ChewsWise Blog

ChewsWise Blog

USDA Gets Tough on Giant Organic Dairy

By Samuel Fromartz

After years of complaints and aggressive advocacy by the Cornucopia Institute and organic dairy farmers, the USDA did what it should have done long ago: it got the largest private-label organic milk company in the nation, Aurora Organic, to agree to reform its farming practices. It also threatened to revoke Aurora's organic certification if the company did not follow through on these reforms during a one-year probation period.

Cornucopia and others have lobbed criticisms at Aurora for years, primarily for keeping its organic cows in feedlots against the letter and spirit of organic regulations that require the animals to have "access to pasture." Though this entire period, it should be noted, the Colorado Department of Agriculture and Quality Assurance International continued to certify the company's practices as organic and Aurora denied it was doing anything wrong.

According to the USDA complaint, however, the company did not have enough pasture for its cows and was bringing animals onto its farms that may have been improperly transitioned to organic production.

The media was all over the story, but here's a couple of things you might not know. Based in Boulder, Aurora Organic was backed by $18.5 million in venture capital funds from Harvard University's endowment fund and made a business selling store-labeled organic milk to retailers such as Costco, Wal-Mart, Trader Joe's, Target and Safeway. Despite the inordinate negative publicity, no retailer has stepped forward and dropped the company's milk, nor has Harvard or its alumni ever raised any questions publicly about this investment (made through Charlesbank Capital Partners of Boston).

The USDA Agricultural Marketing Service said in a press release it "will exercise increased scrutiny over Aurora's operations during a one-year probationary review period. If Aurora does not abide by the agreement during that time, AMS may withdraw from the agreement and could revoke the organic certification for Aurora's Platteville, Colo., plant."

In its own press release on the matter, Aurora said that it was increasing pasture at its Plateville farm to 400 acres -- a figure I found astounding because company officials had told me the farm had 2,900 acres of irrigated pasture and 12,000 acres of range land when I spoke to them for my book in 2005. What happened to the 14,900 acres of pasture they previously said they had?

It will graze 1,250 animals on those 400 acres, a herd that has been shrinking from the more-than 5,000 cows it once had at the Colorado facility.

Pasture wasn't the only issue. Under the new organic system plan (which every farm must have to get certified), Aurora must:

  • Provide daily access to pasture during the growing season, acknowledging that milking cows is not a reason to deny access to pasture
  • Reduce the number of cows to a level consistent with available pasture with agreed maximum stocking densities
  • Eliminate improperly transitioned cows from its herd and not market those cows' milk as organic
  • Agree to use the more stringent transition process in the regulations for animals added to its dairy herd.

This is the second major action by the USDA against an organic dairy company this year. In May, the USDA yanked the organic certification for the Vander Eyk farm - a giant operation in the central valley of California.

Is the USDA finally getting the message that consumers and organic dairy farmers want a high-integrity product? We hope so.

With My Re-Entry, A Fat Post

By Samuel Fromartz

Whew! What a nice break.

I did the unthinkable and went on vacation for 2 weeks without a laptop. I checked email a couple of times  at a public library, but truth be told, I didn’t miss it. Not a bit. Without pending deadlines, I had very few emails that demanded attention. And as for all those pesky email lists and alerts, I just scanned and tossed them once I got back.

What I realized was something I already knew but found hard to accept - that email and the web are an incredible time suck, with a plethora of minutia sapping your attention and brain power. It’s the intellectual equivalent of eating too many corn chips in front of the tube. You wonder where all the time went and what you got out of it. (Perhaps I’d even include this post in that -- actually, I will. Take it or leave it).

But now that I am back in this unnatural position, in front of a screen, consuming my metaphorical brain corn chips, a couple of items have grabbed my attention. Like fat. It’s been on my mind this summer. In the summer lull, I happened to catch Shaq’s Big Challenge on ABC in which the giant basketball star corralled a group of morbidly obese kids from the Sunshine state for months, trying to get them to lose weight and get in shape.

The show itself had its moments, leaving me teary-eyed and bleary-eyed. The challenge these kids faced was truly heartbreaking at times, but it was also difficult to dramatize what was a months-long slog of weight loss, exercise and diet change. Shaq helped. He’s actually entertaining. The kids were also heroic. But it’s a crime that they got to such an extreme stage before there was any sort of intervention. Indeed, the public school, with its lack of a physical ed requirement and its fast-food lunches, was an enabler of the epidemic. The parents didn’t help either. In fact, they were part of the problem, which shows how love, spoiling, and nutritional ignorance are a recipe for disaster.

