Vancouver: Supermarkets And The Local Economy

LoCo BC (British Columbia) is a Vancouver business organisation focused on creating a diverse and vibrant local economy by strengthening small and mid-sized businesses. The following article in their current e-newsletter will no doubt interest PWF readers, given the popularity of ‘Locals Take On Coles & Woolies…Relocalisation? and ‘WHY DO We Buy Lettuce In A SEALED BAG?

Wall-Mart Local Food Sourcing: Good for Farmers and Local Economies?

“Nothing inspires more lively debate than sustainability at Wal-Mart. The company often criticized for poor employment practices (low wages, no overtime, no benefits, anti-union) and pushing smaller businesses out of communities is in the news almost daily for commitments to green their operations, green their supply chain, and this week, for making a commitment to sourcing local food.

You gotta give it to the mega-retailer, they know how to give people what they want. Local food sales became big business in the past decade – North American farmer’s markets generated more than $2 billion a year in sales, with steady growth every year. And who doesn’t love a deal? Studies show that when Wal-Mart moves into a town, grocery prices everywhere drop. When the company moved into organics in 2006, they began competing with pricey competitor Whole Foods.

Wal-mart’s forays into sustainable foods (organic foods, sustainable fish, and now local food) are based on the purportedly altruistic premise that all families, no matter how wealthy, should have access to healthy food. Wal-Mart will no doubt bring more local food into the mouths of consumers local to that state (local food sourcing in Canada will roll out by 2013). And Wal-Mart will use its sheer size to make good on its promise to bring healthy, local and organic food to consumers at cheaper prices. The sheer vastness of Wal-Mart will require it. The company had over $400 billion in sales last year, with groceries accounting for more than half. It’s estimated that if Wal-Mart were a country, it would be the 19th largest economy in the world.

Is all this cheaper pricing and access to shelf space good for local farmers and economies?

Wal-Mart uses its size to lower prices by squeezing suppliers on pricing, and competing with smaller retailers aggressively on price, often squeezing them out of the market. In this case, those may be local grocers committed to supplying farmer’s with a fair price. Because of their purchasing power, Wal-Mart will also be sourcing from a certain scale of farm (mid-sized), and in so doing influence the food grown by those farms. Bigger farms and big food purchasers tend to drive monocultures. Part of the beauty of the local food movement thus far has been that it has exposed consumers to the diversity of produce available in their region. Right now in BC more than 60 varieties of heritage and regular apples alone are in season. Local farmers in the future may well have less opportunity to decide what they grow, to set fair prices, to sell to a variety of retailers, and consumers may have less options in food and retailers.

And remember that Wal-Mart is entering the local food market not to support local farmers and build strong local economies, but rather to reduce environmental impact and improve efficiency. Reducing food transportation miles not only reduces the company’s environmental impact, but creates cost efficiencies in the company’s vast distribution infrastructure. Consider that in the last 110 or so year the split between the revenues of food producer versus distributor has been steadily declining. In 1900, of every dollar spent on food, 40 cents went to the farmer. Only 7 cents of every food dollar today remains in the farmers hands. There is big money in food distribution.

And what of local economies?

Local economies are built on independent ownership and the concept of the multiplier effect (ME). The ME demonstrates that money spent with local businesses circulates through other local businesses and thus “multiplies” in economic impact to the benefit of community members. Locally owned businesses often have more localized supply chains, and are more likely to use other local suppliers (couriers, office supply, financial/accounting, marketing). They in turn support other local businesses, and wealth flows and remains in a community. Most importantly, owners live in the community spending their profits locally.

Wal-Mart made $14 billion in profit last year alone. It’s CEO earns $19.2 million dollars annually, while it’s average employee makes $20K. The Walton family has a net worth of $86.3 billion. Buying local food from Wal-Mart only increases the vast fortunes of a rich few. Wal-Mart and other big box stores have helped to dismantle local economies in many places by clear cutting small businesses from main streets across North America.

Please eat local food. Grow it. Buy it from a farmer. From a farmer’s market. From a CSA box. From a local store. Even a locally owned chain. But please don’t get your local food at Wal-Mart, and don’t think for a second that the Wal-Mart effect will be good one for local food.

Wal-Mart…Coles…Woolies?