Is Walmart’s index the best thing since sliced bread?

This is the second in a three-part series about Walmart’s supplier sustainability index. Part One can be found here.

Can Walmart change the way wheat is grown in America?

The company is trying to do just that. Here’s how.

Start inside a Walmart store in Laurel, Md. On sale here are nearly 40 brands of flour, many more varieties of bread and countless other products made from wheat, including cookies, cakes, crackers and pancake mix.

In theory, Walmart has influence over every one of those products. The giant retailer (2012 revenues: $469 billion) sells more groceries than any other supermarket chain. Brands such as Pepperidge Farm, Arnold and Sara Lee need access to its shelves.

To make agriculture more sustainable, Walmart has begun asking its suppliers probing questions about the grains they use. What percent of your grain is provided by suppliers that track fertilizer use and have goals and a program in place to optimize fertilizer use? What percent of your grain is provided by suppliers that monitor soil fertility and have goals and a program in place to minimize soil degradation and erosion? What about fuel use? What about water? What about pesticides? What about managing biodiversity?

Whew.

For the flour and bread makers, this is new territory. Most never deal with the farmers who grow their wheat. They buy from middlemen.

“When you run into production agriculture, with thousands of growers, the product is commingled, it’s by definition a commodity,” says Fred Luckey, a retired Bunge executive who is now chairman of Field to Market, a nonprofit group working with Walmart.

Now they have to did deep into their supply chains, if they want to stay in the good graces of Bentonville. No company has tried anything like this before.

“You’re looking out over a snowfield where there are no footprints,” Luckey says.

Next page: Upstream, back to the source