by Marion Nestle
Apr 14 2014

Walmart’s price-cut organics: good, bad, or indifferent?

When Walmart announced last week that it would start carrying Wild Oats organic foods at prices at least 25% below those of national brand organics, I had some conflicted reactions.

Walmart’s rationale sounds terrific:

We know our customers are interested in purchasing organic products and, traditionally, those customers have had to pay more,” said Jack Sinclair, executive vice president of grocery at Walmart U.S. “We are changing that and creating a new price position for organic groceries that increases access. This is part of our ongoing effort to use our scale to deliver quality, affordable groceries to our customers.

But Reuters explains what this is really about:

Organic foods accounted for roughly 4 percent of total U.S. food sales in 2012, but growth in the category for years has outpaced the industry overall, buoyed by growing demand for simpler food made from natural ingredients.

Organic foods often cost more than their conventional rivals, and that has limited purchases by the legions of lower-income U.S. shoppers who are needed to propel a niche product into a national player.

Walmart caters to that audience…”If we can make that price premium disappear, we think it will grow much, much faster,” Jack Sinclair, executive vice president of grocery at Walmart U.S., said of the retailer’s small but faster-growing organic sales.

For Walmart watchers, the announcement raises many concerns.

Tom Philpott, writing in Mother Jones before the recent announcement did a brief investigation of Walmart’s organic and local offerings in Austin, Texas:

Of course, Walmart exists to generate profit, not social change. And that may explain the dearth of produce being trumpeted as local and organic in the Austin store I visited. The city teems with farmers markets, Whole Foods branches, and a successful food co-op. With so many options available, shoppers here are likely not heading to Walmart for their heirloom tomatoes. As Prevor [Jim Prevor, the Perishable Pundit] told me, the company tailors its offerings to each region. It will “essentially sell whatever its customers want, as long as there’s a profit to be made.” 

Forbes asks a tough question: Maybe Walmart has just killed the organic food market?

WalMart getting into organics in a big way [may not be] good news for the industry. Most especially when they say that they’re going to eliminate the price premium that organic has traditionally carried…I don’t think it’s revealing anything terribly new to state that those who preferentially buy organic are often those who would prefer not to be thought of as WalMart shoppers.

And Trillium Asset Management, a company that claims to be devoted to sustainable and responsible investing, wonders whether the Walmart plan means that organics have lost their soul:

Wal-Mart’s pledge…is making a whole lot of people very nervous. Wal-Mart’s modus operandi is to keep prices low by driving down costs in the production chain and keeping its own wages low; its competitors’ practices are variations of the same theme, if less cutthroat. Good ol’ American-style capitalism and its frequent bedfellow, inadequate regulation, now threaten to strip “organic” of everything it once stood for (and everything that has made it more expensive): small scale production, gentler treatment of animals, better treatment of farm workers, and the elimination of chemical aids to production.

My personal observations of Walmart stores also make me skeptical.  I haven’t seen some of the previous promises effectively translated into reality.

Walmart says it will roll out the lower priced organics to about half its 4000 stores by this summer.

I’m reserving judgment until I see how these particular promises are implemented in the stores.

This just in: USDA’s latest data on organic agriculture.

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  • C R

    Capitalism gone wild due to false logic. Cheaper food does NOT equal more affordable food.
    Walmart managers and owners and shareholders aren’t living in poverty.
    Walmarts price cutting drives jobs out of North America, specifically unionized jobs that offer benefits and security and living wages. With less income, these people can no longer shop locally and are “driven” to Walmart’s cheaper food prices.
    Their employees make less than a living wage, and have no security, thus are driven to Walmarts cheaper food prices.
    Price cutting on food doesn’t hurt Walmart or food distributers or Big Farma. It hurts farmers, usually small farmers and farmers/ranchers that rely on Big Farma for contracts to grow crops/raise animals. Big food distributors end up going to China for cheaper food due to cheaper labour and lax agricultural/perticide/organic regulations.
    Walmart isn’t doing anyone any favours. It doesn’t even help the poor, because Walmart’s low food prices keep the government’s cost of living index lower, thus lowering union salary increases and social assistance increases (largely based on food and oil indexes, rarely including rent indexes).

  • SAO

    Some people just like their illusions:

    “Capitalism and inadequate regulation NOW threaten to strip “organic” of everything it once stood for: small scale production, gentler treatment of animals, better treatment of farm workers, and the elimination of chemical aids to production.”

    Is Whole Foods not a capitalist enterprise? Is Walmart planning to lobby for new Organic standards? No! The fact is that industrial Organic production has existed for a long time.

    In fact, many small scale farms choose not to get Organic certification, as it is too burdensome. The fact that Walmart can enter the Organic market is proof that “small scale production, gentler treatment of animals, better treatment of farmer workers, and elimination of chemical aids to production” is an illusion.

    Please, tell me what part of the Organic certification process discusses how you treat farm workers!

    Please, read the list of approved chemicals and explain how each and every one is safe and not actually a pesticide/fungicide/herbicide.

    If you want small scale production, gentler treatment of animals and farm workers, and fewer chemicals, you need to know a lot about where your food is produced. And that’s not just a few questions to the seller at the farmers’ market, whose produce might rot if it’s not sold by the end of the day.

  • My concern is when Walmart starts to force organic prices down, will farmers be forced to go the conventional route because they can’t cover their costs with Walmart’s bullying. I’m all for making organic more accessible, but not at the risk of losing organic food options. Maybe I’m being naive that organics cost more because it actually does cost more to raise organic crops (I’m thinking more smaller farmers probably)…

  • Jennie

    I simply must agree with you. This dreadful cheapness in everything is an affront to those of us who have positioned ourselves at the top, those of us with good taste and the means to express it. Walmart is nothing more than a cheap attraction for cheap people who understand nothing about fashion or social grace. Those of us who know are eager to be seen paying extravagant prices at exclusive boutiques. It makes us feel so smart and important, words cannot convey the wonderful feeling in a manner trashy cheap common people could ever apprehend, the sort of common people Walmart so crudely caters to. Walmart is an abomination, as is it’s customer base. A blight on society. Cheapness is just so tacky, so unnecessary. Down with Walmart shoppers!

  • JW Ogden

    The great bulk of the research on the subject shows that organics are not better in any way.

  • pawpaw

    Consider this story on NPR yesterday (read or listen at link below).
    A highly respected organic researcher makes the point that, for certain items, scale of production CAN bring organic foods to same price as conventional, or nearly so. Cites some cases in point. Worth considering in this discussion.

  • David Harrell

    Wow, talk about a non sequitur that sounds like it came from some Wal-Mart corporate PR talking points. CR never insulted WalMart shoppers, just stated what’s often unstated — that the way Wal-Mart does things, “cheap” prices at the store mean steeper prices to workers and the environment.

  • Dallas Jenkins

    How dare that evil corporation use its success to allow for food that previously only existed for elitist wealthy people to be available to the commoners! Money bad!

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