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The New Horizon for Organics: A Market Outlook of the Effects of Wal-Mart on the International Organic Market

The New Horizon for Organics: A Market Outlook of the Effects of Wal-Mart on the International Organic Market. Georgia Clark Parr Rosson Flynn Adcock Dwi Susanto Texas A&M University Texas Cooperative Extension Center for North American Studies. Wal-Mart. Large, global retailer

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The New Horizon for Organics: A Market Outlook of the Effects of Wal-Mart on the International Organic Market

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  1. The New Horizon for Organics: A Market Outlook of the Effects of Wal-Mart on the International Organic Market Georgia Clark Parr Rosson Flynn Adcock Dwi Susanto Texas A&M University Texas Cooperative Extension Center for North American Studies

  2. Wal-Mart • Large, global retailer • Market access as well as market control • 45% of US consumers shop at Wal-Mart • Conventional supermarkets account for half of all organic sales • Wal-Mart aids companies in determining what will be in demand • Aims for 10% mark-up on organics • Creates business expansion and encourages mergers • ‘Bidding war’ has begun amongst organic suppliers to meet Wal-Mart’s demand

  3. Organic Supply and Demand • USDA certification program increased awareness, demand • Wal-Mart creates own market niche for organics and brings more awareness • US supply can not meet demand – 10% of consumption comes from imports • Long wait to gain certification • Large farms not yet established to cater to large retailers en masse

  4. Average Price Premium for Organic Foods in the United States • Short-run: High demand and low supply • Long-run: Lower prices due to supply and demand reaching equilibrium • Milk, butter, fruit, vegetables, and durable goods are all secure prospects for Wal-Mart • Beef and fragile goods are not a viable option • Organic canned goods, textiles will certainly be imported

  5. Future of Organics • Loosening Regulations • Easier market access • Large-scale production • Incorporation of organic practices into farming, not total immersion • New technology, innovations, and products

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