In early May, Mark Kastel got a letter from the state's Department of Agriculture, Trade and Consumer Protection (DATCP). Kastel, co-director of the Cornucopia Institute, a Wisconsin-based farm advocacy group, had been awaiting the letter for months. It was the agency's response to a complaint Cornucopia had filed against Wal-Mart, accusing the giant retailer of mislabeling non-organic food as organic.
DATCP's letter did not make a specific finding of wrongdoing. But it did issue a warning that "use of the term 'Wal-Mart Organics' in combination with reference to a specific non-organic product may be considered to be a misrepresentation and therefore a violation" of Wisconsin law. It added that the state would continue to monitor Wal-Mart to insure future compliance.
"This finding is a victory for consumers who care about the integrity of organic food and farming," says Kastel, who sees the letter as lending credence to Cornucopia's claims that there were major problems with Wal-Mart's organic program. (The U.S. Department of Agriculture has yet to comment on a similar complaint.)
In September, the Cornucopia Institute completed a study that examined Wal-Mart's early effects on the organic market. The study vilified the retailer's low-price model for organics and concluded it was "cheapening" the organic label by sourcing the great majority of its organics from "major agribusiness, foreign sources and domestic industrial-scale farms."
In addition to uncovering signage problems in Wal-Mart stores in five states (Wisconsin, Texas, Minnesota, Iowa and Illinois), Cornucopia alleged instances of outright deception. For instance, the group said an "organic" infant formula on Wal-Mart's shelves contained synthetic ingredients prohibited by organic standards.
Wal-Mart spokesperson Karen Burk dismissed Cornucopia's allegations, suggesting that the problems with signage were isolated incidents, like when a green organic tag is "inadvertently placed by or accidentally shift[s] in front of the wrong item." But Kastel says the signage issue reflects the giant retailer's lack of dedication to organics.
Kastel says Wal-Mart's foray into the organic realm, launched in early 2006, "was never about selling high-quality organics." Rather, it was "merely an attempt to go slightly more upscale in an effort to compete with other retail chains, like Target," and to capitalize on the robust organic market - estimated at $16 billion and growing 20% annually.
"Wal-Mart and organics didn't sound right from the start," says Kastel, "and after our research we discovered it wasn't right."
By "research," Kastel is referring to Cornucopia's September study, which he promptly provided to Wal-Mart CEO Lee Scott. After receiving no reply, and after a January follow-up survey found no action had been taken to correct the "deceptive" signs, Kastel filed his complaint with Wisconsin.
Wal-Mart's failure to promptly act on the signage issue sparked outrage in the organic community. The Organic Consumers Association, a Minnesota-based consumer advocacy group, responded with a boycott. This group, like the Cornucopia Institute, has been a persistent critic of Wal-Mart's entry into the organic foods market. Of particular concern is the integrity of its organic milk.
The issue came to the fore after one of Wal-Mart's original suppliers, Organic Valley - a cooperative of small farmers - refused to meet Wal-Mart's rock-bottom price demands. The retailer then turned exclusively to Horizon Organic (owned by Dean Foods) and Aurora Dairy, both of which have been assailed by critics for getting most of their milk from "factory-farms."
These large-scale organic dairy operations confine thousands of cows in outdoor feedlots, where they're milked three times a day and provided very little pasture for grazing. Defenders of Aurora and Horizon say they are in compliance with organic standards, which hold that ruminants must have "access to pasture." Others disagree.
"It is logistically impossible to pasture very large herds, particularly if you want to milk them three times a day, as both Horizon and Aurora are apparently doing," says Dave Engel, executive director of Nature's International, a Wisconsin-based certifying agency.
Kastel points to other standards for organic dairy farming, such as the passage that says livestock conditions must "accommodate the health and natural behavior of animals," as proof that these larger dairy farms are not in compliance. He adds that the standards tell farmers when they can temporarily confine their livestock - for weather or health reasons - so it follows that they should not be confined at other times.
"The law is clear," Kastel says. "If you took any one of those regulatory elements maybe it wouldn't be clear, but when you add them all up it is very evident what the expectation of the farmer is."
The other major beef that critics like Cornucopia have with Wal-Mart is the retailer's propensity for sourcing organics from big business and foreign countries.
One concern is that food flown thousands of miles around the world is something less than "organic." Though the standards provide no restrictions for faraway sourcing, many in the organic community believe preservation of fossil fuels is an integral component of organic production, which flies in the face of overseas sourcing.
Another concern is how to verify that organics grown overseas are actually organic. Ronnie Cummins, of the Organic Consumers Association, says Wal-Mart is already obtaining much of its organics from China, where the certification process is "totally dubious."
The Cornucopia Institute has also leveled sharp criticism at China's certification process. There are currently 40 foreign organic certifiers accredited by the USDA, but Kastel says China's organic program remains "state-controlled" and that the USDA has "yet to make a legally mandated site visit to audit and review" its qualifications.
Joan Shaffer, a spokesperson for the USDA's National Organic Program, says the agency's deputy administrator, Mark Bradley, will be flying to China for such a purpose later this year. "We are committed to preserving the integrity of the National Organic Standards," she says.
But two independent audits - by the American National Standards Institute in 2004, and the USDA's Office of Inspector General in 2005 - were both critical of how the National Organic Program handled violation complaints.
In the end, much of the attention focused on Wal-Mart's presence in the organic market owes to fears that the giant retailer will sap appeal for organics and eventually kill the rapidly growing market.
"The bottom line is that Wal-Mart's logistical expertise has not transferred well to organics," Kastel says. He adds that the state of Wisconsin's reprimand of Wal-Mart "should serve as a warning to any retailer: If you are going to engage in organic commerce, you better have management in place to oversee the integrity of your program."
