In the U.S. Costco is known as one of the major distributors of organic food products. CEO Jelinek Craig claims that Costco distributes so much organic food that they actually can’t keep up with the need of their customers.
During the shareholder meeting, Craig said that they cannot get enough organics to stay in business day in and day out.
Costco came up with a very interesting and innovative idea, which will help them to solve the problem of not having enough produce. They decided to buy additional equipment and land for farmers who will work for them and will start growing organic food.
The project is still in the first phases. Till now, Costco has worked only with Andrew & Williamson Fresh Produce which is the San Diego-based produce wholesaler. They lent money to the organic farmers to buy equipment and 1,200 acres of land in Baja California.
Even though some other sellers have lent a hand to farmers with similar loan programs, this program is the only one that encourages farmers to grow only organic food.
Encouraging contractors to grow organic is very rare in the food industry because the transition from traditional to organic farming costs lots of money and takes many years. Suitable land for growing organic food is very expensive and very rare. That’s why Costco’s initiative is very impressive.
Costco can up with this idea because of the increased demand for organic products. According to the Organic Trade Association, sales of organic food has increased by the years. In 2004 it was $11.3 billion and in 2014 it was $35.98 billion.
Association spokesperson Angela Jagiello says that demand is increasing and that they’re not seeing the same level of farmland. She adds that they’re not seeing the level of growth they need in home supply to meet demand.
Actually, this is not the first time they spent money to increase their source of organic food. Costco has been buying cows for the last year and is making a contract with owners of organic fields in Nebraska to have landowners there raise livestock for their organic ground beef program.
Costco’s projects will boost their source so it can meet this new greater than before demanding for organic food. At the same time, it will help local farmers to succeed and to reduce the need for imported food products, which contain high levels of harmful bacteria, antibiotics, and pesticides.