What Became Of Walnut Acres? - Northeast Organic Farming

Spring, 2006
What Became Of Walnut Acres?
The Natural Farmer, $10 a year, 411 Sheldon Rd., Barre, MA 01005
29
by George DeVault
Today’s $15 billion a year organic foods industry -the darling of both profit hungry multi-national food
conglomerates and well-heeled though aging baby
boomers in search of greater health and longevity - was born humbly enough in an old iron kettle hung
over an open wood fire more than half a century
ago. The scene was a rundown farm in rural central
Pennsylvania, a place called Walnut Acres by the
previous owners. Taking turns over the steaming
kettle with a large wooden ladle were Paul and
Betty Keene, young, idealistic homesteaders who
were struggling to care for two babies and pay off
a whopping big mortgage by bringing 100 wornout acres back to life with a team of horses and
unconventional organic farming methods.
It was a time of great change in America. World
War II had ended the year before. The Baby Boom
was just beginning. Bogie and Bacall sizzled on
the silver screen as suburbs, hastily built to house
returning vets, greedily gobbled up farms from Long
Island to Los Angeles. TV had yet to invade the
American living room.
Yet a growing number of disaffected young
Americans weren’t buying the new American
Dream. They longed for a simpler, more
meaningful life. They’d had their fill of big cities,
cookie cutter cottages in the suburbs, traffic jams
and commuter trains. Like generations of pioneers
before them, they yearned to go back to the land.
They didn’t have to look for someone or something
to show them the way home.
Helen and Scott Nearing were already “living
the good life” in their first hand-built stone home
in Vermont. Ed and Carolyn Robinson, recent
refugees from Manhattan, had just written the
suburban homesteader’s manifesto, The “HaveMore” Plan, the blueprint for “a little land -- a lot of
living” from their homestead in rural Connecticut.
And J.I. Rodale was promoting organic gardening
and farming through his magazine by the same
name.
The Keene’s first harvest from their six old apple
trees wasn’t much, maybe 10 to 15 bushels of
fruit. But Paul and Betty weren’t about to let it
go to waste. By blending tart and sweet apples
instead of adding sugar, they cooked the apples
down to 100 quarts of apple butter -- worth $1 each
-- that helped their young family survive their first
winter at Walnut Acres. In the process, they quietly
revolutionized our food system, eventually forcing
no less a power than the federal Food and Drug
Administration (FDA) to change its regulations.
Change did not come easy, though. Federal
standards stipulated that blanched peanuts must be
used to make peanut butter. The contrary Keenes
used whole, unblanched peanuts, complete with
the vitamin-rich red skin and the nutritious heart or
germ of the peanut. Federal regulations allowed up
to 15 percent of non-peanut products such as sugar
and saturated fats in peanut butter. The Keenes
used only their unblanched peanuts, no added fat
and just a pinch of salt. The result was that, in the
beginning, Walnut Acres had to label its peanut
product “imitation peanut butter.” Why? Because
it did not meet FDA’s minimum standards. Simply
put, Walnut Acres’ peanut butter was too good. The
Keenes urged their thousands of loyal customers
throughout the country to bombard Washington
with letters of protest. They did and, in time, FDA
changed its regulations. The Keenes fought -- and
won -- similar battles over organic beef and pastas
made with whole wheat flour.
For more than 50 years, Walnut Acres remained
a leader of the movement. The farm and its retail
store served as a Mecca as organic faithful from
throughout the United States and many foreign
countries beat a well-worn path to tiny Penns Creek.
For many, the highlight of Walnut Acres’ catalog of
wholesome foods was Paul Keene’s homey columns
about life on the farm. Paul kept customers in touch
with Walnut Acres’ back-to-the-land roots as the
movement matured into an industry that, with 20
Walnut Acres once had one of the premier logos of the organic market.
percent annual growth in recent years, became a
venture capitalist’s dream come true.
But suddenly, it all came to an end. Walnut Acres’
granolas, soups and canned vegetables, peanut
butter and apple butter quietly disappeared from
America’s grocery shelves. The farm’s popular
catalog mysteriously stopped showing up in
mailboxes of 40,000 loyal mail order customers.
Today, the farm’s devoted customers are asking,
“What Became Of Walnut Acres?”
Our story ends where it began, on the walnutlined banks of Penns Creek, near a crossroads
Pennsylvania village by the same name.
*****
PENNS CREEK, PA. (Feb. 15, 2001) -- The
uniformed private security guards are edgy. Their
walkie-talkies crackle back and forth with reports
from distant corners of the cavernous warehouse on
the conduct and mood of the growing crowd milling
around inside the maze-like building.
Some 40 to 50 former -- possibly disgruntled -employees are thought to be in attendance. They
were among more than 100 people thrown out of
work in August, 2000, when Walnut Acres, with
shelves full of organic foodstuffs and crops standing
in the fields, was abruptly shut down by the new
owner David C. Cole, former president of America
Online’s internet services, who sank some $4
million into the operation.
The result has been bad blood and bad press. No
one knows quite what to expect today. Anything
may happen.
Outside, the parking lots are filling up with
cars, vans and trucks with license plates from
Pennsylvania, Maryland, New Jersey, New York,
Michigan and North Carolina. A lone horse and
buggy from a nearby Amish or Mennonite farm is
tied to a bush near the front door.
This is the end of the farm known as Walnut Acres,
which a big red sign on the side of the faded red
building proclaims is “America’s Original Organic
Farm.”
“BUSINESS CLOSED” reads the auction notice in
the Feb. 3 edition of Lancaster Farming. “Canning,
baking and mill equip. Also to be sold: 12 +/- acres
with approximately 100,000 +/- square foot food
processing facility with outbuildings, including
grain processing facility, (8) silos and refrigerated
warehousing. Real estate to be sold at 10:00 a.m.”
