it became apparent that this discussion of organics was primarily designed for business leaders and industry representatives, with just a smattering of selected community delegates. We were motivated to sponsor the Organic Community Summit when we learned that many key participants would be excluded from joining what was billed as the “new organic conversation” with "industry leaders" in Boulder.
The Community meeting featured two keynote speakers. Jim Riddle, former National Organic Standards Board chair, said organics encompasses a wide range of farmers, activists, academics, business people, and regulatory personnel, and “in harmony we thrive.” He said the organic movement has strong roots, and this is a time of great opportunity for the whole community, as organic agriculture is best positioned to meet today’s paramount challenges of climate change, energy use, and sustainable food production. These issues were underscored by the second keynoter, Fred Kirschenmann, a universally respected organic leader and also former member of the NOSB, in the context of the longtime organic movement, which grew out of the commitment to soil health principles espoused by its early pioneers. He also referred to the tension the organic community is experiencing with the commercialization and mainstreaming of movement ideals and the need for the entire industry to move beyond this conflict if organic is to survive as meaningful label in the marketplace.
The remainder of the meeting was open to all the Summit participants. Others sent comments via e-mail. Participants strongly felt that all sectors in the organic community (farmers, advocates, consumers, academics, public interest groups, investors, manufactures, distributors, and retailers) are vitally important to both the economic success and realizing the societal benefits that organic food represents.
Maintaining genuine and meaningful organic standards was high on everyone’s list. The organic industry is successful because of the high esteem the consumer holds for organic food and the farmers who produce it, as well as an authentic approach to food processing, distribution, and retailing. There is great danger that market acceptance will rapidly diminish if consumers perceive the integrity of organic is being breached by business interests looking to capitalize on organics’ good name. Organic production does not mean business as usual in this respect, but rather resides in the province of socially responsible business.
In the coming years, climate change, energy conservation, water quality and quantity, and food security will be the major emerging themes in this country and around the world. How agriculture reacts to the end of cheap energy and cheap water resources will have a profound effect on our well-being and, through impacts of global warming, on the planet. In all of our deliberations we need to make sure that organic food production, processing, and distribution remain a proactive alternative for consumers to meet these profound challenges.
Organic food also needs to remain at the forefront of offering consumers alternatives to technologies and practices they find environmentally destructive, a danger to their families’ health, or morally abhorrent. In the near term, animal cloning, genetic pollution, livestock confinement operations, as well as the exponential growth of imports and concomitant food safety problems will be high-profile issues that have the potential to showcase the vastly superior organic alternative.
To keep organics healthy, other important issues will also need to be addressed. There is wide concern that smaller farmers and processors are being squeezed out in terms of distribution opportunities and escalating costs at the USDA for certification. Also, aggressive action is needed to recruit and train new, young farmers to take the place of retiring organic producers and to meet increasing demand for organic commodities—domestically. The word local needs to be respected and continued to be associated with organics. Shipping food around the country, or around the world, does not conform to the expectation of the organic consumer. And more needs to be done to facilitate market access by smaller, dedicated farmers, who are held in high esteem by the consumers. These family-scale farmers are the "face of organics”!
Overall, we need a greater level of transparency, both in the processes and ingredients used to manufacture organic food and in the oversight of our industry by the USDA. At the same time, the National Organic Program needs a much higher level of funding, as does organic research. Industry clout could be a positive force for change at the political level to support and expand all aspects of organic agriculture.
In closing, we need to move toward a unified industry. The fact that we felt compelled to hold a Community Summit in the same week that industry interests were holding their Summit is counterproductive and a loss of a great opportunity to join experienced and passionate people in the common goal of furthering the organic movement. This message, and our gathering, were not intended to be "anticorporate." We absolutely welcome corporate investors into the organic market. Their capital and expertise have broadened both product offerings and distribution and are an integral part of organics’ success. But, the commercial sector needs to carefully consider the long-term implications of not respecting the high standards created by the organic community/industry. If we lose the integrity of the organic standards, we will rapidly lose organics’ preeminence in the marketplace.
We all look forward to future meetings that are truly legitimate gatherings of the entire organic community. Together, we can ensure that organic food and farming offer healthy returns to farmers and investors, respectful employment to all those involved in such an important enterprise, respect for the Earth, a productive, sustainable, safe, and nutritionally rich food supply that meets modern energy and climate challenges, and a positive “green” model for society.
