Costco is one of the biggest names when it comes to grocery stores, and it’s been selling so much of its organic food, that they’re trying something new in order to keep up with demand. Costco is actually helping farmers purchase land and farming equipment to grow organic products.
According to Costco CEO Craig Jelinek, “We cannot get enough organics to stay in business day in and day out.”
So, why is there such a shortage in organic produce? The struggle lies with the land. Switching from conventional to organic farming takes three years, and it isn’t cheap. The time frame, set by the U.S. Department of Agriculture, is based on the time it takes for pesticides and other non-organic substances to completely wash from the soil.
As Will Rodger with the American Farm Bureau explains, “The difficulty is that in this three-year window, you’re using organic methods but you’re only getting conventional prices for what you’re selling. The margins right now are better on organic produce. But you have to take that three-year hit.”
You can see where this could be an issue for farmers, stores and customers. The other option is to farm on previously unused land. Farmers can start organic farming on this immediately, but it’s even more expensive and hard to find.
Just to put it into perspective, last year, 5% of produce purchased was organic, but only 1% of farming land is organic. Not only is the land and soil an obstacle for farmers looking to grow organic, but once the switch is made, new machinery and equipment is needed as well.
Here’s where Costco comes in to help! The first farming company they’ve helped is Andrew and Williamson Fresh Produce. Costco helped find them virgin land in Baja and loaned them the money needed to start growing organic immediately. Not surprisingly, the amount loaned is being kept hush-hush.
Aside from Whole Foods, Costco is the only store to loan farmers the cash they need to grow organic. We expect to see other suppliers start following suit and helping farmers ‘field’ their way through the tough transition.