Last last week Amazon made a 13.7 billion USD bid for organic upscale retailer Whole Foods. The announcement sent competing grocer stocks reeling with the potential that Amazon-type competition could create major struggles for Kroger, Walmart and Costco in the long term.
Financial market commentator Jim Cramer, stated on CNBC that “this is a game changer…..you cannot compete against Amazon…Amazon does not let you compete…they will dominate food in two years.”
Those are very strong words, but what is the impact for the farmers? In terms of organic farmers, the news is probably not a great story. As Cramer states at the end of his interview, Amazon will deflate the price of food for the consumer. That this is just one part of the equation. We will also see lower prices at the farm gate to enable those lower retail prices, and organic farmers already face higher costs of production in comparison to their conventional brethren.
I spoke with Kevin Grier about the purchase and what it could mean for competition among food retailers. This interview originally appeared on RealAg Radio on June 20.
As organic food has increased in demand, the biggest obstacle to further growth has been supply. A majority of the organic food in Canada is already imported from Brazil and China, and adding Amazon to this competitive mix only increases the probability more organic food is imported.
Even with Amazon’s superior logistical skills, the question remains: are people that interested in shopping online for groceries? Time will tell and like Kevin Grier says, “if anyone can make this work, it’s Amazon.”
Shaun appeared on RFD-TV to discuss the impact of the purchase and what it may mean for organic farmers in the long term: