Does Walmart Have a Vendetta Against Small Farmers?

Walmart local produceIn 2010, Walmart (WMT) vowed to double its sales of locally grown produce by 2015. It was an attempt to both increase the amount of local foods in stores (as part of its environmental and sustainability initiatives) and invigorate local economies by supporting small farmers.

Walmart has already blasted through its goal of selling 9 percent local produce -- 11 percent of the produce in stores now comes from farms near them. Yet despite Walmart's boast that this shift "saved customers over $1 billion on fresh fruits and vegetables," small farmers haven't benefited at all, according to a recent NPR report.

Which raising an interesting question: Is that Walmart's fault, or is it the farmers choosing this path?

The Walmart Way

The problem from Walmart's perspective is that, as a low-price, high-volume business, it needs three things from its produce suppliers: cheap fruits and vegetables (to remain competitive), consistent products (so customers' expectations are always met), and high volume (to maintain quick turnover of products it sells).

But these things are difficult -- if not impossible -- for small farmers to achieve. They have to charge higher prices to cover the costs of their operations (because they don't make up for it in large volume); they're limited to seasonal produce and are greatly affected by the weather; and their volume is much smaller than industrialized farming operations.

So, in reality, a prime reason Walmart may not be sourcing more from small farms is because of the logistical hurdles it would present.

What Farmers Want

One the other side of the equation, many small farmers are adamantly opposed to Walmart and refuse to do business with the world's largest retailer, regardless of any possible advances on Walmart's part.

Alternative farming evangelist Joel Salatin bluntly declared in the 2008 documentary "Food," "I have no desire to be at Walmart." As he explained, because of Walmart's business model he would be forced to view his customers, his products, and his business completely differently to fuel the growth Walmart would demand.

For him, maintaining the integrity of his small enterprise and the values he espouses is more important than whatever increase having Walmart as a client could bring to his business. Anecdotal evidence points to similar opinions holding true among many small farmers.

Harvesting the Blame

I reached out via email to Ron McCormick, senior director of Local and Sustainable Sourcing at Walmart, to hear straight from the source what is going on. Unfortunately, his office hasn't yet responded to me. So I can only speculate.

But, as with most things business, it's likely a combination of both factions.

Walmart's size forces it to seek out only those partners who can achieve the high volume it needs. Small farmers prefer the direct in-person relationships they develop and nurture with their customers, which would be lost if Walmart were their middleman.

In the end, the status quo is probably best for both sides: Walmart achieves its business agenda (though admittedly, not by helping small farmers), while small farmers maintain the integrity and relationships they hold most important.



This article was written by Motley Fool analyst Adam J. Wiederman. Click here for a completely free copy of The Motley Fool's research report on two "cash kings" sticking it to Walmart.

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Minor Von

just before I saw the paycheck 4 $8381, I have faith that my mom in-law was like actualie taking home money part-time at their laptop.. there sisters roommate has been doing this 4 only about 16 months and just cleard the debts on their cottage and bourt themselves a volvo. go to, ......... BIT40.ℂOℳ

February 27 2013 at 7:05 PM Report abuse rate up rate down Reply
michael

Walmart by its nature is destructive to the well being of our Country. No wonder the small farmer can't do business with them. Many of their workers collect foodstamps while employeed there. They offer little if any insurance forcing another cost on to taxpayers. If your spose has insurance you can not apply for it costing its competitors to pay for it. It is greedy and corrupt.

February 27 2013 at 6:43 PM Report abuse rate up rate down Reply
michael

My dad recently gave me his shovel as he moved into a Condo. It is the same shovel I used as a teen. I went through about 15-20 shovels before that or one about every 1 or 2 years. Saved a few bucks on each at walmart though.

February 27 2013 at 6:36 PM Report abuse rate up rate down Reply
Dale Mulkey

walmart has a vendeta against everyone

February 27 2013 at 5:20 PM Report abuse rate up rate down Reply
1 reply to Dale Mulkey's comment
fitecf

....actually everyone has a vendetta against WalMart.

February 27 2013 at 6:40 PM Report abuse rate up rate down Reply
rankincap

Walmart is a value venue, not a support the world venue. I have a small business and I cannot nor do not want WALMART BUSINESS, CAN NOT AFFORD TO FINANCE THE GROWTH NEEDED TO SUPPLY THEIR NEEDS. wALMART IS NOT A VILLIAN, THEY ARE TRYING TO PROVIDE GOODS AND SERVICES TO A CLIENTEL AT A PRICE POINT TO SATISFY THEIR NEEDS.... nor can small farmers do busines with such a large business,,, Walmart only nets about 4% of sales so there is not a lot of room for error.

February 27 2013 at 4:41 PM Report abuse -1 rate up rate down Reply
David

TESTING

February 27 2013 at 4:38 PM Report abuse rate up rate down Reply
David

TESTING

February 27 2013 at 4:38 PM Report abuse rate up rate down Reply
David

TESTING

February 27 2013 at 4:38 PM Report abuse rate up rate down Reply
David

test

February 27 2013 at 4:38 PM Report abuse rate up rate down Reply
meyerjrj

Small farmers and Wal-Mart are not a good match as business partners for the reasons mentioned in the article. I deal with the farmers markets and road side stands as much as possible for quality and to keep some of my money local. There are a lot of local farmers that sell direct to the customer, give them a chance!

February 27 2013 at 4:37 PM Report abuse rate up rate down Reply