A laughing baby is covered in baby food. He’s making a gushy mess, as babies do, but having a grand time. A magic word reassures us–before we’ve had a chance to worry–that the food itself is wholesome. That word, of course, is “organic.” More surprising, to many viewers of this advertisement, will be the origin of this virtuous feast: Wal-Mart. This summer, the mega-retailer launched a multimillion-dollar ad campaign with an irresistible promise: “Introducing Organics at the Wal-Mart price.” The commercial, which cannily plays to mothers’ worries about how pesticides and additives may affect their children’s health, has run on network and cable TV; a print version will appear in Parenting, Real Simple, Self and Cooking Light. Already one of the nation’s leading organics vendors, Wal-Mart announced this past spring its intention to enter the market far more aggressively, to double its inventory and eventually offer organics at only 10 percent above the price of conventional food.

Food bearing the government’s organic label can be, for low- and middle-income shoppers, prohibitively expensive. That’s why, to many observers, an “organic Wal-Mart” represents the democratization of healthier–and better-tasting–food. Bob Scowcroft of the Organic Farming Research Foundation argues, too, that environmentalists should cheer Wal-Mart’s move, which will “turn hundreds of thousands of acres” now being farmed conventionally to organic. “Think of the tonnage of toxins and carcinogens which will disappear from the earth,” he says. Scowcroft also points to research by the Swiss government showing that organic farming can reduce global warming–actually drawing nitrogen and carbon from the atmosphere. Like the retailer’s push for fuel-efficient trucking, Wal-Mart’s entry into the organic sector could turn out to be another example of how one decision by this company–however market-driven–might do tremendous good, simply because of its scale.

But while there are potential upsides to Wal-Mart’s move, it also offers plenty of reasons to worry. To advocates of local economies, like Judy Wicks, founder of Philadelphia’s White Dog Cafe and co-chair of the Sustainable Business Network of Greater Philadelphia, an organic Wal-Mart could do “more harm than good” because of the changes it will bring about in the organic food industry. For example, she cites Wal-Mart’s likely impact on many small farmers. In other industries Wal-Mart’s aggressive competition has proved devastating to small producers, from TV manufacturers to conventional pork farmers. Though Wal-Mart, like Whole Foods, has agreed to source some products locally, most family-scale organic farmers will not supply big-box retailers directly. But many farmers will nonetheless struggle to meet Wal-Mart’s price, in order to supply competing retailers or simply hang on to customers. “Every farmer has to compete because Wal-Mart is in every market,” explains Mark Kastel, senior farm policy analyst at the Cornucopia Institute, a progressive research group that advocates for small farmers. “From an economic justice standpoint,” he adds, Wal-Mart’s plan to go more aggressively organic is “a disaster” because it could prove ruinous for so many family farms.

Some of the concern over small farmers may be sentimental, a remnant of our national identity as a land of Jeffersonian citizen-yeomen. And some detect, in the progressive reaction to Wal-Mart’s organic ambitions, a whiff of countercultural cliqueishness. Gary Hirshberg, president of Stonyfield Farm, which supplies organic yogurt to Wal-Mart, is a former hippie who lived on an organic solar- and wind-powered farm in the 1960s and ’70s. He dismisses Wal-Mart critics in the organic movement as “activists who don’t want to think of organic as a segment. They think of it as a lifestyle.” To Hirshberg, organic Wal-Mart is a sign of the movement’s success, and those who don’t like it are elitist purists, dedicated to their own marginality.

But there are unsentimental reasons to root for small farmers in this drama. They are important to a progressive vision, partly because they are more likely to be farming organic out of principle than a large corporation is and thus more inclined not to cut corners and compromise standards. People who live on their farms with their families also have a compelling incentive to treat the land better. Regina Beidler is a Mennonite who lives with her dairy-farmer husband, Brent, and 8-year-old daughter, Erin, on 145 acres with forty cows in Randolph Center, Vermont. Because the Beidlers farm organically–which as defined by the Department of Agriculture means no pesticides, petroleum-based fertilizers or sewage-sludge-based fertilizers–Erin roams the farm freely (her job is to push the button on the grain elevator). “It’s reassuring to know she isn’t being exposed to those [toxic] substances,” says her mother. “It’s much more child-friendly.”

