Walmart squeezes organics.

• Author: Hauter, Wenonah
• Position: Column - Cover story

One of the most frequent questions I get about the food system is what to make of the fact that Walmart sells organic food.

Is it good news or bad?

Is it a sign of progress or the end of organic?

On April 10, a press release from Walmart added fuel to the debate. Not only is Walmart promising to sell more organic products than ever before, but the company says it will sell them cheaply.

There will be folks who spin this announcement as good news, claiming any increase in the volume of organic food sales, no matter where or at what price, is a good thing. But unfortunately, it's not that simple.

Walmart's business model is based on practices that increase the corporate consolidation of the food system, take money away from farmers, workers, and food processors, and drive agriculture to get more industrialized. The organic sector is already facing these pressures, and more exposure to the Walmart way of doing business could only make things worse.

No single company has more impact on food in this country than Walmart. It opened its first supercenter to sell food in 1988, and it took just twelve years to become the largest food retailer in the United States. One out of every three dollars spent on groceries in this country goes to Walmart.

With Walmart's huge market share also comes huge power, which has ripple effects throughout the economy. The company continually puts pressure on its suppliers to cut costs. And with Walmart as their biggest customer, food companies have little choice but to comply.

More than just size and market share have enabled Walmart to exercise such considerable control over suppliers. Walmart's success is the result of several very specific ways in which it does business. None of these bodes well for the organic sector.

The incredibly uneven power dynamic between Walmart and its suppliers puts the retailer in an excellent position to make demands, which it doesn't hesitate to do.

The pressure to cut costs has pushed companies like Levi's, Huffy, Rubbermaid, and RCA to close up manufacturing facilities in the United States and move them overseas. It has also pushed food producers such as Vlasic into bankruptcy as they try to meet Walmart's demands on pricing.

Walmart also demands volume. It sells an incredible amount of each food product, much more demand than a small- or medium-size producer could ever hope to meet on its own.

For a company obsessed with increasing efficiencies in its supply chain, it makes...