“You can’t be here!” a guard warns, advancing on
a handful of prospective buyers. The curious, all
registered bidders, are crowding in to check out two
upright coolers and solid oak display shelves. They
are armed with tape measures and 27-page auction
catalogs that break Walnut Acres into 681 lots to
be sold to the highest bidder. “Everything Must
Be Sold!” emphasizes the auction notice on the
Michael Fox web site. That means everything from
“1 pallet of small pieces of plywood (Lot 108)” to
“1 Chester Jensen 500-gallon, 100 psi cooker/cooler
(Lot 229).”
“You can’t be back here. That’s where they’re
handling the money,” the guard says, nodding
his head toward the uniformed auction workers
hovering around tables set up just behind the two
custom-built oak checkout lanes that recently rang
up the purchases of organic granola, flour and other
health foods at Walnut Acres’ retail store.
But there is no money to handle yet. It’s early, only
about 8:30 a.m. Yet money seems to be the word of
the day.
“If you bid $100, we charge you $110,” says Bob
Sherman, opening auctioneer for Michael Fox
International, Worldwide Asset Services Since 1946.
“That’s how the auction company gets paid.
“If you spend more than $2,500 today we need
a cash deposit. How much do you plan to spend
today?
“There will be no abandonment. Take it all. Don’t
cherry-pick.
“Bid-rigging is a felony,” Sherman warns.
By the time he finishes explaining the legal fine
print and promoting nine upcoming Michael Fox
International auctions -- including a box company
in New Jersey, a bakery in Indianapolis, a printing
plant in Ohio and a Michigan paper mill -- it is
nearly 10:30 a.m.
Sherman begins by offering the entire business -grounds, buildings and contents -- for one money.
He asks for $1.5 million. There is no bid. Asking
price finally drops to $200,000. Still no bid.
Sherman moves on to the real estate in its entirety.
Asking price finally drops to $100,000. Again, there
is no bid.
Sherman shifts to the entire contents of the warehouse, retail store and offices. Again, no bid.
30
Spring, 2006
from The Natural Farmer, publication of NOFA
their own lives. They even printed some of Ralph’s
books themselves. Little did we realize then what a
lifelong ecstasy awaited us through these seemingly
chance contacts.”
Nearby was Three Fold Farm in Spring Valley, NY.
It was operated by the Anthroposophical Society
on the biodynamic teachings of Rudolph Steiner.
The Keenes began teaching Steiner’s principles and
composting to their students.
The Keenes soon learned that Dr. Ehrenfried
Pfeiffer, a Swiss soil scientist who had worked with
Steiner in Europe, was now farming and teaching
in the United States. “The very thing we now
wanted most was there, waiting, in Kimberton, near
Philadelphia, Pennsylvania,” Keene continues in his
book.
Paul and Betty Keene around 1940
No one says a word. The crowd of several hundred
stands deathly silent in Walnut Acres’ large garage,
stirring slightly to ward off the cold that freezes
fingers and makes noses run.
Sherman takes it all in stride. While an auction
worker snaps digital pictures of the action, a helper
holding a large red arrow on a long stick to identify
the item now up for bid steps up to Lot 1, the first
of 25 fans on stands. “By the piece and take your
choice,” Sherman says. The fans sell for $40, then
$30, then $20 and finally $10 apiece.
By noon, Sherman is only on Lot 157 “1 3-ton long
ram jack engine hoist.” It’s going to be a long day.
*****
Mussoorie, INDIA, 1939 -- “How can a young
person best serve humanity and his world?” was my
question.
“Ah, my friend,” came the answer, “when you
return to your home in America, you must give
away everything you have. Don’t own anything.
Then you will be free to talk and to act. Doors
will open for you.” Mohandas K. Gandhi was
suggesting a recipe for my future.
“Mr. Gandhi, shining eyes peering over his oldfashioned glasses, had not answered my question,
but he had lifted it and me to a higher plane. He had
stated a principle, set a direction that I have tried
ever since, sometimes in faltering ways, to follow. I
have certainly not adopted his counsel completely,
but it has set a lifetime pattern for me.”
So explained Walnut Acres founder and organic
farming pioneer Paul Keene in the prelude of
his 1988 book “Fear Not To Sow Because of the
Birds.” The book is a collection of essays written
by Keene from 1949 through 1986. Published first
in the popular Walnut Acres catalog sent to mailorder customers throughout North America, Keene’s
homey columns trace the history, philosophy and
evolution of Walnut Acres and the organic farming
movement over the last half century. (The book’s
title comes from an inscription Keene found on
an old tombstone. He adopted it as the motto for
Walnut Acres, saying that he always “tried to sow
enough for birds and people, and then to move
through our days trustingly.”)
At the time of his soulful stroll with Gandhi along a
dusty road in India, Keene was on holiday from the
Woodstock School in the Himalayan foothills where
he was teaching on contract for two years.
“I was on leave from my position of teaching
(college) mathematics in the States,” he continued in
his book. “After years of preparation and teaching,
my work there seemed somehow flat and empty.
An unreality about it gnawed at my spirit. Had I
become too separated from life at the roots?
“It was Gandhi -- his simple life, his powerful
personality, and his philosophy -- who inspired
me upon return to the States to spend four years
studying and learning homesteading and organic
food production. Thus prepared, with only a few
dollars, some ancient furniture and farm equipment,
and a team of horses, the family began buying
a lovely farm called Walnut Acres. Since that
beginning, things had always come as they were
truly needed. A surprised observer, I have been
swept along by life as in a miraculous stream.
“I have found that answers do not come by
concentrating on one’s own desires or fancied wants
or needs. Somehow, by seeking out the larger
framework, as Gandhi did, one rises here and there
above the choking limits of self into a freer, fresher
atmosphere, to where one simply sees farther,
through an expanded, more beautiful landscape.”
The next year, Keene found his soul mate in
Betty Morgan, a shy, sickly girl who was born to
missionary parents in India. In 1940 the couple
returned to the United States a few months after
their marriage. They lived on a friend’s farm in
the Catskill Mountains of New York and soon
discovered the how-to pamphlets of Ralph Borsodi,
a Columbia University economist, and his wife,
Myrtle, who Keene described as “original thinkers,
indefatigable doers, born teachers.”
“It didn’t seem quite fair for us to go back to
teaching mathematics and physics for one year.
Whenever I should have been working on a doctoral
thesis, before my eyes swam visions of fertile fields
and growing crops, of barns and animals and small,
tender, living things. My heart belonged now, in a
way both exciting and calming, to another world,
at the doorway of which I stood awestruck. It was
hard to finish that year of teaching.”
With friends recently returned from India, Paul and
Betty Keene went to Suffern, NY, to check out the
Borsodis’ “School for Living.” In 1941 they moved
there. They stayed on for two years as co-directors
earning $5 per week. The school had a board of
directors that Keene described as “visionaries from
among church groups, university faculties, political
parties, and financial institutions.
“When these persons gathered, the thrill of a
new hope could be felt coursing through their
deliberations. Here were people pioneering their
way into the future. Those of that early group
still living today must view the present scene with
knowing smiles and not a few chuckles,” Paul
wrote in 1986. “It is good, so long before, to have
seen into the future and to have shaped one’s life to
one’s own dreams. To know that earlier one has not
been all wrong can generate occasional warmth and
glow.”
“Our journey had begun most encouragingly. Here
were intellectuals for whom writing and telling
were not enough. They were doing things with
their own two hands. Growing, grinding, baking,
preserving, building, weaving -- homesteading, they
called it -- they were actually controlling much of
“We were always on the edge financially. The
five dollars per week we received at the School
of Living, in addition to room and board, had not
greatly distended our purses, with the arrival of
the first baby and all that. But when the offer of
$50 a month for the three of us came through from
Kimberton Farms School, out of which we had to
pay all living expenses but housing, we jumped at
the chance.”
At Kimberton, 10 to 15 men and women students
managed 1,000 acres. Paul and Betty worked
there for two years. During that time they met J.I.
Rodale, a former IRS accountant and industrialist
with dreams of launching a publishing empire.
Rodale had recently bought a rundown farm outside
of Emmaus, PA. He was trying to restore it to
productivity using organic methods. Rodale came
to attend a lecture on natural farming methods
around 1942.
“J.I. told me he was thinking about starting up
a little magazine called Organic Farming and
Gardening. He asked me if I wanted to become
the assistant editor. I laughed and said, ‘No sir, I
think I’d rather farm.’” Keene is quoted as saying
in a history of organic farming found on the Natural
Foods Merchandiser’s web site.
(Rodale’s first effort to launch that magazine failed
miserably. He sent subscription offers to 10,000
rural boxholders, asking them to send him $1 for
a year’s subscription of 12 issues. They sent back
a grand total of $12. Rodale quickly changed
the name of his magazine to Organic Gardening
and Farming. At its peak in the 1980s, Organic
Gardening had more than 1 million subscribers.)
Meanwhile, the Keenes continued to farm. “Only
when we felt we had learned what we needed to
know to go on our own as full-fledged farmers
did we decide to leave,” Keene writes. Shortly
after they moved to a rented farm in Easton, PA,
the Kimberton school closed. The Keenes were
practically wiped out by heavy hail and rain. In
1945 they began looking to buy a place of their
own. They finally found 100 acres near the center
of Pennsylvania, borrowed $5,000 and bought it.
“In March (1946) we moved there -- two children,
two parents, Betty’s elderly missionary father, a
team of horses, our dog Lassie, and an old car.
“Never was a new-born babe more beautiful to a
relieved mother than was Walnut Acres to us as
we rattled proudly up the winding lane on that
bright March moving day so long ago. Glory was
everywhere. The tin roofs are rusted through in
spots? Set buckets under the drips until we find
time to patch the holes. The house and barn haven’t
been painted for 20 years, the windows are falling
out? Ah, but the wood is sound -- and just paste
paper over the holes for now. The place has no
plumbing, no bathroom, no telephone, no furnace -we must heat with a wood-burning stove? That’s all
right. Isn’t it great to pioneer? We must pay off the
mortgage with that one team of horses, plus an old
plow and an old harrow -- and live besides? Tut,
tut -- we’ve lived on nothing before; we wouldn’t
know how to live otherwise. Oh, the wonder of it
all. We had a house and barn and outbuildings and a
hundred acres. Did you hear? One hundred acres!”
*****
Spring, 2006
The Natural Farmer, $10 a year, 411 Sheldon Rd., Barre, MA 01005
A little after noon, the auction crowd moves into
Walnut Acres’ cannery. Lot 191 (1 Panama 303
closing machine), the huge, aged gray device that
for at least 9,522 hours, according to its hour meter,
closed countless cans of Walnut Acres vegetables,
soups and other organic products brings $700.
Lots 192-211 consist of 20 “retort baskets,” round
perforated rust-colored steel tubs. Each is 20 inches
deep and about three feet across. They weigh at
least 100 pounds each. For years, a half-ton chain
hoist lifted them into giant pressure cookers nearby
and the contents were processed for canning.
Bidding is slow. Finally, a burly man in a green
stocking cap and a tattered flannel shirt says he will
take them for $10 each.
“Sold!” snaps the auctioneer.
“What are you going to do with all of those?”
someone asks.
“They’re cheap!” the buyer replies.
After the chain hoist, the three pressure cookers
themselves come up for sale.
There is no bid. No one has any use for such
ancient technology.
In the next room, there is more modern equipment.
A 500-gallon steam jacketed kettle brings $8,500, a
200-gallon cooker $1,600.
In the mill room a 40-hp high-efficiency hammer
mill fetches $6,000. Most items bring less, much
less. Lot 267 (74 assorted plastic barrels w/lids and
dollies) goes for $125. Lot 268 (55 plastic totes w/
lids and dollies) commands $175.
The crowd loosens up, breaks apart into smaller
groups scattered around the huge building as people
wait patiently for the special items they came to bid
on.
The undercurrent of conversation grows louder
behind the chant of the auctioneer.
“It’s a sad day. Sure am glad Paul Keene isn’t here
to see this,” says a man in a John Deere cap.
