Organic Foods
It used to be that organic food was a niche market. Cooks who wanted to put together a completely organic meal had to go out of their way to find a dedicated, organic supermarket like Whole Foods (WFM) or their local equivalent -- if one even existed.

Now, a stroll down the aisles of strip-mall stalwart Safeway (SWY) reveals a surprisingly strong and ever-increasing selection of organic foods. And even discounters such as Walmart (WMT), Costco (COST), and Target (TGT) are stocking their shelves with organic fare.

This might seem like a dream come true for organic devotees, but this increased availability highlights a new dilemma for organic-food purists: Organic food simply isn't as organic as it used to be.

Big Government, Meet Big Food

For food to receive the coveted "USDA Organic" seal of approval, it must meet specific requirements, one being that all nonorganic ingredients a producer wants to include must appear on a list of approved substances.

The Department of Agriculture's "National List of Allowed and Prohibited Substances" is the master list of substances that may or may not be used in organic crop production, organic livestock production, and in or on processed organic foods. In 2002, there were 77 items on that list. But The New York Times reports that as the world's industrial food concerns have gotten more involved in the production of organic food, that list of approved nonorganic ingredients has grown to more than 250 today.

Why allow nonorganic ingredients in organic foods at all? In some cases, it's unavoidable. Take bread. As the Times reports, baking soda isn't organic, but you can't make bread -- organic or not -- without it. So baking soda is one of the approved nonorganic items on the list.

Better Foods, Bigger Profits

Organic food still counts for just 4% of food sales, but that percentage is growing as "big food" (as it's called by its detractors) establishes a presence in the natural food market. It's a tasty market for large corporations: As anyone who's shopped for it knows, organic food commands a higher price point and therefore more profit.

Big companies have been busily stocking their pantries with small, once-independent organic producers. And where they can't acquire an established company, they create their own organic brands to fill supermarket shelves. A niche market that was once small (all-natural) potatoes has turned into big business. Just take a look:
  • Cascadian Farms and Muir Glen are owned by General Mills (GIS), which had $16.7 billion in sales in the past year.
  • Kashi and Morningstar Farms are owned by Kellogg (K), which had revenue of $13.2 billion in the past year.
  • Honest Tea is owned by Coca-Cola (KO), which had sales of $47.2 billion in the past year.
  • Naked Juice is made by PepsiCo (PEP), which sold $67 billion in products in the past year.
  • Boca Foods is owned by Kraft (KFT), which recorded $54.9 billion in sales in the past year.
A few well-known organics brands remain small and independent, including Eden Foods, Clif Bar, and Amy's Kitchen. But it's plain to see that organics have become big business.

Take Two Aspirin and Call the USDA in the Morning

As more companies get into the organics business, and more types of organic foods are produced, there are bound to be additions to the USDA's list of approved nonorganic ingredients.

Is this a bad thing? It's up to consumers to decide.

Take aspirin, for instance. Aspirin makes the list for treating inflammation in livestock, a worthy cause. But aspirin is definitively man-made. And while it's hard to make too much of a case against the use of baking soda, one could easily make the case against the use of aspirin.

So while it's not automatically a bad thing for new substances to make it onto the list, the jump from 77 approved nonorganic ingredients in 2002 to more than 250 today is alarming, especially considering the USDA's organic standards didn't exist before 1997.

For health-conscious consumers who go out of their way to buy organic, and who pay the extra money for the privilege, it's worth reevaluating the meaning of "organic" and whether or not the extra effort -- or the extra money -- is still worth it.



John Grgurich is a regular contributor to The Motley Fool, and owns no positions in any of the companies mentioned in this column. The Motley Fool owns shares of PepsiCo, Whole Foods, Costco, and Coca-Cola. Motley Fool newsletter services have recommended buying shares of Costco, PepsiCo, Coca-Cola, and Whole Foods, as well as creating a diagonal call position in PepsiCo and a bull call spread position in Walmart.


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5 Comments

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Theodore M. Seeber

Organic Asprin is possible- it's just a distillation of willow bark after all.

September 12 2013 at 10:18 PM Report abuse rate up rate down Reply
kairologic

Beyond this... "certified" organic products may have been GM before contracting with the program, and, under certain economical and environmental circumstances, they may be used in place of non-GM stock - and still be labeled organic. There are loopholes in the national organic regulations that can allow for scheisters to pull it off. http://kairologic.blogspot.com/2012/07/organic-schmorganic.html

August 03 2012 at 12:41 PM Report abuse rate up rate down Reply
Tina Klamert

In the same way that we want energy companies to invest in Green Energy and eventually transition and phase out the old corrupt & distructive energy, we have used our voice, through purchases, to tell the food industry what we want. So this is their way of making the transition as well. We want companies to 'label it,' right. Well, as long as the 'big food industries' don't compromisethe integrity of certified organics, I'm okay with them getting in on the movement. Hopefully, they will phase out the garbage foods once the scales of their profits have tipped in the direction favoring organics. And then we can put an end to Monsanto and their patents on life.

July 12 2012 at 12:50 PM Report abuse rate up rate down Reply
alyackey

"Take bread. As the Times reports, baking soda isn't organic, but you can't make bread -- organic or not -- without it."

I quit reading this article at the point. While bread can contain a host of things, the basic recipe since ancient Rome for white bread has been: 1. water 2. flour 3. yeast 4. sea salt.

(Try a pound of unbleached, unenriched flour, one cup of water, one tablespoon of yeast and a dash of sea salt. Mix, let rise twice and bake for about 3/4 of an hour at 375 degrees F.)

But since the source was the NYT what do you expect.

July 11 2012 at 1:41 PM Report abuse rate up rate down Reply
1 reply to alyackey's comment
linmarco

Agreed! Truth is by the time the big boys get through they will be selling food nowhere near organic and
no one will be able to touch them. Why? Every elected official charged with regulating them is presently bought and bossed. They will grow the so called organic produce by the tens of thousands of acres, process it, and undercut the genuine organic stores. That's life.Give it few more decades and we will be eating soylent green.

July 11 2012 at 4:38 PM Report abuse +1 rate up rate down Reply