Walmart’s About to Do for Organic Food What It Did for Every Other Consumer Product

Walmart’s going to give organic food a big push

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Organic chicken feed. Lance Cheung / USDA

The major hurdle faced by every budding business, eventually, is scale. Something can work wonderfully in your lab, or workshop, or kitchen, but in a modern globalized economy, if you can't get it to scale, sooner or later you won't be able to compete. 

Walmart does "scale" better than almost any other company in the world. And now, says the Washington Post, Walmart is going to turn this power on the organic food industry. The big question is whether or not the organic agriculture industry can take it.

Organic agriculture eschews inputs like chemical fertilizers and pesticides, and, as a result, some consumers think that organic products are better for their health and for the environment. But shirking these advances of modern agriculture also means that, for many farmers, organic crop yields are lower, and prices for organic foods are higher.

Walmart, says the Post, is going to start selling a line of organic food products that don't have this price difference:

“There will be no premium for the customer to purchase organic products,” said Jack Sinclair, executive vice president of grocery at Wal-Mart U.S. “They will be able to purchase organic at non-organic prices.”

For those looking to buy organic products but turned off by the significantly higher prices, this is good news. But for organic food producers, it's more complicated. 

Organic farmers have an issue with scale—although there are some examples of organic yields meeting conventional yields, in general, organic production just can't produce as much food per unit of land as regular farming. As such, organic food costs more to make. If Walmart is going to start selling it without a markup, those shortfalls are going to hit someone.

Over recent decades, rising demand for organic foods has already been squeezing American farmers, says NPR. Unable to keep up with demand, American farmers have turned to importing organic grains from Asia. Working under the scale and stability of a Walmart contract could give the company's partners confidence to invest locally. But, until that can happen, the environmental and global health costs of increased international shipping ultimately detract from an organic farm's potential benefits. This adds to the fact that, though organic farms are better for the environment on a “per acre” basis, they're actually worse on a “per product” basis.

Aside from all that, the mass adoption of organic agriculture isn't a practical plan from a more fundamental standpoint. As it stands, organic farms rely on nutrients trickling down from conventional farms. Many organic products rely, indirectly, on chemical fertilizers and pesticides. As organic agriculture gains a larger share of food production then, some scientists suggest, crop yields could drop even further.

From the perspective of driving sales, Walmart's move is a savvy one. From the perspective of supporting organic agriculture's purported goals, it may be less so.

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