Few corporations evoke envy or ire as much as Walmart. In my opinion, one area where Walmart is making significant positive impact is in agriculture. In June 2010, Walmart announced a strong commitment to sustainable agriculture, in support of its broader leadership on a variety of environmental issues (http://bit.ly/18cQCtz).
Walmart’s sustainable agriculture initiative has three focal components:
(1) Support farmers and their communities
(2) Produce more food with fewer resources and less waste
(3) Sustainably source key agriculture products
Walmart can rightly claim some success from its sustainable agriculture program. A few highlights: monitoring of the beef supply chain in Brazil to avoid deforestation for grazing or soybean cultivation; achieving third-party sustainability certification of 75% of in-store seafood.
But not all initiatives have gone perfectly. For example, an effort to double the amount of locally grown produce in Walmart stores (from 4% to 9%) was recently achieved, a few years ahead of schedule. However, the benefits to small- and medium-size farmers have been questioned (http://n.pr/Y5xfxT); some farmers claim that Walmart is squeezing them on prices (shocking).
Recently, Walmart announced what I think is its most ambitious and important agriculture initiative to date: fertilizer optimization for commodity agriculture grains (corn, soy, wheat) used in third party products on Walmart shelves (e.g., Kellogg cereal). From the Walmart website:
“Walmart depends on the American farmer to efficiently produce the key ingredients in many of our products and we want to do our part to help ensure this productivity continues. You cannot grow food without fertilizer and it is a crucial component of our food supply. However, over or improper use can negatively impact the environment and the grower’s pocketbook, making it a potentially costly element in food production. The supply chain needs food companies (our direct suppliers) to signal unified interest, support, and demand for programs, tools, and information that can help producers continuously improve and optimize their fertilizer use, yield, and profitability. That’s why we have directly engaged a dozen food categories and even more suppliers in a consistent, coordinated fashion to connect our suppliers to their farmer-partners and improve cost effectiveness, as well as helping them meet their own sustainability goals in ways they cannot do alone.”
This initiative reaches as deep as it sounds: Walmart is asking its suppliers to go to its suppliers to go to its suppliers to go back to the field and initiative fertilizer optimization protocols. Walmart has created a framework to achieve the desired results (http://bit.ly/1bDXmVR), using the very cool “Fieldprint Calculator” tools developed by the non-profit, Field to Market (http://bit.ly/1ahQyxs).
Why target fertilizers? That’s a topic for another post, but in short: fertilizers represent a significant portion of total agriculture production costs and fertilizer run-off has long been responsible for water quality issues. In just the past few years, we have seen fertilizer run-off contribute to epic algal blooms that in turn wreck havoc on marine ecosystems. For some startling imagery and links to more info, check out this National Geographic article: http://bit.ly/14c6ZKQ .
This Walmart fertilizer initiative is not the first time that it has pushed down on the agricultural supply chain to drive change. In 2011 Walmart announced that by 2015 it would use only RSPO-certified sustainable palm oil in its private label products (http://bit.ly/1bg4LJu). This may sound straightforward, but it’s quite complicated. Palm oil is present in 50% of Walmart’s products. And yet, Walmart only uses 84,000 tonnes of palm oil (25M gallons), or only half a percent of global palm oil consumption — not exactly a massive amount – thereby limiting Walmart’s ability to influence in palm oil industry. On top of all of this, it’s not like consumers are clamoring for sustainable palm oil in their Great Value detergent.
I view the nitrogen initiative as even bolder, given that Walmart is asking its suppliers (e.g., Kellogg) to increase nitrogen use efficiency for their respective products (as opposed to just for Walmart’s own products, like in the palm oil initiative). Walmart estimates that its suppliers can positively impact 10M acres of corn soy and wheat by 2020 (today in the US there are about 240M acres combined for all three).
Walmart should be commended for its efforts in agriculture sustainability. They are bringing about real, difficult change. They are not just looking to buy credits for sustainable palm oil (http://bit.ly/ZCeqR), they are actual buying segregated “clean” palm oil. They are not just buying organic produce, they are demanding reductions in fertilizer use for regular food products.
One area where I would like to see more Walmart engagement: biofuels, which is the intersection of agriculture and energy. Walmart has already made an ambitious commitment to power its buildings with 100% renewable energy by 2020 (http://bit.ly/10xpj04). Walmart operates one of the largest trucking fleets in the world and is consequently a large consumer of diesel fuel. If Walmart combines its expertise in in sustainable agriculture with its commitment to clean energy, the impact could be huge. I can think of a company that would like to have a role in that initiative.
Naveen is the CEO of TerViva. He can be found frequenting the snack food aisle of his local Walmart.