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From: [log in to unmask] href="mailto:[log in to unmask]">Denise O'Brien
To: [log in to unmask] href="mailto:[log in to unmask]">listwfan
Sent: 6/13/2006 8:49:45 AM
Subject: wfan list> Everyday low sticker prices


Everyday low sticker prices

By Wayne Roberts

Like kids in a candy store, the eyes of Wal Mart executives may be
bigger than their stomachs if they think they can manage a major
expansion of organic food sales while driving organic prices down to
within ten per cent of conventional foods - a combo of soaring demand
and crashing prices that flies in the face of common sense economic.

With annual revenues of $285 billion, Wal Mart has the clout to try to
make this happen. But throwing its weight around the organic block may
just provoke politicization of the organic food sector, which has so
far remained aloof from politics and managed to keep the tensions of a
decade's exponential expansion both quiet and internal.

Everyday low prices for quality organics that are usually 40 to 100 per
cent more expensive than conventional synthetically-produced foods would
certainly boost sales by organic farmers, over and above the 20 per cent
a year growth rate they've been enjoying with premium prices over the
past 15 years. But inside-the-boxstore thinking may have led Wal Mart
officials they could replicate successes in other areas without taking
account of the unique quality, measurement and bookkeeping methods that
underlie organic food production, methods that won't sit well in the Wal
Mart system.

It's all food for Wal Mart executive afterthought: organic food really
is a different beast.

Even Wal Mart's classic methods aren't as likely to force down prices of
organic food as they forced down prices of manufactured goods, including
manufactured foods, and including organic milk, which they already lead
the word in selling.

Wal Mart method 1, special deep discounts exacted in return for
high-volume purchases, work for widgets made in factories, where the
per-unit price goes down with mass production. But the per unit costs of
goods grown on organic farms don't follow a typical factory graph graph,
since monoculture, the pre-condition for mass production methods, acts
like a magnet for pests and parasites.

Wal Mart method 2, just-in-time logistics, slash the costs and risks of
storing bluejeans, plastic toys and hard candies. But the weather isn't
as cooperative with a mega-corporation's squeaky-tight schedules as
factory owners can be, and organic farms are even more dependent on
whims of the weather than conventional ones, which often pick foods
before they're ripe, then add the sun-kissed color later with additives.
In a cold or rainy snap, Wal Mart's organic division could easily find
itself holding the bag.

Wal Mart method 3, cheap retail labor and buildings, don't do much harm
to dry goods or conventional foods with additives that make them perform
like dry goods. But unskilled post-harvest handling and poorly-equipped
stores can spoil organic goods that follow natural life cycles and age
badly on untended retail shelves.

Welcome to the factors that explain why food was one of the last of the
economic sectors to be industrialized, even though it was one of the
first to be commercialized. Industrialized food may be the best thing
since sliced bread, but mechanized slicing of thin-skinned loaves of
bread didn't get going until the late-1920s. Other than cookies, jams,
whitebread and similar sweet nothings, food production and processing
weren't mechanized until the 1950's and '60s, centuries later than light
industries such as clothing, and a half-century after heavy industries
such as steel and auto. Organic came into prominence as a movement and
set of principles that resisted industrial methods which treated land,
seeds, plants and animals as if they were chemical or mechanical factors
of production on a factory floor.

Organic bookkeeping adds another slew of problems and introduces another
set of perpetual conflicts for industrial-scale retailers.

It's true that huge retailers can work on farmers to get over some of
the short-term causes behind price differences between organic and
conventional food. Organic pioneers had to handle a steep learning
curve, thanks to the indifference and ridicule from government
agriculture field staff, university ag departments and giant retailers,
all of whom left organic producers to fend for themselves. These
producers learned the hard way, on their own dime, and probably hoped to
recapture some of their past losses in premium prices, a hope Wal Mart
and other superstores are sure to dash.

As well, some of the price difference with organics relates to the sheer
economics of high demand and low supply. The lure of mass sales to Wal
Mart and other retailers will certainly encourage large-scale farmers to
switch over to organics, and that new production may well swamp the
market, as has happened occasionally with milk and a few crops such as
garlic and onions. A few of these over-produced goods are already being
sold into pools of conventional food and sold at regular prices.

But the main explanations for higher organic prices are structural -
central to organic bookkeeping methods and principles -- and will stick
around for the long-term, or foment a huge ruckus when Wal Mart insists
on diluted methods.

This is a sticky point for customers, especially the kind of customers
trained in Wal Mart-style consumerism. Relatively high prices for pop,
cookies, pastries, frozen french fries, potato chips, ice cream,
microwave-ready meals, and similar psuedo-foods are accepted without
much complaint because that's the price of what's deemed a special
treat. But there's no excuse other than Yuppie snobbery to charge extra
for plain potatoes, carrots, spinach and breads that don't even require
expensive pesticides and additives.

Having long suffered from this double standard on food prices, those who
know and respect what organic food is about are pretty defensive about
its high price. In contrast with the artificially low price of synthetic
or industrialized food, the relatively high price for organics captures
something like the full cost and value of growing and marketing real
food that meets environmental and human health needs. Organic prices
"internalize" these costs. By contrast, the low sticker prices seen in
Wal Mart and other superstores come from "externalizing" the full cost
of cheap fertilizers and pesticides by dumping them in the environment
and on unsuspecting animals, including people.

Wal Mart is an icon for such externalization practices, increasingly
reviled for the everyday expensive pollution and exploitation linked to
its everyday low prices.

But organic producers can't externalize costs without losing their way.
They can't dump manure from factory barns into rivers and then buy
chemical fertilizers; they have to compost manure and return it to the
soil, which is more expensive. They can't grow miles of one crop and
spray with chemicals; to discourage pests, they have to grow a wide
range of crops, which is more labor-intensive and expensive. They can't
jam produce into a truck, then spray it with fungicides that keep it
from spoiling and gases that keep it from looking haggard; post-harvest
handling has to be quick, skilled and careful, which costs money.

The only way to mess with organic prices is to mess with organic rules,
already under constant pressure in the United States, where the United
States Department of Agriculture controls the organic label and has
allowed standards to erode to the point where factory-style cow and
livestock barns are setting the norm. The same pressures will be applied
on a Canadian government label, expected some time in the next year.

The impact of a cost-cutter like Wal Mart on government-managed organic
standards will cause the composted manure to hit the fan as the battle
to impose everyday low prices comes down on one of the few economic
sectors that's been protected until recently by benign neglect that's
allowed prices to reflect costs.

(adapted from NOW Magazine, June 8-14, 2006)

Denise O'Brien
Women, Food and Agriculture Network
59624 Chicago Rd.
Atlantic, Iowa 50022
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