Wheat Farming WalmartBy Michael Hirtzer

Walmart has long used its commercial might to forge a global supply chain with ruthless efficiency. Now it has a new target: U.S. wheat fields.

As part of efforts to reduce its carbon footprint and burnish its image as an environmentally responsible company, the huge retailer is sending senior employees into the fields for the first time ever, looking for ways to help farmers reduce their use of carbon-intensive fertilizers or improve logistics.

"We don't have a lot of visibility in the supply chain, so we started in the field," says Robert Kaplan, a sustainability manager at the Bentonville, Ark.-based firm. "I hadn't seen a wheat field before and I wanted to find out how we go from a green crop in the fields to flour on our shelves."

This May, Kaplan and a colleague were the first Walmart (WMT) employees ever to attend the annual crop tour across the No. 1 winter wheat state Kansas, a rite of passage for traders, analysts, academics and buyers for the past 55 years.

The aim is simple: use Walmart's commercial muscle to get its Great Value-branded flour and wheat products from field to shelf more efficiently, using less carbon.

In the process, however, Walmart may end up initiating transformative changes in the way U.S. farmers grow wheat, lowering costs and improving yields for a crop that has failed to keep pace with the dramatic improvements in sustainability of other commodities such as corn and cotton.

There are some relatively easy wins: convincing more farmers to abandon the practice of plowing their fields after each harvest, and using satellite imagery to optimize fertilizer use.

But the challenge is substantial. Wheat is already one of the least-intensive crops in terms of nitrogen fertilizer, using half as much as corn to produce and acre of grain.

"Wheat is relatively low input. There are not a lot of corners that can be cut," says Jason Kelley, a wheat and corn extension agronomist at the University of Arkansas.

Lagging Efficiency

In the last three decades, better farming practices, such as reducing tillage, have resulted in a 15% drop in greenhouse gas emissions in each bushel of wheat grown in the United States, according to a soon-to-be-released study by Field to Market, an alliance of national farm groups and more than 40 companies including Cargill and Kellogg's (K) (but not Walmart) that are seeking to enhance sustainability.

But those gains pale in comparison to other major crops. The amount of water needed to irrigate cotton fields has dropped by 30%, according to the study; soil erosion in corn farming has declined by 67% since 1980.

As it continues to buy more and more wheat to support its in-house brand, Walmart believes it can use its muscle to bring changes to the agricultural landscape by getting farmers to adopt more progressive techniques and labeling the flour they sell as a sustainable product.

In 2010, Walmart's store brands had a 4.4% share of the $14.35 billion U.S. packaged and industrial bread market, up from a 3.7% market share in 2006, according to research firm Euromonitor International.

About 40% of U.S. wheat is used for food. Walmart declined to specify how much wheat it buys directly or through its suppliers.

Tim Robinson, the company's senior buyer of baking commodities, joined Kaplan on the trip.

He said that, while it is still in the fact-finding phase of its wheat work, Walmart is likely to promote "precision farming" which uses satellite-guided planting to improve yields and no-till methods which proponents say reduce soil erosion and maintain land quality.

Roughly 75% of wheat farmers in Arkansas plow, or till, their fields, says Kelley. Abandoning that practice could require them to rotate crops regularly and take greater care in planting to avoid stunting plant growth.

"Wheat is one of the later adopters to no-till or zero-till," said Stewart Ramsey, a senior economist at analytics firm IHS who works with Field to Market.


New Inefficiencies

If anyone can drive efficiency into the generations-old practices of U.S. farmers, it's Walmart.

"Having world class logistics and distribution is the core of their business and what they've increasingly been doing is looking to apply those capabilities across the broader supply chain, going further upstream into production and processing," says Stewart Samuel, a senior analyst at global food and research firm IGD.

The company has embarked on an effort to eliminate 20 million tons of greenhouse gas emissions from its global supply chain by the end of 2015, the equivalent of taking nearly 4 million cars off the road for a year. It declined to say how much of the company's total emissions that represented.

Last year, the company installed more efficient lighting in its stores in the United States and Mexico and also delivered more goods even as its truck fleet drove fewer miles.

Ideas Sprout

May's crop tour has already yielded new ideas.

As one farmer told Robinson and Kaplan about how he used manure from nearby cattle feedlots to fertilize his fields, they wondered about the feasibility of hauling manure from U.S. poultry producers -- predominately in the mid-South -- to farmers elsewhere in that region or to the Corn Belt.

