Monday, May 3, 2010

walmart's organic lettuce

Wal-mart has a new commercial explaining how they can sell organic lettuce at the same price as regular lettuce, because "our customers shouldn't have to pay more for a product that's good for their families and good for the earth."

That's fine and dandy, but don't forget two glossed-over details:

1. Organic lettuce costs more than regular lettuce to produce. If Wal-mart can charge the same thing for both, all that means is that they are over-charging for regular lettuce in order to bring the prices in line. They are failing to cut their profit margins on regular lettuce, or failing to aggressively negotiate equally favorable contracts with regular lettuce farmers, in order to sell the two goods at the same price.

2. This partnership directly with farmers, negotiating low prices in exchange for huge contracts, is great for eliminating middlemen and delivering goods closer to marginal cost to customers. Yet this is exactly what anti-Walmart crusaders complain about for making business harder for the middlemen and smaller establishments. Are they still complaining about it now that it's used to serve their other political agendas?

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