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THE LAND, APRIL 25, 2014
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How will Wal-Mart entry impact organic market? GUEBERT, from pg. 2A Those cuts “have been particularly painful for Wal-Mart,” Reuters noted, because “one in five Wal-Mart shoppers relies on food stamps.”
the 1,600 organic items it already sells to customers whose wallets are either staying the same or shrinking?
OPINION
Mart’s sales — organic or otherwise.
Interestingly, though, the company’s expanded organic strategy includes a The short answer is it can’t. plan to “create a new price position ... that increases access.” That’s marketThe longer answer, however, suggests speak for Wal-Mart’s plan to cut That important fact appears to have it might be cheaper for Wal-Mart to been overlooked by the numberorganic retail prices by 25 percent to, crunching analysts doing the math on attract new, upscale customers to its hopefully, boost sales. 4,000 U.S. stores with an expanded what Wal-Mart’s bigger (it says it organic food line than to convince its Whether that idea actually increases already stocks 1,600 organic items) current price-focused, penny-pinched organic sales — and doesn’t nick profentrance into the $30 billion U.S. customer base to buy more organic its — remains to be seen. organic grocery business. food. There can be little doubt, however, It also raises the question: How can Besides, some of those new customers that Wal-Mart’s plan to expand its Wal-Mart increase overall grocery just might buy clothes, toys and a DVD organic grocery list while cutting retail sales by adding 100 more “mostly player, too. That would boost Walprices will increase demand and, in organic,” mostly not-cheap items to turn, producer prices for already-tight supplies of organically grown grains, vegetables and meat.
stands at 20 million bushels while today’s organic soybean production is less than one-third of that, or about six million bushels. As such, organic soy now sells for $25 to $30 per bushel, or twice the price of conventional soybeans. Maybe Wal-Mart’s plan will, in the future, lower prices paid organic producers but, Clarkson adds, “right now, there is so much demand and competition for supplies that ... I cannot imagine that changing anytime soon.”
Clarkson’s view is widely held among organic producers and consumers. Most don’t fear the retail giant’s new venture to go green because, after years of hard work, they know organic food is more relationship dependent than price dependent. As such, they suspect In discussing the Wal-Mart idea with the Bentonville Biggie may have taken a bite out of one tough turnip. the New York Times, Lynn Clarkson, owner of Illinois-based Clarkson Grain, But, hey, they quickly add, welcome “which processes and sells organic and to the revolution, Wal-Mart. conventional wheat, soy, corn and other grains,” noted that the supply of Alan Guebert’s “Farm and Food File” organic grain can’t meet the market’s is published weekly in more than 70 demand now. newspapers in North America. Contact him at agcomm@farmandfoodfile.com. For example, Clarkson estimates that Past columns, news and events are today’s U.S. organic soybean demand posted at www.farmandfoodfile.com. ❖
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