"We're an expert in transportation. What if we could find empty trucks going from one place to another that will help farmers get something they need?" Robinson said.

Tanner Ehmke, who grows wheat in western Kansas and met with Walmart during the tour, said: "From the farmer's perspective that is a great idea. Manure is a fantastic fertilizer."

"The question is whether it would pencil out, costwise," Tanner said.

He's not the only one asking that question.

"Hopefully, sustainable flour becomes an everyday business practice," said Robinson as the tour paused in Wichita, Kan. "We can't do this if it costs more."



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39 Comments

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Rickey

People will shop at walmarts just to save a couple bucks
But not me they Suck!!

June 21 2012 at 5:30 PM Report abuse -1 rate up rate down Reply
wstevebro

Finally WalMart is trying to respond to the negative image it has with the "Green" movement. If they would only start giving their employees health coverage and other benefits maybe I could take this seriously.

June 21 2012 at 5:25 PM Report abuse -1 rate up rate down Reply
qtrback12

Walmart is a joke......forged a global supply chain with ruthless efficiency...the word "ruthless" if the general consumer only knew......

June 21 2012 at 5:19 PM Report abuse -1 rate up rate down Reply
1 reply to qtrback12's comment
qtrback12

Key word being "ruthless"....sorry didn't get to proof read...

June 21 2012 at 5:20 PM Report abuse -1 rate up rate down Reply
giver7700

You dont get any more anti-American than the Walmart organization. They have already put millions out of business all over the world. There are no borders to these people... and no boundaries. Everything is about money. America needs to stop this land grab by the government and by the corporations. That means YOU!. Write/call your congressman.

June 21 2012 at 5:19 PM Report abuse rate up rate down Reply
MERLIN

walmart has destroyed the rest of business in this country now its the farmers turn. guess who will pay for this move

June 21 2012 at 5:14 PM Report abuse -1 rate up rate down Reply
Billie Corvino

Walmart sucks, Nuf said.

June 21 2012 at 4:57 PM Report abuse +1 rate up rate down Reply
cheyan56

Hmmm, I thought that plowing the fields after a harvest helped the soil! Do they want to ruin the soil? Then we would have another dust bowl era and soil would be ruined and not be able to plant anything...That is one reason there is crop rotation etc. Come on..there are just some things WalMart needs to keep their noses out of and by the way...how much would they pay the farmer?? The farmers don't make all that much money from crops...no matter what they grow...

June 21 2012 at 4:56 PM Report abuse rate up rate down Reply
1 reply to cheyan56's comment
dondothom

Sorry, but you are out of date. I am 83 and watched the plow go out of use. I know, I know, I said it couldn't work, too. But it does! Tilth improves, erosion is reduced, and costs go down. Farming is no longer a way to live. It is a business. When one does not know anything about a subject they should not attempt to talk about it. I spent my working years in agriculture and still own my land. It has been good to me and It has been rented to the same family for 26 years

August 01 2012 at 10:50 AM Report abuse rate up rate down Reply
shirllinde

What they are considering would save the farmer money, save the consumer money and reduce the fertilizer runoff that is ruining our rivers and lakes. Even if you don't agree with all their policies give them credit for this one --it is encouraging the right approach. They are NOT talkng about genetically modifying anything just using more green practices.

June 21 2012 at 4:48 PM Report abuse -1 rate up rate down Reply
1 reply to shirllinde's comment
qtrback12

and Walmart needs to be involved why? I give them credit for one thing, creating the website, people of walmart, that's it!

June 21 2012 at 5:22 PM Report abuse rate up rate down Reply
giver7700

Walmart is just trying to take over America's farms. Plain and simple. This is just a first step. The next thing you know we will all be working for Walmart. I quit buying there a long time agao. Talk about GREED! They will never have enough!

June 21 2012 at 4:41 PM Report abuse +4 rate up rate down Reply
Silverfish

It sounds like they might have some good ideas on this but they are totally overstepping their bounds here. Walmart should not be in the business of telling their suppliers/manufacturers of how to produce their product. A similar analogy would be if a teacher or school administrator were to go into the home of a student and tell their parents how to raise their own kid. Unless they actually own the means of production which would probably make it a monopoly to begin with.

June 21 2012 at 4:35 PM Report abuse +2 rate up rate down Reply