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Local Farmers and Wal-Mart

Recently, Michele at Garden Rant posted a blog commenting on a Wal-Mart press release, announcing a decision to source food locally. The post is titled ” Everyday Low Prices” and is dated October 15, 2010. Some members of the public have never had anything nice to say about Wal-Mart, so it was not surprising to see how many readers of Michele’s blog greeted the press release with cynicism and posted comments strongly arguing against it. Critical commentors focused on the unwelcome consequences this program might have on independent farmers as well as the negative effect that this retailer has had on small town America.

Regardless of one’s opinion, it is important to recognize that Wal-Mart reinvented retailing for the 20th century world. Consequently, many potential suppliers, who are powerful or flexible enough to take on Wal-Mart, dream of doing business with this organization while loyal customers flow to its doors as endlessly as a river. The significance of the seamless, continuous traffic that makes the company successful is lost on some critics. What needs to be emphasized is that consumers, in a very specific socio-economic level, with precious and often limited disposable income, combined with little free time, can find almost everything needed in this one-stop shopping experience.

Has this marketing phenomenon forced smaller retailers to close? Yes. Has the retailer placed suffocating pressure on suppliers to hold down costs? Yes. Has it homogenized and shrunk consumer choices in the name of efficiency? Yes. Are the stores blight onto our landscapes? Yes. Does this company treat some employees in a heartless fashion? Yes. However, is the public happy to shop there? Yes. We never hear of customers complaining about Wal-Mart; we only read negative opinions generated by social critics. To whom do we think that Wal-Mart listens? Even when scorn is justified, it is the consumer dollar spent that has greater impact on corporate decisions.

I am not Wal-Mart’s designated customer. I shop there only on rare occasions when it is practical to do so. Neither am I a shareholder of that company; I have no vested interest in any side of the dialogue. What I care about is the accuracy of knowledge. In a conversation where controversy is latent,  it is important for participants to see the larger picture; a thorough knowledge of an issue makes it easier to digest and more effective to argue. In this case, it is helpful to understand that Wal-Mart is a formidable international economic force, a fact that is sometimes beyond the comprehension of both its customers and its critics. It has redefined how retail business is done on a large scale and its influence is felt around the globe. Most importantly, it makes some suppliers, its shareholders, and its customers very happy. One should never underestimate behemoth corporations. They recognize better than anyone else that the bigger they are, the harder they might fall. Therefore, they are constantly strategizing to remain successful.

While Wal-Mart has an obligation to make consumers feel as if they are getting the best value for their money, there is also a fundamental need to maintain a positive public image. In an era when so many inhabitants of the world are anxious about the health of our planet, it is good public relations to enhance a press release with such words as “local farmers” and “sustainability. The recent communiqué, about buying food locally, is couched in language that makes it appear as if the retailer is concerned about the earth and local farmers. It would be unwise to draw that conclusion.

Buying produce from local growers has nothing to do with supporting family farms or the sustainability of the land. It has everything to do with the fact that shipping costs are lower when food is sourced locally. Lower shipping costs mean increased profitability. Wal-Mart, like all other businesses, is mandated to make money for its shareholders. And making money is not a crime, not a sin, and not immoral. It is appropriate commercial behavior.

It is also widely held that local delivery, compared to delivery from farms across the continent, requires less fuel and consequently reduces pollution. No one should be deceived into thinking that corporations are in business to play protector of the environment. Benefits of energy conservation and reduced pollution have no designated columns on fiscal balance sheets.

If it is successful in sourcing food locally, Wal-Mart will be able to bring down purchasing costs. That is expected to improve its competitive edge and profitability; something that only shareholders will notice and appreciate. The consumer might not feel a thing. And yet, that scenario can only work if food can be grown all year. Unfortunately, that is not climatically realistic in half of North America unless farmers invest in year-round greenhouses. Investing, with the hope of doing business with a firm as large as Wal-Mart, is very risky, as this retailer needs large quantities of everything it purchases and its terms of doing business are severe. That is a game only the big boys can play. Small, local farmers may get burned.

Some of the readers of Michele’s blog are probably correct in assuming that local farmers will not see real lasting benefits from having their food sold at Wal-Mart. If they are wise, growers will refuse to participate in this venture unless their production is huge and their facilities, highly automated. More importantly, local farmers must be able to endure having their prices squeezed because all of the “middle men”, who are essential in bringing food from farm to store shelf, will also need a slice of the proverbial pie.