Can Walmart really make a positive difference when it comes to the U.S. food system? That is the essential question a recently released Food & Water Watch report answers. Titled Why Walmart Can’t Fix the Food System, the report looks at Walmart’s business model, and whether it can make an impact, for the better, on our food system. Walmart’s business model is the problem, the report states, “which means the company is not going to be a meaningful part of the solution to problems in the food supply.”
Walmart is a monolith, a giant among retailers. The report lays out some mind-blowing facts about Walmart, including that it is the biggest company in the U.S. Walmart is the world’s largest private employer with 2.1 million employees, 1.4 million of them in the U.S.
Walmart has almost 4,000 (3,804) U.S. stores, and more than 4,500 (4,557) stores internationally in 14 countries. In 2010, Walmart’s sales reached $419 billion, and the company makes $1.87 million in profit every hour. That’s a lot of cash.
Walmart is, in addition, the country’s largest food retailer, and the largest buyer of agricultural products in the U.S. The company controls more than 50 percent of the grocery market in 29 markets across the U.S. Walmart is a major player in the U.S. food market, whether I like it or not. In full disclosure, I don’t like Walmart for several reasons, one of them being that I believe it chokes out competition from local stores by undercutting prices.
The following quote from the report shows why Food & Water Watch came to the conclusion, inherent in the title, that Walmart’s business model can’t fix our food system:
“Walmart’s model is based on practices that drive consolidation; take money away from farmers, workers, and processors; and drive agriculture to get more industrialized. Walmart’s model is part of the problem, which means the company is not going to be a meaningful part of the solution to shortcomings in the modern-day food supply. Instead of succumbing to Walmart’s public relations campaign and pressure to be allowed in new urban areas, local governments should look for other solutions to increase communities’ access to healthy food.”
As a retail monolith, Walmart could theoretically make a positive impact on the food system by influencing suppliers. However, that will never happen because, as the report points out, Walmart pressures suppliers to cut costs. Contracts with Walmart “are non-negotiable as a rule.” Suppliers have to accept Walmart’s terms in order to do business with the company.
Unfortunately, Walmart’s business model influences other grocery store chains which have to “emulate the company’s practices” so they can compete. That means getting bigger, consolidating their operations, and “putting price pressure on their suppliers and workers.” Ah Walmart, the gift that keeps on giving.
What the government and consumers can do about Walmart
The report calls on federal government to take steps to make it “easier for communities.” Those steps include:
- Investigate the impact of Walmart’s monopoly power in the food chain and in local retail markets, including anticompetitive practices that result from Walmart’s disproportionate market share.
- Create food and farm policy that re-establishes regional food systems that will provide healthy, affordable food to all communities.
There is something we can do as consumers: choose not to shop at Walmart. It may be hard for those of us in rural areas where the choices are few for stores in general, but particularly when it comes to groceries. However, it’s better to drive a few miles further and shop at a company that practices a better business model. With spring coming, which means where I live that a bounty of fruit and vegetable varieties will be available, let’s try to buy local produce as much and as often as we can. Are you game?
Photo credit: Flickr user, matteson.norman