Industrializing of Organic Foods

"Is what whole foods did for the "branding" of organic good for local/regional farms or did it co-opt them?"

So I wrote a lovely response to a totally different question (below), thinking about how the interaction between Whole Foods and local farms has been for the farms...

But now I think what you're really asking is if making organic more mainstream and available from a large conglomerate has hurt local farmers? I would say yes. (Although I think the growing number of CSA's is combating it, as well as the increase in farmers markets and attendance). The mainstreaming of organic has created (dare I say it) the bastard child industrial organic; so Whole Foods making large quantities of organic produce and other products available created a demand spike and these large farms move in to create the supply. Even traditionally industrial produce companies are coming out with organic lines, i.e.: Chiquita, Dole, del Monte. The story is the same with any industrial agriculture- get big or get out. I think that Whole Foods compromises it's vision when it tries to be like other grocers and have 'seasonless' supply (berries, peppers, bananas; in Jan.), organic tv dinners and other various organic processed foods. I would say my organic coming of age was in the arms of Whole Foods, at first I was dazzled by the organic goodies and fresh produce, but looking back just because it's labeled organic doesn't mean it's good for you or the Earth. (but I wouldn't say Whole Foods is the culprit, just one of the many forces that are driving this continuing industrialization of agriculture)

Plus, in my experience volunteering at a small organic farm a few miles from our apartment in DC, even the large scale certification of organic has hurt small farms. The process of becoming USDA certified and maintaining certification is so costly and intensive that it wasn't worth it for this farm to become certified, so they changed their description from Organic to 'Eco-ganic.' The USDA certified practices are better suited to large farms; the owner of the farm picked up a tomato and explained that in order to be compliant she would have to be able to track when it was planted, harvested and which field it came from. This farm was run by herself and her husband with a smattering of help from their kids, grandkids and volunteers, there's no way they could have that kind of precision.
And you'll notice that grocers carrying organic produce carry certified organics.

---the other answer--
On face, I would say Whole Foods local produce initiative has been okay for the farmers it serves. Although farmers markets and attendance at markets is high, having a guaranteed buyer (like a big name grocery store) is good. From what I know about how Whole Foods does it, they allow individual stores to connect with the local farmers, so it's not the corporate office calling the shots. And as far as I can tell, it goes from the farmer to the store, so no middle-man, which means more money to the farmer. Also, Whole Foods charges a premium on their organic foods (as was noted by Scott) so, it stands to reason that the farmer is also receiving a better price for their goods. I do not get the feeling they've become part of the industrial food chain by selling to a large grocer. They do not (seem) exist to sell to Whole Foods. I would consider them "specialty suppliers." Kind of like locally sourcing someone to bake bread (i.e.: Grand Central w/Market of Choice) or even cleaning services. Although some of them in their effort to sell to Whole Foods have created local cooperatives under one name to sell as a group and I can't say what effect that has had.

However, that being said, Whole Foods has almost 200 stores in the US and is traded publicly, so they have to have growth/increased sales...and a good image, so I'm sure it's not picture perfect. Plus it's juxtaposed against the fact that they also carry big name industrial organics (i.e.: Cascadia Farm, Earthbound Farms, Chiquita-organics, etc.); additionally they have their own line of products (the 365 stuff) and who knows where that comes from.
Furthermore, the term local can be stretched, local to Whole Foods is within 200 miles (which is awesome if you consider that the average meal in the US travels about 3000 mi.) but not to my standard of local (you say 200 miles I think about the fact that Oregon is 300 miles of the I-5 corridor), my standard of local holds a much smaller radius. I can't wait to have a CSA next season.