The Associated Press reports that Wal-Mart plans to spend $400 million on locally grown produce this year, which the company defines as anything farmed within a state's boundaries. The company's Commitment to You web page states that the company "realize[s] the important role that American farmers play in today’s society — both in terms of ensuring our high-quality food supply and supporting the local and national economies." The local-food buying program, it continues, "reflects our ever-important goal to provide consumers with quality, affordable, home-grown agricultural selections."
But it would not be far-fetched to think that the retailing giant (the largest public corporation in the world and the largest U.S. food retailer) also has other, less lofty, motivations. Such as reducing fuel expenses: with diesel fuel prices going through the roof, buying tomatoes from a neighboring county instead of Florida or California can save money in fuel and labor.
Indeed, Wal-Mart's Checkout blog last week bragged that by optimizing the 12 million pounds of peaches it sources from 18 different states and distributing the product locally, "Wal-Mart saved 672,000 food miles and 112,000 gallons of diesel fuel…[equaling] more than $1.4 million." Wal-Mart may also see a financial benefit in reducing its exposure to nationwide food-safety scares and their aftershocks — dark clouds could be hovering over fresh, out of season tomatoes for a long time — by providing more accurate information about the food's provenance.
If one can get past the irony of a leader in the globalization of the food chain, whose stores have paved over countless acres of U.S. farmland, claiming to be a booster of local producers, Wal-Mart's initiative has potential to improve local food systems by teaching shoppers about the joys of eating what's in season, providing a new market for regional farms, and helping customers gain a better understanding of the origins of their food.
The devil is in the details. For example, Wal-Mart has a history of squeezing suppliers for lower and lower prices. A 2005 article in the New York Times recounted how Wal-Mart asked for a 20 percent price cut from the Organic Valley dairy cooperative after it had been the primary organic milk supplier for three years. Organic Valley CEO George Simeon said, "Wal-Mart allows you to really build market share. But we're about our values and being able to sustain our farmers. If a customer wants to stretch us to the point where we're not able to deliver our mission, then we have to find different markets."
In the AP article, local-food expert Rich Pirog, associate director of the Leopold Center for Sustainable Agriculture at Iowa State University, expresses concern that Wal-Mart will buy only from the largest growers, thus preventing the smallest farms from getting any of the business. Over time this could lead to regional consolidation and possibly the replacement of small, diverse farms with large monocrops grown for Wal-Mart. These same concerns were raised back in 2006 when Wal-Mart announced plans to jump into the organic food market. (See Michael Pollan's blog posts for the Times — 1 and 2 — and the paper's editorial.)
If Wal-Mart's initiative is successful, I wonder how it will affect its state and federal lobbying strategies. Will it put some of its lobbying muscle into farmland preservation? Or into removing the prohibition on vegetable and fruit planting on USDA program lands? Or will it seek to impose ever more draconian food safety regulations on its suppliers?
(Via Paul Krugman)