Amazon-Whole Foods Could Transform the US Food Market — In a Good Way
By: Sarah Mock
Tags: Food, Politics, Farming, Organic Farming, Agriculture

That’s why Amazon’s proposed acquisition of Whole Foods is such a huge deal. When I spend time with farmers, many of them big commodity farmers in the Midwest, they (generally) aren’t ideologically opposed to growing organic or otherwise changing their management practices. The biggest reason they don’t do it is because it’s expensive, and there usually isn’t a market for it. And when they say market, they mean in the most literal sense — there is not a physical place where they can easily, and with certainty, go and sell thousands or millions of bushels of whatever they’ve grown for a good price (or any price, these days). Few local elevators separate organic produce, and otherwise finding specialty buyers and storage takes a whole lot of time that farmers don’t have.

Many farmers don’t grow organic because they don’t know where to sell it. But Amazon could change that.

If anyone has the logistical expertise, the capital, and the value proposition for setting up a massive national infrastructure to support a huge uptick in organic production, it’s Amazon. And if anyone has the marketing pull to get consumers to spend more, it’s Whole Foods (hopefully leaving more “food dollars” left over for farmers as well as the grocer). One of the primary reasons that a few big companies (Tyson, Bunge, Louis Dreyfus, Archer Daniel Midlands, etc.) have such a strong hold over the American food system is because they own, or have cornered and co-opted, the physical infrastructure of our food system; from rail lines and grain elevators to barges and cold storage. Breaking up that oligopoly requires a worthy challenger- one willing to build and maintain a more modern, efficient, and technological infrastructure system. And it might not be as hard as it sounds, given that US ag infrastructure is already dated. Given there’s been no competition for decades, why make improvements?

How does food stamps fit into the equation? (The program formerly known as food stamps is now called the Supplemental Nutrition Assistance Program, or SNAP.) In the 2014 Farm Bill, Congress allowed for a few pilot programs allowing SNAP recipients to use their EBT (Electronic Benefits Transfer, food stamp debit cards) and WIC (Women, Infants, and Children assistance) benefits at online retailers. Amazon recently announced that anyone with an EBT card could get a reduced Amazon Prime membership, paying only $5.99/month. For the poor, who often live in neighborhoods or rural areas that don’t have access to grocery stores, this could be a game changer.

Imagine being a working single mom, without a car, living more than a mile from the nearest grocery store. Now, even with the nutrition benefits she gets through SNAP, she may have to travel for an hour, by bus, after working a long shift at one of her two jobs, just to find a store where she could possibly buy the nutritious food her children need. She almost certainly spends more than $5.99/month on bus fare. If Amazon had a fully built out grocery system, she could save hours traveling to the grocery shopping, have access to a broader range of food options, and get them delivered right to her door. The impacts that might have on underserved communities could be enormous.

Obviously, there are caveats. If you don’t have access to the internet, this is not a solution for you. Amazon is by no means a local business, so spending money with them, rather than at a local shop or grocery store could be devastating for local businesses.

And Amazon is certainly not doing this for altruistic reasons. If they can win even a fraction of SNAP spending, it would be a billion-dollar proposition (tens of billions of dollars are rolled into nutrition programs every year- representing more than 75 percent of the farm bill allocation). And Amazon is having trouble with dishonest pricing, Consumer Watchdog is currently calling for the federal government to halt Amazon’s acquisition of Whole Foods until they are investigated for a pricing issue (apparently that crossed out “original price” you see on Amazon may be fake). Obviously giving one company too big a share of our food system is a dangerous proposition, but it’s a problem that already exists. Currently, you could count the number of companies that dominate wholesale and retail food markets in the US on two hands. Adding Amazon to the mix may actually diversify, not shrink, the marketplace. (Those other food sellers, and their representatives, are calling for more scrutiny.)