by Tom Philpott.
years into the Obama administration, most of the energy around
food-policy reform resides in the East Wing, in the form of the first lady’s Let’s Move! campaign. So far, Let’s Move has been about Michelle
Obama pursuing what I have called a “soft power” campaign—that is, using her stature to nudge private companies to reform their ways in the absence of real policy change.
So far, the centerpiece of Let’s Move! has been a non-binding deal the first lady and her staff worked out with Walmart in January, in
which the retail giant vowed to push down the prices of the fruits and
vegetables it sells as well as push its processed-food suppliers to cut
down on added sugars and fats. (Walmart wields tremendous power in the
U.S. food system—it owns a commanding 25 16 percent share of the U.S. grocery market.) [See correction on Walmart’s grocery market share below.]
The Let’s Move! crew remains enthusiastic about the Walmart deal. At The Atlantic‘s “food summit” this week, Sam Kass, the White House
chef and food-policy guru who spearheads Let’s Move, was asked what
facet of the program would have the greatest impact going forward. He replied:
the Walmart commitments around reducing the cost of fruits and
vegetables and making sure that the healthy items are at least as close
to being the same price as less healthy items, for example wheat bread
versus white bread. Why should whole wheat bread be any more expensive
than white bread? They’re really going to try to work to make those
prices the same. As well as reducing sodium and sugar where possible,
[in] some pretty dramatic numbers. We feel really good about that.
I’ve written before, I’ve got no problem with the globe’s biggest
retailer using its market power to make junk food less junky, or fresh
produce more affordable—so long as the latter isn’t achieved by
further squeezing farmers’ wire-thin profit margins. But the Walmart
“commitment” is purely voluntary—and thus very much secondary to
another commitment, this one legally binding: the need to
maximize profit for shareholders.
In a recent interview with The Wall Street Journal, Walmart CEO William Simon spoke bluntly
about that commitment. The retail behemoth’s share price has been
dropping of late; in the interview, Simon is addressing not East Wing
do-gooders but rather hard-hearted investors looking for return on
capital invested. Get this exchange:
WSJ: Is Wal-Mart as focused as it needs to be on offering the lowest possible prices?
Mr. Simon: A lot of things have distracted us from our pricing mission. We got enamored with presentation as an example. We walked people through our [remodeled] stores and they were gorgeous.
they cost more. And if you spend more on your building, your prices
can’t be as low as you want them to be. “Every Day Low Price” can’t come
from the supplier because they have to make money too. “Every Day Low
Price” has to come from every day low cost, which means we have to
operate for less. Sustainability and some of these other initiatives can be distracting if they don’t add to every day low cost. [Emphasis added.]
other words, when push comes to shove on the profits front,
“sustainability and some of these other initiatives” start to look
pretty inconvenient from the corner suites of Bentonville, Ark. Simon’s
remark made me think of a statement by another Walmart exec, Vice President of Corporate Affairs Leslie Dach, at the time of the company’s Let’s Move
announcement. From a February The New York Times article:
By lowering prices on fresh fruits and vegetables, Wal-Mart says it will cut into its own profits but hopes to make up for it in sales volume. “This is not about asking the farmers to accept less for their crops,” he [Dach] said. [Emphasis added.]
have to wonder, as Walmart struggles to keep its share price moving
upward under tough economic conditions, if the company will adhere to
Dach’s non-binding pledge regarding farmers. If Walmart decides to push fruit and
vegetable prices down by exerting pressure on farmers—as it has done
to all of its suppliers since the glory days of Sam Walton—we could
see yet more consolidation in the fruit-and-veg sector, more midsized
veggie farms going out of business or scaling up to gargantuan size.
general, I think that Walmart’s Let’s Move agreements might bring some
slight improvements to a food system geared to churning out cheap junk,
but they can’t and won’t be transformative. The creed of “Everyday Low
Prices,” the zeal to churn out profit by maximizing sales volume and
minimizing cost, lies at the root of our food-system dysfunction.
Relentless cost-cutting means pressure to move environmental destruction
off of corporate balance sheets, creating ecological sacrifice zones.
It also drives companies to pay workers as little as possible,
creating a vicious circle in which we need cheap, low-quality food
in order to feed millions of low-wage workers.
his WSJ interview, Walmart’s CEO, who commands our nation’s largest
private labor force as well as Mexico’s, made this interesting
are watching our labor [costs] very carefully, from an expense
standpoint, but it is not good business to cut your labor to the point
that your shelf availability is not where you want it to be.”
It also bears noting that Walmart has thus far refused to sign the Coaltion of Immokalee Workers’ pledge to pay an extra penny a pound for tomatoes, which would lift the wages of thousands of farm workers above the poverty line. Evidently, pinching pennies is still central to Walmart’s bottom-line success. As long as that’s true, it offers little real contribution to the effort to reform the food system.
[Correction: In the original version of theis post, I had Walmart’s market share at 25 percent, based on mistaken number crunching I did from data from this USDA report. The correct calculation is 16 percent market share. But Walmart’s market share is still significantly higher than any of its competitors —Kroger, the second-largest grocery vendor, has about a 10 percent share. So the adjective “commanding” still applies.]
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