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Economic Sense

RSS By: Matt Bogard, AgWeb.com

Matt's primary interest is in the biotech industry and ag policy.

Wal-Mart and Green Labels: What will it lead to

Jul 31, 2009
By Matt Bogard


In a recent New York Times article ( here) Wal-Mart's plan to add labeling to food that indicates a 'green index' was laid out. This brings up several questions.

First, is this an example of markets generating information that consumers value? Will consumer choice as a result drive prices that reflect our true impact on the environment? Will this come about voluntarily with no government intervention?

This could be a good thing. But it all depends on what the standards are. In the last couple of years Kroger decided that they would stop buying environmentally sustainable milk made with rBST and only stock organic and less sustainable conventional milk. They said that they were doing this in response to consumer demand, and not overhyped environmentalism ( even though their choice actually increased their carbon foot print, but uninformed consumers know no better and felt is was a move to the greener side). As a result Kroger's decision dealt a blow to dairy producers and cast a grim shadow on the future of modern science based agriculture.

So I'm curious about how Wal-Mart will rate biotech food and clothing products vs. conventional and organic. Will Wal-Mart base their decisions on science, or public perception?  Will biotech foods get points for being greener than conventional and organic? If so this could be another good thing to come of the labeling. Many groups will be shocked to learn just how green biotech is when those products are rated 'more sustainable' than non GMO labeled foods. This could present a dilemma to organic producers who depend on a marketing strategy of having the 'perception' of being greener. It could end up leading to the incorporation of modern technologies into organic practices, creating a new greener product. But alas, I'm not so optimistic. 

Will Wal-Mart create this voluntary industry standard, and then send lobbyists to DC to get it codified into law- so that they have a new competitive advantage over the mom and pops ( just like I understand they have done by supporting minimum wage and recenlty supporting legislation related to healthcare).

Regardless, this is the time that the Agriculture industry needs to get involved and keep a careful watch. The standards Wal-Mart sets could impact us all from pasture to plate.



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