Volume 6, Number 2                                       November 1, 2002

The Farmer


"Organic" Farming

by Eric Rubin

(Organic farming has been suggested as a possible high profit niche market for Black farmers. We at Muhammad Farms grew "organic" produce only to have our Black customers complain about the price, comparing us to the state farmers market prices. WWW.MuhammadFarms.com asked Eric Rubin, a community activist and organizer, who worked in the food industry for over 14 years as an entrepreneur and sales manager for National Brands, to help us answer the question of whether Black farmers should be moving towards growing organic crops. This is his reply.)

A few weeks ago we had a discussion about organic crops and you asked me my opinion. As I stated I am a supporter of organic crops and look forward to the day that they are available to everyone.

However when you asked me whether I thought Black farmers should be moving towards growing organic crops, I did in fact state that at this particular time – NO. The reason is simple – distribution!

Unfortunately there are limited distribution channels for organic produce and organic products in general. My main concern is that farmers who move towards growing organic crops potentially put themselves into the position of becoming sharecroppers to national distribution chains.

If a farmer is going to sell product as ‘produce’ then the first question is to whom? If it is to a distributor of organic products then we must look at who is this distributor and to whom are they aligned with?

There are really two separate but equally important questions. Are the crops being sold as organic produce to be distributed as such, or are they being sold as organic produce in order to be used as part of a value added food product?

Within both of these questions, it is important to understand that the farmer is no longer growing a ‘commodity’. That product that is now ‘organic’ is in fact a ‘value added product’. It is particular to the market because it has intrinsic value – i.e.. it has been grown under specific conditions. These conditions create the additional value of the product. The amount of time, energy, and additional capital invested in creating the ‘organic’ product must be realized in the sale of the product, and this is where the potential problems lie.

Let us say that the produce is being sold to a distributor that will resell it at retail level as organic produce. First, that ‘buyer’ is looking at that product as a commodity in relation to the farmer. If he is buying greens, he is looking at the various farmers who are producing ‘organic’ greens and shopping the best price.. i.e.. ‘commodifying’ the ‘value added’. If many farmers begin to ‘go organic,’ and supply is greater than demand, then commodity relations develop even further.

This takes on serious repercussions, as the necessary time and capital outlay for ‘organic certification’ forces the grower into a niche market at the mercy of the retail buyer. Where the farmer sees him/herself as investing in creating a value added product, and where the buyer is selling the product as a value added product – the issue lies in the space between. The farmer invests more to make more, the buyer sells the value added ‘organic’ produce at significantly higher markups – yet the buyer relates to the farmer as a producer of a commodity, and develops and leverages the product based on the laws of supply and demand! This becomes more evident when we begin to investigate who are the distributors.

For instance Tree of Life, Inc. is one of the largest distributors in the world of natural and ‘ organic’ products. Tree of Life North America is a division of Wessanen's Natural and Specialty Foods Group. In their mission & vision statement Wessanen states "...Our long-term objective is to maximize the value of the capital invested by our shareholders...", which is no different from any other corporation in the food industry.

This takes on an even more ominous tone when the farmer is selling the organic product to a buyer who is selling the product to an ‘organic’ manufacturer of organic foods. For in this relationship the product grown by the farmer is just one of many items that are part of a ‘value added’ food item.

Supposing a farmer had worked out an agreement with Boca Burgers to supply the soy or other vegetable components, will the owners of Boca Burger pay fair market price for the ‘organic’ product that the farmer produced? Boca Burger is owned by Oscar Meyer/Kraft, which is owned by Phillip Morris . One only need to ask any of the producers who supply Kraft to know how they are squeezed.

Another example is Cascadian Farm, who produce over 150 organic products in eight

food categories. Included are frozen vegetables and fruits, juice concentrates, fruit spreads and conserves, frozen desserts, meals and entrees, pickles, relishes, and sauerkraut. Cascadian Farm is a division of Small Planet Foods which is now owned by General Mills.

Let’s look at Worthington Foods who manufacture under the name "Morningstar Farms" a variety of burgers, patties, breakfast links, corn and veggie dogs; under name "Worthington" frozen foods, dry burger alternative, and canned vegetarian meat alternatives; under the name "Natural Touch" burgers, tuna substitute, patties, vege franks, entree mixes, Roma coffee substitute; and under the name "Loma Linda" canned vegetarian products and entree and gravy mixes. Worthington Foods is now owned by Kellogg's.

So in conclusion, until distribution and sales channels can be developed between the farmer and the consumer that are based on mutual respect and understanding of the farmers relationship to growing the products, and more so that the farmer has some control in these relationships, the opportunity for the farmer to become further entrenched in being squeezed by the system of commodity relationships is in fact increased.

There are in my mind certain opportunities for the small farmer who desires to produce organic product. One opportunity is to develop not only their own distribution systems, but also the final place of sale.

Because of the nature of production and distribution, it is in the final sale that the true ‘value’ of a ‘value added product’ is realized. There are in fact two price points for the farmers, the point of sale at the point of production (the farm), and the point of sale at the final stop on the distribution chain (retail store or restaurant).

This retail store could be a cooperative that purchases the product directly from the farmer. Again, this relationship must be based on mutual respect, because the commodity relationship still remains, (a retailer can and will squeeze the farmer) if he sees that he can increase his margin because the product must be sold.

The ideal scenario would be to see cooperatives that are partnerships with the farmers and the various communities, where both components see the intrinsic need of the whole, and work to form a production/distribution/sale relationship that benefits all. This is both possible and necessary. (Or as we say at Muhammad Farms, we must control the product from "the land to the man".)