Mergers in the Organic Food Industry
Air Date: Week of April 7, 2000
Reporter Nathan Johnson takes us to a farmers' market in Santa Cruz, California to help explain how the organic food industry is booming and why the small, local farmers who began the trend are getting squeezed out of the market.
CURWOOD: Not so long ago, if you wanted organic food you'd grow it yourself, buy it from a local farmer, or take a trip to the health food store. But today, you can get organic produce in giant supermarkets, not far from the Twinkies and potato chips. U.S. consumers are now spending six billion dollars a year on organic food, making it the hottest sector of the industry. Small farmers started this trend, but the lure of big profits now means big business is moving into organic production. Nathan Johnson begins our story at the farmer's market in Santa Cruz, California.
(A bell rings; background voices)
JOHNSON: The bell means it's exactly 2:30, and farmers who have set up tables in the middle of this downtown parking lot can now start selling to the students, restaurant chefs, and everyone else who's been waiting.
STEINBERG: Today we brought a nice range of winter vegetables. We have Meyer lemons. They're sweet lemons. We have anise or fennel. We have three kinds of chard: gold, red, and green. We have red Russian and red curly kales...
JOHNSON: Jonathan Steinberg is a lanky 40-year-old who looks like just another aging Santa Cruz surfer, but he's actually one of the most experienced organic farmers around.
MAN: I've never seen this before.
STEINBERG: It's a new variety, gold chard. We saw it in a small seed company's catalogue and said Oh, we've got to have that. It's really great. I think it's really tasty, too.
MAN: Yeah? It's going to look nice when you stir-fry it...
STEINBERG: Yeah, it's a color contrast...
JOHNSON: The revival of organic agriculture started here 20 to 30 years ago, when young people from the counter-culture went back to the land. And with the help of the Whole Earth Catalogue, they planted their first organic vegetable patches.
STEINBERG: Many of us were idealistic, and many of us weren't from farm backgrounds, and we had to learn it somewhere. But you know, the underlying feeling was sincere. Very, very sincere effort to make better.
JOHNSON: These early pioneers succeeded beyond their wildest dreams. Stuff that used to be found only in hippie communes, like organic broccoli and free-range chicken, are now fairly common. But at some point, organic agriculture stopped being a cultural movement, and started becoming an industry. Organic farms and natural food retail stores are now reorganizing themselves into large, more financially-sophisticated companies.
STEINBERG: There used to be 50 market chains, and now there are eight or ten market chains. People that have been loyal to us have dropped out. We're taking a beating on our end. The guys that started it all might be out of business soon.
JOHNSON: As grocery stores merge, competition to supply them is fierce. There are more growers than ever, including large-scale conventional farmers who are switching some of their production to organic. As a result, last year Jonathan Steinberg lost money.
STEINBERG: It's really, really, really discouraging to spend my entire adult life doing this trade and working hard, not being a bum. You know, missing parts of my son's childhood, missing my beautiful wife. And then to do that all season and not make a penny. It's sad. It's been really hard for us. I'd be lying if I didn't tell you that we're really kind of discouraged.
JOHNSON: If farmers like Jonathan Steinberg want to survive, they have to make a choice. Either they can retrench into specialized markets, like selling directly to gourmet restaurants, or they can grow bigger, to compete with other large growers.
(A phone rings.)
WOMAN: John, you’re on nine!
JOHNSON: At the sales desk at Earthbound Farms, there are people taking orders from all 50 states, Canada, and even from overseas. At around 7,000 acres this is the biggest and one of the most profitable organic farms in the country.
GOODMAN: Everyone has different accounts. Like, Amy has a lot of the natural food accounts. She's got Whole Foods and Wild Oats, and some of the natural food distributors.
JOHNSON: Myra Goodman founded the company with her husband 16 years ago.
GOODMAN: But yeah, we'll talk to the buyers from all the supermarket chains. From Kroeger's and Publix and Albertson's, Safeway. So many of them are merged now, I don't, you know -- (Laughs) I don't know which are which.
JOHNSON: Outside the San Juan Batista headquarters, Ms. Goodman says to keep up with the boom in sales, they're building a state-of-the-art, seven million dollar refrigerator.
GOODMAN: This is our new 60,000 square foot cooler, and it's got that roof angle on one end because this is slated to be another 60,000 square foot cooler, to build in 2002. So we're finally anticipating our growth. And as you can see, it's like a three-story building that's going to be racked all the way up.
JOHNSON: Products like their pre-packaged salad mix are stored here, before heading out across the country in trucks for three, four, or five days. To keep the produce from wilting, they use machines called hydro-vacuums.
GOODMAN: They suck out all of the warm air, so your product is immediately chilled. And most of the stuff's actually going to get processed, so it will get washed through our wash line and you know, it will be fine.
JOHNSON: All this processing and technology exposes the company to criticism that it's too much like the agribusiness companies people rebelled against 25 years ago. But Ms. Goodman says Earthbound Farms is succeeding in doing just what those rebels always wanted. It's helping to change the way America grows its food. She cites a partnership between her company and the nation's leading non-organic lettuce grower, Tanamura and Antle ,that will cause Tanamura to stop using chemicals on land it uses to grow crops for Earthbound Farms.
GOODMAN: Their plan is to transition acreage forest as needed. And what it proves is that organic agriculture is viable for the future.
JOHNSON: Still, as a few big retail and wholesale players start to dominate the organic marketplace, old-timers like Warren Weber worry the organic industry is losing the things that made it popular to begin with.
WEBER: It's a good creek. It's a very strong creek, has a lot of steelhead in it.
JOHNSON: Warren Weber farms along Pine Gulch Creek in Bolinas. Along the stream bed are dense stands of native California buckeye and white alder.
WEBER: As you can see, looking at the banks, you know, they're very wild.
JOHNSON: Is this where you got your start in farming?
WEBER: Yeah. Oh yeah. We came out here. See that caboose? I lived in that in the beginning, and we farmed with horses and, you know, we were, you know, the beginning, really, of organic farming. (Laughs)
JOHNSON: To him, organic means much more than just farming without chemicals.
WEBER: What it means to be organic has a lot to do with the kind of farm it is and the environment it's in. It has a lot to do with the local nature of our food supply. And we're losing that.
JOHNSON: He agrees that consumers are still better off by buying organic produce, even if it's mass-produced for large supermarkets.
WEBER: It's getting something that's better, clearly better than the alternative pesticide, chemical thing. But it's still a highly-industrialized product. Once that becomes fairly apparent, I'm hoping that we'll have some sort of a resurrection, you know, of smaller stores, medium-sized stores, wanting stuff that's fresh, wanting stuff that's local. Wanting stuff that's from family farms.
JOHNSON: Small farmers are starting to think about these ideas. There's talk of adding a new, more robust organic label, a label that can bring together concerns about the health of both the environment and of small family farms. Combining environmental and social values into a single food label is a big step. But remember, these same folks were once called foolish for eating organic greens and goat cheese. And look what they've created. For Living on Earth, I'm Nathan Johnson in Bolinas, California.
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