Sincerely yours, on behalf of all those who participated in Monday's Organic Community Summit,
Barth Anderson
The Wedge Co-op
The nation's largest single-store natural foods cooperativeDave Engel
Certified organic dairy farmer
Natures International Certification ServicesRonnie Cummins
Organic Consumers AssociationSteven Heim
Expert in corporate responsibility and ethical investing
Boston Common Asset ManagementSteve Gilman
New York Organic Farming ActivistMichael Potter, CEO
Eden FoodsKen Rabas
Farmers All-Natural CreameryMark Kastel
The Cornucopia InstituteTrudy Bialic
PCC Natural Markets
The nation’s largest consumer-owned grocery CooperativeGoldie Caughlan
PCC Natural Markets
Former member: National Organic Standards BoardOrganizations listed are for identification purposes only
I'm not a lawyer, but my thinking comes awfully close to these two legal scholars blogging on the FTC's opposition to the Whole Foods/Wild Oats merger.
Thomas Lambert of the University of Missouri law school writes of the FTC complaint: "This is bad news for consumers. If the FTC successfully blocks this merger, it will thwart consumer-friendly productive efficiencies without procuring any benefits in terms of constrained market power."
Geoffrey Manne at Lewis & Clark Law School writes at Truth on the Market:
The FTC argues that Whole Foods and Wild Oats compete for market share. I have no doubt thatâs true. The question, left unanswered in this complaint, is whether, in a business notorious for razor thin margins, shifting market share injures anyone at all other than the losing competitor. Likewise, other than John Mackeyâs belief to the contrary, the question remains what evidence supports the seemingly crazy contention that this battle for market share is fought by these two merging companies alone, to the exclusion of practically everyone else.
This is similar to my point: the FTC is punishing Whole Foods for the way it markets natural and organic foods, finding that this creates a distinct industry. This has nothing to do with the actual products it sells, of which it would have combined 15 percent market share.
Did you know McDonald's Fillet-o-Fish sandwich comes from sustainable sources? Check out my interview with Charles Clover, author of The End of the Line, on Salon.
Whole Foods CEO John Mackey published an extraordinary blog post in his battle with the Federal Trade Commission, which has opposed its $670 million merger with Wild Oats. In the annals of corporate literature, it's unusual in the details it provides about the deal, and in Mackey's aggrieved personal take on the FTC. The only thing that comes close to this type of public venting is Warren Buffet's annual letters to shareholders. The lawyers must have been sweating.
I highly recommend the section explaining the deal and detailing Whole Food's competition, which is primarily Trader Joe's. The juicy part comes further down when CEO John Mackey says what he really feels about the FTC, leading him to conclude that Whole Foods will never pursue another merger that needs government approval.
He also argues that Whole Foods prices have never been determined by competition with Wild Oats, but with other competitors like Trader Joe's. (In DC, Whole Foods has actually gone so far as displaying check-out receipts from Trader Joe's and Whole Foods side-by-side to show customers it is competitive, even cheaper, on a basket of products. Presumably, the FTC never visited the "P" St. Whole Foods store across town - as I regularly do - to witness this evidence of competition).
Curiously, the FTC never asked for any pricing information, despite requesting 20 million documents, Mackey says. Still, the FTC has claimed prices will rise.
If you're interested in the organic and natural food marketplace, this makes for extremely interesting reading.
- Samuel Fromartz
What fuels a global food system? Packaging. Philip Nelson of Purdue University just won $250,000 World Food Prize for his work, which was announced Monday at the State Department. The Des Moines Register reports:
His achievements include perfecting heat sterilization and cooling methods for preserving many vegetable and fruit products without refrigeration, designing valves to keep micro-organisms out of storage containers and developing tanker ships for transporting orange juice around the globe.
By Samuel Fromartz
The Federal Trade Commission's complaint against Whole Food's merger with Wild Oats is getting hammered from all directions. The Wall Street Journal editorial page weighed in today, wondering why the FTC took on the case.
The FTC argued (pdf) the merger should be blocked because it would get rid of the only competitor in a "distinct" industry, leading to higher prices and crappier stores. I've blogged on the weakness of this argument before but the Journal – whose editorial page I don't often agree with, let alone quote - puts it nicely:
But this is where the FTC's story gets weird. It wants to argue both that the quality, selection and "experience" make Whole Foods unique among supermarkets and that without competition from Wild Oats (in the few markets in which they overlap), Whole Foods' quality, selection and experience will worsen. Which means, we guess, that Whole Foods would look more like an "ordinary" supermarket. Which would mean, more competition for Whole Foods. Or something. We admit the FTC lost us when it started arguing that Whole Foods' evil plan is to undermine the very uniqueness on which the FTC is basing its antitrust case.
