business news in context, analysis with attitude

Yesterday, we took note of a Wall Street Journal commentary piece by Henry I. Miller - described as “a physician and molecular biologist … a fellow at Stanford University’s Hoover Institution,” and the “founding director of the FDA’s Office of Biotechnology” - in which he attacked the organic food business as being rife with “blatantly false and deceptive advertising claims.”

I commented:

On this one, I think I’m going to let members of the MNB community respond. I think that every industry has manipulators and deceivers, but I’m a little surprised that this fellow is using such a broad brush.

I was not disappointed.

One MNB reader responded:

I’ve been in the produce business for 44 years now on both the retail and supply side. It’s a fact that growers of organic produce apply pesticides, fertilizers and fungicides to their crops. The difference between organic produce and conventionally grown produce is that organic produce applications are not supposed to contain any “synthetic” ingredients. Only natural compounds. Additionally, growers of organic produce may have to apply sprays more often than growers of conventional crops because “organic” applications are not as effective. So yes, organic producers use pesticides. So if the great unwashed think that organic means pesticide free, they would be wrong.  I will say this. Applications are expensive for both conventional and organic farmers; therefore they want to use as little as possible to get the job done; not only from a cost standpoint, but from the fact they make their living from the land and the last thing they want to do is abuse it and, they all want to provide food that’s good for folks…like their own families. That said, I’m still confused by organic bacon.

From MNB reader Liz McMann:

Oh, jeez, Miller. You might as well be saying, “In fact, all crops are organic because they are carbon-based.”  It’s an argument that just makes you seem stubborn and ignorant. Yes, organic agriculture uses pesticides. Like vinegar.  That’s a pesticide. And antioxidants naturally found in plants are pest-deterrents. But the USDA organic standards give clear and strong restrictions on the pesticides that are allowed within organic agriculture. To claim that organic farmers use pesticides just like conventional farmers do is ludicrous.
As for the non-GMO claims on products that literally could not even be GMO? I’m with you- that’s misleading.  But get a clue, organic and non-GMO are not the same thing. That is not the “organic industry.” Organic means so much more.

From MNB reader Cindee Lolik:

I, for one, would be interested to know who funds Mr. Miller's research - it could be quite illuminating.

My sense, from emails that I have not posted here, is that he has a considerable bias toward the ag-tech business.

Got another email from MNB reader Carl Jorgensen:

I’m surprised the WSJ fell for this. There are so many things wrong with this article, it’s hard to know where to start. First, FDA has no role in regulating organic. That’s USDA’s purview. No surprise that FDA is silent! Second, midway through he launches into a legitimate critique of companies that get the non-GMO label on products that are inherently non-GMO to begin with, like orange juice. The clever strategy here is conflating non-GMO with organic, knowing that most consumers don’t know the difference. Finally, while trace amounts of pesticides are found in analyses of organic foods, the levels are orders of magnitude less than found in conventional foods. You can test your own blood, or for that matter your tap water, and find higher levels of pesticides than you will find in organic foods. They have been used on such a scale and for so long, they are now ubiquitous in the environment.

Misinformation campaigns like this do a great disservice to all the hardworking organic farmers who are following the strict rules of organic production. The benefits of organic farming to the environment are real, and well-documented in the scientific literature. The problem from ag biotech’s perspective is that they don’t have a revenue model for it, so they try to sow doubt and confusion in an attempt to keep it from growing. History has shown that rearguard attempts to stop change fail in the long run!

On another subject, from MNB reader John Rand:

Noted the small discussion over the last week about public transit, with the most recent reader comment that it requires public subsidy to be viable, and is not particularly a bargain compared to taking taxis.

True.  But I think it depends on how you look at both of those facts.

Public subsidy is not necessarily a failure, it is an admission that something is important enough to the society as a whole to be funded out of public revenues. At the extreme (such as having an effective national military) it may be the only effective way to do something, but history is replete with examples of public subsidy. I do not understand why that is a problem – we need communications, education, public health, courts, fire and safety  departments, law enforcement – and public transit has at least a fair argument to be made that it deserves subsidy. It is called civilization. We get to decide what it should look like.

Secondly, we have an accounting problem in this country – the inexpensive taxi ride comes with a host of hidden costs – resources extracted for vehicles, roads, and fuel, pollution, traffic, gridlock, and extremely high sunk costs (mostly subsidized) for roads and traffic management. We just put these costs somewhere else on the social balance sheet and they are often overlooked. Until we have end-to-end accounting for every indirect cost as well as direct cost, we don’t make good decisions. That inexpensive taxi ride on vacation gave someone emphysema or lung cancer, contributed to poor air quality, irritated someone else on the same road, cost everyone time and money…on and on.  Public transit has its own set of costs of course – but the point is we often don’t (or can’t) compare apples to apples.

