Small Farmers. Big Change.

It’s a question Dr. Phil Howard, an assistant professor at Michigan State University, has spent a lot of time trying to answer. Howard’s research focuses on the food system, the changes occurring within that system, and how those changes affect communities. So why does it matter? Many consumers choose foods that come from organic small-scale or family farms, because they don’t want to buy foods from multinational food companies.Little do they know, what appears to be organically grown by a family farm, while still organic, might actually come from a major corporation like Coca Cola, Clorox or Kraft. But because parent companies aren’t required to put their name on packaging, it isn’t always obvious who actually owns the product.One of Howard’s main projects has been to figure out who has that ultimate ownership. To demonstrate his findings, Howard created several visual representations, which are available on his Web site. The charts certainly get the point across: The organic industry is becoming increasingly consolidated.After seeing Howard’s charts and hearing him speak at our Annual Retreat, I had the opportunity to ask some more questions about his research. AS: What does the consolidation of the organic food industry mean for consumers? Why should folks care who owns what? PH: Consolidation in the organic food industry means that fewer and fewer people are making decisions about how organic food is grown, processed, distributed and sold. If you want to have a voice in these decisions you should care whether the people involved are likely to be receptive to your concerns, or if they are only accountable to Wall Street. AS: How does this consolidation affect food quality? PH: It’s hard to say with certainty. Some companies that have been acquired by multinational food processors have maintained their quality, while others have worked to increase profits by cutting costs in ways that we might not be happy with. This might mean importing more organic food ingredients from countries where wages are lower. Or in the case of Odwalla after its acquisition by Coca-Cola, it could mean dramatically reducing the percentage of organic ingredients. AS: What affect does consolidation have on organic farmers, specifically small-scale farmers? PH: Some small-scale farmers have lost price premiums which enabled them to stay in business, as larger farms were able to achieve economies of scale and/or externalize some of their costs. Others lost markets as the retail environment changed. For example, as Whole Foods grew they centralized their distribution system. They are now much less willing to buy from a small-scale farmer for one store, when they can buy from a large-scale farmer who can supply stores in an entire region. Consolidation in retailing also makes farmers more vulnerable in price negotiations with supermarkets. Farmers without other markets may have no choice but to accept a very low price for their product. AS: Why did you choose organic consolidation as your research focus? PH: Like most of my research, it was the result of responding to questions people asked me. I studied consolidation in commodities, dairy and supermarkets at the University of Missouri. When I talked about these trends in California people suggested I look at the organic industry, because it was happening there, too. Then people asked me which organic companies were still independent, so I put together a short list of some of the largest, nationally distributed independent brands. AS: “It’s a chart that’s worth a thousand words,” wrote Laura Sayre about your organic industry chart. When did you start making your consolidation flow charts? Why did you choose this visual format? PH: I started the first chart in the summer of 2003, to accompany an article on the broader topic of food system consolidation for California Certified Organic Farmers magazine. I chose a visual format primarily because it helped me to make sense of the situation in a way that a text-based list could not. I was able to see the whole picture with just a glance. Most people are able to take in more information with their sense of vision than their other senses, even before paying conscious attention. A new field of information visualization is developing to take advantage of this capacity. AS: In your opinion, is it better that the organic industry ‘goes mainstream,’ by superstores like Wal-Mart starting their own organic lines and making organic options more available to a large number of consumers, or does this ultimately have negative implications for the organic industry? PH: There are some positives in terms of reducing synthetic pesticide use, which is often used to rationalize this process. Ultimately though, if you have other concerns such as social justice, ecological sustainability, humane treatment of animals, or democracy, we need to recognize that what is now called ‘organic’ does very little to incorporate these concerns. They may have been ideals at the beginning, but they didn’t make it into the USDA standard. AS: What can consumers do to help stop the consolidation? PH: One way is to support smaller-scale and independent farms and processors through your purchases, if you can get that information about size and ownership. Sometimes this will mean paying a bit more, because big corporations can afford to sell at a loss if it means driving competitors out of business. Political action to enforce anti-trust laws and stop subsidizing the largest players is also needed. The Agribusiness Accountability Initiative is a good source for more information on what’s happening and how to get involved with global responses to these trends. AS: Any recent discoveries you’d like to share? PH: Private label organics is a very recent trend, and growing very rapidly on a global basis. Safeway introduced its organic label less than three years ago, and it has grown to include 300 products. What’s most interesting is that they are licensing it to other retailers, so you can now find their O Organics products in a French supermarket chain’s stores in Taiwan. AS: What’s the best way for consumers to stay informed on this topic? PH: Watchdog groups like the Organic Consumers Association and the Cornucopia Institute are good sources for staying informed, particularly for efforts to weaken organic standards. View or download Phil Howard’s consolidation charts here. To read more about who’s behind your organic food, click here and here. This article originally appeared in the August/September 2008 issue of What’s Brewing.  To read other issues of What’s Brewing, or to add your name to the email list to receive these e-newsletters, click here.

