Building a Sustainable Food System in the Age of Wal-Mart

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During a conversational lull at a co-op meeting a year ago, a rural electric co-op manager turned to a food co-op manager and asked: “So, Wal-Mart says it’s going to carry a lot more organic food. How will that impact you?” The store manager thoughtfully replied, “We haven’t figured all that out yet. We’re concerned about them tying up our sources of product and their ability to get preferential deals from manufacturers. It’s certainly going to change how people talk about organics.” How right she was.

Now add the retailing acquisition of Wild Oats by Whole Foods Market. What does it all mean for natural food co-ops? At a deeper level, in a world of Wal-Mart organics, how do co-ops build a sustainable food system?

Impacts on supply and distribution

No question, mainstream retailers are affecting the supply chain, generating heated conversation about organic foods. In a recent Organic Trade Association survey, 52 percent of retailers said that they could sell more organic product given consistent supplies. A consequence is a large increase in imported organic foods and ingredients, igniting tensions over food miles and affecting U.S. producer margins. Major companies are responding to Wal-Mart: Mars now exclusively sells them an organic Dove chocolate bar, and Kellogg now sells organic Raisin Bran, Frosted Mini-Wheats, and Rice Krispies.

Concerns arise about the dominance of corporate interests in the organic community and related public policy. Wal-Mart is today the largest seller of organic milk, through relationships with Horizon and Aurora Dairy, generating discussion over organic practices in these operations (access to pasture), perceived diminution of organic standards, and the absence of more holistic measures of sustainability in organic certification.

Wal-Mart’s famed logistical proficiency will shake up distribution patterns and margins, and I suspect an early impact of the Wild Oats acquisition will be the harmonization of warehouse capacity and distribution patterns within United Natural Foods and others.

Acting on values

The food co-op sector is assessing the business implications of these topics. But for a moment, I’d like to talk about the unique contributions that our sector could make in advancing the creation of a more sustainable food system during this period of upheaval. Natural food co-ops were created to provide access to the kind of foods, and a food system, that owner-members said they wanted. A time of economic turmoil is exactly the right time to demonstrate how effective cooperative ownership uniquely delivers on those values.

Educating consumers and the trade

A historic competitive advantage of consumer food co-ops has been their role as a trusted educator about products and issues. Initially it was around topics of conventional vs. organic production, but today’s conversation needs to go deeper and broader to evaluate those situations where “sustainable” may not mean “organic” and vice versa. I recently attended a farmer appreciation day at the Moscow (Idaho) Food Co-op and was delighted to see customers, farmers, staff, and children interacting with informational displays, samples of local foods, store signage, and some thoughtful questions and answers. Events, community forums, newsletters, and conversations in the grocery aisles are all tools that need to be honed to enlarge the conversation about food system sustainability.

Food co-ops also must engage their trade partners about product, packaging, and transportation. A start was the “Sustainability in the Produce Supply Chain” forum sponsored by National Cooperative Grocers Association at Expo West in March. Co-op grocers, distributors, producers, and others spent a day thinking about how to transition to a more sustainable business model. (See report, p. 10.)

Some of this conversation will be challenging because it will acknowledge that the organic system we have now does not address all key elements of a sustainable food system. I spent a spring weekend driving the hilly Palouse region of eastern Washington, talking with the farmer-owners of the Shepherd’s Grain brand of flour. These wheat growers are not organic, but they use no-till methods, Integrated Pest Management, and crop rotations (among other practices) to produce grain that is milled into high quality flour. It was raining that Saturday morning (a major event when you only get 14? of rain a year) and their impact on the landscape was visible. Their farms consistently conserved soil; conventionally tilled fields had gullies and sinkholes where soil had eroded, silting in roadside ditches and causing streams and rivers (all bound for the Columbia River and its salmon) to run muddy brown. Shepherd’s Grain uses Food Alliance certification to verify their commitment to an agricultural system which is, at least in some ways, “beyond organic.” Our ability to incorporate these distinctions in our conversations will be critical.

Growing the supply base

More than any other retail sector, co-ops could be the friendliest place for new producers to gain local market entry and for producer-owned co-ops to gain system-wide entry. If we’re going to grow the kind of supply base we need, the food co-op community must commit itself to intentionally bringing all its purchasing and merchandising systems to bear on this opportunity.

Local sources are important and must be supported. But if co-ops only think and talk locally, they will under-leverage their ability to make systemic change across the planet. In Minnesota in January, I want to support the sustainable work of Florida orange growers, Nicaraguan coffee farmers, Ghanaian cocoa bean producers, and yes, pork and beef producers only a county away. Systemically aligning with producer-owned co-ops that share our sustainable values honors our desire for both healthy environments and democratic economies.

In those cases where sustainable producer-owned brands are not available, different tactics may be needed to grow the supply base. Organic private label lines have proven to be a very effective strategy for Wal-Mart, Whole Foods, and Safeway over the past several years. It may be time for NCGA to re-evaluate this tool as well.

Engaging in public policy

Building a food system is achieved one transaction at a time. But those transactions, individually and collectively, take place in a crucible formed by public policy. This sector has felt its power: remember USDA’s original proposed organic rules? A massive public response corrected some USDA misdirection. We have enormous potential to encourage the public policy we need if we’re going to build a sustainable food system, and that same potential exists for us to support public policies that create and defend cooperative economies.

Credit unions’ experience with the banking industry shows us how important it is to effectively engage with policy makers on issues of importance. Are we ready to monitor changes in organic standards and advocate for policies and programs we need?

Branding the food co-op experience

If we choose, each of these components can become a distinctive piece of brand identity and competitive advantage for the food co-op sector. The response to Wal-Mart and Whole Foods is not to become like them, though there are elements of each that truly are worthy of emulation. In my mind, the right first response is to become even more intentionally distinct in talking with our owners about shared values and the future we seek to create. Then we must demonstrate, to owner-members and those who want to be our owner-members, our ability to mutually invest and cooperate to create that future.

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Kevin Edberg is executive director of Cooperative Development Services and has a professional background in agricultural marketing ([email protected]).

See other articles from this issue: #130 May - June - 2007