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Should Whole Foods, Like Google, Get Out of China?

Google is exiting China for a number of reasons, including the hacking of its data, but fundamentally, Google found that it couldn’t live up to its values of openness in a repressive society. Whole Foods Market has a different China problem: The company imports lots of organic food from China, but it’s hard to know whether the state run system of agriculture and organic inspections can be trusted.

The “natural and organic” supermarket chain has been generating unwanted attention for the foods that it sources from China for at least a couple of years. The most recent bit of news is a Florida lawsuit that adds an incendiary charge–that one of Whole Foods’  big suppliers relies on forced labor. This is only an allegation, and the evidence is skimpy, to say the least, but it’s another reason that branded companies like Whole Foods had better fully understand their supply chains, wherever they may lead.

In fact, all companies would do well to think about traceability–the idea that they should  know the origins of the commodities they use. Without traceability, companies can’t be serious about sustainability. (More about that in this 2009  blogpost, Why Traceability Matters.) Patagonia, Tiffany & Co., Wal-Mart and many others are learning the value of  transparent supply chains.

Sometimes companies learn the hard way. Last week, Nestle and its Kit Kat bars came under sustained attack from Greenpeace, which charged that the global food giant “uses palm oil from companies that are trashing Indonesian rainforests, threatening the livelihoods of local people and pushing orangutans towards extinction.” This set off a major brouhaha–Nestle asked YouTube to take down a video from Greenpeace (which, of course, brought more attention), then told critics on its Facebook page not to mess around with its logo, then printed a response on its website that raised as many questions as it answers. Like most controversies, this one is complex but it appears that Nestle was doing business and still may be with a palm oil producer called Sinar Mas which is accused of leveling Indonesian rainforests to make way for palm oil plantations.

Back to Whole Foods: The Florida lawsuit, which hasn’t gotten much press,  was filed in a state court by a group called Southeast Consumer Alliance that lawyer Bruce Baldwin told me was formed, in part, to hold companies accountable through lawsuits. The suit, which is seeking class-action status, alleges that  Whole Foods violated Florida’s deceptive and unfair trade practices act by labeling as “organic” foods from China that were “the product of a venture using forced labor” and “were not properly certified under the National Organic Program (NOP).” The source for the forced labor allegation is a website run by the Falun Gong, a dissident group that opposes the Chinese government.

The allegation that foods imported from China don’t meet organic standards deserves to be taken more seriously. It’s not new: In 2008, Roberta Baskin, a reporter with an ABC-TV station in Washington ran a story questioning China’s organic standards (available here) in which she pointed out, among other things, that 365 Brand frozen “California style” vegetables are imported from China. It includes this exchange between Baskin and Linda Greer, a scientist at the Natural Resources Defense Council:

Linda Greer: ”I wouldn’t buy something organic from China with the idea that it’s truly organic.”
Baskin: “Why not?”
Greer: “The reason is we’ve had such a difficult time tracking things.”

The issue isn’t hypothetical. The TV station tested powdered ginger that was sold as organic at Whole Foods and found it contained a pesticide called Aldicarb. The company pulled the ginger off its shelves, as did others who imported the ginger.