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posted May 15, 2004

Discussion of industry practices - Loblaws

Dear organic farmers,

Yesterday I did the shopping for my ailing in-laws at the Loblaws around the corner from them and found that

1. all the iceberg lettuce in the store is certified organic
2. you have a choice of organic or non-organic bananas, both at 79 cents a pound, only that the organic ones looked better.

Can you give me a hint about the economics of that industry? Doesn't make sense to me.

-Jutta-

Reply from Lorenz Eppinger (of Greenfields Farm):

Loblaws are the absolute king at organic bananas when it comes to price - organic iceberg lettuce is available in abundance right now, just name a price you are willing to pay and they will give it to you. However, most organic consumers are aware of the low nutritional value of iceberg lettuce and it's relatively high probability of contamination, hence it isn't moving too well.

Reply from Alvaro Venturelli, who sells at our market:

Loblaws has been trucking through Ippolito trucking, not the produce outlet at the Food Terminal. They were bringing in seven full trucks a week just of organic produce. They also have a huge buying power as they are the larget supplier of Organic Food to Canada. This means bulk buying power. As well, these stores are famous for operating on the concept of loss leaders. As long as they bring them in, they don't mind losing money, and produce is the number one loss leader due to its perishable nature. Also, on my trip through Mexico, I ran into many organic farming situations where the farmers were stuck with many tons of produce. One farm alone left over 100 tonnes of mangoes on the trees. There is not a distribution system set up to get so much organic food out. The large distributors would rather sell less food at a higher profit margin. This leaves large buyers in the position of picking and choosing who they'll buy from, as well as in as position to demand certain prices from the farmers. Why would they build more infrastructure to bring in more food, at a lower profit margin? They wouldn't. Also these bananas though they're from Ecuador, are probably from a US owned corporation. This past year, the US gave out more than $28 Billion in Agriculture subsidies, mainly aimed at export surplus, to throw food at other countries, in the interest of establishing preferrence for their buyers, and also to kill off local competition from local farmers by dumping on their seasonal markets. We do not have any remotely comparable subsidy here and yet our distributors prefer US goods because of the price difference they can offer. They can sell it for less than it cost to produce. Pretty nasty. The Romans did it,and the Egyptians before them. It's a tool of imperial domination via the creation of trade imbalances.

A generally accepted premise from those in food security fields is the idea of building local food webs. Know your farmer. Truthfully, you are the answer. Direct farmers markets are a huge step in the right direction. The US has done this a while ago in the interests of stronger local food systems. Its protectionism which comes not in a form of subsidy but just the elimination of foreign competition. Europe does it, the US does it and for some reason, our government has not. This is done by only allowing local farmers to sell food at our venues.Those of us in the true north strong have a bit of a disadvantage here but it doesn't exclude us from making good connections directly with southern farmers, or not allowing them to dump on us and kill our seasonal markets. Basically, the delivery mechanism is in the wrong hands;. The truth is that it is very easy to overproduce food. The problem lies in the way it is suppy managed. Currently food and agriculture development are all being looked at with a prime directive of profit generation. I believe that until we begin to build our communities with community health as the most important factor, things will most likely only get worse. Britain has decided that future agriculture policies need to have just this concept as their main focus.

If we create 50 markets like ours in Toronto we will take over a good portion of the food chain and put decision making for importation into the farmeras hands, while encouraging through our policies the betterment of local agriculture through season extension and healthier food via this organic thing we do.


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