Wal-Mart changes frustrate produce suppliers

04/30/2010 02:33:04 PM
Dan Galbraith

Changes to the way Bentonville, Ark.-based Wal-Mart does fresh produce business is rubbing produce suppliers and distributors the wrong way.

Dan Galbraith
Sections Editor

Industry perception that the retail giant might make life even harder than it has been for grower-shippers became clear as a majority of respondents to The Packer’s latest Produce Pulse survey adamantly opposed the direction Wal-Mart is heading.

“Their margins will stay the same. The way they will achieve savings is pressure the growers and shippers to reduce their costs and take less for their hard work,” one grower-shipper said.

One produce distributor offered this take on Wal-Mart: “I think they will likely fail. When Wal-Mart takes on the grower-direct business model, they will increase their overhead, and likely lose growers if they do not understand how to manage them and their requirements. There are many unanswered questions:

  • What will an offshore supplier do with rejected product?
  • Will Wal-Mart offer preseason advances?
  • What premium will Wal-Mart offer the growers over their current arrangements?
  • What will a Wal-Mart grower do with the ‘rest of the crop’ that is not the premium sizes?
  • Will Wal-Mart pay its growers in seven to 14 days like we do?”

Sounding off

When asked specifically about Wal-Mart’s changing initiatives and how they might affect produce businesses, many of those polled expressed frustration, even anger.

Comments were made under the condition of anonymity, making for more candid responses.

“I hate Wal-Mart,” commented one director of produce, perishables or merchandising.

“Wal-Mart is a big bully and suppliers should shut them down,” one grower-shipper said.

Other respondents even went so far as to use expletives in referring to their disgust with Wal-Mart and the company’s alleged alienation of growers, small and large.

“It could have adverse effects if they are going to try to buy as cheap as they can. It may put some growers out of business,” one said.

“It will affect the market, no doubt about it, and will also threaten the supplier/grower to a point where they will lose suppliers,” another grower-shipper commented.

Survey participants also sounded off on the perception that Wal-Mart is taking advantage of produce suppliers and cutting into grower-shippers’ profits.


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