The key, though, was you couldn’t finger anyone for the blame: The clueless school, trying to offer food kids would actually eat (for $1 a meal); the parents, who obviously had their own food issues; the kids, who bellyed up to the trough of candy, soda, burgers, pizza and fries at any opportunity and the culture at large, which provides this smorgasbord and offers absolutely zilch in the way of accessible healthy food alternatives or education. Yes, the critics will claim, these kids and their parents were just exercising free choice to eat what the hell they wanted. But frankly, that’s like saying they were choosing to stick a very slow acting gun in their mouths and pulling the trigger. The bullets were edible and called food. We know the result - an epidemic of obesity that is only getting worse.

As everyone knows, the only way to lose weight is to eat less and move more. Both are difficult. Even with a personal trainer in the mold of Attila the Hun, Shaq’s personal counseling sessions, an obesity doctor, a nutritionist, a receptive school principal and a chef re-engineering the school lunches, it was difficult. And people without resources are expected to do this on their own? No wonder dieting is a $35 billion business which people perennially fail at. (It’s kind of an ideal business model for it ensures repeat customers). All of these kids, however, lost weight, some dramatically. But the big winners were clearly in the minority, which shows you how difficult it is -- even with the most extreme sort of intervention -- to succeed.

There have been several TV shows along these lines (ABC seems to be flogging the genre with its current Fat March in which several obese adults walk from Boston to D.C. to lose weight). Why the interest? There’s a growing audience for these shows -- literally. We are now told that we are getting fatter, according to a widely reported study this week. Not a single state has shown a drop in obesity rates in the past year. People in 31 states have gotten fatter. So there's a entertainment genre for couch potatoes worried about  being couch potatoes. (Now if TVs were powered by treadmills rather than enjoyed with potato chips we might actually get somewhere...)

Forget for a moment the impact on heart disease, diabetes, and other illnesses. (Obesity-related hospital costs for children ages 6 to 17 more than tripled from 1979 to 1999, rising from $35 million to $127 million, according to the report.) Just consider the quality of life issue. The overweight kids in Shaq’s show were unhappy, depressed, with extremely low self-esteem. Their parents, schools and society had failed them. Everyone recognized the train wreck but no one knew what to do. Even the Superstar was flummoxed.

But at least he (even at the behest of a prime time ABC show) tried. The Washington Post mentioned a couple of other examples in its report on the latest statistics, like a "Shape Up" program in Somerville, Mass., that added school crossing guards to previously unattended corners and alerted parents to the change. That boosted by 5 percent the number of kids who walked to school.

But here’s the kicker quote to the Post story, which we should all keep in mind. “Interventions are important to put in place," said Jeffrey Koplan, who directs the Global Health Institute at Emory University in Atlanta. "But none of this is going to turn around [the obesity epidemic] in a year or two, or three and maybe not even in five. We have got to be in this for the long haul."

Kind of sounds like, well, exercising.

Naturally, Whole Foods Wins

I'm surfacing from my self-imposed Internet vow-of-silence to take note that a judge has ruled in Whole Foods favor (WSJ $) and allowed its acquisition of Wild Oats to proceed. On its face, this supports the position that I've articulated before -- that Whole Foods does indeed face competition from others besides Wild Oats and that the merger does little to alter that reality.

The organic, natural food, and grocery market is fast-changing and to think anyone has a hammer lock on consumer choice when it comes to this food is myopic. The competitive advantage presented by Whole Foods and Wild Oats stores does not mean shoppers have no other choices. Indeed, I wonder how others will now respond to this merger, if it goes ahead. I doubt they will sit still or give up on organics.

I would also note that the FTC, in an improperly redacted court filing, actually presented evidence of that broader competitive market. It argued that Whole Foods was muscling organic suppliers to keep them from selling directly to Wal-Mart -- instead forcing Wal-Mart to buy through distributors. That way, Wal-Mart would not be able to pursue its favored tactic of demanding lower prices from suppliers and passing on those savings to customers.

The FTC was arguing that Whole Foods was stamping out a competitor -- an especially ironic argument considering how Wal-Mart's entry into grocery sales has vastly reduced consumer choice by driving other supermarket companies out of business. Also, regardless of what you think of these strong-arm tactics (if one can actually strong-arm Wal-Mart), this suggests that Whole Foods was worried about competition from the retail giant. So then Wal-Mart is the competition?

