Whole Foods and the Celebrity Farmer

As Wal-Mart and other supermarket chains follow the high-end grocer's lead and promote local produce, farmers are becoming the new American idols

by Pallavi Gogoi

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.

Back-Door Brawl

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").