'Green Wheat:' Wal-Mart may transform farming
As it continues to buy more and more wheat to support its in-house brand, Wal-Mart believes it can use its muscle to bring changes to the agricultural landscape by getting farmers to adopt more progressive techniques and labeling the flour they sell as a sustainable product.
In 2010, Wal-Mart's store brands had a 4.4 percent share of the $14.35 billion U.S. packaged and industrial bread market, up from a 3.7 percent market share in 2006, according to research firm Euromonitor International.
About 40 percent of U.S. wheat is used for food. Wal-Mart declined to specify how much wheat it buys directly or through its suppliers.
Tim Robinson, the company's senior buyer of baking commodities, joined Kaplan on the trip.
He said that, while it is still in the fact-finding phase of its wheat work, Wal-Mart is likely to promote "precision farming" which uses satellite-guided planting to improve yields and no-till methods which proponents say reduce soil erosion and maintain land quality.
Roughly 75 percent of wheat farmers plow, or till, their fields in Arkansas, says Kelley. Abandoning that practice could require them to rotate crops regularly and take greater care in planting to avoid stunting plant growth.
"Wheat is one of the later adopters to no-till or zero-till," said Stewart Ramsey, a senior economist at analytics firm IHS who works with Field to Market.
If anyone can drive efficiency into the generations-old practices of U.S. farmers, it's Wal-Mart.
"Having world class logistics and distribution is the core of their business and what they've increasingly been doing is looking to apply those capabilities across the broader supply chain, going further upstream into production and processing," says Stewart Samuel, a senior analyst at global food and research firm IGD.
The company has embarked on an effort to eliminate 20 million tonnes of greenhouse gas emissions from its global supply chain by the end of 2015, the equivalent of taking nearly 4 million cars off the road for a year. It declined to say how much of the company's total emissions that represented.
Last year, the company installed more efficient lighting in its stores in the United States and Mexico and also delivered more goods even as its truck fleet drove fewer miles.
May's crop tour has already yielded new ideas.
As one farmer told Robinson and Kaplan about how he used manure from nearby cattle feedlots to fertilize his fields, they wondered about the feasibility of hauling manure from U.S. poultry producers -- predominately in the mid-South -- to farmers elsewhere in that region or to the U.S. Corn Belt.
"We're an expert in transportation. What if we could find empty trucks going from one place to another that will help farmers get something they need?" Robinson said.
Tanner Ehmke, who grows wheat in western Kansas and met with Wal-Mart during the tour, said: "From the farmer's perspective that is a great idea. Manure is a fantastic fertilizer."
"The question is whether it would pencil out, costwise," Tanner said.
He's not the only one asking that question.
"Hopefully, sustainable flour becomes an everyday business practice," said Robinson as the tour paused in Wichita, Kansas. "We can't do this if it costs more."