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Anne Bertucio
November 2nd, 2012

Farmers Pay the Price for Consolidation in Organic Food Industry

Food & Water Watch Analysis Finds That Dean Foods’ Shift from Organic to “Natural” Soymilk Cost Organic Soybean Farmers an Estimated $8.7 Million

WASHINGTON, D.C.—Organic food has become big business and the largest food manufacturers have rapidly taken over the organic food sector, sweeping formerly independent businesses into large food conglomerates. An analysis released today by the national consumer group Food & Water Watch found that the farmers who grow organic crops and raise organic livestock now face the same forces of corporate consolidation that dominate the conventional food industry, with a declining number of buyers putting downward pressure on the prices farmers receive.

“A third of the largest food processing companies purchased organic brands between 1997 and 2007, and half introduced organic versions of their conventional food brands,” said Food & Water Watch Executive Director Wenonah Hauter. “Over the past decade, every link in the organic food chain, from purchasing to processing to distribution to retail, has been dominated by a small number of huge corporations.”

The report, The Economic Cost of Food Monopolies, found that some firms bypass the organic label altogether and offer a self-defined “natural” label instead of following organic standards. In 2009, Dean Foods, the owner of WhiteWave’s Silk soymilk brand, began to offer a “natural” category and shifted its purchasing from organic soybeans to non-genetically engineered soybeans. WhiteWave’s Silk had previously sold about three-quarters of all organic soymilk. Many consumers and even some retailers were unaware of the switch from organic to “natural” because the Silk packaging remained the same, except the organic seal was dropped.

“Losing the organic integrity and standards shakes the very foundations of the system,” said John Bobbe, executive director for Organic Farmers’ Agency for Relationship Marketing, Inc. “It has the potential for dire consequences for organic soybean producers’ profitability and long-term sustainability, not to mention it’s grossly misleading for consumers.”

Food & Water Watch’s analysis found that organic soymilk consumption dropped 73 percent from 67 million gallons in 2008 to 18 million gallons in 2009. The impact on organic soybean farmers was significant. Since it takes 1.5 pounds of soybeans to make a gallon of soymilk, the one-year drop in organic soymilk consumption reduced demand for organic soybeans by 1.2 million bushels. Non-genetically engineered soybeans cost significantly less than organic soybeans (about $7.25 a bushel less in 2009), meaning that Dean Foods saved — and organic farmers lost — an estimated $8.7 million in 2009.

Food & Water Watch’s examination of the Silk soymilk case is part of a multi-sector examination of the cost of economic consolidation in the food and agriculture system. Other sectors and regions included Iowa hog production; milk processing and dairy farming in upstate New York; poultry production on Maryland’s Eastern Shore; and California’s processed fruit and vegetable industry.

“Replacing one adjective on a soymilk label has real-world environmental and potential human health impacts that many consumers are unaware of,” observed Hauter. “The shift away from organic soybeans brought some 32,000 acres back into conventional agrochemical production. The market power of Silk soymilk should serve as a cautionary tale of how the big food industry can distort and manipulate the organic market.”

A copy of the report, The Economic Cost of Food Monopolies, can be downloaded here:

Contact: Anna Ghosh, 415-293-9905, aghosh(at)fwwatch(dot)org

Food & Water Watch works to ensure the food, water and fish we consume is safe, accessible and sustainable. So we can all enjoy and trust in what we eat and drink, we help people take charge of where their food comes from, keep clean, affordable, public tap water flowing freely to our homes, protect the environmental quality of oceans, force government to do its job protecting citizens, and educate about the importance of keeping shared resources under public control.