Every company wants an edge, a distinctive way to stand out to consumers, but that alone does not make for a unique market or wipe out competition from other vastly different-looking companies selling the same  things. Whole Foods understands that, which is why it is consistently paranoid about losing customers to the competition, whatever their size or shape. Apparently, that point was lost on the FTC, which seemed to take John Mackey's chest-thumping at face value. It was not, however, lost on the judge.

Finally the ruling was sealed but if anyone wants to leak it, I'd be interested in reading it and commenting further...

Fromartz Unplugged

In case you're wondering, we've entered a Net detox program for a couple of weeks this summer. Instead of blogging, we're in the mountains eating good food, reading books, having conversations, running up and down mountain trails and generally enjoying ourselves. We're only at step five of the detox program (and this post put us back a step) so it'll be a couple of more weeks. Believe me, it's great.

Enjoy your summer!

Samuel Fromartz

How Organic Fared in House Farm Bill

Organic agriculture won backing in the House version of the food and farm bill, though not at the level the organic lobby was pushing for. I'd call it a solid double rather than a home run. Here's the break down, as reported by the Organic Farming Research Foundation:

  • The organic research and extension initiative got $5 million a year, plus $25 million in discretionary funding (that portion will only appear if money can be found). The money will fund much-needed research on organic methods and USDA extension agents who can advise farmers on organic agriculture. OFRF comment: "While the mandatory funding is an increase of $2 million per year from the 2002 Farm Bill, it falls short of the $15 million per year in mandatory funding which OFRF recommends."
  • An organic data initiative to collect information on production and marketing got $3 million over five years.
  • The Organic Conversion Assistance Program was allocated $50 million, providing technical and educational assistance to farmers who are transitioning to organic production, a three-year process. Transitioning farmers can receive up to $10,000 per farmer per year for three years. OFRF comment: This was "significantly less than the $50 million per year in mandatory funding recommended by OFRF." But it would be the first time money was set aside to help farmers through the financially difficult transition period.
  • The National Organic Certification Cost Share Program, which helps defray the cost of organic certification, was reauthorized with mandatory funding of $22 million, up $5 million from the 2002 farm bill. Under the program, farmers can receive up to 75 percent of their certification costs, to a maximum of $750. This was less than the $25 million that OFRF had sought.

The action will now switch to the Senate, which writes its own version of the bill. The differences eventually will be resolved in conference. For more on the ins-and-outs of the farm bill action last week, especially on farm payment limits (or lack thereof), check out Mulchblog, Blog for Rural America and FarmPolicy.com.

- Samuel Fromartz

GMOs Ruled Out in Africa Hunger Fight

In a significant announcement, the Alliance for a Green Revolution in Africa, backed by the Gates and Rockefeller Foundations, has ruled out the use of genetically modified crops to fight hunger and poverty on the continent, according to the group's chairman Kofi Annan, in a report in the Kenyan Business Daily.

"We in the alliance will not incorporate GMOsin our programmes. We shall work with farmers using traditional seeds known to them,” he (Annan) said. Mr Annan said poor pricing of commodities, and not type of seeds, keeps African growers away from their farmlands despite spiralling food insecurity and poverty on the continent.

“We need to get the right seeds into their hands by strengthening research partnerships with local universities and other institutions,” he said. Mr Annan said insufficient infrastructure such as roads, poor storage facilities and  weak market structures were to blame for Africa’s continued dependence on food aid.

High-yield seeds were at the center of the former Green Revolution in Asia. While many have viewed GM crops as the latest step in high-yield agriculture and a way to fight hunger in the Third World, many others have criticized that approach and African countries have resisted for numerous reasons: the risk of GMO contamination, trade impediments to GM crops, the issues of patenting seed and the high costs of large-scale intensive agriculture. Although AGRA has not ruled out GMOs, the group says on its web site:

The Alliance is not at this time funding the development of new varieties through the use of genetic engineering. We have chosen to focus on conventional breeding techniques—which can be quite technologically sophisticated—for two main reasons:

  1. We know that conventional methods of plant breeding can produce significant benefits in the near term at relatively low cost. Until now, however, conventional plant breeding has not received sufficient attention or investment in Africa, leaving untapped the inherent genetic potential available in African crops. With improved seeds produced through conventional breeding methods, plant scientists and farmers could readily raise average cereal yields from one tonne to two tonnes per hectare—making a major contribution toward ending hunger and poverty in Africa.
  2. Conventional crop breeding fits within the regulatory frameworks now in place in most African countries, enabling relatively rapid dissemination to farmers of the new varieties they desire.

