Organics: A poor harvest for Wal-Mart

Farmers say retailing giant is backing off ambitious plans

…There may be problems with supply as well as demand. Wal-Mart is known for its hardball tactics with suppliers, driving costs as low as possible and regularly switching suppliers to get the best price. That kind of attitude can alienate farmers, especially organic ones, who tend to plan their crops years ahead of time. They need to keep land pesticide-free for four years to win organic certification. “Is organic really compatible with the Wal-Mart approach? We’re finding out that it’s not,” says Jim Riddle, organic outreach coordinator and guest lecturer at the University of Minnesota.


Consider the case of Organic Valley Family of Farms in La Farge, Wis., one of the country’s largest cooperatives of organic farmers. When demand for organic milk soared two years ago, rival Horizon Organic Dairy offered to sell to Wal-Mart for 15% below Organic Valley’s price. Wal-Mart expected a similar reduction from Organic Valley, but instead the cooperative pulled out. “Looking for ever-lower costs comes at a real cost to sustainability,” says George Siemon, Organic Valley’s chief executive. “To have consistent supply, you have to change the paradigm of thinking and think about long-term partnerships.”

Business Week