Regulators Warn Wal-Mart About Misleading Organic Consumers

CORNUCOPIA, Wis. — 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, Ark., the Wisconsin Department of Agriculture, Trade and Consumer Protection stated they’d 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, had filed complaints with Wisconsin regulators and the USDA after claiming numerous incidents of fraudulent organic labeling in Wal-Mart stores in five states from Texas to Minnesota.

Although Wisconsin regulators opted to send only a formal warning concerning Wal-Mart’s organic marketing practices, they said that they had 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,” said Mark Kastel, co-director 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. Such practices place ethical retailers, their suppliers, and organic farmers at a competitive disadvantage.”

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, according to Cornucopia.

“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 stated.

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, according to Cornucopia.

In early 2006, Wal-Mart advertised that they would introduce 400 organic products at prices just 10 percent over the cost of conventional food. The pronouncement left many organic and retail industry observers questioning the feasibility of their initiative, according to Cornucopia.

The Cornucopia Institute subsequently published a report, “Wal-Mart: The Nation’s Largest Grocer Rolls-Out Organic Products—Market Expansion or Market Delusion” (available at www.cornucopia.org).

According to the report, Wal-Mart was aiming to lower organic food prices by selling a “different kind of organic product” depending on cheap foreign imports from China, large dairy farms milking thousands of cows, and partnering with corporate agribusinesses lacking prior experience in organic production.

According to the Wall Street Journal and business analyses from other sources, Wal-Mart’s organic initiative, as part of a larger integrated approach to attract upscale consumers, has been a failure and is causing the corporation to now reduce the number of organic food offerings.