Organic growth?
Organic food is one of my favorite topics - it's a fascinating market that big food oligopolies have rushed into with both feet, thanks to both high margins and the anxiety of missing out on the next big trend. With Wal-Mart in the picture, as I have pointed out, the whole issue of how to define organic and how much it will be redefined is a hot one.
BusinessWeek's recent cover story dives right into the controversy with its title "The Organic Myth" (10/16/06). The article outlines the biggest problem: a lack of real organic food. Even Wal-Mart is having trouble getting enough to ill its organic shelves. So much so, that organic yogurt maker Stonyfield Farms (a division of yogurt market leader Danone) has to import organic powder milk form New Zealand and then reconstitute it in order to keep up with yogurt demand. There simply aren't enough organic cows in the US, and not enough organic grain to feed them if the herds rapidly expanded. As the article points out, "Farming without insecticides fertilizers, and other aids is tough."
Dean Foods, owner of Horizon organic milk, also has a cow problem. It has over 8,000 cows in the Idaho desert closely penned and grain fed. Basically, an "organic" factory farm according to some critics.
Organic food now accounts for 2.5% of the groceries sold in the US, but demand is rising steadily and, if the prices came, down to could take off, according to the article. But producing organic food costs more and Americans are used to cheap food. The solution imports: Stonyfield, for example imports apple purer from Turkey, strawberries from China, and bananas from Ecuador. But the question what do these countries mean by organic and who is monitoring them. Indications point to a flood of "organic" produce coming to Wal-Mart from China and other countries who environment records have hardly been stellar and where government inspection can be lax. That could lead to a food disaster from tainted food that could hurt the industry badly.
Meanwhile, business as usual applies. Stonyfield Farms' idealistic head and co-founder, is under enormous pressure to please his corporate owners with 20%-40% growth a year. It's the kind of pressure to grow that can undermine some of the basic principles of organic, no matter hwo good the intentions. As organic farming converges with the rest of the food industry, is it still organic?
7:49:36 PM 
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