WADE GOODWYN, HOST:
It's WEEKEND EDITION from NPR News. I'm Wade Goodwyn. Organic food has taken another step away from its crunchy alternative routes. Walmart, the king of mass-market retail, says it will sell even more organic food, and it promises to bring down the price tag as well. Now the question is will organic producers be able to keep up with demand? Joining me talk about this is NPR's food and agricultural correspondent Dan Charles. Dan, welcome to the show.
DAN CHARLES, BYLINE: Nice to be here.
GOODWYN: Dan, Walmart says it's going to sell organic food more cheaply. How's it going to do this?
CHARLES: Well, you know, Walmart already sells organic food. But this - they're trying to make a statement saying we're going to set up our own house brand. It's delivered by a separate company actually called Wild Oats. And they're saying we're going to organize this, and we're going to deliver organic food more cheaply. And it's a good question. How are they going to do this? I mean, I actually talked to the CEO of Wild Oats. And he said it's all about logistics. He said Walmart is the king of distribution, right.
And so if we organize the production and the processing and distribution of organic foods on a large scale, there's efficiencies to be had. This is actually kind of an experiment, a test. You know, how much of the extra costs that you pay when you buy organic food - how much of that is just the fragmented nature of the business? How much of it is the small-scale aspect? And how much of it is inherent in organic production?
GOODWYN: Well, there's no question that Walmart is kind of the king of logistics. But if you talk to some of their suppliers, they'll also complain that Walmart is the king of squeezing them and making them produce the product ever more cheaply at their own expense.
CHARLES: Right. So you could say this is a threat to some organic producers who are used to higher margins. On the other hand, I mean, the organic production is expanding, and if Walmart wants large quantities, they may have to outbid other producers. There is a limit right now on the amount of organic food for sale. They say they want to expand that, and there's no reason why they couldn't. There's lots of land out there. Right now, organic is actually a very small part of American food production, people say 5 percent or less. So there's no reason why Walmart couldn't expand organic production if they offered a good price. The question is can they do it cheaply?
GOODWYN: Part of this has to do with trust. Are people going to stop going to Whole Foods and go over to Walmart 'cause they can get the eggs $2 cheaper? I'm a little skeptical.
CHARLES: OK, so this gets to this question of what is organic really because organic has an actual legal definition. You know, it's set out by the National Organic Standards, laid down by the USDA. And it has to do with how organic food is produced - no pesticides, no industrial fertilizer, certain other rules like...
GOODWYN: Chickens can walk around.
CHARLES: Chickens can walk around, etc. And you can do that on a large scale, and you can do it for Walmart. But organic, also, for the consumer sometimes, is cultural image. People think small-scale, local, nonindustrial, non-Walmart, right?
CHARLES: So, you know, so you can see the organic label kind of splitting. You can get organic eggs for $3 a dozen. You can get organic eggs for $6 a dozen. And the companies that sell them for $6 a dozen say we are the true organic. We go beyond the strict requirements of these rules. Our milk comes from small, family farms. Our chickens have lots of pasture, not just, you know, a door in the side of the chicken house. And we'll tell you where we get our products. You know, we're more true to organic roots. And maybe they will get a certain segment of the market, and the $3 eggs will get another segment.
GOODWYN: NPR's food and agricultural correspondent Dan Charles. Dan, thanks.
CHARLES: Enjoyed it, Wade.
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