“Oh, it would just kill him,” replies a man in a black
hat and the plain garb of a Mennonite farmer.
Then 90 years old and suffering from Alzheimer’s
Disease, Paul Keene resides in an assistedliving facility near Harrisburg, PA. Most days,
acquaintances say, he doesn’t remember Walnut
Acres. But other days, he excitedly tells people he’s
very busy, “working the new price list.” That’s what
he called the typewritten and mimeographed sheets
that he and Betty carefully collated on the kitchen
table in the early days. The price list. It’s what later
became the glossy, four-color catalog that more than
40,000 loyal Walnut Acres mail-order customers
throughout the United States and Canada so eagerly
awaited. Each new issue contained a homey column
by Paul Keene, written as if he were talking to them
across the kitchen table. There were snapshots
of the children, the animals -- Mollie and Prince,
the Belgians that pulled the McCormick-Deering
reaper-binder used to harvest the wheat, and runt
lambs named Pooh and Eeyore -- and scenic vistas
of the gently rolling farm that customers felt
belonged to them, too.
In the fall of 1946, the six old apple trees at Walnut
Acres produced their first crop for the Keenes. The
harvest wasn’t huge, just 10 to 15 bushels. But the
thrifty homesteaders weren’t about to let any of it go
to waste. Using a big kettle and a tripod they had
bought at a farm sale, the Keenes began cooking
up batches of apple butter over an open wood fire.
Instead of adding sugar, they experimented until
they found just the right combination of sweet and
tart apples. Voila! “Apple Essence” was born. It
was a staple in the Walnut Acres price list from then
on.
That first year, the Keenes made 100 quarts of Apple
Essence. It sold for $1 a quart.
Word of Walnut Acres, Apple Essence and the
farm’s growing list of other products quickly spread
far and wide. So did the price list.
31
“All the time we were falling in love with our fields
we were being made aware of increasing outside
interest in their returns,” Paul wrote in February,
1986.
“A first postcard, then a first letter, then a visitor
came from New York City, which was 200 long,
winding, rough miles away. I was sitting on the old
barn roof, painting over the rust at last when that
first auto appeared. I almost fell off.”
The Keenes had a lot of help from their many
friends along the way.
“I am a customer from way back. We knew
Paul and Betty for years and years. We were
good friends. We met through Scott and Helen
Nearing, originally,” recalls Florence “Mickie”
Haase, who with her husband Marty lives in Nova
Scotia. “Helen gave me their catalog. It was three
typewritten pages at the time. We ordered Apple
Essence. We were very pleased with that and
told people to order from them. We’re probably
responsible for several thousand people becoming
Walnut Acres customers.
“Over the years we got to know the Keenes very
well because we went to natural foods conventions
together. My husband had a publishing company
and we often had a booth near the Keenes.
“We were younger than they. We always looked up
to them because it seemed like they were always the
spirit of the whole Natural Foods Association and
everything that went with it. They spoke all over
whole Northeast. Paul was in great demand as a
speaker. He was just so marvelous. The auditorium
was just always filled. He was always giving
everybody a big lift. It took us quite a few years to
go to Walnut Acres, to go to Mecca to see it. That
just made me even more excited about promoting
them.”
Walnut Acres’ business boomed. Draft horses
were replaced by a classic Ford 9N tractor, then
other, bigger tractors and new, larger modern
farm implements. In 1958, the old dairy barn was
32
from The Natural Farmer, publication of NOFA
converted to a custom-grinding mill and store. A
new wing for a mill and refrigerated storage was
added in 1964-65, along with a cannery, freezer
room, office and new retail store. More storage, a
huge kitchen and even bigger retail outlet went up in
1972. The farming operation now totaled 360 acres.
The world was beating a path to Walnut Acres’ door.
Unbeknownst to the Keenes, their unassuming
farm at Penns Creek was also producing a totally
unexpected crop -- new organic farmers.
“I was reading Paul Keene’s catalog and in each
catalog was inspirational prose about life on
the farm. I was an English Lit. dropout from
grad school at the University of Washington. I
said, ‘That’s what I want to do ... be a vertically
integrated farming, and manufacturing sales
company,’” recalls Gene Kahn, president and CEO
of Small Planet Foods and a vice president of
General Mills.
In 1972, Kahn founded Cascadian Farm on 51
remote and hilly acres in Washington’s logging
country. By the middle of that decade, following
the Walnut Acres model, he began manufacturing
organic jams and pickles himself. The business
was not successful. Kahn says he soon switched
to outside packers, providing benefits of scale that
Walnut Acres never enjoyed. The whole idea was to
make Cascadian Farm products much less expensive
and more mainstream. Cascadian was bought by
Welch’s in 1990, then acquired by the General
Electric pension fund in 1996. General Mills
bought the company in January, 2000. “I am getting
nothing but help and support from them,” Kahn
says. “The only thing they have done is make us
better.” His company projects sales of $100 million
in 2001.
“Walnut Acres was my inspiration for entering into
business. Paul Keene gave me a real model and a
reason to enter business and paved the way for the
whole industry. Walnut Acres was America’s first
organic farm of any scale involved in interstate
commerce.”
Paul Keene took it all in stride. “We’ve wondered
sometimes about our growth,” he wrote in February,
1986. “We would not want to grow so large as to
limit our ability to apply our idealism fully to all
portions of our work. We do not think we have
done so; we don’t know how large we could grow
and remain sound. We feel of late that we have
come close to a size that seems ideal.
“The solid virtues of the small farm remain. The
time may yet come when we will see our country’s
greatest task as that of making land available to
those who would use it wisely, on a small scale. We
may learn to order things so that millions of families
can once more make a substantial portion of a
complete, satisfying living from the soil. Perhaps
we can once again realize the virtues of simplicity
and frugality.
“As we see it most people on this Earth gain
strength from closeness to the soil and from thinking
in small terms. Perhaps these are both basic needs,
on which continuing life on this planet is predicated.