Using the FTC's definition of uniqueness, you could argue that Nike was unique in the 1990s because it had Michael Jordon as its spokesman. There was only one Jordon, only one Nike swoosh logo, and therefore it had a monopoly. (Or was it just selling sneakers in a smart way?) Or you could argue that Apple Computer is a monopoly because it sells premium computers that are distinct from the mass market and appeals to certain customers. (But it only has 4.8 percent share of PC sales).
As the Journal points out:
The FTC is again playing 'pick your market' to justify a dubious antitrust action …The public-policy principle at work here is that if you define a market narrowly enough, you can find an industry monopolist anywhere.
The Hartman Group, a market research firm, also weighs in:
This is like suggesting that Starbucks must be monitored because they currently dominate the market in the "sophisticated" or "specialty" coffee experience, as if this were somehow an inherent right guaranteed to all. Never mind that Dunkin' Donuts sells a heck of a lot of coffee, should Starbucks ever offer to buy out Tulley's we can presume what the FTC's answer would be.
Let's consider another argument that escapes the FTC.
If Whole Foods and Wild Oats are so distinct why are supermarket companies rushing to sell organic and natural food in reformatted stores that look awfully similar to Whole Foods and Wild Oats? These supermarkets are getting into the segment for the same reason every other major food company is – because they are losing food sales to the new competition.
Despite the best efforts of food companies to simply get us to buy more food and get fat, we have limits. If we start buying a new product it usually means we are buying less of something else. Supermarkets know they can't just quit selling the slow-growing old line products, because a lot of people like them. But they would surely like to get a piece of fast-growing organic and natural food sales. They know if they don't get a piece of those sales, they will lose them to places like Whole Foods and Wild Oats. That's also the same reason Kraft, Kellogg, General Mills and all the rest of the mainstream food companies are selling organic food. It is a growth market.
Jon Ogg at Blogging Stocks writes:
Kroger used to be just another one of the many grocery stores out there. After years, the food retailer has finally figured out that not only could it carry many of the same organic and natural foods that Whole Foods does, but that it could also do it at a lower cost. To top it off, Kroger also figured out that the profit margins were better than the ones on other packaged goods of lower quality and price.
Over the last year, the Kroger closest to my house has expanded its offering of organic and natural foods, not just in selection, but in shelf space as well … it looks like a 300 percent jump.
John Mackey, Whole Food's CEO, is quoted in the FTC complaint as telling his board: "By buying [Wild Oats] … we eliminate forever the possibility of Kroger, Super Value or Safeway using their brand equity to launch a competing natural/organic food chain to rival us. … [Wild Oats] is the only existing company that has the brand and number of stores to be a meaningful springboard for another player to get into this space. Eliminating them means eliminating this threat forever, or almost forever."
Mackey's worry was that if another company bought Wild Oats, then Whole Foods would face stiffer and well-capitalized competition. Now other companies will have to build competition from the ground up, as they have been doing. The merger, in other words, was a defensive move that would put Whole Foods one step ahead of its competitors who want to take back a share of food sales they lost to an upstart. Will it keep them out of the natural and organic food business entirely?
Not a chance.
The Environmental Working Group last week released its new farm subsidy database that shows you the money. In case you missed all the news reports - many by local reporters showing who got what in their county - the database lets you to search for subsidy recipients any which way, including by name. (The entry point is Ken Cook's Mulchblog.)
EWG also helpfully provided a breakdown of farm subsidies that flow to the districts of lawmakers on the House Ag Committee's Subcommittee on General Farm Commodities and Risk Management.
The 18 members on the Subcommittee (out of 435 members in the House, or 4 percent) received $10.013 billion in farm subsidies from 2003 through 2005. This constitutes 23.2 percent of total subsidies nationwide. Of the five programs targeted for payment limits, these 18 members receive $8.227 billion, 23.7 percent of the nationwide total for these programs.
As the saying goes, "money talks." It's something to consider when you're trying to change the Farm Bill. Speaking of which, if you want real inside-the-beltway reporting on the Farm Bill, look no further than the Blog for Rural America.
