Panic for Organic

I wrote this article for the Fast Company CoExist website in February of 2014.


How A Panic Over Cancer-Causing Apples Created The Modern Organic Food Market

You may not remember alar, a ripening agent used on apples. But the media firestorm over its harmful effects were a huge turning point in creating a mass market for organic and natural foods.

This piece is adapted from Natural Prophets: From Health Foods to Whole Foods–How the Pioneers of the Industry Changed the Way We Eat and Reshaped American Business by Joe Dobrow, which will be released February 18.

Not that Kahn–the 41-year-old CEO ofCascadian Farm, a modest-sized producer of jams, frozen vegetables, and other organic foods–was featured in the magazine. He just knew that its lead story, about the torrent of food scares then flooding the marketplace, was going to change his life. And his company. And probably the whole natural and organic foods industry–which at the time was just a wisp of a business, all of $3.55 billion, or less than 1% of all food expenditures in the country.

Kahn was no soothsayer; he had simply been toiling away in the obscure world of organic foods for 17 years, waiting for something to restore a little common sense to a nation grown inured to a diet heavy in chemicals.

And all winter long, the news had been bleak.

In early March, traces of cyanide had been found on grapes imported from Chile, throwing the entire seasonal fruit market into turmoil. Chicken being delivered to the Campbell Soup plant in Fayetteville, Arkansas for Swanson frozen dinners was found to be contaminated with the long-banned cancer-causing pesticide heptachlor, leading the meat producer, Townsend Poultry Products, to destroy its flock of 400,000 birds. Reports also surfaced questioning the safety of everything from broccoli to beef to popcorn.

Most nerve-wracking of all, though, was the high-profile Natural Resources Defense Council (NRDC) report, highlighting government studies showing that the 26-year-old apple ripening agent Alar had caused tumors in lab mice and posed an “intolerable risk” to children. Six thousand preschoolers might eventually get cancer from Alar and otherchemical pesticide residues, the NRDC suggested. Shortly thereafter, on February 26, 60 Minutes trained its caustic cameras on Alar, calling it “the most potent cancer-causing agent in the food supply today.”

The reaction was swift. Parents started dumping applesauce. Schools in New York and Los Angeles canceled their orders for apple juice. Supermarkets pulled apples off the shelves, driving apple prices to their lowest level in years, $7 for a 42-pound box, well below the break-even point. (A group of Washington State apple growers would later file a $250 million class action suit against 60 Minutes, alleging false disparagement; but theSupreme Court eventually upheld an appeals court’s dismissal of the suit.)

To Gene Kahn, this was very good news, indeed. For ever since he had dropped out of the graduate program in English Literature at the University of Washington in 1971 to become a farmer, and founded what, with his Sixties-bred cynicism, he sardonically called the New Cascadian Survival and Reclamation Project–Cascadian Farm, for short–he had struggled mightily to find a marketplace of like-minded believers. Sure, there were pockets of potential here and there. A handful of natural foods retail chains had sprung up to replace the dusty old wood-slat-floor health foods outposts of yesteryear, although the three largest–Mrs. Gooch’s in Los Angeles, Bread & Circus in Boston, and Whole Foods Market in the southwest–had fewer than 30 stores, combined. A few natural foods brands–among them, Celestial Seasonings tea, Stonyfield Farm yogurt, and Odwalla juices–had crossed the great divide and began to appear on conventional supermarkets shelves. But by and large, natural and organic foods were still thought to be the domain of the Woodstock Generation, a hippie sideshow to the serious business of commercial food production and retailing that, aided by the postwar surge in development of pesticides, herbicides and artificial additives, had converted America from a nation of bread lines into the bread basket of the world.

The Newsweek article, hard on the heels of 60 Minutes and all of the other media coverage, began to change all of that. It was, the magazine said, a “panic for organic,” as the sleeping giant of the mass market was rudely prodded from its slumber and awoke to find the safety of its foodstream (annual application of more than a billion pounds of chemical pesticides, including 50 on broccoli alone; growth hormones implanted into steers; dioxins in milk containers; DDT showing up in fish 17 years after it had been banned) in question at every turn. Soon, conventional grocers like D’Agostino’s in New York began offering organic produce for the first time, and demand surged.

There had certainly been other food scares.

Just before Thanksgiving in 1959, residues of the widely used herbicide aminotriazole were found in Oregon cranberries. Aminotriazole was known to have caused thyroid cancer in laboratory animals, and although medical experts disputed the threat to humans, the Food and Drug Administration (FDA) issued a ban on these cranberries. TheDepartment of Health, Education and Welfare later issued a ban on all aminotriazole-treated cranberries from 1957 to 1959. The thought of a toxic Thanksgiving dinner two years in the past was a bit unsettling to a populace that still trusted its government and big institutions.

Then in 1962, in persuasive and urgent language, Rachel Carson’s Silent Spring warned Americans about the dangers of DDT and other pesticides. Her description of 11 orange pickers in Riverside, California, poisoned by parathion–reduced to “retching, half-blind, semi-conscious misery”–conjured the visceral Civil War writing of Ambrose Bierce or Stephen Crane. She told of puppies and little boys dying due to pesticide exposure, “the appalling destruction of wildlife,” and asked us to imagine a sterile future world in which “no witchcraft, no enemy action had silenced the rebirth. . . . The people had done it themselves.” It spent 31 weeks on the New York Times Best-Seller List and was probably the most influential book of its generation–deeply affecting Gene Kahn, among many others.