Perhaps even more convincingly, as groups like the Organic Consumers Association point out, transporting food long distances is a staggering waste of energy and contributes to global warming. According to research by Brian Halweil of the Worldwatch Institute, our food typically travels 1,500 to 2,500 miles to reach our plate, 25 percent farther than in 1980. By the time we sit down to eat it, a meal from a conventional grocery store has used four to seventeen times more petroleum than a meal made from local ingredients. While Wal-Mart officials have expressed concern about the “food miles” issue, industry observers predict that most of Wal-Mart’s produce will travel significant distances–Chile, Kenya and China are some of the likeliest low-cost sources, according to Mary Hendrickson, director of the University of Missouri’s Food Circles Networking Project–raising confusing questions about whether organic Wal-Mart will, on balance, hurt or help the planet. (Just to confuse the environmental issue still more, Bob Scowcroft points out that converting all those acres in China will clean up a lot of groundwater there, which is obviously good for the Chinese.)

Most small organic farmers interviewed for this article believed that in organics, as in many other sectors, Wal-Mart’s low prices would, ultimately, mean lower standards. Stonyfield Farm’s Hirshberg, who has had many discussions with Wal-Mart officials about the company’s commitment to organics, says Wal-Mart does not plan to lower its price by lowering standards; rather, he says, Wal-Mart is committed to delivering the savings through efficiencies within its own system. But Wal-Mart’s behavior as a major player in the organic dairy industry has already suggested otherwise. It has also provided a window on how the company will treat small organic farmers: just fine, until they can no longer provide the lowest possible price.

When Wal-Mart began selling organic milk, one of its first suppliers was Organic Valley, a cooperative of small farmers committed to organic principles. Organic Valley farmers, including Regina Beidler, were proud to be reaching Wal-Mart’s customers, people like themselves who were struggling to make ends meet. But Organic Valley faced a milk shortage, so when the co-op found itself outpriced by a competitor, Horizon, which is owned by Dean Foods, the farmers decided not to engage in a price war to stay on the Wal-Mart shelf but to continue supplying the smaller food stores that had long formed the backbone of their customer base. “We didn’t want to make compromises,” says Organic Valley CEO and farmer George Siemon, meaning that the farmers needed to get a fair price while maintaining their product’s integrity.

Horizon, which controls 55 percent of the organic dairy market, meets Wal-Mart’s low price in part by providing appalling conditions for its cows. The Cornucopia Institute’s Mark Kastel, first reached for this article as he was standing on Horizon’s 4,000-cow Idaho feedlot, says the cows were “standing in 90-degree heat. No shade, no water. These animals are living very short lives.” (To be considered “organic,” animals–whether they are raised for meat, milk or eggs–must be given some access to the outdoors. It is an irony of the bureaucracy and inequity surrounding federal certification that by following the letter if not the spirit of such regulations–that is, for some of their lives Horizon’s cows are outside, even if they have no room to move around–Horizon can call its milk organic, while many small farmers, whose cows roam freely and munch on grass, cannot; in many cases the farmers can’t afford the expense of the certification process, or are put off by the paperwork.) The Organic Consumers Association has urged shoppers to boycott Horizon. As savvy consumers learn that sometimes the organic label tells an incomplete story, Organic Valley stands to benefit. “Organic Valley has long been built on the idea that family farming is a better way to give care to animals and the land,” Siemon says diplomatically. “Consumers have a hard time believing that large factory farms are really organic.”

To be sure, some family-scale organic farmers are benefiting from Wal-Mart’s entry into the industry. Horizon buys at least half its milk from hundreds of small-scale farmers, as even a dogged critic like Kastel, author of a report called “Maintaining the Integrity of Organic Milk,” acknowledges. And while Organic Valley isn’t supplying Wal-Mart directly anymore, some Organic Valley milk does end up, much transformed, in the Wal-Mart customer’s shopping cart: Stonyfield Farm buys milk from the cooperative to make organic yogurt. Says Stonyfield’s Hirshberg: “If you’re serious and sincere about family farms, then your ultimate goal is to be in Wal-Mart, to be where food is sold.”

Still, the Horizon/Wal-Mart alliance is potentially ominous for family-scale dairy farmers, because, as Kastel points out, “there’s a shortage today, but a year from now,” as producers rush to meet the demands of big retailers like Wal-Mart, “you could have a surplus.” A milk surplus could erode the organic premium and drive many small organic dairy farmers into bankruptcy, just as it has wiped out many of their conventional neighbors. Organic farmers, especially in the Northeast, are already in a precarious situation because of high fuel, grain and transportation costs. Travis Forgues, a second-generation farmer in Alburg, Vermont, the state’s farthest-northwest town, milks eighty grass-fed cows. A 33-year-old father of three young children, he speaks for many small farmers when he says, “If we didn’t have the organic market, my dad and I would have been out of here long ago.” On the danger of a surplus fueled by demand from Wal-Mart and other big-box stores, Forgues says, “Anyone who’s not worried about what’s going to happen is crazy.”

With Wal-Mart on the scene, the strength of alternative and local economic institutions will determine whether small farmers like Forgues survive. With 871 farmers and growing, Organic Valley, the largest organic farmers’ cooperative in the country, is still going strong even without Wal-Mart’s business, maintaining farmer control while still distributing on an impressive scale. (In the grocery store on my corner in New York City, which is not a natural-food store or a food co-op, Organic Valley milk is sold right next to Horizon, and that’s the case in stores all over the country.) Farmers agree that the co-op model is critical, helping them maintain some power in an increasingly concentrated market. “The farmer has to be in the driver’s seat,” says Forgues. Because of the organic milk shortage and the Organic Valley cooperative, he continues to get a fair price and has survived a difficult season far more easily than most of his farmer neighbors. Of Wal-Mart, he says, “We’re not going to cut our price so we can get onto that shelf. We have to make sure farmers don’t get removed from the process, as happened in the conventional food market.”

In a nod to the savvy consumer’s growing interest in nearby food, Organic Valley is in the process of regionalizing many of its operations, so that even though farmers in twenty-three states belong to the co-op, customers in New England buying Organic Valley milk will be, increasingly, buying from New England farmers. Farmers’ markets, which are growing in popularity, will also be critical institutions in the organic Wal-Mart era. Jim Goodman, a Wisconsin dairy farmer who tends 400 certified-organic acres with his brother, sells to a local cheesemaker (as well as directly to customers through mail order) but also relies on the weekly farmers’ market in Madison, where he sells beef. He doesn’t think Wal-Mart is going to affect his business. “People who come to the farmers’ market are shopping there because they want to deal directly with the farmer,” he says. “They want to meet the person who raised it, put it in their hand. When they get home they can say, ‘This came from Mike, this came from Jim.’ When you’re sitting down to dinner that makes so much difference. I’d be surprised if they would go to Wal-Mart just because it’s cheaper.”

For local food to become more than a niche market and begin to transform our relationship to the environment, however, energy is going to have to be a lot more expensive. For the majority of Americans to have the incentive to buy local, the cost of food transport would have to reflect its true environmental costs. Many local food advocates speak–half with alarm, half wishfully–of “peak oil,” the notion that we are running out of oil and will soon be forced to grow our own food and cooperate with our neighbors. That neo-primitivist scenario, if it ever comes to pass, is not going to arrive nearly quickly enough to substitute for the necessary work of persuading Americans to change our lifestyles, and advocating policies that conserve energy.

“Consumers have to be more educated,” says Goodman. He thinks it’s important to tell people why the prices are higher: Organic is not overpriced; rather, conventional food is cheap because its costs are passed along to the environment, small farmers and the health of those who eat it. “If people can’t afford to buy organic,” he says, “it’s because they are not paid enough in their jobs, and don’t have health insurance.” That, Goodman insists, should be part of a broader economic justice agenda: A living wage should allow a person to buy responsibly grown, healthy food for her family. “With organic food,” he explains, “there’s no hidden cost.” It’s also true that at farmers’ markets and roadside stands, organic food is often cheaper than in stores, because there’s no profiteering middleman.

Taking their case to the shopper, Organic Valley farmers like Travis Forgues have been traveling the country on speaking tours. The Organic Consumers Association is working to create a domestic fair-trade group, whose label would assure the consumer that food was produced in a way that was environmentally and socially responsible–giving an edge to smaller, more conscientious producers over Dean Foods. With the goal, too, of making local organic produce affordable to the poorest Wal-Mart shoppers–those who will probably never be able to afford a meal at the White Dog Cafe, which runs around $50–the OCA is also working to broaden a program making it easier for farmers’ markets to accept food stamps.

Many organic farmers are social activists and idealists who care about the environment, animal rights and economic justice. But many are also entrepreneurial–and that’s how they will survive the new era of big-box organic. The challenge Wal-Mart poses, says Bob Scowcroft, is “to get consumers who discover organics at the Wal-Mart to get out of their car and to the farmers’ market.”