Organic Food And The Walmart Effect

Walmart announced this week that they are expanding their selection of organic foods, and we’re not sure how we feel about that. On the one hand, the idea of organic food being more affordable and being available to a wider demographic sounds like a good thing. We consider it our mission to advance the health, well-being and lifespan of humanity. It would seem only natural that we would support bringing healthy food to as many people as possible, in order to improve their quality of life. Yet, as we’ve mentioned before, the whole “organic” label does not mean that the food is free of pesticides and other contaminants, and that large factory farms that provide both conventional and organic products to supermarket chains are practically producing the food side by side. 

Before you think that we’re just singling out Walmart, it is important to point out that the biggest growth in the organic and natural foods market during the last 15 years have taken place at mainstream grocery store chains like Kroger and Safeway. That market has grown in that time from six billion dollars annually to over 48 billion. For example, in 1998 their share of the market was 25%, with natural and specialty retailers taking up 74% and direct channels such as agricultural co-ops and farmers markets taking up 1%. By 2012, conventional retailers made up 55% of the market, whereas natural and specialty retailers shrank to 38% and direct channels grew to 7% (hooray for farmer’s markets).

Based on those numbers, it makes perfect sense that a player like Walmart would want to get in the game. It is also worth noting that they plan on bringing their model of “everyday low prices” to the market, which will undoubtedly affect pricing throughout the industry. Again, at face value this would seem like a good thing. As consumers, we’ve been conditioned to appreciate a bargain without always thinking about the less visable costs that are associated with the worldwide supply chain of cheap goods.

At the end of the day, buying your “organic” foods from Walmart or Ralph’s or Smith’s probably won’t really make any difference, except for what you may end up paying. One  relevant question is how will this affect the direct channels. Large supermarket chains will undoubtedly be able to adapt to the drop in prices that will most likely be the result of the “Walmart Effect”, but what about your local producer? Most small farms run on extremely tight margins with little room for readjustment. By coming in and changing the way the game is played, the retail giant may end up putting the squeeze on your local farmer’s market. It’s probably safe to assume that there isn’t a huge cross-section of locally sourced food enthusiasts who also happen to be Walmart shoppers. For those who do prefer their food grown within a reasonable proximity to their community by people they see on a regular basis, the situation will bear bitter fruit, indeed.

What do you think about Walmart ‘s expansion into the organic marketplace? Leave a comment below!