Perhaps it has always been this way, and we are
just relearning what those who went before already
knew. In the midst of so many rapid changes that
toss us about like leaves in the wind, it is good to
know that Earth abides, and that small is beautiful.”
But Walnut Acres wasn’t so small anymore. Neither
was organic farming. By the mid-1980s, the natural
foods movement was becoming big business. As
annual industry sales figures grew into hundreds of
millions and then broke into the billions, organic
food companies naturally attracted the attention
of giant corporations controlling the nation’s food
supply. The industrial world was quickly catching
up to little Walnut Acres, then passing it by, despite
management efforts to stay on the cutting edge.
“The catalog changed. Things I had ordered for 20
or 25 years suddenly weren’t there anymore,” Haase
recalls. Techno kitchen gadgets replaced the 8-grain
medley cereal that she delighted in giving to friends.
“More and more of the catalog was going into glitzy
things not related to the farm, things for personal
care and more imported items.”
She was so upset about the changes that she
mentioned it to Keene. “‘The young people (the
second generation of the family business) are
running it,’ Paul said. ‘They do things differently.
They seem to think that this is important to get the
upwardly mobile type of population. You have to
go with the times.’”
After all, Paul Keene had other, bigger worries.
Then in his mid-70s, his mind wasn’t as sharp as it
used to be. He became increasingly confused and
forgetful. The realization that he was slipping made
him anxious. That made everything worse. He
spent less time dealing directly with the business
and retreated to the log springhouse that became
his study and eventual hideaway. Even worse,
his wife’s health was deteriorating rapidly. Betty
suffered from a genetic condition called Alpha 1
Anti-trypsin Enzyme Deficiency in which the body
digests its own protein and eventually destroys its
own organs. Long the victim of a wracking cough,
she eventually developed serious emphysema.
Hospitalized in May of 1987 for respiratory
problems, Betty suffered a massive heart attack and
died. She was 75.
Paul was devastated by Betty’s death. Without
Betty around to guide him, family members, friends
and business associates suddenly realized just
how much she had been covering for him. Dayto-day business operations increasingly fell to the
Keene’s middle daughter Ruth and her husband
Bob Anderson. The couple soon completely
took over management of Walnut Acres and also
played a leadership role in the organic industry,
with Anderson serving on the National Organic
Standards Board in the early 1990s. Despite
annual sales of $10 million, Walnut Acres was
not prospering and growing as other organic food
companies were.
“We needed capital to upgrade,” says Shawn
Brouse, former printing and labeling supervisor
at Walnut Acres. “The company enjoyed a great
stand in the 80s and was resting on its laurels.
Nobody looked ahead to see that in the 90s, others
were going to make organic cereals. And here we
stood with 50s equipment trying to compete with
Campbell’s. Our prices were so high and we had
so much overhead. Everybody knew it was oldfashioned.”
Dilbert Meets Doonesbury
Demand for organic foods exploded in the 1990s,
with sales soaring by 20 percent a year. “No longer
the cuisine only of sandal-clad environmentalists,
organic food is coming of age. It is clearly big
business,” The New York Times reported on Oct.
26, 1996. The article, headlined “A Widening
Popularity Brings Acquisitions,” detailed a long
list of giant food corporations snapping up smaller
organic firms in what one natural foods executive
described as a “buying frenzy.”
Enter David C. Cole, the former president of
America Online’s internet services. Described
by The New York Times as a “venture capitalist,
philanthropist and organic farmer,” the then 42-yearold Cole bought a farm in 1995, paying a reported
$11.5 million for Sunnyside Farms, a 539-acre
spread in Washington, Va.
In March, 1999, Cole bought controlling interest in
Walnut Acres. He promptly invested $4 million “to
increase Walnut Acres’ online presence,” according
to Organic Food Business News.
“We were all told that they (the Keene-Anderson
family) were so excited that they had found
someone who shared our ideals for organic and
sustainable agriculture,” says Brouse. “But soon
it was, ‘Internet here we come! To hell with the
catalog and the store.’” Internet sales soared. Mailorder sales slumped. E-commerce was simply
draining existing business from old sources. Walnut
Acres was not reaching many new customers. The
problem was nothing unique to Walnut Acres.
Wall Street’s 1999 dot.com boom went bust in
2000, with companies such as MotherNature.com,
Whole Foods (owner of Fresh Fields), Wild Oats
Market and Balducci’s pulling out of the internet
market after heavy losses. There were more than
Spring, 2006
63,000 layoffs in the internet field since December,
1999. At Walnut Acres when it became apparent
that change was not going to be as easy, quick or
profitable as first expected, former employees say
what seemed a friendly partnership in the beginning
quickly soured, turning into something resembling a
hostile takeover or at least a marriage of two popular
comic strips -- the dot.com parody of Doonesbury
and the dysfunctional corporate dealings of Dilbert.
“We were busier in my department and many
other departments than we had ever been,” recalls
Brouse. “We were running a third shift. Food
was really flying in wholesale. New guidelines
were constantly being set. Then, the next month
management would do a 360. It was impossible to
accomplish tasks, but we were doing it.
“Ruthless corporate America came to little Penns
Creek and Penns Creek had its eyes shut. The
Walnut Acres of today has nothing to do with
Walnut Acres of eight months ago. What Walnut
Acres stood for it stands for no more. If the world
knew what happened at Penns Creek they would
never buy another Walnut Acres product again,” he
adds.
Cole named a new CEO in early in 2000. Then, on
June 20, 2000, company press releases announced
the beginning of the end: “Remote geographic
location of the plant is detrimental ... that changes
necessary to modernize the aging plant would
prevent the company from achieving profitability by
continuing to manufacture goods there.” Catalog
operations were suspended June 23.
“Well all right,” responds an editorial in the local
newspaper, The Daily Item, two days later. “We’ve
all heard jokes about living in Central Pennsylvania
and being centrally isolated from everywhere.
But we would have thought that a state whose top
industry is agriculture might be, dare we say it, a
‘central geographic location’ for an organic farming
operation. Walnut Acres will continue, but not from
Snyder County. We’re too remote, we hear. Not
good for business. Unless your business happens to
be farming.”
