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Organic consumerism

By Fred Hansen - posted Wednesday, 4 June 2008

First a parable: “The Highwayman said to the traveller: pray, sir, leave your watch and money in my hands; or else, by god, you will be robbed.” That’s the kind of deal that esoteric merchandisers use to rip us off - selling us things like homeopathy, food-miles, carbon footprints or organic food. You cannot argue with these latter-day environmentalists - but the market can teach them a lesson.

One general rule of markets and consumers reads: producers who actually provide what the consumers want prosper, but others who attempt to supply what suits themselves do not. Yet the surging demand for esoteric consumer products such as homeopathy and a host of alternative quack treatments, as well as organic produce, seems to prove the opposite. They are essentially producer agendas imposed on consumers.

So is this just the exception to the rule or is it becoming the new rule?


We see a similar sort of market distortion with the rejecting of nuclear electricity or genetically modified food, given that both are now shown to be safe and in the best interests of consumers.

On the face of it one might think the rules about informed choice are being undermined by dodgy science and ideological movements - time-honoured rules alongside price and quality comparison in a competitive free market economy. Sure, market shares of esoteric products are soaring globally and thanks to favourable media coverage some have recently gone mainstream. Does that mean that the optimism about well informed consumers making smart choices is misplaced?

Given the murky record of health and other benefits of these merchandise, do we have to conclude that people under the influence of mass media are not able to look after themselves properly? I don’t think so.

Exploding the organic food market

Let’s examine this with organic food. Why are large numbers of people so fond of shopping “organic”, so much so that all major supermarkets have now filled their shelves with it?

The market was worth about US$40 billion in 2006 and is expected to keep growing. The founder of organic farming, Rudolf Steiner (1861-1925), was an Austrian, self-declared philosopher who, only in his last days, gave lectures on biodynamic agriculture to a group of German farmers in Wroclaw.

Ever since Steiner established this new branch of agriculture, biodynamic farmers claim that their crop rotations, use of manure instead of fertilisers, and avoidance of pesticides, protect the environment and result in healthier food. As is the case with most esoteric creeds, Steiner’s rules were never changed and remain the orthodoxy of organic farming to this day.


How is it possible that this anti-modern and anti-urban ideology could conquer the world food market and the big cities to boot? Well, the answer is that exactly the opposite is actually happening. Lady Balfour, herself a passionate organic farmer in England, stated in 1977 “ironically, organic farmers may have sown the seeds for their own destruction … It’s as simple as that: productivity versus permanence. There is no room for both.”

Standardisation opened the door for the corporate entrance into the organic market while competition imposed on producers the pressure of costs. Today, the largest food corporations in the world own most of the organic industry’s leading labels, which are distributed by the world’s largest food retailers.

Cunning new players are using the brand “organic” merely to detect price-insensitive consumers among their customers and to sell them the heavily overprized stuff as long as possible.

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About the Author

Dr Fred Hansen is a science writer having published mostly in Germany and the UK. He came to Melbourne a year ago and has published some articles in the IPA Review. He also has a regular blog at the Adam Smith Institute in London. Dr Hansen was a green MP in the state parliament of Hamburg in Germany in the mid-1990s and chaired the science select committee there.

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