CORPORATE TAKEOVER OF OG FOODS

CORPORATE TAKEOVER OF ORGANIC FOODS

Coca-Cola, Wal-Mart and the corporate owners of cigarette giant Phillip Morris Companies Inc. might seem an unlikely match for organic and natural food.

But these large corporations, which have been accused of contributing to obesity, cancer-related deaths and the destruction of independent businesses, are swiftly taking over the organic industry in Canada.

Some say the entry of organic food, ranging from apples to milk to hamburgers, into mainstream retailing means the industry is finally getting the recognition and sales it deserves.

But others are concerned that corporate empires will wipe out small, independent farms, rely heavily on imported food from countries with suspect standards, and rapidly erode the principles upon which organic food production was built.

"What's important to keep in mind is that these big corporations are getting into organics not because they have doubts about their prior business practices or doubts about chemical, industrial agriculture," said Ronnie Cummins, national director of the United States-based Organic Consumers Association.

"They're getting in because they want to make a lot of money -- they want to make it fast."

He said the companies couldn't care less about "family farmers making the transition to organic farms."

Despite high prices -- about 40 per cent higher than conventionally grown food, a recent analysis in Ontario found -- Canada's organic industry was worth up to $1.3 billion in 2003 and is growing 20 per cent a year, Agriculture Canada says.

Canada is also involved in organic exports -- about $63 million worth in 2003, Ottawa says.

Organic retail sales have come to occupy a small niche in the Canadian food market in recent years. People looking for alternative foods could find organically produced vegetables, meat, even toothpaste, produced by small, specialist companies guaranteeing chemical- and pesticide-free goods.

But recently, the niche began to expand -- greatly. With many Canadians now heavily focused on healthy lifestyles, companies have watched sales of packaged foods plummet -- and as a result are anxious to move into natural foods. The door has opened to the mainstreaming of organic food.

"It's increased tremendously in the last few years in particular," said Ted Thorpe of the Hamilton, Ont., area, who has been an organic farmer since 1990.

Last month, for instance, Wal-Mart Stores Inc. announced it plans to become the leading mass provider of organic food. The company is in the process of doubling its selection of organic products, spokeswoman Karen Burk said.

Wal-Mart has carried some organic products in the last few years, but now recognizes that customers are "very interested in a large variety of organic selections," Burk said.

In March, giant Colgate-Palmolive Co. bought control of Tom's of Maine, an independent, U.S.-based business that specializes in natural toothpaste and other personal care products.

In 2004, Kraft Foods, synonymous with processed cheese and Kool-Aid, bought Back to Nature, a small natural cereals maker. Kraft is a subsidiary of Altria Group, which also owns Phillip Morris, one of the biggest cigarette makers in the world, as well as one of the world's largest brewers.

Coca-Cola, whose sugary drinks have come under fire from doctors and nutritionists, bought out Odwalla Inc., which produces premium juices and nutrition bars.

Loblaw Companies Ltd., owners of Superstores in the Edmonton area, now carries more than 300 products as part of its President's Choice Organics line and plans on further expansion, said Geoff Wilson, senior vice-president of investor relations and public affairs.

The company's mission is to sell a large line of organics at low costs so that people scared off by the high cost will be more inclined to buy.

What was once a small niche market that operated at farm gates and in health-food stores has expanded into a multibillion-dollar industry worldwide that seems to be gaining momentum. But the people who have supported organics when it was still a fringe segment of the food industry see big problems.

There's a conflict of interest between the principles of organic agriculture and the tenets of capitalism that will likely only get worse with time, they say.

"Those companies are basically interested in the bottom line, aren't they? It's another niche they can tap into," Thorpe said.

"Because they are big concerns, they can probably undercut a lot of the smaller outlets. They can see the numbers -- the industry's been growing exponentially over the last few years -- and, basically, it's more dollars to be made."

Traditional organic farmers find it ironic that companies such as Loblaw sell organic products beside traditional farm goods produced using pesticides or controversial methods.

"This is a very values-driven sector and so the organic pioneers, some of them are not very happy, for sure," said Laura Telford, executive director of Canadian Organic Growers, a national charitable organization.

Most corporations that sell or specialize in organics import their goods from South America, China, the U.S. and elsewhere.

"We import, especially during the winter. We import from many countries," Wilson said.

He said Loblaw also sells locally grown food and that the company sends certifiers to other countries to ensure standards are met.

But many critics say that's not good enough. In order to be truly organic, products should be locally grown with the least impact on the environment, said Cathleen Kneen, executive director of the B.C. Food Systems Network.

"There's more and more concern in particular as we look at the environmental cost of transporting food long distances (and) realize we're not going to be able to do that much longer."

A bigger reliance on cheap imports could also spell problems for farmers and independent businesses, said Ann Clark, a plant agriculture professor at the University of Guelph.

Adds Cummins of the Organic Consumers Association: "(There's) more and more outsourcing, ingredients from countries like China, where not only is there semi-slave labour but standards are dubious."

At Loblaw, there is room for small growers to get involved, Wilson responds, despite the company's significant reliance on imported organic foods.

"With the increasing demand there's lots of opportunities for growers to get into it," he said.

But Cummins said he's talked to many farmers who are angry because they've started losing contracts to China. If this keeps up, the practices of large corporations could have devastating consequences for traditional organic food industry, he said. "The Wal-Marts of the world want to control the organics sector and say they are going to control it (and) have a traditional business model that is basically going to destroy organic integrity if consumers don't stay vigilant and get organized."

THE BIG PLAYERS

Here are some recent corporate takeovers of small organic brands and their new corporate parents:

- Kraft Foods bought small natural cereals producer Back to Nature in 2004. The company, a subsidiary of Altria Group, which also owns Phillip Morris Companies Inc., one of the largest cigarette makers in the world, also purchased Boca Burger Inc.

- Odwalla Inc., which consists of premium-priced juices that are all-natural and partially organic, was purchased by Coca-Cola in 2001.

- Dean Foods Co., the largest dairy company in the U.S., bought out Horizon Organic in 2003.

- Kellogg's has acquired a few natural and organic brands: Kashi Cereal and Morningstar Farms.

- General Mills purchased Small Planet Foods, which owns organic brand Cascadian Farm, in 2000. The brand consists of items such as frozen fruit, vegetables, granola bars and fruit spreads.

- Colgate-Palmolive Co. bought Tom's of Maine, which specializes in natural oral and personal care products, in March.