Local residents, including many farmers who
supplied Walnut Acres, had no idea what was
happening. Usually, Walnut Acres employees
were at Leon Kuhns’ farm a mile and a half from
Penns Creek checking regularly on the progress
of his organic peach and apple crops. For the past
35 years, Kuhns’ father and then Kuhns supplied
Walnut Acres with organic fruit. Their only contract
was a handshake with Paul Keene, who promised to
buy everything they produced. Kuhns was born and
raised there and went to school with the Keene girls.
“Finally, a month before the peaches would have
come in, I hadn’t heard from them. So, I called and
talked to the man in charge, and he said he didn’t
think this year they would take any peaches or
apples,” Kuhns recalls.
“There was no warning. We had to hunt other
markets for our crops. We were fortunate. I bought
a computer, got on internet and sought out different
people who dealt in organic fruit. We got rid of
everything that we had. We got about a third more.
“Let’s say the Lord smiled upon what we did. He
helped us out tremendously, which was something
that we really needed at the time. It was a big
lump to swallow when, all of a sudden, where you
delivered all of your fruit they’re not taking none
anymore.” Other area farmers and residents were not so
fortunate, according to Kuhns. “They find it rather
rough going until they get onto an organic market
that they can sell to. It really hit hard. People who
worked there for 30-plus years are finding different
jobs. Some do rather well and others don’t do so
good. What Walnut Acres has done did not do this
area and these people any favors. Boy I’ll tell you,
it hurt.”
The shock was felt as far away as California.
“Everyone I told the Walnut Acres story to -- family
owned, not corporate, organic pioneers -- they
bought whatever I told them about. I was selling
Spring, 2006
The Natural Farmer, $10 a year, 411 Sheldon Rd., Barre, MA 01005
left and right,” recalls Jules Michael, former retail
sales representative for Walnut Acres in northern
California. “Any store I went into, everybody was
buying Walnut Acres soups.”
Michael says the new management wanted her to
stay on. “They sent me a contract. It contained a
clause that if I left I couldn’t work for any other
organic manufacturer anywhere in the country for
up to a year. They weren’t willing to change any of
the clauses or compensate me in any way.
“I think they were sleazy. They ruined a family
business that was a pillar of the natural foods
industry. I cannot believe that the company could
not have survived. There is no reason why they
had to shut everything down. We all wanted to do
something about it, but there was no time. It just
doesn’t seem like it had to happen that way.” She
was laid off the beginning of August, 2000.
On Aug. 19, 2000, the Penns Creek facility was
officially closed. “When Mr. Cole slammed the
doors shut on the plant, he did so with our company
store stocked with shelves of food, along with
our retail packing line,” Brouse wrote in a letter
published in the November, 2000, issue of Organic
Food Business News. “He stopped tractors from
rolling on the farm with fields full of healthy crops
of corn, hay, soybeans, barley and rye. People need
to know about this.”
The same issue of the newsletter carried two widely
contrasting articles. One called Walnut Acres a
“financial loser.” The other predicted total organic
sales in 2000 of $7.8 billion. The continuation of
the Walnut Acres article was headlined, “Walnut
Acres Exec Denies Charges.” Mark Rodriguez,
Acirca/Walnut Acres CEO, “denied reports that
crops in the field had been left to rot. In fact, they
were harvested in the second week of November
and remaining packaged products were given to
food shelters and specialty distributors. All the
employees were given a 60-day notice of the plant
closing, and many received up to six and seven
weeks of vacation pay, even though the company
was not obligated to provide the payment.” With
the help of local job counselors, more than 60
percent of the workforce found new jobs.
“Is There A Downside?” asked the headline on the
editorial in that issue.
“This issue is filled with glowing reports about the
growth of the organic food industry. However, we
have been troubled by recent reports that indicate
the bloom is coming off the rose. Is the industry
going through the same fallout as the dot.com high
tech fallout?
“In the last two months, we have seen a major
California produce distributor, Earthstar, declare that
it has no money to pay off $900,000 in bad debts.
Hurt by poor crops, the well-known Pavich Family
Farms has declared bankruptcy. In this issue, the
new CEO of Walnut Acres tells us the company was
losing money for years.
“On the plus side, publicly held companies such as
Horizon Organic Holdings and Hain Celestial say
their profits are up, but their stock is down.
“Are these all early warning signs to keep a closer
eye on finances? The organic food industry holds
great promise. Sales this year could reach $7.8
billion, one new study reports; and, while we are
certainly optimistic about the future, perhaps we
should also be wary of the downside.”
Organic Means More Than Money
The Natural Foods Merchandiser took a much
broader view when reporting the closing of the
Walnut Acres plant in Pennsylvania: “Though
the brand name may live on, for many consumers
the farm itself best represented the vision of the
founders Paul and Betty Keene, who learned organic
farming techniques in India and later supported
a variety of charitable and community-building
programs both locally and around the world with
profits from their ground-breaking business. Even
if the brand name returns, the Keenes’ vision for
the company may be irrevocably lost, many in the
33
industry said.”
conference call.
Count Travis Tabor among the many feeling a loss.
“The industry lost the heart of its heart, right along
with Arrowhead Mills (recently sold to Hain),” says
Tabor, president of Sunbelt Sales and Marketing in
St. Augustine, FL. “The Frank Fords (Arrowhead
Mills founder) and Bob Andersons of the world,
they don’t grow on trees. They are the true stewards
of the land.
“The company was in financial trouble and that’s
why it went out and secured a majority investor in
July, 1999,” says Rodriguez. “What happened is
that they brought in a guy named David Cole and a
$4 million capital infusion that was badly needed.
David Cole worked alongside the Andersons to
try to develop a new, refined strategy to turn the
company around. At the time they believed that
developing internet sales would promote sales of
product across America and be a greater conduit for
the network of organic farms that they were trying
to develop (in conjunction with Cole’s Sunnyside
Farms in Virginia). As they started to put more
money into the business, the business started losing
more money. We’re not quite sure why.”
