Who owns organic?

From roots to suits

Sound Consumer | January 2007

by Phil Howard, Ph.D.

(January 2007) — Organic once described a tiny movement to create a more ecologically sustainable, socially just and humane food system. Now the commercial use of this word in the United States is controlled by the Department of Agriculture, a massive federal bureaucracy that regulates a $15 billion-a-year organic food industry.

Some pioneers within the organic movement, such as Cascadian Farm's Gene Kahn and Stonyfield Farm's Gary Hirshberg, went from being small-scale hippie farmers to millionaire executives in some of the largest food corporations in the world. The commitment to food produced without synthetic chemicals has remained, yet some of the other original goals seem remote. Should this transition be viewed as an enormous success, a huge failure or a plan in progress?

The truth is that the standards are only four years old and still evolving, and recent trends in organic food have both positive and negative effects. The success of organic, however, is a striking reminder that we have the power to influence the way food is grown, processed and distributed. Those who continue to fight for the ideals of the original organic movement should feel optimistic about achieving these goals in the future.

Patterns in the organic industry

Organic can be narrowed to a method of food production, but it began as and still is a grassroots movement for change in the entire food system. David Lively, a co-founder of the Organically Grown Company, reminds us, "The ag-biz system scoffed at us for decades — sometimes directly to our faces — and they were correct in doing that, of course, because we were absolutely as threatening to their professional world view as they suspected.

The issue is not simply a company's size, but rather market power and ownership — in other words, concentration.

Then, between December 1997 when draft national standards first were released and October 2002 when they were implemented, the organic sector grew by roughly 20 percent per year, while non-organic food companies grew less than 5 percent. Multinational corporations noticed and naturally began acquiring organic companies.

A few examples of the buyouts in this period include Coca-Cola's takeover of the organic juice company Odwalla, Kellogg's purchase of organic cereal manufacturer Kashi, and dairy giant Dean Foods' buyout of organic milk producer Horizon.

The peak of acquisitions occurred in 1999. Since then the pace of takeovers has slowed and involved smaller organic companies, such as the sale of organic chocolate startup Dagoba to Hershey's in 2006. The reason for the slowdown is that there are very few organic companies of substantial size left to purchase.

A few of the biggest independent companies have resisted enormous buyout offers from conventional food processors due to a strong commitment to their ideals. For example, Eden Foods does not use the USDA organic seal on its products even though it's certified organic; Eden says the standards don't represent a high enough level of integrity.

Some farmers have abandoned organic certification, saying they don't want to pay for it, and may present themselves as "beyond organic." Yet "beyond organic" still is organic ... and then some.

The relationships between the giant food processors and their organic subsidiaries usually are not apparent on the products lining grocery store shelves. Looking at the labels we have no way of knowing that Santa Cruz Organic and R.W. Knudsen brand juices have the same corporate owner, JM Smucker. Although one founder of an organic food company told me that "consumers don't care" about this trend, hiding their corporate ownership suggests otherwise.

With the biggest original organic companies nearly all sold off, the mainstreaming of organic food is occurring in different ways. Multinational food processors are establishing partnerships with organic companies and developing their own product lines under existing brands.

For example, Kellogg's Kashi brand has branched out to frozen dinners, and Unilever has introduced an organic version of Ragu pasta sauce. This latter strategy has not been as consistently successful as the takeover of organic brands, so despite significant marketing efforts, it may soon falter.

Concerns about concentration

Although the original vision emphasized mimicking ecological processes to the greatest extent possible, USDA standards so far have just prohibited certain substances. They say little about planting a diversity of crops, which attracts beneficial wildlife and reduces susceptibility to disease and pests — even though this was a key element of the organic movement philosophy.1

To supply the biggest food processors and retailers in the world, the majority of new organic food production involves planting a single crop, using industrial-scale machinery and trucked-in organic fertilizers. As organic has become a big business, the fossil fuel consumption used to ship products around the globe and the amount of packaging waste also have become indistinguishable from the non-organic food system.

Silk brand soymilk, for instance, began using soybeans imported from Brazil, Argentina and China the year after it was acquired by Dean Foods. In fact, more than 40 percent of the USDA's certifiers now are based outside the United States. Even domestically, there's no guarantee that the workers producing organic food enjoy better wages or working conditions than their non-organic counterparts.

With respect to animal welfare, the USDA is under fire for allowing factory-scale "organic" farms. Although the standards currently have a provision for "access to pasture," it's not clearly defined and is not consistently enforced. Some dairies, such as Horizon and Aurora (the source for most private-label organic milk), operate feedlots with 4,000 cows or more — and they're being criticized for rarely if ever allowing the cows to graze on green pasture. (See Got organic milk — USDA certified?, Insights by Goldie, June 2006 Sound Consumer.)

Elizabeth Henderson, of the National Campaign for Sustainable Agriculture and an organic farmer, says "[Large-scale farms] can follow most of the rules in the National Organic Program, but they do not participate in the social program that is essential to making the production of food sustainable in the long run."

Michael Sligh and Carolyn Christman of the Rural Advancement Foundation International (RAFI) write, "The issue is not simply one of size, but rather of market power and ownership." Concentration in the non-organic food industry has created a handful of giant corporations with such enormous buying power that they're able to set prices, limit farmers' return, and control market access. It also has had several other negative effects ... an accelerated loss of genetic diversity, reduced innovation, less responsiveness to consumer and social interests, and fewer decision-makers in the industry."

Positive impacts

Though organic may not yet mean all that it was envisioned to be, much of it is positive. The USDA standards strictly prohibit genetically engineered and irradiated ingredients, synthetic pesticides and fertilizers with sewage sludge — and violators are subject to stiff fines. Undeniably, as more land is converted from conventional to organic production, fewer toxic chemicals are applied. Because this benefits both ecosystems and human health, some advocates suggest we should work to make organic even more mainstream before worrying about the issues noted above.

There are social benefits to big organic as well. Retail prices of organic food have fallen, in some cases to the same price as non-organic. This is particularly helpful for those with low incomes, who otherwise might not be able to afford organic food. The greater availability of organic food is another plus; consumers can find organic food almost everywhere now, and in some places we can purchase organic food from vending machines.

Animal welfare could be viewed as another success story, as organic farm animals are not allowed to ingest synthetic hormones or receive antibiotics unless they're sick. With few exceptions, access to pasture is much greater than what you'll find on non-organic farms.

"The success of organic has allowed companies the means to reinvest in advocacy that moves the organic ideals forward," says Natalie Reitman-White, of the Willamette Farm and Food Coalition. The entry of big business also has provided legitimacy to more organic research and education, such as the nation's first organic major and the BIOAg program at Washington State University.

Advancing the ideal

There have been a number of attempts to weaken the USDA organic standards, from the moment they first were proposed. These were widely believed to have been orchestrated by big companies interested in making bigger profits, which is something to keep in mind given the entry into the industry of behemoths such as Kraft (whose parent corporation owns Philip Morris) and Wal-Mart.

Fortunately, these attacks have been unsuccessful due to hundreds of thousands of citizens making their voices heard in Washington. Combined with the market performance of organic, this demonstrates that we can make a difference.

The organic standards are an important baseline and the organic label sets the bar for other eco-labels that may follow. RAFI argues that it's time to strengthen the natural links between organic and other labels identifying sustainable methods (such as fair labor and fair trade), that instead of fighting each other over smaller niches, a collective effort fights "greenwashing" that undermines organic integrity.

As the industry evolves, we'll need to advocate the next level of criteria one way or another. These must address concentration in the industry, where food comes from, how far it travels and by what means, packaging and waste, a living wage for farm workers, preserving farmland and keeping farmers on the land, and continuing to be the front line for sustainability.

Philip Howard, PhD, is an assistant professor of community, food and agriculture at Michigan State University.

  1. The Wild Farm Alliance recently published a guide to fill the void in language, identifying specific farming practices consistent with the organic rule on biodiversity. With funds contributed by the Organically Grown Company, PCC and many others, the guide has been distributed to 8,600 farmers.

More about: certified organic, food industry concentration

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