Not too long ago, I wrote about Wal-Mart Stores, Inc. (NYSE: WMT) and the entrance of the world's largest retailer more heavily into locally-grown fresh produce. As a way of differentiating itself, Wal-Mart is really on the right track here. Partnering with local merchants near each community it serves could help repair the rift between small-town merchants and the retailing behemoth that has steadily grown for the last two decades.

The retailer may finally be heeding the advice of many critics. That is, when it does good, it needs to actively market and promote that effort as much as possible. Last week, one of the retailer's locations in Manteca, California along with local growers, put the positive word out about how Wal-Mart is joining with the local merchants to ensure customers can buy produce with confidence. This is great -- but Wal-Mart needs these "workshops" at every location where it has a significant and growing relationship with local food suppliers.

Tiffany Moffatt, Wal-Mart's corporate affairs director for the western U.S. region, stated that "In the (West Sacramento, Calif.) store, we carry more than 120 locally grown products .. our partnerships with local farmers have grown by 50% over the last two years." This is great PR, and Wal-Mart needs even more of it moving forward. When you have local food suppliers describing Wal-Mart as a "a demanding but loyal customer," then one has to guess that Wal-Mart is indeed sowing the seeds to forming new relationships with communities outside its rather boring big-box store presence. Alerting the buying public is the next phase in Wal-Mart's efforts -- and it can't happen soon enough.

Wal-Mart Stores Inc. (NYSE: WMT) has been under fire recently for the possible mislabeling of "organic" foods and produce in its stores. To bring you up to speed, the world's largest retailer embarked on bringing higher-end food goods into its stores last year to attract higher-income shoppers who require healthier foods not tainted by pesticides, preservatives and fake colors and flavors (like most processed foods).

The only problem was, as I noted several times in the last year, was that the smaller organic farming industry was not at all prepared to supply the needs of Wal-Mart. Hence, Wal-Mart's "organic" retailing machine was doomed from the start I believe. It could still arrive to where it needs to be, but with allegations of mislabeling regular food as "organic," maybe its heart was never in it to begin with.

Fast forward to 2007, where the Wisconsin Department of Agriculture, Trade, and Consumer Protection says it found numerous instances of conventional food products improperly labeled as organic. The culprit? Wal-Mart. Big surprise, right? The findings were made public after a three-month investigation found that the term 'Wal-Mart Organics' were being used on non-organic products. That, my friends, is easily a blatant misrepresentation. The term 'Wal-Mart Organics' sounds great from a marketing perspective, but those goods better be actual organic foods of the hammer will start swinging.

The rumors about Wal-Mart intentionally mis-labeling and mis-packaging certain food offerings in its stores last year as the retailer moved into the "organic" arena have been around since the start of Wal-Mart Stores, Inc.'s (NYSE:WMT) new entry into selling organic foods and related items.

Strike the heaviest blow yet to the retailer on that note, though. Wisconsin-based Cornucopia Institute, an advocacy group, is accusing Wal-Mart of "organic fraud." The group claims that Wal-Mart is defrauding its customers by mislabeling non-organic products as organic. The Cornucopia Institute promotes sustainable farming and is one of the largest watchdogs of the organic food market as newer and larger retailers push their way into the approximately $15 billion industry.

The group stated that it conducted checks of Wal-Mart stores in five states -- and discovered labeling violations in virtually all of the "dozens of stores" it visited. While that does not constitute fraud in "all" Wal-Mart stores as it relates to "organic fraud," it is a decent representative sample nonetheless.

Wal-Mart came back with a rather goofy defense to the allegations, saying that it often mixes organic and conventional products on its shelves to make it easier for customers to find organic options. Um, what? I think separating organic and non-organic foods would make it much easier to distinguish between the two -- not the other way around.

The company responded with an emailed statement: "Although Wal-Mart has more than 2,000 locations that may offer up to 200 organic selections in addition to thousands of non-organic offerings, we believe it to be an isolated incident should a green organic identifying tag be inadvertently placed by or accidentally shift in front of the wrong item."

An activist group that represents smaller farmers has sued Wal-Mart, saying that Wal-Mart Stores, Inc. (NYSE:WMT) has incorrectly labeled several products as organic. This lawsuit was reported in The Washington Post today as the complaint was presented to the U.S. Department of Agriculture (USDA).

Called "Cornucopia," the group sent its complaint to the National Organic Program, a division of the USDA, and in it stated that at several Wal-Mart stores the retailer had incorrectly labeled Stonyfield Farm's all-natural yogurt as organic.

Stonyfield Farm is one of the largest purveyors of all-natural yogurt in the world, but has struggled under the load of growing organic popularity and has had to make adjustments to its business model to skill keep natural ingredients in the product. Now it is no longer considered "100% organic."

The lawsuit filed by Cornucopia also said that several Wal-Mart stores had included non-organic products such as tofu, egg-roll wrappers, and juice in a cooler designated for organic produce -- which could cause customer confusion with all-organic products. A Wal-Mart spokeswoman responded in an email that "it's hard to take their claims seriously" and said that one of the group's founders, Mark Kastel, had worked for a Wal-Mart rival.

But so what? Wal-Mart needs to determine if the claims are valid and address them if they are -- but stating something that has no relevance to the lawsuit's claim does nothing for nobody. Wal-Mart may be correct here, as may be Cornucopia. If the lawsuit cannot prove the claims it brings up in the lawsuit, then Wal-Mart can pounce. Not until then, though.

Wal-Mart Stores, Inc. (NYSE:WMT) is entering the organic foods marketplace, and it's just getting started. Could this move fall flat on its face for the world's largest retailer? An article over at the Motley Fool hints at this, arguing that the higher prices of organic products compared to processed foods may eventually turn customers away.

That is, unless education about the quality and nutrition of organic products is brought to the customer's attention. But, then again, there are legions of customers who only shop on price and price alone, quality be damned. Sigh -- that's too bad, really. Organic foods, from brands that are trustworthy, can be a treat to eat, both taste-wise and nutrition-wise, especially when compared to taste-enhanced and chemical-laden processed foods many of us eat these days.

Will Wal-Mart's continuing entry into the organic marketplace cause prices to drop to a level where the ordinary consumer will consider organic products over standard, processed food products? The organic suppliers most likely do not have the business models to drop prices like this at Wal-Mart's request without re-engineering their businesses on that precept -- and that's such a large gamble for many producers that I'm willing to bet it won't happen for most of them, even with Wal-Mart as a potential long-term customer.

Where does that leave Wal-Mart? With higher-priced organic products that will hit a consumer-purchasing plateau -- and thus with a failed strategy of mainstream organic purchasing. Maybe.