But this is a place for retail discussions, and let’s bring it back to practicalities – I recently was able to spend some time in Prague, in the Czech Republic, and was able to spend a week enjoying their mass transit system.  And if we had that level of excellence in more places, public transit would be a pretty easy sell, both to taxpayers and to riders. Subway trains, trams and busses are all one system, one interchangeable ticket, no transfer fees or complications. Schedules are tight and reliable, information on arrival and  departure times is digitally available at virtually every stop (I didn’t see any without it but I can’t claim to have seen them all). I never waited more than 10 minutes at any stop, and usually less. Fares are paid electronically at kiosks, ticket are scannable, equipment is clean and well maintained, as are the stations for the underground trains.  The system is dense in the city of course, but runs 30 miles out to the suburbs, on the same equipment.  Admittedly it is a little crowded at peak times on main lines – but no worse than any other urban system, and its very popularity is sort of a standard of excellence.

Oh, and it runs pretty much all night, as I have to admit being glad it was there after a late evening drinking some most excellent Czech beer.

In short, a wonderful customer experience, far superior when taken as a whole system to anything New York, Boston, Washington, Atlanta, Chicago, or almost any other American city I have ever traveled (and I have used public transit at all of them). You get what you pay for – but in the end, you also need to pay for what you get. And after wasting I- don’t- know- how- many hours of my life in traffic, I would be pleased to have a more viable alternative.

And the same is true of retail – we talk a lot about retail experiences, good, bad and ugly. I would argue most of the transformation and angst retail is going through is based on the same thing – retailers are vulnerable when they can’t deliver on time, in-stock, clean, reliable service. People will seek alternatives when the product and its experience is substandard. I see a lot of announcements about stores being remodeled or redeveloped or reimagined over a 4 or 6 or 8 year period – but too little about how to improve basic staff competence, nothing on how to screen out irrelevance, how to stay more responsive to customers (riders, so to speak) than to suppliers with slotting fees for extraneous nonsense.
Dinosaurs walk the earth. Me, I’ll be glad to take the train.

Thank you for answering the “why do we have to pay for it” argument far more eloquently that I did.

On the subject of the ongoing Amazon-Walmart conflagration, MNB reader Lisa Bosshard wrote:

From a consumer viewpoint, because let’s face it, we’re all consumers too – My family is a loyal Cottonelle toilet paper user and we have also been using Walmart on-line grocery ordering with free pick up services at store weekly for well over 6 months now.  But, this is where we have a problem.  I can’t find Cottonelle toilet paper on WM website any longer and have no idea why.  So, we needed to make a Costco run and guess what, no Cottonelle there either.  Next step was Amazon and boom – available, shipped free (yes we are Prime members), delivered two days later.  My first question is why can’t I find it in stores now, to which I have no idea and second, what else should I look for on Amazon, set up as subscribe and save and call it a day?  That’s a staple item we have intention of changing and today, maybe a rare example of being brand loyal.  But let’s face it, it’s not an area I plan to experiment in and TP is expensive.  Amazon just won another monthly ticket purchase from us.

From another reader:

I would agree that the good news is that Walmart is nimble as well as willing to admit mistake, unlike many of their major competitors, major being Kroger specifically. For their size, they do not get enough credit for having this in their DNA…thanks Sam! Walmart has done a great job addressing Amazon for wall street, that said, they have quietly kept their eye on the cash cow, there brick and mortar! You can argue that there super centers are running as efficient as ever with variety, in stock and innovation! Grocery has always been a business of attrition, and Walmart has always been the king of last man standing in a market. Something bigger that Amazon and Walmart is going on in grocery, through both their messaging and or spending they are taking their competitors down one at a time. Who can afford to keep up and if you try, you will lose!
Stay tuned it’s a slow bleed, we will wake up one morning and read on the MNB that some giant grocery company is in financial trouble!
Whoever you are in grocery retail, the key is taking care of the cash cow, which is taking care of the customer in your store!

On this subject, I commented:

This really isn’t news to anyone who has been reading MNB for any period of time - we’ve been writing here about the coming conflagration between Amazon and Walmart, and the expected (and even unexpected) collateral damage that will result, for years … It is very simple. Everybody has to rethink everything.

Which prompted MNB reader Rob L Vasseur, Jr. to write:

Kevin. I have been reading MNB for over a year now. I love the commentary and the news that you bring each and every issue! I have often related news or observations you have made to issues I’m dealing with in my life.

Today, I believe you made the most profound statement ever in that entire last line about Amazon vs. Walmart. These are indeed words to live by and with your permission I will be posting them in various formats around my house and office as a reminder. Thank you for the inspiration!

My please, You flatter me. On the other hand, it beats last week, when some guy called me a “prig.”
KC's View: