Wal-Mart, the world鈥檚 largest retailer, is muscling in on one of the fastest growing segments of American agriculture: local food.
Wal-Mart says 11 percent of the produce sold in its stores nationwide comes from local farms, a large increase from the mere 4 percent it sold two years ago when the chain announced its intention to step up local sourcing as part of a larger sustainability platform and a commitment to buy from small businesses.
There鈥檚 no doubt Wal-Mart鈥檚 move into local foods has shaken up the food supply chain, but small family farms aren鈥檛 necessarily seeing the benefits.
Bringing in produce from far and wide
The produce consumers buy at Wal-Mart stores in central Missouri often comes from Herman Farris鈥� refrigerated delivery truck. The truck was empty when it left Columbia, Mo.'s east-side Wal-Mart, but just hours later was full of crates of produce bought from Produce Row in St. Louis, Mo.
鈥淥nce I leave here, I鈥檒l go pick up their bananas they need tonight, deliver them overnight and then they鈥檒l have them first thing in the morning,鈥� Farris said.
Farris, who wears glasses, a camouflage button-down and his long hair parted down the middle and pulled back in a ponytail, isn鈥檛 a farmer. He鈥檚 a broker, and has been for 40 years. That means he purchases produce from wholesalers, auctions and farms for grocery stores.
Farris has been buying for Wal-Mart since the company began carrying fruits and vegetables in the early 1990s. Although he has other customers, including the Midwestern grocery store chain Hy-Vee, Wal-Mart is his biggest customer. So when he gets a call from Wal-Mart 鈥� and he or his wife get several of them a week 鈥� Farris always finds what they鈥檙e looking for, even if it鈥檚 yucca root in the dead of winter.
鈥淭hey don鈥檛 want to say no to anything,鈥� Farris said. 鈥淭hey don鈥檛 want to say, 鈥楴o, we don鈥檛 have鈥� or, 鈥楴o, we can鈥檛 get.鈥� It鈥檚 鈥榃e do have' or, 'We鈥檒l have it here real quick.鈥欌€�
The produce Farris buys in winter, though 鈥� whether yucca root or a load of bananas 鈥� isn鈥檛 locally grown. But Farris says Wal-Mart asks him to buy local when he can. And during the summer and fall, nearly all the produce he delivers to the 20 Wal-Mart Supercenters that make up his turf is grown in Missouri. That鈥檚 Wal-Mart鈥檚 definition of 鈥渓ocal,鈥� that produce is grown and sold in the same state.
Back in 2010, Wal-Mart pledged to double its local produce sales from 4 to 9 percent by 2015. While the chain has met its local sourcing goal, there鈥檚 little evidence of a widespread benefit to small farmers, at least in Missouri.
The challenges of becoming a Wal-Mart supplier
During the winter, the Columbia, Mo., farmers market is held inside an old two-story shopping mall called Parkade Plaza. On market days, three-dozen farmers and crafters sell meat, eggs, cheese, seasonal fruits and vegetables, jars of honey and preserves, baked goods and jewelry.
One Saturday morning, I asked the farmers there if they knew anyone who had worked with Wal-Mart. Jim Thomas, a small-scale organic vegetable grower wearing a baseball cap and overalls, hadn鈥檛 heard of any farmer who has successfully sold to them.
鈥淭hey tend to try to force people into lower prices than feasible,鈥� said Thomas, who owns Share Life Farms with his wife Rose. 鈥淎nd so that鈥檚 my only concern 鈥� is that they鈥檙e willing to pay the price to get the quality that they get from local produce.鈥�
About the only local produce sold in Missouri Wal-Marts in the dead of winter are these pecans from Miller Farms in Dewitt, Mo. (Abbie Fentress Swanson/Harvest Public Media)
鈥淎lways Low Prices鈥� was, after all, Wal-Mart鈥檚 slogan until 2007. Now it鈥檚 鈥淪ave Money. Live Better.鈥� And the company says its local produce push is doing just that 鈥� saving money for its customers who want to buy local foods and helping farmers live better too.
Despite repeated efforts to set up interviews with Wal-Mart, the retailer declined to be part of this story to talk about its local produce push. Testifying in front of Congress in March, though, Ron McCormick, Wal-Mart鈥檚 senior director of sustainable agriculture, claimed the emphasis on local has billion.