Later still, there was the crisis over cyclamate, an artificial sweetener dozens of times sweeter than sugar, which had been discovered in 1937 when a University of Illinois graduate student working in a lab rested his cigarette on a bench and noticed a sweet taste as he put it back in his mouth. It came into wide use in diet sodas–until 1969, when it was proven to cause cancer in lab animals, and thus became the first food additive banned by the FDA.

But Alar–somehow this was different. Maybe it was poignant image of schoolchildren slurping carcinogenic cups of apple juice with their lunches. Maybe it was the power of the mass media, which were at or near their peak in 1989 (60 Minutes was viewed by at least 18 million households). Regardless, this became the singular, catalytic event that ushered the natural foods industry out of the backwaters and into the American refrigerator, the faceoff that launched a thousand sips.

As he began selling container-loads of organic apples to customers who had never bought them before, in the U.S. and even in Japan, Gene Kahn decided it was time to double-down. If the public at large had finally come back around to the wisdom of organics, that would trigger the conversion of more acres of farmland over to organic methods, and his little operation would need to expand. He quickly began borrowing money to fund an expansion that, through various fits and starts, would launch Cascadian Farm into the big time, and result in its eventual sale to Welch’s, and later to an investment team headed by the General Electric Employee Pension Trust, and still later to General Mills.

The rest of the natural foods manufacturing industry also received a big jolt. Nascent operations like Earthbound Farm, Pacific Natural Foods, Organic Valley and Seventh Generation–all of which had been founded in the three years preceding the Alar scare–took off. Soon, money began flowing into the industry, and in the next three years, 1989 through 1991, many new powerhouse companies and brands were created, including Annie’s Homegrown, Horizon Organic, Terra Chips and Clif Bar. It was an all-out organic orgy–induced by the panic, produced by eager investors, seduced by the lure of legitimacy.

Meanwhile, Washington, reactive as always, up-shifted slightly to get the wheels of government turning faster. Senator Patrick Leahy and his working groups, which had already spent years trying to craft legislation that would create a national organic standard to replace the growing patchwork quilt of state definitions, picked up the pace of their work; a few months later, this resulted in passage of the Organic Foods Production Act of 1990. Then, on September 1, 1989, the Environmental Protection Agency announced a proposed ban on Alar (although its manufacturer, the Uniroyal Chemical Company, had already succumbed to pressure and voluntarily removed it from the U.S. market in June).

The Alar alarm and the interest in natural foods that it triggered also created the perfect opportunity for the newfangled retailers, who became the real power brokers in the industry. Small operations, like the Unicorn Village market and restaurant in North Miami Beach, Florida, which had been around for 10 years, surged: Unicorn did $8 million of business in 1989, with an almost unheard of 58 percent profit margin, and moved to the splashy Waterways complex in Aventura the following January. Similarly, North Carolina entrepreneur Lex Alexander was able to capitalize on the new demand and self-finance an expansion from his one store in Raleigh to a second store in Durham in 1989. Both of these operations would soon be purchased by Whole Foods Market, which, bolstered by the new mass market for natural and organic foods, would go public in January of 1992 and then trawl through the 1990s gobbling up rivals like a game of PacMan–first Bread & Circus (for $26.2 million in October 1992), then Mrs. Gooch’s (for $64 million in May 1993), and eventually Fresh Fields (for $134.5 million in June of 1996). By 2005, it would join the Fortune 500. Today, Whole Foods has transcended the realm of mere mortal companies, emerging as the unquestioned leader of a buoyant $100 billion industry, so influential it has spawned a revolution in triple bottom line thinking among many industries, so iconic it has even been spoofed on The Simpsons.

Perhaps most importantly, the legacy of the Alar episode can be seen in the way that natural and organic foods have permeated mainstream America. Where once they sat on the fringe of society, the fodder for unintentional spoofs–remember Euell Gibbons, the white-haired, 60-something spokesman for Grape-Nuts cereal in the 1970s, who, in a series of TV ads, went trekking through the snow in a sheepskin jacket in search of some “high bush cranberries” to add to his bowl of Grape-Nuts, “my back-to-nature cereal,” with a flavor that “reminds me of wild hickory nuts”?–today they are an integral part of society. Eighty-one percent of U.S. families now report that they at least occasionally buy organic foods. Big Food companies now own and operate many natural foods businesses(Coca-Cola owns Honest Tea, Kellogg owns Kashi, Dean Foods owns Horizon Organic, and yes, General Mills still owns Cascadian Farm). And we see the USDA certified organic seal staring back at us from nearly every supermarket aisle and gas station food mart in America.

And as for Gene Kahn? He led Cascadian Farm for 32 years, and then served in various executive capacities with General Mills until 2010. Today, he continues to fight the good fight, working on crop biofortification efforts through an organization called HarvestPlus. Come March 27, 2014, he might just open up his cabinet, pull out of those old copies of Newsweek, and see how far we have come in the last 25 years.