Costco is pulling a move that is not often seen in the grocery industry. Demand for their organic produce has climbed so much that they've run out of stock and have begun lending money to farmers for purchase of land and equipment.
They loan a farmer some money, farmer buys land and pays back Costco while delivering them organic food. It's a win-win.
Costo has recently surpassed Whole Foods, selling $4 billion in annual organic produce, to become the largest organic produce distributor in the United States.
“We cannot get enough organics to stay in business day in and day out,” said Costco CEO Craig Jelinek.
Indeed, the company has launched it's pilot program to rectify the situation. So far it has helped San Diego-based Andrew and Williamson Fresh Produce purchase 1,200 acres in Mexico along with the requisite equipment to farm it. The return on investment involves Costco getting first dibs to purchase whatever Andrew and Williamson grows on the property.
There is no public plan to take the program further, though many conversations are going on behind closed doors about it. “The challenge for the farmer is: ‘We may go down this road and what happens if something bad happens?’" says Jeff Lyons, Costco’s senior vice president of fresh foods. "We have to make sure we don’t get them in a position of financial trouble. We need to make sure the loans are totally secure.”
Investing in organic food is probably one of the best things an individual can do. Seeing one of the largest food retailers in the world do it is awe inspiring.