Critics evaluate Wal-Mart’s focus on sustainable food systems

Wal-Mart CEO Doug McMillon took a bold stance earlier this year when he told the world he would push the envelope toward innovation to drive future growth and improve its sustainability record in the process. That speech was part of Wal-Mart’s Sustainability Milestone Meeting in February, an event that was followed up in Bentonville on Monday (Oct. 6) as the retailer outlined plans for a sustainable food system with an expanded goal to provide 4 billion healthier meals to those in need over the next five years.

“The future of food is absolutely critical for both our society and for our business, which means we have a huge opportunity to make a difference here,” Doug McMillon said in his opening remarks. “We’ve learned on our sustainability journey that we’re most successful when our initiatives create social and environmental value and business value at the same time. Food is our number one category worldwide, and we are going to do even more in our grocery business in the years ahead. Paving a sustainable future for food is necessary for society and our business.”

Michele Simon, president of EatDrinkPolitics, said Wal-Mart is great at garnering media attention with big numbers like 4 billion healthier meals for those in need, but she would like to see the retailer invest that money into higher wages for its workers, many of which require social assistance from food banks.

Jack Sinclair, vice president of grocery for Walmart U.S., said since 2010 Wal-Mart has given $2 billion cash and $260 million of in-kind contributions to hunger relief programs. Simon said supplying food banks is a noble action but it does get at the route of the hunger issue.

“I would like to see Wal-Mart work to alleviate the need for food banks they could start by ensuring their own store workers earn enough to shop for and purchase the food they want and need,” Simon added.

Wal-Mart’s answer to low wage arguments is that the majority of its hourly employees earn more than the state’s minimum wage, many of which will have the opportunity for manager promotions.

FOOD SHORTAGE
No one doubts the world is facing a food shortage by 2050 unless production capacity can double in that timeframe in order to feed 9 billion people around the globe.

“Food production is not keeping pace around the world, which means we have to innovate,” McMillon said.

He said the areas where Wal-Mart feels it can make the biggest contributions are in responsible sourcing of its products, working with suppliers on increasing yields while reducing water consumption and greenhouse gas emissions. All of which, McMillon said will be good for business and better for the environment.

“The good news is we have a track record of doing this. We have been meeting with farmers around the world to make this happen from Costa Rica to China and Zambia,” he said

Programs like “direct to farm” allow small producers to get into the Wal-Mart logistics system and to reduce transportation miles. It began in Costa Rica and has been scaled to other parts of the world.

“Our customers care for it (sustainability) and some of our suppliers need our help. We know something about efficient supply chains and we have become holistic merchants that look at the true cost of a product, which includes the water and land used in production,” McMillon said.

Simon said she would like to know if the savings created from more sustainable farming efforts go back to the small farmer or if are they passed on to the consumer or put into Wal-Mart’s sales margin.

FERTILIZER REDUCTION
Tim Richter, a Midwestern hog and corn farmer, took the stage in Bentonville on Monday touting the benefits of Triple Bottom Line. a commodity cooperative that has helped boost the returns on 7,000 farm acres with less fertilizer use. Richter has farms in Iowa and Missouri and he said optimizing fertiziler usage on his corn acreage has been a win for the farm productivity and provided a greener footprint for hogs and corn coming from his farms.

Wal-Mart said its food suppliers use corn and wheat from farms like Richter's in products that could wind up on Wal-Mart shelves. Reducing fertilizer usage on products sold in its stores is one of the main platforms Wal-Mart and the Environmental Defense Fund have recently partnered.

Richter said farmers can’t grow corn profitably without nitrogen based fertilizer, but by using technology-based tools like Adapt-N made available to him by Triple Bottom Line, he used the optimum amount on all his corn fields, which translated to $150 in additional profit per acre last year.

“The nitrogen I applied ended up in the crop which is where we want it, not in the air or water, so it increases profit while reducing greenhouse gases and water quality problems” he added.

Sinclair said the retailer has taken $3 billion out of the cost of grocery in the past three years because of responsible sourcing.

In 2010, Wal-Mart said it was going to double the amount of locally grown produce – produce for stores grown in the same state. The retailer reported it’s 17% ahead of goals this year. Wal-Mart said by next year 50% of its palm oil and beef from Brazil will be sourced by sustainable measures guarding against deforestation efforts.

LEANING ON PARTNERS
Wal-Mart does not apologize for leaning upon partners in its efforts of sustainability. Kathleen McLaughlin, president of sustainability at Wal-Mart, said it’s going to take everyone working together in some capacity to ensure the world doesn’t run out of fresh water and there is enough food for all in the coming decades.

At Monday’s meeting Wal-Mart recognized a partnership agreement with six large suppliers: General Mills, Kellogg, Pepsi, Monsanto, Cargill, and Coca Cola. Together this group pledged to reduce 8 million metric tons of greenhouse gases by employing more sustainable practices on 10 million acres farmed over the next three years.

Unilever also announced a pledge to have 100% of its soy-based products provided by sustainable farms by 2017. Mike Faherty of Unilever said the company plans to double productivity at half the costs.

Matt Carstens of United Suppliers Cooperatives said its members were committed to extend its reach to 10 million acres over the next three years, reducing 4.8 million metric tons of greenhouse gases in that time period.

Retail sustainability expert Stacy Mitchell has said Wal-Mart pivoted to the supplier emphasis in the last two years or so while other goals once stated where abandoned. Mitchell is a research analyst at the Institute for Local Self Reliance in Portland, Maine.

Mitchell said Wal-Mart has received much media attention for sustainability efforts when it’s their suppliers doing most of the heavy lifting. She said there is still much room for improvement in Wal-Mart’s sustainability goals but it may be easier and cheaper for the retailer to shift more focus on the supply chain for which they can take also credit.

Michelle Harvey, with the Environmental Defense Fund, said Wal-Mart has a big opportunity to leverage its scale further and expand upon its work to make the food healthier, provide clearer labels and better access in food deserts. She supports the work already done by Wal-Mart with its suppliers to reduce their carbon footprints.

FOOD DESERTS
Wal-Mart’s meeting also featured a store manager from Washington D.C., who spoke on behalf of the retailer’s efforts to put stores in food deserts.

“As part of our commitment to provide solutions to food deserts, we announced we would provide more than 1.3 million people living in more than 700 USDA designated food deserts with access to fresh, healthier food. We said we would open between 275 and 300 stores in areas serving food deserts by 2016,” Walmart noted in a 2011 news release.

Simon and other critics have said Wal-Mart’s efforts in food deserts are commendable but when they open stores and don’t pay livable wages the cycle of hunger is bound to continue.

Wal-Mart has also held true to its pledge to reduce salt and added sugar from certain products which bear the “Better For You” label on the front of the package.

“Grocery is a very personal category – it’s about what you feed your kids and how you take care of yourself.  It’s about your health and wellbeing. And it all comes down to trust. Customers have to trust us on food. When we focus on food, we are doing right by our customers, our communities, and our planet,” McMillon said.