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


Monday, October 11, 2010

How the mid-term elections will impact the next farm bill

New members likely to bring renewed focus on cutting federal budget

By Sara Wyant

With the dust barely dry on the 2008 Farm Bill, it almost seems too early to be thinking about writing another one. But the current Chairman of the House Agriculture Committee, Collin Peterson (D-MN), has made no bones about it: he wants to get started early next year and complete a bill prior to 2012.

In fact, Peterson has been meeting with several farm organization leaders, telling them that he intends to write a “baseline” bill, or one that uses existing funds for programs, rather than trying to find “new” money. Other House Agriculture Committee Democrats have been urging interest groups to get all of their farm bill ideas in by December so they can hold hearings and start drafting new legislation early next year.

There’s only one problem. We won’t know who is going to be in charge of the Committee until after Nov. 2. With many pollsters pointing to a tidal wave of frustrated voters willing to throw out dozens of incumbents, there could be over 100 new lawmakers this fall.

Chairman Peterson’s own seat appears to be safe, but if Republicans pick up at least 39 seats in the House of Representatives, there could be a new Chairman in charge. And that’s likely to be Oklahoma Republican Frank Lucas.

Lucas is not in quite as much of a hurry to write a new farm bill. In an exclusive interview last week, he told me that the fiscal environment will likely be better if we wait a year.

“If we write a Farm Bill a year early, we’ll wind up with less resources to work with and a more difficult environment,” Lucas explained. “Everything of course is subject to what happens in the election in November. Everything is subject to what the majority in the spring will do budget-wise, but from my own perspective, I think we’re better to wait until 2012.”

In the Senate, Agriculture Committee Chairman Blanche Lincoln is more inclined to accept the later time frame for working on a new farm bill. However, there is also a lot of uncertainty about who will be chairman of the Agriculture Committee next year.

Most polls indicate that current Chairman Blanche Lincoln (D-AR) is trailing her challenger, Rep. John Boozman by large margins. If she loses and the Democrats retain control of the Senate, Michigan Senator Debbie Stabenow may take the committee’s helm. If the GOP gains 10 seats in the Senate this fall and regains the majority, ranking member Saxby Chambliss (R-GA) could once again be in charge of the committee and he’s not eager to write a new farm bill next year either.

In most mid-term elections, the party in control of the White House usually loses some seats. But the expectation increases dramatically when the President’s job approval rating hovers below 50%, as is the case with President Barack Obama. In 1993, President Bill Clinton’s approval rating was at 46%, according to Gallup polling data, and the Democrats lost 53 seats to the GOP.

New members

Regardless of who is in the majority, there could be as many as 100 new members of Congress next year and most will have no prior experience with working on farm bills.

“We’ll need to put a great deal of effort in educating these folks early,” says Mary Kay Thatcher, director of public policy at the American Farm Bureau Federation, who noted that a high percentage of the incoming freshmen members will likely represent rural congressional districts.

Rep. Lucas (R-OK), the likely Ag Committee Chairman in a GOP-controlled House, says he expects to spend a huge amount of time in January and February educating new members.

“We’ve got to explain to them what rural America and production agriculture and processing are all about,” he said.

Current Chairman Collin Peterson (D-MN), told us that he fears the election of a lot of Tea Party-leaning Republicans would “be a problem for farm bills and farm policy.”

Chandler Goule, vice president of government relations at the National Farmers Union, offered a more blunt assessment.

“If the Tea Party gets a lot of their members into Congress, I think you kiss a good chunk of the farm bill goodbye,” Goule said, predicting that commodity and even conservation programs would face significant budget cutting pressure.

Fiscal focus

Whether or not the renewed focus on deficit reduction is driven by the Tea Party movement or other newly “reborn” fiscal conservatives, several members tell us there is likely to be a renewed push to cut all federal programs next year. If that’s the case, farm programs will certainly be under the microscope.

Farm and commodity groups will be working to help the incoming lawmakers understand that gutting ag programs alone won’t make a dent in the budget deficit.

While acknowledging that trillion-dollar deficits “do have have consequences,” Sam Willett, senior director of public policy at the National Corn Growers Association, hopes the ag community is able have an adult conversation with the freshman class about the value of a reliable risk management safety net for producers.

“We have a challenge in terms of letting them know where our priorities are and, in some cases, they have may have received different messages during their campaigns,” Willett explained.

At the National Cattlemen’s Beef Association, VP of government affairs Colin Woodall thinks the likelihood of having so many new members of Congress increases the chances for progress on other key issues that are haunting many farmers and ranchers. He cites issues such as regulatory overkill by the Environmental Protection Agency and estate taxes.

“I think we’re going to have a much easier time making the case to them on why the ‘death’ tax needs to be reformed,” he said, adding that depending on how many Tea Party-backed candidates are elected, “the talk of repeal could come up again.”