Eyes on the Big Box Store Prize

Farming in El Salvador. Not the number one way to get rich quick…in fact, it’s likely well below number one hundred. Nevertheless, there are farmers out there, working tirelessly to feed us. There are many more farmers working tirelessly just to feed their families. And there are a few farmers hoping to “make it big” in the farming world. By and large, here, that means either exporting your crops – easy for coffee, difficult for many other commodities – or selling to Walmart. This multinational corporation has deep roots in Central America. They have many stores, both under the name “Walmart Supercenter” and several subsidiaries including Club Co, La Despensa de Don Juan, Despensa Familiar, Maxi Despensa, Paiz, Más X Menos, Maxi Pali, Palí, and La Unión. El Salvador has 79 Walmart stores; the company is the largest retail corporation in the world. Add to that the many suppliers that Walmart contracts for goods to be sold in the U.S. and you have a fairly large influence on markets in Central America. Their greatest competitors in the region are PriceSmart for goods and SuperSelectos for groceries.

Greenhouse of sweet peppers, near Jutiapa, El Salvador. This farmer is looking to the “Walmart prize.”

In 2010 Walmart initiated a sustainable agriculture plan (which I do have trouble even writing with a straight face). One of the main components of the initiative is a direct buying scheme that links farmers directly with Walmart stores in an effort to both sell locally produced goods, but also for Walmart to offer assistance in what it considers good farming practices. (I’ll mention here that the Walmart publications fail to actually define what it considers sustainable agriculture, or that they would encourage integrated pest management or non-synthetic fertilizers, only that they would “share best practices.”) Nevertheless, to this end, Walmart pledged that by the end of 2015, it would be sourcing $1 billion from 1 million small and medium farmers. With $419 billion in annual sales, this certainly does seem like a drop in the bucket, but it’s Walmart Central America that’s leading the way in these farm direct plans. And farmers in the region know it. If they can expand, they will, and they aren’t looking to sell more at the local markets, where sales are inconsistent and prices are fickle. They see Walmart as a stable buyer, one to sell to now, but also one that could potentially open doors to the export market.

The farmer hopes to catch a Walmart contract and build two more greenhouses, the size of the one pictured. He intends to focus solely on sweet peppers, and eschews selling to the local market. “Too much trouble,” he says.

Some of my concerns include the specifics of what Walmart’s “specialized group of agronomical advisers” are actually advising the generally poor and often illiterate farmers in the region. Perhaps that seems like I am being a bit overly stereotypical, but that is the group of farmers Walmart is proudly announcing that it is helping. In reality, I think it’s more mixed. I think many farmers that sell to Walmart are not the farmers at all, but the richer landowners, and so are profiting from the sales while paying their employees wages that rarely top $200 a month. Another possibility is that the farmers are contracted and Walmart “helps” set everything up, but keeps an exclusive contract. That means everything grown goes directly to Walmart, none to local markets. Next we’ll be seeing “rural food deserts.” An additional potential drawback is that Walmart expanding its reaches will actually drive local food prices down, in part because in keeping with their pledge of “everyday low prices,” they have been known to force farmers to lower their prices or lose their contracts. Farmers, having done everything the Walmart agro-advisers said, are so far invested in the relationship that losing the contract would be devastating. Lowering their prices is only crippling, but allows them to survive.

However, farmers in El Salvador have their eyes on Walmart, hoping to cash in, at least for a short while. The party certainly won’t last forever.

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