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Posted in Uncategorized | Tagged food system, organic industry, Phil Howard | 5 Comments

5 Responses

1. on October 31, 2008 at 1:06 am | Reply eddiemill

   I thought that the USDA label was actually pretty good? A good certification should mean that farmers wanting to convert can’t simply backwards-adapt their farm. Organic is really about balance.

   The fact remains that organic farming is fundamentally better for farmers and the environment. We can only expect business to be business if there are loopholes in the allowances.

   It seems to be following all the signs of a developing industry. The demand growth is phenomenal, and that’s what’s ultimately going to drive an honest organic produce section to reality.

   -Eddie Miller
   BU ’10
   eddiemill@gmail.com

   Organic agriculture and global development

   
   
2. on November 4, 2008 at 2:02 am | Reply Nicholas Reid

   Eddie;

   Once again, thanks so much for following our blog and posting your comments. I completely agree that organic is about balance; balance between agricultural production and human development on the one side and environmental stewardship and sustainability on the other. I think the modern “organic movement” should aim to restore that balance in a food system whose priorities have become grossly skewed toward production of “cheap” food; without regard to the detrimental affect on our environment. Here are my thoughts on organic consolidation.

   I think it’s a common misperception on the part of consumers and producers to imagine “organic” as a new concept or a developing industry, or an industry at all. Organic is not new, neither in concept nor in practice; in many ways, organic is a return to pre-industrial methods of food production. Small farmers around the world have been growing food, building civilizations and cultures, and managing eco-systems for thousands of years, in ways that have not led to wide-spread desertification, global warming, holes in the ozone, mass animal extinctions, and under-nourished/over-fed, cancer-ridden populations.

   The application of industrial production methods and modern science to agricultural has destroyed many of the traditional agricultural techniques and acquired knowledge of local production; it has created a “race to the bottom” in food production that values profit over nourishment, and marketability (shiny red apples, chemical preservatives, irradiation…) over sustainability. This lowest-common denominator approach to food production has had a disastrous affect on producers, consumers and the environment.

   Along the way, industrial agriculture has forced small farmers to adopt modern “techniques” to survive; families who have farmed their land for centuries have been forced to choose between bankruptcy, (and the loss of their homes and land), and chemical fertilizers, herbicides, pesticides, and genetically-modified seeds. It is for those farmers, who truly understand the land and production, consider themselves “stewards of the land”, and value healthy food, that organic exists.

   In that sense, I think of organic as very similar to what Fair Trade premiums are to farmers; access to markets dominated by corporations and agro-industrial methods of production that are environmentally and socially damaging; (like you say, “organic farming is fundamentally better for farmers and the environment”) and “fair prices” that the reflect the true cost of agricultural production in a way that does not destroy the environment, the producers and consumers.

