Will Whole Foods Market Sell GMOs in 10 Years?

Yes, it sounds crazy to consider today, but quickly shifting foundations of food production systems may force Whole Foods Market to sell food ingredients created through genetic engineering sooner than you think.

Aug 17, 2014 at 1:08PM

Images

Source: David Shankbone/ Wikimedia Commons.

Many consumers and food distributors, including Whole Foods Market (NASDAQ:WFM) and WhiteWave Foods (NYSE:WWAV), have called on politicians and the food industry to label food products containing ingredients produced from genetically modified organisms, or GMOs. Despite the mountains of scientific evidence and the consensus among mainstream scientists that GMOs are just as safe as traditionally produced foods, a loud minority insists there are -- or could be -- health and environmental risks. Besides, why should genetic engineering have any place in the food system when sustainable and environmentally friendly organic foods are available for purchase?

Well, perhaps you should familiarize yourself with an important label: the U.S. Department of Agriculture Organic Seal.

As it turns out, the institution clings to a rather contradictory definition for organic foods. While it will be much easier to do nothing and maintain the current definition, a tidal wave of food products and ingredients enabled by recent advances in our ability to intentionally and rationally design biology will make inaction increasingly difficult. There are two potential solutions. The first is to allow specific genetically engineered organisms into the organic definition, which is unlikely in the near term. The second is for consumers and food distributors such as Whole Foods Market and WhiteWave Foods to realize that organic foods are far from the only way to protect the environment. They will inevitably be forced to choose between two divergent marketing strategies:

  1. Saying their foods are environmentally friendly.
  2. Saying their foods are organic.

And they can only choose one. Good luck.

(Im)perfect definition
The USDA defines organic word for word as the following three sentences:

Organic is a labeling term that indicates that the food or other agricultural product has been produced through approved methods. These methods integrate cultural, biological, and mechanical practices that foster cycling of resources, promote ecological balance, and conserve biodiversity. Synthetic fertilizers, sewage sludge, irradiation, and genetic engineering may not be used.

Do you see it? The middle sentence and last sentence are blatantly at odds with each other. Production practices that "foster cycling of resources, promote ecological balance, and conserve biodiversity" don't necessarily exclude genetic engineering. And no, I'm not talking about biotech crops -- feel free to leave them out of the organic definition and continue to direct your anger at seed and pesticide companies.

I'm talking about food products created with "biology" that enhance the "cycling of resources, promote ecological balance, and conserve biodiversity" even more so than organic farming practices. Some may be more wholesome, too, which, as you can imagine, presents a major problem for the marketing machines and business models of Whole Foods Market and WhiteWave Foods.

Whole Foods, big problem
Investors pinning their hopes to the long-term growth of Whole Foods Market have stomached a 30% stock-price drop in the past year. Let's be honest, most of the fall can be chalked up to short-term, knee-jerk reactions. Whole Foods Market still wallops the competition when it comes to monetizing every square foot of its stores. Store expansion will inevitably push both the top and bottom lines higher, even if increased organic food offerings from competitors squeeze margins.

WFM Chart

WFM data by YCharts.

A potential longer-term problem arises when you consider that consumers looking for environmentally friendly food may soon be able to look beyond the organic food industry altogether. After all, the current USDA definition is immediately challenged by the growing field of synthetic biology, which will soon produce the exact same -- or enhanced -- food ingredients without the need for inefficient, land-hogging agricultural production systems. What better promotes resource cycling and biodiversity than reducing the number of farms?

Streamlined industrial fermentation processes powered by biology (similar to brewing) will yield food ingredients such as cocoa, vanilla flavoring, milk, sugar, and more in several weeks' time -- making the phrase "annual harvest" a relic of the past. How? Time, land, and energy will be saved by reducing the complexity of the biological production systems (plants and cows). The same building blocks of life-powering plants and cows will be transferred to microorganisms with the sole purpose of creating the products we want. Think about it: Yeast and bacteria don't need to exert energy (or a minimal amount at most) to power a brain, moderate body temperature, maintain an immune system, grow limbs and stems, or a host of other functions that aren't directly related to the food ingredient you crave.

Better yet, there will be no need for pesticides, massive quantities of water, or petroleum fuels to power tractors. Imagine that.

What's the solution?
The USDA Organic Seal promotes sustainable and ecologically beneficial production practices, but prohibits uses of genetic engineering that do the same. It may not be that unrealistic to expect an amendment to that definition in the long term, although it's much more realistic to expect a shift in marketing strategies for Whole Foods Market and WhiteWave Foods in the short term. You may think it's impossible today, but selling responsibly produced GMOs may be one of the best business decisions either company can make for investors, consumers, and the environment. 

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their nondividend-paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool's board of directors. Check out his personal portfolioCAPS pageprevious writing for The Motley Fool, or his work for SynBioBeta to keep up with developments in the synthetic biology industry.

Maxx Chatsko has no position in any stocks mentioned. The Motley Fool recommends WhiteWave Foods and Whole Foods Market. The Motley Fool owns shares of WhiteWave Foods and Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers