Last week, WalMart announced an ambitious plan to dramatically increase the amount of "local" produce it sources and sells in the US and around the World.
The program is wrapped under a "sustainable agriculture" banner, and WalMart CEO Mike Duke said the goal by 2015 is to double the amount spent with local growers in the US from 9% to 18% and to spend some $1 billion with local farmers in emerging markets by 2015.
The goals are even more far reaching in some regions. In Canada, for instance, WalMart expects to buy 30% of its produce locally by the end of 2013, and, when local produce is available, increase that to 100 percent.
Interestingly, WalMart said the newness of its food business in Canada was the key factor in setting a more aggressive target in the country for local produce, implying ingrained procurement and other supply chain processes in the US would be harder to adjust. Targets for the new program will be set individually by local country managers.
WalMart says it defines "local produce" as commodities that are grown and sold in the same state, with whatever translations of that definition are needed for different countries.
All told, in the US and across the world, WalMart said it will invest more than $1 billion to improve its supply chain for perishable food. The investments in fresh food logistics capabilities would allow product from more areas of country to get to WalMart stores, or get them there faster so that the product's shelf life is longer, reducing spoilage.
Those perishable supply investments could have a huge impact on the agricultural market, as the trend for years has been towards greater sourcing among large grocers from giant farms in Florida and California for most of their produce.
“It’s encouraging that Wal-Mart understands that the path forward in agriculture isn’t through making the big bigger, it’s really through encouraging the small and medium-sized farms,” Margaret Mellon, director of the food and environment program at the Union of Concerned Scientists, told the New York Times after the announcement.
 As it has already been doing with general merchandise and package foods products, WalMart will begin asking its farmer vendors questions about water, fertilizer and chemical use, with plans to use that information in a sustainability index for each supplier.
WalMart also said it plans to invest in training and infrastructure for small and medium-size farmers, particularly in emerging markets, and begin to measure how efficiently large suppliers grow and get their produce into stores. Also in emerging markets, WalMart will train farmers on how to choose what crops have the best market potential and on proper application of water and pesticides.
The announcement had other components, such as a commitment to only use palm oil from sustainable sources.
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