Wednesday, October 20, 2010

How Walmart’s sustainability efforts could impact on-farm production

by Sara Wyant

It’s been said that when Walmart Corporation takes a giant step, the rest of the food industry feels the earth move. The nation’s largest grocer, based in Bentonville, Arkansas, has more than 8,600 stores under 55 different banners in 15 countries, 2.1 million employees and 2010 sales of $408 billion.

If that’s the case, the supply chain might have been shaking Oct. 14 when Walmart announced the company’s new global sustainable agriculture goals. Company officials say their plan will help small and medium-sized farmers expand their businesses, get more income for their products, and reduce the environmental impact of farming, while strengthening local economies and providing customers around the world with long-term access to affordable, high-quality, fresh food.

Critics say much of Walmart’s sustainability plan is more image than substance. It’s part of a broader public relations campaign to improve perception of the global behomoth by linking their “big box” stores with local farmers, they suggest. This strategy allows the firm to offer some organic and local products to get younger, health conscious consumers in the door, while offering the types of inexpensive food products that the majority of their customer base already depends on.

However, other industry sources think that Walmart officials are on the march toward a more sustainable future, even if they don’t exactly know what that will look like when they find it. This latest announcement expands upon a broader 2005 initiative that aimed to improve energy efficiency, cut waste, use more renewable energy and encourage suppliers to adopt sustainable practices.

Over time, this latest initiative could lead to the development of social and environmental benchmarks that all producers would have to meet before selling products to Walmart. And eventually, these supply chain decisions could lead to industry-wide changes in U.S. food production by requiring, for example, “soil health” to meet certain measurements.

“Over time, may not need the U.S. government setting standards for how we plant, spray and harvest. We will just have to follow Walmart’s rules,” noted a farmer who has been in discussions with Walmart officials.

Walmart officials say they are just one part of a broader food industry push toward sustainability.

“Through sustainable agriculture, Walmart is uniquely positioned to make a positive difference in food production -- for farmers, communities and customers. Our efforts will help increase farmer incomes, lead to more efficient use of pesticides, fertilizer and water, and provide fresher produce for our customers,” explained Mike Duke, Walmart President and CEO, in a company release. Duke, who grew up on a Georgia farm, has first hand-knowledge of the complexities of food production and he’s spent time touring farms in different parts of the U.S. to better understand the technologies being employed.

Certainly, Walmart is not alone in the rush to “go green” in the U.S. and around the globe. Other major farm and food players, like Cargill, Monsanto, Syngenta, General Mills, Kelloggs, Pepsico, Mars, Dairy Management Inc., and Stonyfield Farms are also on the hunt for measurable sustatinability goals.

They joined Walmart in funding the Sustainability Consortium, which plans to develop “transparent methodologies, tools and strategies to drive a new generation of products and supply networks that address environmental, social and economic imperatives, according to their web site. Ironically, the very farmers who might be most impacted by their benchmarks, are not part of the Consortium, where first tier membership costs $100,000 per year.

The Consortium, which is jointly managed by the University of Arkansas and Arizona State University and includes research from universities around the globe, has been developing an index which can be used to evaluate and measure sustainable practices on the farm and throughout the supply chain.

Eventually, this might lead to products in your local Walmart that are “scored” according to their level of sustainability, says Matt Kistler, the Senior Vice President of Marketing for Walmart and the man who previously served as Senior Vice President for Sustainability.

Already, Walmart surveyed 100,000 global suppliers to answer some basic questions around their business, explains Kistler. The questions focused on four areas: energy and climate; material efficiency; natural resources; and people and community

For example, “Do they measure greenhouse gas emissions? Do they supply that information to the Carbon Discloser Project? What is your total water use from facilities that produce your product?”

As more research data becomes available through the Consortium, Walmart may ask farmers what inputs they can reduce or what the optimized level of pesticides and herbicides and water to use on a given crop, says Kistler. Once there is a baseline established, Walmart buyers can ask suppliers how they perform against the baseline.

Will that include looking at corn that’s fed to hogs and cattle? Exactly how far will they go in trying to establish a baseline? Kistler says that some of those answers are yet to be determined.

“The deeper supply chains get and the more complex they are, it will take more time and we may get to a point of diminishing returns,” he adds. “You can imagine, in the scale we purchase in, that doing things better by just a small percentage can make tremendous differences. We want to make sure we do them the right way.”

In the meantime, Walmart is focusing on acquiring more food from small and medium size farmers, sourcing more items locally, reducing food waste, providing training, and a number of other initiatives around the globe.

In emerging markets, Walmart will help many farmers gain access to markets by selling $1 billion in food sourced from 1 million small and medium farmers and providing training to 1 million farmers and farm workers by 2015. The focus will be on crop selection and sustainable farming practices – with about half of those trained expected to be women.

The company will require sustainably sourced palm oil for all Walmart private brand products globally by the end of 2015. And it will expand the already existing practice for Walmart Brazil of only sourcing beef that does not contribute to the deforestation of the Amazon rainforest to all Walmart companies worldwide by the end of 2015.

In the U.S., Walmart’s Heritage Agriculture program will help the company double the sale of locally grown food, defined as fruits and vegetables sold in the same state. The program focuses on sourcing produce from states and regions with long histories of agricultural production and reaching a level of 9% of the produce in U.S. stores. Three of Walmart’s largest Heritage Agriculture programs are in the 1-95 corridor along the East coast, the Delta region in the South and the Mid-America region of the Midwest.

For a link to a map showing these regions:

For more background on the regions:

Mid-America ProjectIn the Midwest, where more families are relying on their farms for subsistence, we are increasing our purchases of crops such as apples and potatoes. States in this area have long histories of agriculture production with outstanding soil and water resources. Other examples of crops in this area include onions, cherries, celery, peaches, melons, sweet corn, blueberries and peppers.

I-95 Corridor ProjectIn the I-95 corridor along the East Coast, there is a high concentration of women- and minority-owned growers that benefit as we expand purchases of vegetables, such as bell peppers, cucumbers and squash. By taking advantage of the growing season beginning in Florida and moving northward, we can source tomatoes, peaches, greens, melons, sweet corn, blueberries, apples and broccoli.

Delta States ProjectThe Delta region of the South has a long history of cash crops, such as tobacco and cotton, which are in decline. We are replacing these with produce, such as blueberries in Mississippi and Arkansas where the growing season is longer. Other items include tomatoes, peaches, cabbage, onions, melons, strawberries, peppers, cucumbers and potatoes.
Source: Walmart Corporation web site


1 comment:

  1. I have not taken a cynical approach to Walmart's initiative. When one entity gets so large it can not but begin to see the whole and its inherent limits. And even though Walmart's commands are followed by many, it in itself will not control this sustainability market. The social movement that Walmart and others are following is giving us a glimpse of the characteristics of the emerging ecological dimension of the economy. Our economy is beginning to absorb the valuable ecological externalities we have been able to take for granted.