The organic farming community has gained a significant friend in Costco, and the friendship has every sign of growing ever stronger as time goes on. The warehouse retailer recently surpassed Whole Foods in annual sales ($4 billion) when it comes to organic produce, and the giant member-only store is taking steps to ensure it keeps that title for a very long time.
Only 3.1 million acres of cropland in the United States has been dedicated to organic production, with an additional 2.3 million acres for organic livestock. Although that may sound like a lot, it's not: it represents only 0.8 percent of all US cropland and 0.5 percent of all US pasture for livestock as certified organic as of 2011. The demand for organic produce is growing steadily. In 2004, sales of organic food was 11.13 billion, and it rose to $35.95 billion in 2014, according to the Organic Trade Association. That represents about 5 percent of total food sales. Costco wants to make sure they not only meet the organic food demand, but that they maintain their title as number one as well.
What Costco is Doing For Organics
So far, Costco has dipped its toes into the organic farming waters by loaning money to a California-based organic farming enterprise, Andrew and Williamson Fresh Produce, so the farmers could buy 1,200 acres in Mexico and the equipment necessary to work it. For its efforts, Costco will be first in line to buy produce from the farmers.
Costco also lent funds to purchase equipment to grow organic raspberries on leased land in San Quintin. This gesture means that Costco will be seeing lots of red-approximately 145,000 cases of the berries will be making their way to the retailer's stores. Costco also is looking into making similar arrangements with other farming entities in Mexico and Chile.
Because Costco is the largest retailer of organic produce, it is "in a good position to address the supply shortage," according to Ronnie Cummins, the international director of the Organic Consumers Association. Future purchases of land for organics by Costco are in the planning stages.
In the meantime, Costco has another organic venture in the works. This one involves working with farmers in Nebraska to raise cattle on organic pasture. The retailer purchased the bovine and has the ranchers raising the livestock so it can stock organic ground beef in its stores.
Other New Costco Food Ventures
Aside from its inroads into organic foods, Costco is raising chickens in Alabama to provide meat and rotisserie chicken for its stores. It also has plans to open a chicken processing plant in Dodge County, Nebraska, where it reportedly is working toward antibiotic-free, cage-free chickens.
Another Costco venture involves working with a Mexican vendor to acquire wild shrimp from the region so it can avoid getting the crustaceans from Thailand, where much of the fishing is done by slaves and victims of human trafficking.
Other Retailers Helping Farmers
According to Burt Flickinger III, retail analyst with Strategic Research Group, "it's very uncustomary in the [food] industry for retailers to provide capital to suppliers." Aside from Costco, few others have stepped up. Whole Foods, for example, has had a Local Producer Loan Program since 2006 and funds up to $25 million to area farmers. Anyone applying for a loan must be a local producer that provides a high quality product, and it's desirable that they be an organic or animal compassionate producer" as well.
Read About How Walmart Launched (Really Cheap) Organic Food Products
Wegmans partners with family farms that grow organic produce and raise animals humanely. The farms are situated near Wegman stores so customers are assured fresh ingredients. PCC Natural Markets, a Seattle-based cooperative, has an independent trust called PCC Farmland Trust, which supports farmland preservation in Washington state. Thus far, the Trust has preserved 17 farms for a total of 1,662 acres.
Future of Organics
Costco is now one of the largest sellers of organic food in the United States. This retailer, along with others as well as restaurants and farmers, are faced with the challenge to provide more than the usual fare, which consists of sugary, fatty, highly processed, cheap food. "Instead, they're challenged to supply customers with organic, fair trade, vegan, gluten-free, and just plain nutritious foods at a price point that's manageable," according to a recent Forbes article.
As the article also points out, "that's not what the food supply chain is set up for," yet changes are being made, as illustrated by Costco and a few other providers. As consumers increase their demand for organic, healthy foods, new ways to offer them to the public will continue to emerge.
Image via Suzette
Fortune. Costco is starting its own chicken farm. 2016 April 18.
Whole Foods Market. Local producer loan program.
Huffington Post. Costco is selling so much organic produce, farmers can't keep up. 2016 April 13
Seattle Times. Costco get creative to meet shoppers huge appetite for organics. 2016 April 1
US Department of Agriculture. Documentation.
Wegmans. Near our stores