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November 26th, 2012

How Consolidated Agribusiness Harms The Organic Sector

By Wenonah Hauter

Click here to read about how consolidated agribusiness harms organics and other sectors of the food industry.

The pioneers of organic agriculture probably did not foresee the day when consumers could buy organic junk food at the supermarket. But now organic is a $31 billion a year big business and the biggest food companies are eagerly moving to capture the profitable and high-priced organic food label. Although many consumers and farmers moved to organic to avoid corporate-controlled and unsustainable industrial food production, the Big Food monopoly is catching up.
 
In the past decade, the organic food sector has consolidated rapidly, and it now closely resembles the conventional food industry. Major food companies have snapped up organic brands and launched their own organic versions of popular foods. Between 1997 and 2007, a third of the 30 largest food-processing companies purchased organic brands, and half introduced organic versions of their conventional food brands.
 
These conglomerates are also diluting the definition of organic and selling meaningless “natural” substitutes for organic foods. Giant food manufacturers and agribusinesses with valuable organic lines (like General Mills, Campbell’s Soup and Driscoll Strawberry Associates) have had company representatives on the USDA advisory board that establishes the standards for organic farming and food manufacturing. Perhaps unsurprisingly, the number of non-organic substances approved for organic food has tripled over the past decade.
 
But some companies can just sidestep the tedious process of weakening organic standards by capitalizing on consumer enthusiasm for organic without living up to them. Typically, that effort involves substituting a self-defined “natural” brand for the more tightly regulated “organic” counterpart. Dean Foods and its WhiteWave-brand Silk Soymilk provide an example of how costly such actions can be to the organic sector.
 
WhiteWave was founded in the 1970s driven by a vision that soy foods could help solve world hunger, but it grew into a major player. And soymilk became one of the only grocery products where organic was the norm, not a niche. Organic soymilk was the third largest segment of organic food sales in 2007, behind only dairy and fresh produce. In 2002, the nation’s largest dairy processor Dean Foods bought WhiteWave for $193 million.
 
In 2009, Dean Foods began to blur the integrity of organic soymilk. It began offering soymilk made with non-genetically engineered soybeans, which allowed Dean to shift from expensive organic to cheaper non-GE soybeans. Although Dean changed its ingredient list and removed the word organic from the label, most consumers and retailers still assumed Silk was organic.
 
This insidious transition from organic to “natural” had huge implications for consumers, farmers and the environment because of Dean’s market dominance. Dean was the biggest seller of organic soymilk and a huge buyer of organic soybeans. By 2004, Silk sold three-quarters of all soymilk in the United States and it was organic. Dean’s 2009 “natural” soymilk shell game helped reduce organic soymilk consumption by almost 50 million gallons the first year.  
 
Since it takes a pound and a half of soybeans to make every gallon of soymilk, the steep drop in organic soymilk reduced the market for organic food-grade soybeans by 1.2 million bushels. In their place, Dean used conventional, non-biotech soybeans for the “natural” soymilk, which were about $7.25 cheaper per bushel than organic soybeans in 2009. This meant that Dean saved — and organic farmers lost — about $9 million.
 
When the soymilk demand for food-grade organic soybeans evaporated, it amounted to a 32,400-acre drop in organic production between 2008 and 2009. Those acres could have reverted to non-organic soybeans. Even non-genetically engineered soybeans can and probably do use pesticides and herbicides if they are sold as non-organic. Although Dean promised consumers that it tested non-genetically engineered soybeans for agrochemical residues and even suggested that the soybean pod “naturally shields” it from pesticides, the reality is that agrochemical applications likely increased significantly.
 
The Silk Soymilk saga offers a cautionary tale of consolidated agribusiness power over the organic sector. Dean has described its specialty, organic and soybean-based beverages as “a $2 billion brand powerhouse.” In the case of soymilk, that power was used to undermine organic farmers, the environment and consumers.
 
For more information, read the new Food & Water Watch report, The Economic Cost of Food Monopolies.
 
Wenonah Hauter is Executive Director of Food & Water Watch. This post originally appeared at Civil Eats.

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