   You ask if the USDA is “pretty good”? USDA regulations are the only “organic standards” in the country. They have taken a traditional and holistic approach to agriculture and eco-system management, and turned it into a laundry list of prohibited pesticides and herbicides. In one sense, decreasing the use of those chemicals is certainly a righteous effort, but it has lost the core values of organic production. The only producers who are “backwards-adapting” to meet the organic certification requirements are multinational corporations who are maintaining enormous tracts of mono-crop, agro-industrial plantations, but simply cutting out the pesticides on the list, replacing them with “organic” versions, or compensating by diverting more water for irrigation, and erroneously marking up the costs to consumers. Small farmers, who should be reaping the rewards of organic, are still competing with corporations and large-scale production within the same markets and metrics.

   The corporate domination and consolidation of the organic industry is a decelerated continuation of the corporate consolidation of the food industry; which has been consuming family farms, destroying the environment, and poisoning consumers for the better part of the last century. It provides a slightly healthier and less destructive option for consumers, while distracting them from viable alternatives like small farmer fair trade or local production. The minimalist approach to certification has created an entire “industry” of healthier but still unhealthy, processed foods: organic soda, organic fruit snacks, organic frozen pizza; certainly not the product of a socially and environmentally healthy and balanced food system.

   
   
3. on November 12, 2008 at 12:37 am | Reply eddiemill

   Nick,
   Interesting points, and an interesting vision of organic. As a capitalist at heart though (Econ/Trade and development major), I have been struggling with some of assumptions of the organic ideal.

   First, I think your idea of “backwards adapting” is a very good image. We do not want farmers to be able to just cut out certain antibiotics and get a nice stamp on their eggs that people pay more for. A good certification must exist though, or else the market cannot support better than minimum quality/minimum price “food commodities”.

   A good standard for production does create an industry. It’s then an alternative market, with alternative prices and alternative costs. And must be treated as such: markets must grow.

   Then the challenge for us visionaries and entrepreneurs who care about organic is how to scale growth without sacrificing the health, beauty, and permanence of the land (the three beautiful organic ideals) and hopefully benefit smaller formerly-disenfranchised farmers.

   Cooperatives, local markets, and fair trade are good.

   But ultimately if we want this to be more than a niche in 10 years, it needs to have the scale and distribution mechanisms of a wide-scale solution. New food supply chains will make sure this is also more equal.

   One solution: enter direct trade.
   http://combover.bullvision.com/?p=603

   an interesting campaign for US transition farmers:
   http://www.organicconsumers.org/transitions/

   -Eddie
   BU ’10
   eddiemill@gmail.com

   
   
4. on November 12, 2008 at 1:03 am | Reply eddiemill

   more like it: Organically Grown Company
   http://edibleportland.com/content/2008/09/06/distributing-the-wealth/

   or the company website if you prefer:
   http://www.organicgrown.com/

   
   
5. on November 16, 2009 at 3:30 pm | Reply Andrew Kessel

   The Organic Consumers Association recently wrote about some customers being upset that some Silk products have dropped the organic label and gone “all natural.” This is a perfect example of what happens when the market becomes too heavily consolidated in the hands of a few monopolies; we lose transparency and accountability:

   http://www.organicconsumers.org/articles/article_19566.cfm

   The best part of being a monopoly power like Deans and United Natural Foods is that you can just blame problems on someone else. It’s not deception it’s just business.

   “Dean did not change the product’s identifying bar code or package design, nor did it significantly alter the price – moves that would have triggered scrutiny by store owners, some of whom now feel duped. A number of other Silk products were similarly changed from organic without a new bar code, Dean confirmed.”

   “Dean says it gave advance notice to its distributors and blamed them for not following through with independent grocers like Sunflower. It released to the Star-Telegram a form letter that distributors were supposed to send to retailers explaining that the nonorganic soy milk would carry the organic product’s bar code. National distributors Tree of Life and UNFI did not respond to repeated requests for comment.Specialty food markets contacted in California, Delaware and Texas said they did not discover the switch for six to nine months.

   
   

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