When everyone wants a slice of organic industry pie

Hi Friends!

I hope you’re having a lovely morning so far! The blog has been all about recipes so far this week, and if you missed them, feast your eyes on some delicious Strawberry Rhubarb Frozen Yogurt, a Swiss Chard and Red Onion Omelette, and my Recipe of the Week, Grilled Rosemary Plum and Chicken Kabobs. So today, let’s hang up our aprons and chat a bit about food news, shall we?

Last week, one of my favourite bloggers, Caitlin, shared this article from the New York Times, entitled “Has Organic Been Oversized?” Since I didn’t think I should write an essay in her comments section, I figured I’d get up on my soapbox on my own blog. The article talks about the US food industry, and specifically, how there are very few wholly-organic companies left. Why? Because big business, or the major brands we’ve all heard of, has bought them all up. I don’t normally like to stir pots other than the ones on my own stove, but I thought this issue was worth talking about.

If I asked you now to list 3 independent organic food companies, could you do it? If Kashi is on your list, I’m sorry to break it to you, but it’s owned by Kellogg, as is Bear Naked and Wholesome & Hearty. Yep, the same Kellogg that makes Froot Loops and Frosted Flakes. Larabar and Cascadian Farms belong to General Mills, so they’re out too. (If you want to look up your favourite organic brands to see if they’re owned by an industry giant, check out this table. There is no date on it so things may have changed since, but it appears to be at least as current as 2008.) Once these names are eliminated from the list, there aren’t many left. Eden Foods, Clif Bar & Company, Amy’s Kitchen, Lundberg Family Farms are 4 of few.

So why should we care? What’s the harm in having large corporations buying up smaller independent companies to access a portion of the $30-billion a year (and growing) organic food industry? Well for starters, there is the whole issue of what constitutes organic. The National Organic Standards Board meets to discuss this very subject, and votes as to whether or not various ingredients should be allowed in products that are labeled “certified organic”. Are those ingredients themselves organic? According to this article, not always. A few controversial ones such as carrageenan (a thickener with questionable health effects) and chemically engineered substances have been approved. The “National List” of approved foods used to consist of 77 non-organic substances, and today it’s up to 250+.

Then there’s the motive of profits. Clearly, the organic industry is a profitable one. If you were the owner of a big company in an industry where competition for shelf space is cut-throat, wouldn’t you want to be able to mark up your prices and sell to consumers that are willing to pay the premium? That’s exactly what’s happening for packaged goods. For example…

“On Amazon.com, for instance, 12 six-ounce boxes of Kraft Organic Macaroni and Cheese sell for $25.32, while a dozen 7.25-ounce boxes of the company’s regular Macaroni and Cheese go for $19.64.” (Source)

For the record, I didn’t even know you could buy mac and cheese on Amazon. I guess they think of everything. But back to organics.

The article goes into detail about the number of places on the National Organic Standards Board, and what type of person must fill each role. There are 15 spots, and 2/3 of them need to vote in favour of a decision before it is passed.  By law, the Board has to consist of four farmers (defined as someone that owns or operates an organic farm), three conservationists, three consumer representatives, a scientist, a retailer, a certification agent and two “handlers,” or representatives of companies that process organic food. However, over time, executives and other members of the ‘food giant’ companies have managed to gain dominance.

To sum up the main points, big business has been moving into organics in 2 ways:

  • Firstly by gaining huge influence over the  decisions made by the National Organic Standards Board,
  • And second, by buying up the little independent organic food companies.

For brands like Eden Foods, Clif Bar & Company, and a few others that remain independent, and due to size, can’t take advantage of economies of scale like industry giants can, this isn’t good news. Oh my, I just typed economies of scale. Hello, memories of Economics 101.

What will the long-term effect be?

I’m not a psychic, nor am I an economist or expert in forecasting what will happen to the organic industry. But I wonder… does the future look something like this? (Note: I used these 2 products because they are in the same product category, but this could apply to any of the other companies mentioned above.)

So…

  • If there is in fact as much big business influence on the National Organic Standards board as the article in the New York Times claims,
  • And if the Board continues to add questionable substances to the National List,
  • And if big players in the food industry continue to buy up small organic companies AND start to include new approved ingredients from the National List in their organic products….

…. then I wonder how “organic” a granola bar will be in 20 years relative to an organic granola bar today. Will it be any different from a conventional one?

Now, for a little conversation….

  • What do you think? Should big business be allowed to buy up handfuls of small organic companies, even though other brands in their product lines are clearly NOT made from certified organic ingredients?
  • Now that you’ve read and seen how many previously independent organic companies have been bought up, does this change your perceptions of organic brands, and the industry as a whole? Did any of the information in this chart surprise you?
  • Any other comments to add?
  • Anyone want to play devil’s advocate?

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