Whole Foods and the Celebrity Farmer
The Ricker family of Maine makes for unlikely celebrities. Photographs of the farming family—with 70-year-old patriarch Don Ricker, his three sons, four grandchildren, an infant great-grandson, and the family's mutt—adorn local supermarkets, from Wal-Mart (WMT) to the local Hannaford chain, proclaiming that the juicy red McIntosh apples come from the local Ricker Hill Farm, which was established in 1803 in Turner, Me., by the newly arrived émigré from Poland, Albion Ricker.
After being pushed out of the spotlight for years, the local farmer is emerging as a new celebrity. From the foothills of Maine, through North Carolina in the South, the plains of Idaho, and the lush green valleys of California, a movement to celebrate the local farmer is sweeping the country. At the forefront of the movement has been supermarket Whole Foods (WFMI), which for years has put up photos of local farmers in its stores promoting their produce.
Now many other food chains are also playing up local produce, including Kroger (KR), Publix, and Food Lion, a subsidiary of Brussels-based Delhaize Group (DEG). Currently, Wal-Mart is running a "Salute to America's Farmers" program across several states to highlight its commitment to purchase from local growers. Large "locally grown" signs alert shoppers to local produce, and in some stores local farmers set up a stand for customers to sample their jams and pickles. "Consumers today want to lead a healthier lifestyle, and fresh fruits and vegetables play an important role in that," says Bruce Peterson, Wal-Mart Stores' senior vice-president, perishable food division.
The latest war for credibility among local farmers stems from a brawl in corporate America's grocery aisle. Whole Foods, in the last few years, has been on a torrid growth streak by satisfying shoppers' desire for locally grown, wholesome, and organic food, even at premium prices. But this year, revenue growth at Whole Foods slowed to single digits, just as Wal-Mart jumped aggressively into the fray, vowing to bring down the prices of organics and make them accessible to a mass audience (see BusinessWeek.com, 3/29/06, "Wal-Mart's Organic Offensive"). The result is that both of those companies and plenty of others are trying to build their credibility by touting their ties to the local farming community.
The spotlight on local farmers was especially bright earlier this year in a public exchange of letters in two online blogs. On one side was Michael Pollan, author of this year's best seller The Omnivore's Dilemma, who criticized Whole Foods for not living up to its promise of supporting local farmers and for growing so big that the bulk of its produce came from large industrial farms. Whole Foods CEO John Mackey responded by meeting with Pollan and writing a long public letter to Pollan defending his company. Pollan responded with another public letter to Mackey. "I see more signage about the importance of local produce than I see actual items of local produce. You write that 45% of your suppliers are local, i.e., located within 200 miles of the store—an impressive statistic, but perhaps a misleading one," he countered.
CEO Mackey this time took action by announcing several initiatives in July, one of which was requiring all its stores to buy "out the back-door" from at least four individual farmers. The 187-store chain also pledged to give $10 million a year in low-interest loans to help small local farmers and also set up Sunday farmers' markets in the parking lots of some Whole Foods stores (see BusinessWeek.com, 10/16/06, "The Organic Myth").
Of course it wasn't always like this. Ricker Hill Farm's Harry Ricker, an eighth-generation apple farmer, will tell you that the last 10 years have been painful. As global competitors like Chile and New Zealand stepped up their production of apples, Ricker had to take the agonizing step of selling some of his family's farmland to pay the bills because he couldn't compete on price. Today, the family's farmland has dwindled to 300 acres from 850 acres 10 years ago. But suddenly, things are looking up. This year, 90% of Ricker Hill's apples are consumed within 100 miles from the farm, as opposed to 50% just five years ago. "Without this new movement of buying local, we wouldn't be farming anymore," says Ricker, a graduate of Cornell University, who drives a 12-year-old pickup. "If this trend continues, maybe next year I can trade the 12-year-old truck for a five-year-old one," he jokes.
Many people trace the buy-local movement to author and chef Alice Waters, whose famed Bay Area restaurant Chez Panisse always has a different menu because of her premise of cooking with fresh local ingredients. Even though the restaurant opened in 1971, it was Waters' advocacy of locally grown foods in the mid-1990s, particularly her involvement with the Edible Schoolyard, a project growing vegetable gardens and cooking them in public schools, which sparked national interest in the subject.
The interest in local food has led to a dramatic increase in farmers' markets in the U.S. Today there are 4,385 farmers' markets in the country, an over 50% increase from 2,863 markets in 2000, according to the Agriculture Dept. At the same time, people are starting to take up farming, and the government is seeing growth in the number of very small farms. Clearly this upturn in farming hasn't yet contributed significantly to the broad economic statistics of the country—agriculture accounts for barely 1% of the nation's gross domestic product. It's a shift nonetheless. Overall, in the last six years, the total number of farms has declined a little, from 2.15 million to 2.12 million. But small farms have grown in number from 1 million to 1.2 million in just the past six years. "This explosive American movement to eat local has extended from farmers' markets to retail stores and restaurants," says Brian Halweil, author of the book Eat Here and a senior researcher at WorldWatch Institute in Washington, D.C. (see BusinessWeek.com, 1/21/04, "Saving the Family Farm, Organically").
Part of this revival also comes from the zealous marketing efforts of state agriculture departments. For instance, last year, North Carolina's agriculture commissioner Steve Troxler rolled out a "Got to Be NC" initiative urging shoppers to support North Carolina agriculture and buy locally grown produce from retailers like Wal-Mart and Food Lion and also local restaurants like Andy's Cheesesteaks, K&S Cafeterias, Golden Corral restaurants, and K&W Cafeterias. And New York started a Pride of New York program two years ago in which one of the largest displays of New York apples was presented at a Wal-Mart Supercenter in New Hartford.
Of course, farmers are under no illusions about big corporations being their friends. In fact they recognize that the companies are doing this only because they want to win over their consumers. Sarah Frey-Talley, 30, remembers when years ago she and her four brothers would sit alongside the cantaloupes and watermelons in the pickup truck that her mother would use to deliver the fruits to roadside markets. But today, Frey-Talley and her four brothers jointly farm about 6,000 acres of land, up from 120 acres just 10 years ago. The president of Frey Farms in Keenes, Ill., sells pumpkins and melons to Wal-Mart, Whole Foods, and Meijer, a Midwestern grocery chain, all of whom trumpet local produce. "Clearly, major retailers recognize that consumers want local food and use it as a marketing tool," says Frey-Talley. Of course not all produce is locally sourced—in some seasons, almost all of the vegetables and fruits at any supermarket in one of the northern U.S. states such as Minnesota or North Dakota might be trucked in because none can be found locally.
Wal-Mart executives admit they aren't driven by any altruistic goals when they support the local farmer or when they proclaimed earlier this year that they would double the amount of organic produce and products in stores. "The first thing that drives our decisions is what the customer wants," says Wal-Mart's Peterson. But such relationships are igniting a broader revival of American farms, which have declined by 63% in the last century. After all, who isn't drawn to the new celebrity in town—currently local farmers like the Ricker family.