In a speech last month in Cape Town, when Annan was appointed to the post, the former UN secretary-general laid out the broad goals for the initiative.

We aim to make a concrete difference in our lifetimes. With respect to seeds, the Alliance is already in the fields, working with African farmers and African agricultural scientists to breed new varieties of maize, cassava, rice, beans, sorghum and other major crops that will offer better resistance to disease and pests. Our goal is to produce 100 new crop varieties in five years. And to ensure farmers have access to these seeds, we will also move to create a wider network of local seed distributors and agro-dealers to better serve remote rural areas.

In addition, the group has goals with regards to maintaining and improving soil health, irrigation, and marketing infrastructure.

Agra was established last year with an initial $150 million grant from the Gates and Rockefeller foundations. It seeks to help millions of small-scale farmers and their families get out of poverty and hunger through sustainable growth in farm productivity and incomes. According to the Kenyan report, Annan said food production in Africa could be doubled in the next decade with improved seeds and increased access to inputs such as fertilizers and pesticides.

One More Hole in FTC Case on Whole Foods

The FTC, in making its case that Whole Foods would quash competition by buying Wild Oats, relied on Boulder, Colorado, as an example. That town, ground zero for the natural and organic foods business, is also the headquarters of Wild Oats. And in Boulder, Wild Oats had planned to open a flagship store in March but then put it off.

The FTC asserted, "The Boulder store, the leading edge of Wild Oats competitive initiative, would have opened months ago but for the proposed acquisition. Whole Foods projects that by heading off that store opening, it is avoiding more than $150,000 in lost revenues per week that would have been diverted to the new Wild Oats store in Boulder." (Emphasis added).

Well, the facts are somewhat different. The Boulder Daily Camera reports that the Wild Oats store was not delayed by the proposed acquisition, or by Whole Foods.

Wild Oats revealed this week in a court filing that it has suspended opening its Twenty Ninth Street store because of "a host of significant" design and operational problems, and not the pending acquisition by rival Whole Foods.

But the Boulder-based natural foods grocer said it still plans to open the 40,000-square-foot location feted as the company's flagship store and prototype for future expansion. It just needs to work out the kinks.

"We're still evaluating how we go to market with this store," said Sonja Tuitele, a Wild Oats spokeswoman. "How do we overcome those challenges and enhance the current design and construction of the store and make it profitable?"

The "opening of the Twenty Ninth Street store was unilaterally delayed and then suspended by Wild Oats due to a host of significant design, construction and operational problems unrelated to the pending transaction," Wild Oats' attorneys said in the filing.

- Samuel Fromartz

Consumers Hate HFCS, Survey Says

The Hartman Group market research firm announced a shift among consumers who are veering away from processed foods, sugar and specifically high fructose corn syrup, which it calls "the whipping boy of their frustration."

...When consumers do venture into the (increasingly) quiet depths of thecenter store for packaged or processed foods, they are choosing to focus their attention on those foods with the fewest ingredients, additives or preservatives. Likewise, their chief concern when reading package labels has shifted from nutrients and health claims to sugar content, where they demonstrate two complementary goals (a) reducing overall sugar intake and (b) avoiding anything with HFCS.

Choosing to re-formulate your cookie line with whole grain options is absolutely meaningless if your product still contains HFCS. Ditto for fortified juices, crackers, soups or any other packaged food category. We can guarantee you that 7UP's recent decision to market itself as "natural" to consumers fell on deaf ears when the ingredient label read "high fructose corn syrup."

In a survey, Hartman reported that 71 percent agreed with the statement, "processed foods are not good for my health." (Thirteen percent disagreed). And 89 percent agreed that "the key to long-term health is through eating more fresh foods." (Six percent disagreed). It also reported that 38 percent were swayed by  the chapter on corn in Michael Pollan's Omnivore's Dilemma. Gotcha! Just kidding on that last one.

Dovetailing with the boom in demand for corn ethanol, dare we suggest that HFCS will find itself in a death spiral? Now lets not get ahead of ourselves...

- Samuel Fromartz