Industry News | May 9, 2007

Wal-Mart Warned about Organic Products

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Consumer fraud investigators in the state of Wisconsin released their findings this week after a three-month long investigation into allegations that Wal-Mart stores throughout the state of Wisconsin had misled consumers by misidentifying conventional food items as organic.

In a letter to Wal-Mart Stores, Inc., based in Bentonville, Arkansas, the Wisconsin Department of Agriculture, Trade, and Consumer Protection stated they found numerous instances of conventional food products improperly labeled as organic by the retail chain. Specifically, Wisconsin authorities told Wal-Mart’s legal counsel that “use of the term ‘Wal-Mart Organics’ in combination with reference to a specific non-organic product may be considered to be a misrepresentation and therefore a violation” of Wisconsin state statutes.

The Cornucopia Institute, a governmental and corporate organic industry watchdog, filed complaints with Wisconsin regulators and the USDA after finding numerous incidents of fraudulent organic labeling in Wal-Mart stores in five states including Texas and Minnesota.

Although Wisconsin regulators opted to send only a formal warning concerning the retail giant’s organic marketing practices they said they reached an agreement with the company under which steps would be taken to prevent future organic food misrepresentations. Wisconsin officials also said they would be continuing their surveillance of the company's stores.

“This finding is a victory for consumers who care about the integrity of organic food and farming” says Mark Kastel, codirector of The Cornucopia Institute. “Wal-Mart cannot be allowed to sell organic food on the cheap because they lack the commitment to recruit qualified management or are unwilling to properly train their store personnel,” Kastel says. “Such practices place ethical retailers, their suppliers, and organic farmers at a competitive disadvantage.”

The Cornucopia Web site (www.cornucopia.org) contains a photo gallery of conventional food products that were both priced and labeled with Wal-Mart’s unique in-store point-of-purchase signage as organic foods. The photos were gathered during an investigation by Cornucopia of Wal-Mart’s organic practices.

While Wisconsin regulators have completed their investigation, the USDA has yet to formally weigh in on the matter, despite being notified of the food fraud problem last November, two months before Wisconsin officials were contacted about the same situation.

“A six-month period without any federal enforcement action is absolutely inexcusable when the largest corporation in the country is accused of defrauding organic consumers,” Kastel says. “Last November, we supplied photographic evidence and documentation to the USDA investigators who contacted us about our complaint. But their inaction, and our confirmation of ongoing violations in Wisconsin earlier this year, prompted us to forward these continuing problems to Wisconsin state regulatory authorities.”

The USDA's National Organic Program has long been criticized as being too cozy with corporate agribusiness, understaffed, and lacking strong management and effective organizational direction to protect and promote the organic industry. Two independent audits of the program, conducted by the American National Standards Institute and the USDA's own Inspector General’s office, were harshly critical of the federal government's oversight of the organic certification program.

“The state of Wisconsin should be applauded for doing the thorough research necessary to protect the interests of consumers,” Kastel says. “Their letter to Wal-Mart’s lawyers should serve as a warning to any retailer: If you are going to engage in organic commerce, you better have management in place to oversee the integrity of your program."

Cornucopia stated that spot checks of other major organic stores in the natural foods industry, especially the country's consumer-owned cooperatives, indicated that retailers were investing in strong management oversight and employee training and had excellent records of assuring compliance with the federal organic laws and state consumer protection statutes. “Wal-Mart's model of top-down management and investing as little as possible in wages and training for local employees just doesn't work in organics,” Kastel says.