WALMART has determined that environmental sustainability is an essential ingredient in doing business responsibly and successfully.
The retailer has set the bar high with three goals: (1) be supplied 100% by renewable energy, (2) create zero waste and (3) sell products that sustain people and the environment.
As the largest food retailer in the world, decisions Walmart makes are very important to farmers. Now, Walmart has joined forces with other members of the supply chain to help open up the dialog on making environmental strides.
Walmart knows that customers like the idea of environmentally friendly products, even if they are unlikely to pay a premium for those products, Walmart senior buyer for baking commodities Tim Robinson said. Generation Y and Millennials tend to be more environmentally sensitive consumers because sustainability matters a lot to them.
Still, Robinson, who buys millions of pounds of commodities each year for Walmart's products, knows that costs can't be added into the supply chain. Instead, his goal is to help farmers maintain or reduce costs as resources become available to make better business decisions on inputs.
"We don't want to make the supply chain more complex and come in and tell farmers what to do," Robinson said. "We don't want to stick our nose where it doesn't belong. We're still in the seek-to-understand mode on better understanding what supply chains have done and what we can do to measure the environmental successes going on today."
Field to Market
The world is faced with a daunting truth that populations are soaring and natural resources, including soil and water, are limited.
Field to Market, a coalition of the entire food supply chain ranging from growers to grain processors, conservation organizations and retailers like Walmart, has provided some middle ground to facilitate conversations on measuring sustainability. The coalition helps farmers make more informed decisions on the best ways to reduce their environmental footprint. It also helps those further down the supply chain better understand what grain farmers need.
Unlike the pushes to change production practices like sow housing or egg production, on the grain side, there is a recognition that a one-size-fits-all approach doesn't work for fungible commodities.
Bob Young, economist at the American Farm Bureau Federation and a member of Field to Market, explained that six years ago, there was a great deal of worry that retailers would come in and dictate how farmers should produce, without any consideration of costs. He said a real success of the Field to Market coalition has been bringing farmers to the table to share their story.
Fred Luckey, Field to Market chairman, added that growers are businesspeople and must be able to make economic sense of their investments and practice changes, as do all members of the food system supply chain. The challenge is that end users are either unwilling or unable to pay premiums for those changes or have the leverage to force changes.
"Therefore, the challenge is to find 'win-win' solutions that address on-farm sustainability challenges while still allowing growers to make returns they must have to stay in business," which is the main goal of Field to Market, Luckey explained.
Walmart recently joined the Field to Market discussion because it partners with others in the supply chain to identify the right tools and best practices to help farmers improve their income as well as reduce their environmental footprint.
Rob Kaplan, senior manager of sustainability at Walmart, recognizes that the greatest greenhouse gas contributor in the supply chain is fertilizer, so if farmers can find ways to reduce inputs, it will, in turn, reduce the footprint of food production. Through the Walmart Foundation, money and grants are being awarded to improve such sustainability initiatives.
Walmart also wants to steer clear of certification programs. The goal is to put the industry on a path that keeps striving for improvement. Kaplan said Walmart's plan is less about setting mandates and more about developing a strategy together throughout the value chain that accelerates progress.
Field to Market said over the last 20 years, the six major crops demonstrated progress in average trends for resource use in five key environmental indicators: land use, soil erosion, irrigation water applied, energy use and greenhouse gas emissions. Improvements in efficiency were driven, at least in part, by improvements in yield for all crops.
Due in part to overall increases in production for five of the six crops (excluding wheat) and increases in total land use for four of the six crops (excluding potatoes and wheat), total resource use increased for many crops on many indicators.
Robinson said Walmart is very interested in "doing the right thing" and not necessarily making promises on its food packaging regarding a certain metric. Within the last few months, Walmart has even gone on record stating that it does not support genetically modified product labeling because of the increased costs it will put on consumers.
Walmart's goal is to source supplies more sustainably but not limit itself. For example, as long as there aren't huge cost implications, Robinson said Walmart can almost immediately begin sourcing more sustainably grown flour, but it wouldn't want to separate that flour because doing so would add costs.
He said if it's possible to produce 20% of Walmart's Great Value brand flour more sustainably and more farmers jump on the bandwagon, in the following years, that number will rise.
"It may become the norm over 5-10 years. Our hope is to incentivize producers to optimize the usage of inputs. This saves them money where they're going to be at the same costs, (but) with better yields or making more money," Robinson said.
He envisions setting up more long-term commitments with suppliers or elevators. A long-term commitment can help encourage producers to take more environmentally conscious steps while also maintaining a relationship in bad years, such as the severe drought last year.
In addition, food processors have instituted programs to improve the milling quality of the grain they purchase, although the programs are not designed to reward farmers for environmental successes. For example, Bunge gives producers premiums for identified hybrids that have been found to perform well at the mill.
Consumers increasingly want to know more about food products. Although Bunge does not offer traceability, the work it is doing, along with Walmart and others through Field to Market, starts the dialogue about what may be possible in the future.