49. Walmart's Direct Farm Program

Mar. 8, 2016 - International Women's Day
(Parts excerpted from nextbillion.net/)
On this special day, we wanted to highlight a source of promise and hope for the future in the world of global trade. Specifically, the food and consumer goods retail trade, one of the toughest most global, competitive industries. At the top of that competitive heap of global traders is, of course, Walmart. We'd love to hate them, but guess what? They are showing some pretty impressive leadership capability.


As the world's largest grocer, Walmart's "Direct Farm" program has been increasing farming productivity and farmer's income since 2007. By directly connecting farmers with markets, taking food waste out of the supply chain, motivating farmers to produce more with fewer inputs, and sourcing key agricultural products responsibly, the program is now reaching its 10 year mark.


Under the Direct Farm program, smallholder farmers in developing countries are asked by Walmart to grow a certain type of crop under conditions deemed acceptable to Wal-Mart. In return, these farmers are provided with modern training and methods as well as initial startup materials such as seeds. More importantly, Walmart purchases the entire production at a set price directly from the farmers, thereby setting – but also guaranteeing – price and demand to the farmers. This way, the farmers can sell more (due to higher yield resulting from optimized inputs) at a higher price due to the direct selling contract with Wal-Mart. At the same time, Walmart can secure its supply of affordable, high-quality, and fresh food worldwide.

After launching the Direct Farm program in China, over 800,000 farmers, including women, participated in Walmart's "direct farm" program and increased their earnings more than 10 times by the end of 2010. The success in China sparked the roll-out of the program to Brazil and India, and perhaps even further. 

While the Direct Farm program has not been specifically geared toward women, in September 2011 Walmart began its Global Women’s Economic Empowerment Initiative to help empower women across its supply chain. The goals are to increase sourcing from women-owned businesses, empower women on farms and in factories through training, increase market access and career opportunities, provide job training and education, and increase gender diversity among major suppliers. As part of this initiative, Walmart funded new projects in 2012 targeting women in the agriculture supply chain, such as helping women farmers make their agricultural operations more sustainable and productive through its Direct Farm program.

It's hard to say whether Walmart's version of "Direct Trade" pre-dates or follows the trend toward direct trading in coffee. In any case, it is interesting that they have seen the benefits of direct trade. It seems like soon the big, global players in coffee will be "catching on." Starbucks new "Reserve Coffees" being one example. Importantly, (on International Women's Day) one must also note that after only 5 years of the Direct Farm program, Walmart added a focus on women in the agriculture supply chain. This author knows from presentations made by Beth Keck, Walmart's Director of Diversity at the time, that these programs were successful in reaching 1,000,000 smallholder female farmers.

 

Under the direct farm program, local farmers would be asked by Walmart to grow a certain type of crop under conditions deemed acceptable to Wal-Mart. In return, these farmers would be provided with modern training and methods as well as initial startup materials such as seeds. More importantly, Walmart would purchase the entire production at a set price directly from the farmers, thereby setting – but also guaranteeing – price and demand to the farmers. This way, the farmers can sell more (due to higher yield) at a higher price due to direct selling (see video). At the same time, Walmart can secure its supply of affordable, high-quality, and fresh food worldwide.
After launching the direct farm program in China, over 800,000 farmers participated in Walmart's "direct Farm" program and increased their earnings more than 10 times by the end of 2010.
- See more at: http://blogs.anderson.ucla.edu/global-supply-chain/2013/09/a-win-win-supply-chain-walmarts-direct-farm-program.html#sthash.I6l1G80t.dpuf

As the world's largest grocer, Walmart's "direct farm" program is intended to increase farming productivity and farmer's income by directly connecting farmers with markets, taking food waste out of the supply chain, motivating farmers to produce more with fewer inputs, and sourcing key agricultural products responsibly. - See more at: http://blogs.anderson.ucla.edu/global-supply-chain/2013/09/a-win-win-supply-chain-walmarts-direct-farm-program.html#sthash.I6l1G80t.dpuf

As the world's largest grocer, Walmart's "direct farm" program is intended to increase farming productivity and farmer's income by directly connecting farmers with markets, taking food waste out of the supply chain, motivating farmers to produce more with fewer inputs, and sourcing key agricultural products responsibly. - See more at: http://blogs.anderson.ucla.edu/global-supply-chain/2013/09/a-win-win-supply-chain-walmarts-direct-farm-program.html#sthash.I6l1G80t.dpuf