By many estimates, the global population is going to reach 9 billion people by 2050 and food production will have to increase 70 percent to meet the demands. Few issues will be more important to the world, and the world’s fastest growing markets, than food and agriculture.
Sustainable agriculture is a tremendous opportunity for Wal-Mart to make a difference across a range of issues and in many people’s lives. We recently announced a broad group of goals focused around agriculture in all of our global markets. We organised our commitment around our three main principles: to support local suppliers and their communities, produce more food with fewer resources and waste, and to sustainably source key agricultural products. These principles are supported by global goals we aim to achieve by 2015.
Today more than 1 billion people around the world depend on farming for their livelihoods. Hundreds of millions of these farmers live on less than $2 (R13.77) a day. In emerging markets, Wal-Mart has set a goal to raise farmer income by 10 percent to 15 percent. To do this we will sell $1 billion in food sourced from 1 million small and medium farmers by the end of 2015. Through direct sourcing we can provide greater financial return directly to farmers and suppliers. For example:
n In India, Wal-Mart pays local farmers 7 percent to 10 percent higher prices than they get from their local wholesale market.
n In Japan, by 2015 nearly 40 percent of total fruit and vegetable produce sales will be via direct sourcing.
n In China, this year Wal-Mart expects that over one-third of the fruit and vegetables sold in local Wal-Mart stores will come from farm projects and 1 million farmers will be in the direct farm programme.
Wal-Mart is uniquely positioned to support local suppliers while also helping them to expand their businesses. In Mexico and India more than 90 percent of products are sourced directly. In China that number is even higher at 95 percent. Half is from the local cities where we operate.
In addition to these direct sourcing programmes, we also provide opportunities for local suppliers to grow. For example:
n In South Africa, for the last decade we have been sourcing a significant amount of fresh produce for our business in the UK.
n Wal-Mart buys about 25 percent of all the South African citrus shipped to the US.
n In Argentina, we partner with local farmers to help commercialise and open new markets for their products.
Food waste is a big problem. It is estimated that 30 percent to 40 percent of food is wasted as it goes from farms to tables. We must produce more and waste less.
One of the biggest challenges facing everyone is the lack of a cold supply chain around the world. To help address this problem, Wal-Mart will invest more than $1bn over the next five years in the fresh supply chain to help increase capacity and reduce waste. In addition, we will cut food waste in our emerging market stores by 15 percent and other markets by 10 percent.
When we reach this goal, Wal-Mart will have increased the amount of fresh food available to customers around the world by 10 percent without growers having to use any more land, water, energy or fertiliser. This is a significant opportunity for all food retailers to help producers meet the growing global demand for food.
Additional challenges are the unintended side effects farming practices are having on the environment, from greenhouse gas emissions to deforestation. Two of the major contributors to deforestation are certain types of palm oil and beef production. Wal-Mart can play a leading role.
We will require sustainably-sourced palm oil in all our private brand products by the end of 2015. It’s encouraging to see that many well-known national brands are also moving to sustainable palm oil.
Studies have shown that nearly 60 percent of the deforestation in the Brazilian Amazon is related to cattle ranching. Wal-Mart Brazil has already committed to source beef that does not contribute to deforestation and we have expanded our commitment to the entire Wal-Mart chain.
These commitments are a good start, but only the beginning. As the global population continues to grow, it only becomes more important for Wal-Mart to ensure the food we source is grown in a responsible manner, environmentally and socially. I encourage others to follow our progress and let us know how you think we are doing.
Andrea Thomas is Wal-Mart senior vice-president of sustainability