Farmers, Flooding and Whole Foods' Mea Culpa

By Samuel Fromartz

You probably saw the pictures of flooded farms, overflowing rivers, and the rain that swamped the Upper Midwest last month.

What you might not know is that organic vegetable farmers in the region had severe losses. I knew one of them, Jack Hedin, who owns Featherstone Farm, in southeastern Minnesota.

His farm is nestled in the Wiscoy Valley, beside a tiny stream called Money Creek, literally ground zero for the storm. When it rained, and kept on raining (a total of 26 inches), the creek overflowed, swamped fields, flooded a packing shed and cooler and washed out roads. A levee in the nearby town of Rushford gave way and the town was devastated.

Reached on his cell in a field, Jack told me he lost $200,000 worth of crops – and not just in his fields. (The image at left shows a flooded corn field at Featherstone).

The day the rain began to fall, his crew had picked 10 pallets of cantaloupes and put them in a cooler. But the power went out overnight during the storm and by the time he rigged up a generator the next day, the melons were rotten.

In nearby Wisconsin, Richard de Wilde of Harmony Valley Farm, told me his organic vegetable losses reached $750,000, or about two-thirds of his annual produce revenue.

Featherstone and Harmony Valley are relatively large organic produce farms in the upper Midwest, selling to co-op and Whole Foods stores as well as through their CSAs. (The image below shows washed out top soil at Harmony Valley Farm). The region is home to one of the highest concentration of organic farms in the nation.

They weren't alone with losses, just the biggest. Two others, Avalanche Organics and Driftless Organics, were also hit. You can see a short video of the farmers by Madison filmmaker Gretta Wing Miller here.

The floods came at a particularly devastating moment, for the end of August marks the height of production. Before then, farms are running up expenses. But around the first week of September, the harvest comes in and so does the cash.

Hedin had drawn down $89,000 on a working credit line and was planning on repaying it with the fall harvest. He pared expenses, cutting his crew to 11 workers from 19.

While many of Hedin's fields were under water, a number on dry, higher ground had made it through without damage. He figured he had about $90,000 in crops remaining, but they had to be picked if he was going to make that money.

Retailers Respond

In the days after the storm, co-op supermarkets called up and started buying. Some took mark-ups of only a few cents per item, emphasizing that the produce was coming from badly hit farms. A non-profit called Sow the Seeds Fund, spearheaded by the co-ops and the Institute for Agriculture and Trade Policy, also started a fund-raising drive to raise money for the farmers.

Whole Foods, a big customer for these farms, initially took a different tack, placing a moratorium on purchases because of concerns about food safety.

Bobby Turner, Whole Foods VP of purchasing in the Midwest, told me he first looked into the issue after a store customer sent an email asking if the produce was safe. He talked with another central produce manager as well as USDA officials. Based on these talks, the company decided to ban all produce from the flooded counties until the farms carried out what's known as a USDA GAP (Good Agricultural Practices) audit of their fields, at Whole Foods' expense.

The fear was that stream water containing potentially toxic e. coli (from nearby dairy farms) and banned pesticides would have flooded the fields, contaminating the produce.

It was around this time I got a critical email from a farmer outside the region (yes, farmers talk to each other) describing Whole Foods as a "fair weather friend." Jim Slama, an organic and local food advocate in Chicago, with the non-profit, Sustain, told me he heard similar complaints and began working the phones with contacts at Whole Foods.

The farmers were cognizant of food safety concerns, but they argued their fields on higher ground had not flooded, so a need for a total purchasing ban was overblown.

De Wilde actually tested his fields for pathogens and got two positive hits for e. coli contamination, but it was only on rotted crops in flooded areas next to a stream.

All his other fields and crops tested negative.

Turner soon flew out from Chicago to visit the farms, walking the fields and learning the extent of the damage. He realized the moratorium had been enacted too quickly. Within a day, Whole Foods reversed itself and was buying again.

"We could have been more compassionate, and more communicative," he said.

Writing Checks

De Wilde said his 875 CSA customers who get a box of produce a week will absorb about one-third of his $750,000 loss, in the form of smaller boxes.  (This demonstrates the viability of the CSA system, in which the customer shares the farmers' risk by paying up front for a full season's worth of goods. They get the bounty, or shortfall.) His CSA customers remain fiercely loyal, in fact, they've gone beyond loyal, and have raised $25,000 for the farm.

He, alone among the farmers, also had crop insurance but it only covered $100,000 in losses.

Local co-ops in the Twin Cities are also seeing a rush of donations to help the farmers. Barth Anderson of the Wedge Co-Op in Minneapolis told me the store had raised about $10,000. One customer even wrote an $800 check at the cash register.

Whole Foods is donating $25,000 to Sow the Seeds and will match another $10,000 donated by customers at the cash register.

"Whole Foods is back to buying everything we have, there's no arguing about price, and they're telling us, 'We want to be aware of any surplus product you have,'" Hedin recounted.

Silver Lining?

The crisis may have a silver lining, since the farmers and Whole Foods are discussing three issues that are central to ensuring a sustainable supply of local food:

• Long-term commitments. Farmers have been planting crops based on verbal pledges from Whole Foods. Turner admitted, "that doesn't work if the manager leaves and we don't know what was agreed upon." Now they plan on sealing contracts discussed in the winter, with some built-in flexibility on both sides.
• Pricing. Local farmers will never match California producers on price, because the growing season is much shorter and more variable, labor is more costly and farms are smaller. Whole Foods and the farmers need to agree on prices that work for both sides and are appropriate for the particular farm.
• Quality Standards. If Whole Foods wants to get the best local produce, it may need to consider a wider range of standards, rather than grading to a blemish-free standard on items such as heirloom tomatoes.

Turner said the company is cognizant of these issues and committed to sourcing from these farmers. He said the company has appointed a manager in charge of local foods, who ironically began work just as the storm hit.

The bigger question is whether these farms will be in business the coming year. De Wilde thinks he can squeeze through the crisis and Hedin is also optimistic, but he's not sure how he'll handle his debt. I've heard other farms are struggling but no one has dropped out of the race.

Through all of this, one thing is certain: good partners - and fanatical customers - are key.

Image credits: Featherstone Farm, Harmony Valley Farm via the Wedge co-op.

© Chews Wise 2007

Comments

[Bonnie/Dairy Queen]

Great story, Sam!

[Barth Anderson]

FYI: Filmmaker Gretta Wing Miller has recut her short movie in light of Whole Foods' "mea culpa," as you call it, Sam. The new version is at her website:

http://web.mac.com/milhug/Downtown_Dailies/Flood_of_August_2007.html

[Simon Huntley]

At least Whole Foods can still be shamed into coming in line with their stated values. What wonderful customers you have in the upper mid-west. I wonder what would happen to farms like this is other parts of the country.

-Simon Huntley
http://www.smallfarmcentral.com

[Ellen Malloy]

After a few frustrating weeks of first not getting great produce and then not getting any, and not knowing why, I received an email from my CSA yesterday and learned a bit lesson about commitment. I joined my CSA when the farm was just starting up and it has been a bumpy road at times. This year left me frustrated with the quality and the bounty. It wasn't occurring to me that maybe the point was not that I got an overflowing box of goods but that I was directly supporting some guys who are trying to make their farm work the best they can. I am now really thinking about my motivations and commitment to do what I say I think I do. Whole Foods has a lot of work to do if they really want to be what they claim...but maybe some individuals among us, starting with me, need to do the same.