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Wal-Mart’s Heritage Agriculture Program Gets Good Press But Doesn’t Make A Dent

Jim Prevor’s Perishable Pundit, June 29, 2010

From time to time,

we are pleased to work with National Public Radio to enhance the public’s understanding of issues related to produce and the broader food industry.

Most recently, we weighed into a discussion on “locally grown,” participating in a piece titled, Wal-Mart Helps Small Farms Supply Local Foods:

In recent years, Wal-Mart has tried to soften its image as a corporate steamroller with a number of local and environmental projects.

The company wants to revitalize small and midsize farms in the U.S. and has begun a program to increase the amount of local produce sold in Walmart stores. The program also benefits consumers, who have access to fresher food, as well as Wal-Mart itself. But some critics are skeptical of the program’s logistics.

A Win-Win Program?

At a Walmart in Maumelle, Ark., a stock boy pushes fruit cups and salad toppings onto produce racks. On this day, most fruits and vegetables are labeled with faraway locations: Washington state, Florida, Honduras.

It’s cheaper to grow food in those places, but getting it to central Arkansas burns a lot of fuel. And while environmentalists worry about carbon emissions, Wal-Mart sees dollar signs.

“A surprising percentage, on many crops, of the cost of the goods is the freight,” says Ron McCormick, the head of Wal-Mart’s Heritage Agriculture program.

The company is building up smaller farms to get more local produce into stores for both economic and environmental reasons. McCormick says most local farmers just aren’t prepared to supply the retail giant with the huge quantity and consistent quality of produce it requires….

“[It] seemed to be a win all across the board if we could use our buying power to reinvigorate some of those old agricultural areas that had been abandoned over time,” McCormick says.

Diversification

Wal-Mart is eyeing areas like southern Arkansas, where farmer Randy Clanton drives the back roads of the town of Hermitage. He’s checking on field workers preparing tomato seedlings. A shotgun rides in the truck beside him.

Clanton says his family started growing tomatoes in this area 50 years ago. “That was back when most of your produce business was done in small, mom and pop operations,” Clanton says. “They’d bring these tomatoes in on trailer trucks, even on half-bushel baskets back then.”

Clanton says Wal-Mart has helped make his operation more professional, especially in the area of food safety. Wal-Mart has urged Clanton to diversify and plant watermelons, peppers and cabbage. Now he supplies food to distribution centers covering six states. And the larger market means Clanton makes more money.

“It gives us a sense of security whenever we go out here and start kicking the dirt out here and cranking up ole John Deeres up to get ready,” he says. “If you know you’ve got a market out there — that gives you a reason to get up out of bed every morning.”

Clanton is one of about 350 farmers Wal-Mart is working with as part of its Heritage Agriculture program.

The Realities Of Local Produce

But when Wal-Mart sells Clanton’s Arkansas produce in Illinois, is that still “local food” — or is it business as usual?

“You can do a Heritage Agriculture program and buy certain products grown in Connecticut for your Connecticut stores,” says Jim Prevor, who used to work in produce distribution but now writes the blog Perishable Pundit. “But in the end it’s not going to be a significant part of that Connecticut store’s produce sales because most of the months of the year you can’t grow anything in Connecticut.”

“When you’ve got a private organization the size of Wal-Mart, anything they do in a positive direction for the environment, if they can find a better business model, then the ripple effects are huge,” says Michelle Harvey of the Environmental Defense Fund.

Harvey notes, for example, that Wal-Mart now grows cilantro for Eastern stores in Florida rather than California. Costs are lower, and the herbs are fresher for customers.

Wal-Mart won’t say what its long-term goal is for the Heritage Agriculture program, but it says as of today, 6 percent of its produce is grown in the same state it’s sold.

We actually think Wal-Mart’s Heritage Agriculture program is nifty. What a great job Ron McCormick got for himself to be able to go around the country and help these local farmers and to bring back some crops that haven’t been grown in those areas on a commercial basis for some time. For example, although the NPR piece focused more on tomatoes, Wal-Mart encouraged Clanton Farms to grow some cabbage and so came about the first commercial cabbage crop in Arkansas in decades.

We’ve written before about how fresh-cut processors have reached out to the local communities to encourage them to grow cops for processing. This piece focused on how Dole was attempting to get North Carolina tobacco growers to grow produce for processing. McDonald’s always has to go to local farmers in Poland or wherever it is opening restaurants and get them to grow the type of potatoes and other products it needs.

Although the free market is pretty efficient in determining where things are grown, buyers seeking lower prices and better product are part of that free market, so it is very desirable for a buyer of Wal-Mart’s size to have a few people out there looking to find procurement opportunities that are unconventional and make sense.

For the most part, though, as nice as this may all be, it really is not significant. To an extent, it is no more than an extension of Wal-Mart’s old “store of the community” program — trying to be locally relevant. In a few cases, it represents a legitimate experimentation by a big buyer to see if circumstances have changed, and it now makes economic sense to grow something in a region where the local farmers may not have considered that crop. Inevitably, though, it will have little to do with “small farms” because Wal-Mart is big and needs large production. If these folks are actually small, say supplying direct to a few local stores, they can never be significant in volume.

And Heritage Agriculture, or procurement from non-conventional places, can never be more than a small deal because if it ever becomes a large deal it would just be conventional. Even an item like Arkansas tomatoes is questionable as some kind of Heritage Agriculture project. We’ve had Arkansas tomato companies advertising in Pundit sister publication PRODUCE BUSINESS for 25 years!

We also think that too much can be made of all this. Carbon footprints are complex and involve a lot more than transportation. Although locally grown products may help with local development, it is basically a zero-sum game. We have questioned the First Lady’s focus on local because we wonder what message she is sending to customers for US exports. And even within the US, boosting Arkansas cabbage is probably just hurting some other growing area. That is not Wal-Mart’s problem, but it raises a question about any national effort to boost local production as a path to economic development.

The funny thing is that the success of “local” has almost nothing to do with a retailer buying more locally grown product. Wal-Mart defines “local” as anything sold within the state in which it is grown. So what’s the number one thing Wal-Mart could do to increase its “local” percentage? Build a lot more stores in California! Wonder if the local advocates realize that is what they are pushing for!

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