“Organic means so much more than just no
pesticides and no fertilizers. People were displaced
from that farm that had literally grown our industry
from zero. The next day they were literally off the
farm for the sake of co-packing in glass, which
further destroys the product with light. Other than
oxygen, light is the strongest killer.
“To take something that precious and stamp it the
way it was done is just not humane. We lost the
heart of the heart of the industry. I am just very
grateful that I got to be in the industry between 1970
and 2000, while it was coming of age.”
Increasingly, Tabor says, the most pressing question
in organics today seems to be the same as in any
other business: “What did our stock price do
yesterday?
“It is just a shame that such people could get their
hands on a company of that stature. Walnut Acres
and Arrowhead Mills were always two heads above
the rest. That’s what made it hurt so much. It was
like a slow-motion train wreck. It was a crying
shame. I shudder to think what’s next.”
The next thing for Penns Creek was a short-notice
auction sale in October, 2000, when the bulk of
Walnut Acres’ farm equipment was sold at the local
fairgrounds.
Rising From The Ashes
“America’s Original Organic Brand Begins Life
Anew,” proclaims the headline on a Jan. 12, 2001,
press release produced for Walnut Acres-Acirca by
the New York public relations firm of Patrice Tanaka
& Co., Inc.
“This month, Walnut Acres’ parent, Acirca, Inc.,
re-launches the pioneering brand with a new line of
certified organic soups that will bring great taste,
convenience and healthful ‘flavor classics with a
twist’ to today’s consumer.”
“Established in 1946, Walnut Acres is a brand of
Arlington Va.-based Acirca, Inc., makers of fine
organic foods. The Acirca name derives from
‘A Circle of Life,’ underscoring the company’s
commitment to organic foods and its intent
to manage products which give back to the
environment,” the press release concludes.
There is no mention in press releases or on the
company’s website of Walnut Acres founder
Paul Keene, who was given the annual Organic
Leadership Award for his lifetime of work during
the Natural Products Expo in 1998. There is no
mention of his farm at Penns Creek.
Why? What happened? Many other organic food
companies such as Cascadian Farm prospered when
taken under the wing of larger companies. What
went wrong at Penns Creek? Why does Walnut
Acres now exist only as a brand name, its founders
and past completely ignored?
“I can’t say anything,” replies former Walnut Acres
president Bob Anderson. Legal documents that
reportedly assured former Walnut Acres employees
their pensions and other benefits strictly forbid
him and other family members from discussing the
business.
“They have just been muzzled,” says family friend
Mickie Haase. “Mr. Cole has done a wonderful job
of keeping the public and organic loyalists in the
dark about all of this.”
In March of 2001, Acirca CEO Mark Rodriguez
and Michael Neuwirth, corporate communications
director, gave their side of the story in a three-way
Cole, working with Bob and Ruth (Keene) Anderson
chaired a global search committee that brought
Rodriguez in as CEO in April, 2000. That month
Rodriguez founded Acirca, Inc., “a venture capitalfinanced packaged goods company targeting the
rapidly growing, $20 billion worldwide market
for organic food and beverages,” according to
Rodriguez’ corporate biography. Core investors
reportedly included venture capitalists such as
media mogul Ted Turner and America Online
founder Steve Case. From 1990 to 1999, Rodriguez
was CEO in North America for Great Brands of
Europe, Inc., and Danone International Brands,
Inc. Annual sales during that time rose from $68
million to $800 million through internal growth and
acquisitions.
“I came in and evaluated the business and very
quickly it became apparent that as the Walnut Acres
product offering had expanded to answer their
consumers’ demands, more and more and more of
the farming inputs required to produce the products
or finished goods that were being sold through the
catalog were coming from other parts of the country.
Less than 10 percent were grown on the farm.” The
supplies were coming from throughout the United
States and even Mexico.
“There was no buying leverage. They were
purchasing inputs in less than truckload quantities
and paying the highest possible costs. The huge
winner in this model was the trucking companies. It
was putting pressures on the company and its brand.
Walnut Acres was in dire straits,” says Rodriguez,
adding that suppliers were not being paid on time.
After 10 weeks of intense study, he says, “we
presented a new strategy to our board that said
the key to the business has to be providing access,
providing the brand to more people to take
advantage of the growing organic food movement.
“In our current business model it is impossible,
because the more we sell, the more we lose. The
key is to produce the same or better high-quality
products closer to the point of crop harvest and
closer to the point of consumption. That was point
number 1.
“Point number 2 was: Let’s bring this brand back
to its roots (certified organic) and eliminate all of
the product offerings -- 80 percent of what was in
catalog was either not certified or was someone
else’s trademarks.”
As for the Walnut Acres manufacturing plant at
Penns Creek, PA, Rodriguez says management and
employees asked, “What if we focus on one or two
categories that we are the absolute best at and try to
bring other product in to co-pack? At the end of the
day, we found we would only need to employ the
plant 14 days a year.” It was closed Aug. 19, 2000.
The distribution center was shut down Feb. 1, 2001.
“We are trying to make the brand approachable to a
much wider audience than it has ever been exposed
to before. We have moved this business from a
direct mail-order business that had 40,000 core
customers to a retail business where Walnut Acres
will be available in 5,000 stores across America.
Our mission is to bring packaged organic food to
the people to make it easier for them to access and
enjoy the tremendous health benefits of consuming
products that do not have a lot of bad stuff in it,”
says Rodriguez.
34
from The Natural Farmer, publication of NOFA
“The most important thing for us and what we
consistently tell people we work with or talk to
is that the new management and the new owners
of this company really take our responsibility of
stewarding this great brand very seriously and our
aspirations are to enhance its position within the
organic movement.
“The last thing that I want to do is cast a shadow
on the organic food industry or the pioneers in the
organic food industry.
“We are trying to find a balance in terms of a deepheld and earned respect for the founders and the
development of a new business model. The last
thing I would want to do is disparage the former
owners.
