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Are Organic Foods Getting Too Pricey for the Middle Class?

Even Whole Foods and its upper-middle-class customers are feeling the pinch.
 
 
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It's no secret that food prices are going up. Bloomberg News reported this month that we are experiencing the highest rate of food inflation in 28 years, and both corn and soy hit record high prices during July.

Consumers are doing what they can to cope with these rising prices -- but does that mean staying away from organic food that may already be pricier? And if so, could a lull in organic sales make farmers and retailers shy away from the organic market as a result?

What better place to look for trends than the poster child for high food prices: my local Whole Foods. Referred to by many as "Whole Paycheck," Whole Foods made headlines in the New York Times this month for seeking to change its high-priced image: "Now, in a sign of the times, the company is offering deeper discounts, adding lower-priced store brands and emphasizing value in its advertising. It is even inviting customers to show up for budget-focused store tours like those led by Mr. Hebb, a Whole Foods employee."

A year ago I left a job in the Whole Foods bakery, where I served coffee, baked bread and scooped gelato. Now, I visited the same store where I worked to discover that the bakery's "Every Day Value" items (whole wheat bread and blueberry bran muffins) rose in price by a dollar each in the last year. I also remembered that the store occasionally put items on sale and frequently posted signs advertising value when I worked there, so I wondered if the New York Times was correct.

Carolyn Kates, the marketing assistant at my local Whole Foods, had some answers. With company profits falling 13 percent in the third quarter this year, Whole Foods sees the need to move away from its "Whole Paycheck" image. And now that even its upper-middle-class customer base is feeling the pinch, the store needs to convince shoppers to try its lower-priced grocery items, particularly its private-label brands, 365 and 365 Organic.

Why the drop in profits?

While the price of oil is apparent when people go to the pump, folks are now beginning to realize that filling up at the grocery store is getting more expensive too, and for similar reasons.

As recent studies such as "Diet, Energy, and Global Warming" by Gidon Eshel and Pamela A. Martin show, we almost literally eat oil. It takes oil to plant, harvest, transport and process the wheat in the wheat bread and bran muffins that rose in price; fertilizers used in conventional agriculture are often petroleum-based as well. When oil prices rise, food prices are soon to follow. This affects consumers, retailers and farmers.

Sure, Whole Foods may have taken a hit last quarter, but will these rising oil and food prices actually keep consumers from organic and health foods?

According to USA Today , organic industry executives believe that the loyalty of core organic consumers will keep the organic market strong overall, even if sales growth has slowed compared to past years. Slowed growth in organics reflects not only cuts in spending by current organic consumers but also a slower rate of adoption by new organic consumers. However, a May survey of 1,000 people by Information Resources found that 52 percent were buying fewer organics because of cost.

Organic shoppers like San Diego mom Erika B. Perkins continue to buy organic by cutting corners where they can. "Our family still buys and grows all organic fruit, produce and organic milk," she said. "However, where I used to purchase only organic grab-and-go snacks and breakfast cereals, now I am buying store-brand snacks and cereals that are still free of MSG and high-fructose corn syrup but are by no means organic."

Others concur. Aaron Turner, whose family eats almost exclusively organic food, said his family continues buying organic food, opting for fewer processed items, which he feels are the most expensive. "We have also started to grow some food at home, like greens, peas, berries and tomatoes. ... And we shop at the farmers market, as the fresh veggies last longer than store-bought items." Even so, he has seen his family's food bills rise $50 per week compared to last year.

For families like the Perkinses and Turners who can afford it, food choices are a balance of price and health. It's no wonder that organic consumers are doing whatever they can to continue buying -- or even growing -- organic despite high food prices.

Stores like Whole Foods can help ease the financial strain by supplying more private-label "Every Day Value" items. But while Whole Foods might be helping its shoppers financially, unless it can help shift our food system to one that does not run on oil, it's not much good in the long run.

Jill Richardson is the founder of the blog La Vida Locavore and a member of the Organic Consumers Association policy advisory board. Her first book, about food politics, is due out in June 2009.

 
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