鈥淲al-Mart buys more U.S. agricultural products than any other retailer in the world 鈥︹€� McCormick said. 鈥淲e operate 41 state-of-the-art grocery distribution centers across the country. The advantage here is that many of them are located in potentially productive agricultural areas. We work to source more produce from areas close to these centers, allowing us to cut costs from the supply chain and to sell a more affordable, fresher product to our customers.鈥�
But Wyatt Fraas, a project manager at the Center for Rural Affairs in Lyons, Neb., says he鈥檇 like Wal-Mart to break down the $1 billion in cost savings and explain how it has gotten its local sourcing up to 11 percent. Especially since in most parts of the country 鈥� including in the Midwest 鈥� it鈥檚 much more of a challenge to source local year-round than it is in, say, California or Florida.
鈥淯nfortunately, there鈥檚 so little definition and transparency about how that happens that we don鈥檛 really know if that happens or how that happens,鈥� Fraas said. 鈥淚t鈥檚 their own numbers, their own record keeping, their own definition.鈥�
Fraas says that farms have to be big to satisfy Wal-Mart鈥檚 needs. In fact, of the eight farms Wal-Mart highlights on its , five of them are classified as very large farms by the U.S. Department of Agriculture鈥檚 definition, with annual sales in the millions of dollars.
And then there鈥檚 the question of volume. Jennifer Schutter, who works for the University of Missouri Extension and helps farmers sell produce to retailers and universities, says small-scale farmers in Northeast Missouri can鈥檛 produce enough to sell to Wal-Mart.
鈥淭he growers here do not have enough quantity to supply the Wal-Mart stores,鈥� Schutter said in a phone interview from her office in Kirksville, Mo. 鈥淎nd they only have produce for four months out of the year. And Wal-Mart wants produce consistently from the same distributor pretty much all year long.鈥�
Schutter added that farms must also consider the costs associated with becoming an approved Wal-Mart supplier, like passing strict food safety inspections, labeling, meeting refrigeration and packing requirements, and paying for equipment and labor to ramp-up production. All of these requirements can lead to tens of thousands of dollars in upfront costs.
Changing the business model to work with Wal-Mart
Doing business with Wal-Mart has been working for a handful of operations in the Midwest like Divine Gardens, a small tomato grower in western Kansas, and Missouri Vegetable Farm, a 200-acre farm 70 miles south of St. Louis.
鈥淲e鈥檙e the first and largest Missouri grower here,鈥� said Jason Landers, the food safety director at Missouri Vegetable Farm鈥檚 sister company, Proffer Wholesale Produce. 鈥淲e grow green peppers, jalape帽os, poblanos, serranos, tomatillos, yellow and green zucchini squash, pumpkins, sweet corn鈥︹€�
Jason Landers is the food safety manager for Proffer Wholesale Produce. The packinghouse鈥檚 sister farm, Missouri Vegetable Farm, began growing vegetables for Wal-Mart in 2010.
Missouri Vegetable Farm was created two years ago to supply Wal-Mart. The farm is part of Proffer Produce, which was founded by Udell and Irene Proffer in 1964. Landers couldn鈥檛 break down the cost of becoming a grower for Wal-Mart, but he did say that Missouri Vegetable Farm didn鈥檛 have to pay for labels, refrigeration or equipment since Proffer Produce already had them.
Proffer Produce has a longstanding business relationship with Wal-Mart. The wholesaler has been a middleman for Wal-Mart since the 1990s and now delivers produce to Wal-Mart distribution centers in the 13 states surrounding Missouri. Overall, the company has sales of nearly $60 million a year.
Inside its 175,000-square-foot shipping facility as a line of workers in hairnets methodically separated green peppers by quality, size and weight, Landers said he thinks farms, regardless of their size, must adapt their business models to compete in the growing local foods market.
鈥淎 lot of farmers over the last few generations have seen that there is this huge growth in production and with the big push on the locally grown product 鈥� they鈥檝e already trained themselves that if they want to continue to succeed, they have to modify their operations,鈥� Landers said.
But LaDonna Redmond, who works for the Institute of Agriculture and Trade Policy, a Minneapolis, Minn., non-profit organization that advocates for family farms, says it鈥檚 a slippery slope when farms start changing their business models to work with Wal-Mart.
鈥淭hat鈥檚 the question: Will it actually benefit them or will the situation turn out to be one where the benefit really is transferred to Wal-Mart?鈥� Redmond asked. 鈥淎nd not necessarily to 鈥� improving the income of small family farmers?鈥�
Redmond says that until Wal-Mart builds the cost of producing local food into its prices, few small farms will truly benefit from the retailer鈥檚 push to source more local food.
About the Author
Abbie Fentress Swanson is Harvest Public Media's reporter based at KBIA in Columbia, Mo.
