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Organic foods were once specialty items found in co-ops and health-food stores. But they have become so hugely popular in mass market that now Wal-Mart is the nation's largest seller of organic produce. NPR's Greg Allen reports that the rising popularity of organic products is creating tensions in the industry, most recently over the use of synthetic ingredients in foods labeled organic.

GREG ALLEN reporting:

If you imagine a dairy farm, chances are it would look at lot like Jim Weideberg's(ph) farm in Gays Mills, Wisconsin. Weideberg's farm sits atop a series of green rolling hills in Wisconsin's dairy country. It's small as dairy farms go, just 45 cows.

(Soundbite of cows)

Mr. JIM WEIDEBERG (Dairy Farmer): It seems like the cows are over there on the next hill in the pasture and you see the grass we have yet.

ALLEN: Jim Weideberg delivers milk to the Organic Valley Co-op. Co-op headquarters are not far away, in La Farge, Wisconsin. It's the nation's second largest seller of organic milk. Its CEO, George Siemon, started out as a city kid who found his way to a dairy farm in southern Wisconsin as part of the back-to-the-land movement of the 1970s. Today Siemon still wears his blond hair down to his shoulders, but he stopped milking cows and instead runs a company with $250 million in annual sales. Although business has never been better, Siemon says there's also trouble in what he calls the organic food movement.

Mr. GEORGE SIEMON (Organic Valley Co-op): It just really hurts to see the organic family fighting.

ALLEN: The tensions came to a head earlier this year in the form of a federal court ruling that severely limited the use of synthetic substances in organic food, a ruling which many believed threatened the industry's continued growth. Siemon says many of the synthetics banned were substances that consumers have long accepted, even asked for: things like calcium fortification in orange juice.

Mr. SIEMON: Well, if you take calcium and you heat it up, it's now a synthetic. CO2 is a gas that's used for your drinks. That's a synthetic. For example, the vitamins used in milk are synthetics. And, of course, that's required by state law.

ALLEN: From its origins more than 30 years ago, organic food has grown into an industry with well over $10 billion in annual sales and one that's been steadily growing by 20 percent a year. Much of that growth is in processed foods, an area where synthetics play an important role. And that's why Congress stepped in, adding a rider to an agriculture spending bill that allowed organic food makers to resume using a long list of synthetics. Siemon believes the deal was necessary to avoid causing hardship to an industry that's still finding its way. Much of the discontent, he believes, is among old-timers who are upset at the changes going on in organics and at the growing influence of companies like Kraft and Wal-Mart.

Mr. SIEMON: I have a little saying. I say that pioneers hate settlers, and there's a certain degree of that going on now where people are unhappy that we've succeeded so much that now you have the major food companies coming in and in the food business. But for me, if this is a movement, then the success is part of what you hope for.

ALLEN: Michael Potter is one of those organic pioneers. Potter is angry about the congressional amendment even though the company that he runs, Eden Foods, is also one of the leaders in the organic food industry. Started in the late 1960s as a food co-op in Ann Arbor, Michigan, Eden Foods today is a company with $60 million in annual sales and a state-of-the-art soy milk factory in Saline, Michigan.

Mr. MICHAEL POTTER (Eden Foods): We'll start down at this end. The soy beans come in at this end right...

ALLEN: Michael Potter may have started in the counterculture, but today with close-cropped hair, business suit and tie, he looks every bit the CEO. Eden Foods introduced soy milk to the US market in 1983. Today its product, Edensoy, makes up almost half of the company's sales. Walking past rooms full of boilers, tanks and steam steel tubing, Potter reaches into a hopper and scoops out a handful of the main ingredient: top quality organic soybeans.

Mr. POTTER: A lot of soybeans you'll find a little black mark, you know, on its belly, like--and but we only use clear hymen beans here.

ALLEN: Potter says Eden Foods has to use synthetics to produce its soy milk; silicon dioxide, for example, a defoaming agent. He says none of it ends up in the final product. Potter says the industry was working with USDA to craft rules that would once again allow the use of commonsense synthetics, things like silicon dioxide and hydrogen peroxide, used to clean packaging. But he was outraged when Congress stepped in, passing what he believes is an amendment that's bad for organic businesses and consumers.

Mr. POTTER: Which basically allows anything to be used in organic foods production--anything.

ALLEN: Potter concedes that the industry will have to change to accommodate new customers and new businesses, but not in a way that, in his words, dumbs down US organic standards.

Mr. POTTER: The organic foods movement, and/or industry, whatever you want to call it, was the development of an alternative to the status quo, not to become part of it.

ALLEN: Supporters of the changes believe Potter's worries are overblown. They say even the biggest companies have no interest in watering down organic standards or doing anything to undercut consumer confidence. But with nearly 40 percent of Americans now buying organic food and sales projected to reach $30 billion by 2007, clearly there's a lot riding on what exactly the label `organic' means. Greg Allen, NPR News, Kansas City.

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