Organic Economics: Regulatory Environmentalism or Market Loving Hippies?

“. . . It appears that the titans of the food industry are having their way with the USDA and the feds may soon approve a list of 38 non-organic items that may be included in foods marked "organic." All of this interesting regulatory play is inidicative of the fact that organic foods finally hit the big time, and thus became worth of Big Food's attention. We see a several different things happening here.

1. The public is becoming more concerned about the contents of its foodstuffs.
2. With more interest in organic food, Big Food decides to buy into to the industry.
3. Once bought in to the industry, making money off of the public's (perhaps legitimate) fear of the current foodsupply (that Big Food created and aggressively markets), industry immediately sought to make organic foods cheaper, more attractive, or tastier (or perhaps all three) by adding non-organic ingredients.
4. With its meaning diluted (and I'm not taking a position on whether this dilution is meaningful - whether these 38 ingredients make items more or less healthy), the term organic may slowly lose its value as an indicator that a food product is distinctively more natural.
5. This will open new opportunities for creative small food marketers to create new language signifying the concept that "organic" once conveyed. . . .” From Appropriating "Organic"
---
“. . . But not everyone agrees that organic farming is better for the environment. Perhaps the most eminent critic of organic farming is Norman Borlaug, the father of the “green revolution”, winner of the Nobel peace prize and an outspoken advocate of the use of synthetic fertilisers to increase crop yields. He claims the idea that organic farming is better for the environment is “ridiculous” because organic farming produces lower yields and therefore requires more land under cultivation to produce the same amount of food. Thanks to synthetic fertilisers, Mr Borlaug points out, global cereal production tripled between 1950 and 2000, but the amount of land used increased by only 10%. Using traditional techniques such as crop rotation, compost and manure to supply the soil with nitrogen and other minerals would have required a tripling of the area under cultivation. The more intensively you farm, Mr Borlaug contends, the more room you have left for rainforest.

What of the claim that organic farming is more energy-efficient? Lord Melchett points out for example that the artificial fertiliser used in conventional farming is made using natural gas, which is “completely unsustainable”. But Anthony Trewavas, a biochemist at the University of Edinburgh, counters that organic farming actually requires more energy per tonne of food produced, because yields are lower and weeds are kept at bay by ploughing. And Mr Pollan notes that only one-fifth of the energy associated with food production across the whole food chain is consumed on the farm: the rest goes on transport and processing. . . .” From Voting with your trolley
---
“. . . It appears that the FTC is moving to stop the proposed Whole Foods/Wild Oats merger. [Geoffrey Mann] would think that the triumphant entry of Wal-Mart alone into the natural and organic foods market would save this merger. But notice something important. The FTC doesn’t claim that the relevant market is the market for natural and organic food. The market is for natural and organic supermarkets. The agencies have been down this road before, mistaking channels of distribution for relevant markets. Now, in some cases, it may be that the market is defined by the merging distributors (as many would say was true in the Staples case). But because economically-relevant market definition turns on demand elasticity among consumers who are often free to purchase products from multiple distribution channels, a myopic focus on a single channel of distribution to the exclusion of others is dangerous.

In other words, there is a serious risk of conflating a “market” for business purposes with an actual antitrust-relevant market. Whole Foods and Wild Oats may view themselves as operating in a different world than Wal-Mart. But their self-characterization is largely irrelevant. What matters is whether customers who shop at Whole Foods would shop elsewhere for substitute products if Whole Food’s prices rose too much. The implicit notion that the availability of organic foods at Wal-Mart (to say nothing of pretty much every other grocery store in the US today!) exerts little or no competitive pressure on prices at Whole Foods seems facially silly. . . ." From Premium natural and organic bulls**t