“The sad thing for us,” Rodriguez adds, is that the
public does not seem to understand the business
reasons behind all of the changes. Yet, “when we
tell the story in a straightforward, truthful way,”
he adds, people say it suddenly makes sense. “It’s
really discouraging.”
Has he ever thought about issuing a press release
saying exactly that? Such a corporate mea culpa
might go a long way toward appeasing loyal Walnut
Acres customers such as Mickie Haase.
Not a bad idea, replies Rodriguez, telling Neuwirth
to make a note of it. Already on it, says the
corporate communications director.
In July, 2001, Walnut Acres/Acirca mailed out a
big press packet. “Americans Fear Their Food,” is
stamped on the outside envelope in red ink. Eight
in 10 Americans say they are unsure how safe their
food really is, explains the press release about
Walnut Acres’ Certified Organic Future, a random
telephone sampling of 1,000 adults by Roper Starch
Worldwide.
“The explosion in popularity of organic food is
largely attributable to the barrage of headlines
about Mad Cow, growth hormones, foot-and-mouth
disease, and other threats to food safety,” says
Olivier Sonnois, Acirca’s vice president of strategy
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and development. “There is a palpable fear of the
unknown and an increasing belief that what you
can’t see might hurt you.”
There is no mention in the press packet of Paul or
Betty Keene or the farm they founded in Penns
Creek, PA. “Established in 1946, Walnut Acres is
America’s original organic brand and is owned by
the Arlington, VA-based Acirca, Inc., makers of fine
certified organic foods and beverages,” the press
releases say.
Americans may, indeed, fear their food. But
longtime Walnut Acres customers
also fear a corporate rewriting of organic
history. “It’s scandalous that they have not even
acknowledged Paul’s existence,” says Mickie Haase.
“This is a tragedy. The organic industry and its
customers should know what has happened. I just
get so boiling mad about this. I’m telling everyone
I know who bought from Walnut Acres not to buy
their products,” adds the woman who once brought
thousands of new customers to Walnut Acres.
*****
No wonder the auction security guards are edgy.
Just how far things have degenerated becomes clear
when the auction moves into the Walnut Acres retail
store in early afternoon. Auctioneer Sherman holds
up a rectangular cardboard sign bearing the Walnut
Acres logo on both sides.
“The name has been sold. It cannot be used in
advertising. This is for nostalgic purposes only,” he
warns the bidders. The sign brings $20.
The auction moves through the warehouse, then into
the bakery. Dirty dishes and utensils are still piled
in sinks and wherever else employees left them
when the business closed a few months earlier. A
thin film of sticky, rancid grease covers many items.
“This is depressing. I shoulda stayed home,” says a
man in the back of the crowd.
“Did it to themselves. Shoulda sold to somebody
else,” his companion replies.
“Five times the money,” barks the auctioneer.
“Let’s go!”
Lot by lot, the auction moves upstairs into
main office, then the third floor offices. Former
employees are there to bid on the new computers
they used not long ago. Everything goes,
typewriters, chairs and desks, cubicles, fax
machines, computers, monitors, printers and boxes
of software.
In the upstairs “peanut room,” an antique 25-pound
coffee roaster brings $600.
Two peanut roasters go for $3,000, each. The
peanut butter mill brings $2,200. Soon, the auction
moves outside for the last odds and ends. A shed
full of wooden bushel baskets and crates -- enough
to fill two pickups and a flatbed truck -- brings $100.
The old Farmall tractor brings $1,300, a wrecked
1994 Dodge Caravan $1,100. Other items, mostly
old, rusty equipment, sell -- on the first bid -- for as
little as $5.
Spring, 2006
It’s getting dark. Weary buyers begin piling inside
to pay for their purchases. The auction clerks are
overwhelmed. Waiting buyers start talking about
their purchases, the auction, the demise of Walnut
Acres. A woman in a blue jacket identifies herself
as Marge Hartley, Paul Keene’s daughter. The other
buyers are suddenly naturally curious, yet their tone
is reverent, almost like they’re paying their last
respects to an old friend.
Marge says she bought a pizza oven. She might
use it to make granola. Her sister, Ruth, bought
the peanut processing equipment. Ruth is thinking
about getting back into making peanut butter. The
old Farmall tractor was bought by Marge’s son and
daughter-in-law who live near Pittsburgh. They
want to move to Penns Creek, maybe in a year or so.
Why? Why, to farm, of course.
“We still have the land,” Marge tells the other
buyers on her way out. “We’ll be fine.”
EPILOGUE
In addition to taking over Walnut Acres, Acirca,
Inc. bought other small natural food companies
and spent lavishly on advertising in what Boston
investment banker Scott Van Winkle told the
Natural Foods Merchandiser (NFM) was “an insane
strategy.”
According to NFM, “Too many investors were
stirring the broth at Acirca ... with no background
in the naturals industry. Said Ben James of North
Castle Partners, Acirca’s lead investor: ‘We had the
wrong business model with the wrong management
team.’” On June 17, 2003, the Hain Celestial
Group, Inc. bought Acirca, Inc. -- including the
Walnut Acres “brand” soups and salsas -- for an
estimated $13.5 million.
It was a small price to pay, considering that sales
of natural and organic products in the United States
totaled $19.7 billion in 2004.
Hain Celestial is “the world’s largest natural and
organic products company,” Chairman, President
and Chief Executive Officer Irwin D. Simon said
in the company’s 2005 annual report. In fiscal
year 2005, Hain Celestial’s net sales totaled $620
million.
Even in their wildest dreams, Paul and Betty
Keene probably never imagined such astronomical
numbers might someday be possible as they stirred
$100 worth of apple butter in an iron kettle over an
open fire in the fall of 1946. They are both gone
now, but their legacy is not yet forgotten.
In a news obituary last spring, The Washington
Post’s Pat Sullivan reported, “Paul Keene, 94, one
of the founders of the U.S. organic food movement,
died April 23 at Messiah Village Nursing Home in
Mechanicsburg, Pa., not far from the farm where he
launched the modern commercial market for natural
foods.”
© 2005 by George DeVault