Farmers Concerned About Sourcing As Wal-Mart Rolls Out Wild Oats Organic Line

As Wild Oats organic foods begin to appear on Wal-Mart shelves across the United States, some organic farmers and distributors are raising concerns that the high-profile move by the world's largest retailer could permanently transform their livelihoods and diminish the quality of the label.

Wal-Mart (NYSE:WMT) has been dipping its toes in the organic market for years, becoming the most popular grocery choice for American consumers seeking organic foods by 2007, and slowly adding new organic products to its inventory ever since. But it was the announcement earlier this month that the Bentonville, Ark.-based chain planned to carry a line of nearly 100 organic products bearing the Wild Oats brand name in all of its U.S. stores and on Walmart.com that has perhaps generated the most buzz.

The bold proposal was greeted with praise by many observers, who were excited to see a new option for consumers who want to purchase foods grown according to the USDA’s organic standards.

But much of the response was restrained, as industry insiders, farmers and families found themselves wondering what exactly organic means to the huge corporation, as well as how the move would affect the existing organics market and those who rely on it either for their livelihood or their nutrition.

Scott Trautman, owner of Trautman Family Farm in Stoughton, Wis., sells the organic beef, pork, eggs and honey produced on his farm directly to consumers. He, like many other people so intimately involved in small- to medium-scale organic farming, is concerned that the entry of major corporations into the organic space will bring with it the industrial approach that has done so much to degrade conventional agriculture.

“On the one side, I’m happy to see organics opened up to more people; on the other, Wal-Mart only cares about itself and will not help anyone or any farm but perhaps bring the same kind of cancer to organics as conventional agriculture,” he said. “I hope consumers will investigate organic food and everything it stands for however they come to it.”

A Tuesday posting on the official Wild Oats blog pushes back against that line of concern, stating that consumers should be happy that large retailers are offering new ways to find and purchase inexpensive organic goods.

“If we really want more people to have access to healthy, organic food, we should celebrate the commitment of those retailers to begin stocking organic products at prices within reach of their customers,” the post states. “Organic isn’t about scale, it’s about adhering to the principles of producing food without synthetic chemicals, and with a respect for sustaining the land and water used to grow that food.”

Wal-Mart says that about 90 percent of the Wild Oats “pantry” items -- non-perishable products like chicken broth, spices and apple sauce -- it plans to carry are certified organic by the USDA, meaning that they contain at least 95 percent certified-organic ingredients.

But Wild Oats and Wal-Mart refuse to discuss the details of just where those ingredients would come from, what companies it is partnering with in the endeavor, or much else about the provenance of its products, which Jack Sinclair, Wal-Mart’s executive vice president of grocery, has said will cost at least 25 percent less than similar products offered by competing national organic brands.

Wal-Mart spokeswoman Danit Marquardt declined to answer such questions, instead referring all related inquiries to Wild Oats, whose spokesman, Bill McCue, stated that its "partnership with Wal-Mart has allowed us to leverage their infrastructure and also secure commitments with manufacturers that create a surety of demand and will allow us to pass on those savings to customers."

McCue went on to explain that Wild Oats will be purchasing goods directly from manufacturers, not making its own organic products, but would not identify those manufacturers nor the farms they source their ingredients from.

“Currently we’re working with 20 manufacturers, and we’re collaborating very closely with them and they share our commitment to standards of excellence to making organic products available and affordable,” he said. “We’ve worked very closely with Wal-Mart to ensure that the rollout is in step with supply.”

Tom Casey, CEO of Wild Oats, which is owned by the Los Angeles-based investment firm Yucaipa Companies, provided some more information in a comment on a posting on the company’s official blog.

“The organic ingredients for our Wild Oats product lines are sourced from many, many farmers, mostly domestic U.S., but some ingredients are sourced globally,” he wrote.

Further details were reported in a Trefis analysis of Wal-Mart posted on Forbes.com that states that “to procure organic goods at lower prices, Wal-Mart is entering long-term purchase agreements with farmers and suppliers. It is also looking to consolidate middlemen to further eliminate unnecessary costs.”

IBTimes contacted dozens of the country’s largest organic farms and organic manufacturers and distributors in an attempt to obtain more details of the arrangements with Wild Oats. None of them would even admit to being a supplier for Wild Oats, and many refused to answer the question at all, stating instead that they do not disclose information about their supply chains or the companies that buy their products.

This blanket unwillingness to discuss how and where the ingredients in Wild Oats products will be grown, and who will be manufacturing the products made from them, raises concerns for smaller farmers and other observers who worry that Wal-Mart’s Wild Oats rollout will bad consequences for the organic industry.

Marianne Cicala, owner of the Cricket’s Cove Organic Orchard in Richmond, Va., says she has turned down offers to sell her entire organic blueberry crop to companies like Whole Foods (NASDAQ:WFM), explaining that she has “no interest” in doing so because she believes corporations are often more focused on their bottom line than on sustainability.

“There are two very different approaches from ‘organic’ growers,” she said. Those of us that are diligent about giving back to the land as well as growing the purest clean food possible. Then there are the mega-growers that are ‘converting’ to organic, the bulk of whom have lost market share to the family farm and clean growers,” she said.

“Mega-corporations invade the ‘farm-to-table’ movement with misleading ads and prey on people that believe that seeing the organic label tells the whole story about the true quality of their food. [Wal-Mart] has flooded the ‘fresh’ produce market with USDA organic-labeled produce, but the quality of the food is nothing that will be served on my table.”