Wisconsin state officials have launched an investigation after complaints that Wal-Mart may be misleading consumers about "organic" products that they sell in their stores.
The question is whether signs on store shelves and banners above the shelves describe foods as "organic" while the foods nearby do not qualify for the label, under federal guidelines.
"We are beginning an investigation that will look into signage and whether it can be considered misleading," says Jim Rabbitt, the director of the consumer-protection bureau of the Wisconsin Department of Agriculture, Trade and Consumer Protection. The bureau plans to examine the practices of Wal-Mart and other retailers for 30 to 60 days to determine how big an issue this is.
The U.S. Department of Agriculture is reviewing a complaint about Wal-Mart's practices from the same watchdog group that notified Wisconsin officials. The USDA has not decided whether to pursue its own investigation. "We are seeking more information to determine what action should be taken," says Joan Schaffer, a spokeswoman for the national organic program at the USDA.
Wal-Mart officials say that the company has done nothing wrong. A spokeswoman points out that the company has more than 2,000 locations that offer up to 200 organic selections, in addition to thousands of nonorganic offerings.
Karen Burk, a company spokeswoman, wrote in an e-mail that if there were any inaccurate signs or banners around organic foods "we believe it to be an isolated incident."
Retailers and farmers involved in organic foods worry that giants like Wal-Mart may muddy the waters about what is and is not organic. Some are upset over the allegations and wonder whether other supermarkets will take steps similar to those alleged.
The watchdog group that prompted the Wisconsin investigation is called The Cornucopia Institute based in southern Wisconsin. The group has been active in what it calls "family-scale farming." The Cornucopia Institute says it has produced photographs of items that are not certified organic or are only partially organic that appear on shelves at Wal-Mart with banners or signs that read "Wal-Mart Organics." The photos from Cornucopia show items that could be easily mistaken for organic. Many have descriptions such as "all natural" or "natural," including Stonyfield Farms All Natural Yogurt and Florida Crystals Natural Cane Sugar.
Organics have been a booming business for food manufacturers and retailers, growing 15% annually for the past five years. It's extremely lucrative: Supermarkets typically charge a 30% to 40% premium in price for organic food compared with conventionally grown food. Many Wisconsin retailers who sell organic milk are charging over $6 a gallon for organic milk which is more than double the price they charge for a gallon of conventional milk.
Retailers and farmers are eager to protect this growing business.
The Cornucopia Institute says that it launched its inquiry after a visit in September to Wal-Mart's prototype store in Plano, Texas. After noticing what Mark Kastel of the Conrucopia Institute said was labeling problems in its organic offerings, the institute sent off a letter to Wal-Mart CEO Lee Scott suggesting that the company correct the problem.
Kastel says consecutive visits in October to Wal-Mart stores in four states, including Wisconsin, showed that the company hadn't heeded its advice, so the institute filed a legal complaint with the USDA in November and followed up with a complaint with the Wisconsin Agriculture Department on Jan. 13.