ORLANDO, Fla. — With both Wal-Mart and Whole Foods moving aggressively to measure sustainability of their suppliers, Jeff Dlott believes meeting expectations of buyers can be both a requirement for doing business and a market opportunity for produce marketers.
“Don’t kill the messenger, but sustainability is becoming a requirement in major markets,” said Dlott, president and CEO of SureHarvest, Soquel, Calif., at a workshop at the 2015 Potato Expo on Jan. 8.
He urged suppliers to be clear on their target markets and align their strategy accordingly.
The “Responsibly Grown” program of Austin, Texas-based Whole Foods — introduced last October — and the yet to be revealed Sustainability Index approach of Bentonville, Ark.-based Wal-Mart were the focus of Dlott’s presentation.
Wal-Mart plans to roll out sustainability benchmarking with top suppliers in the first quarter of 2015, Dlott said. The Sustainability Consortium — a global group of retailer, trade groups and non-government organizations — is working on guidance to help suppliers with the questions Wal-Mart is asking. Dlott said the process will be challenging to all involved.
“We’re still not clear what they are going to do with the information,” Dlott said after the session.
Dlott said there are questions about how long it will take Wal-Mart to compile meaningful “benchmark” data.
During a question-and-answer session after his presentation, a grower asked if sustainability expectations, like food safety requirements, would result in more costs to the grower through audits and certification costs. Another member of the audience asked if there was an opportunity to get a premium with sustainability certification.
“If we do it right,” Dlott said. “We have to bring the solution to the customers.”
Larry Alsum, president and CEO of Alsum Farms & Produce Inc., Friesland, Wis., attended the session. He said his company supplies Wal-Mart through another shipper, but he has not seen the sustainability survey yet. Alsum said the company has just begun to do business with Whole Foods, and has received information on its Responsibly Grown program. Alsum Farms & Produce also has worked with another of its customers, Costco, on that retailer’s inquiries about Alsum Farms’ personnel and associate policies.
“It is becoming the expectation that you have to be there on a lot of this,” he said. The challenge, he said, is to have all the smaller growers the company works with comply with needed paperwork.
“My concern in all of this is that it is going to make it really difficult for a small farmer to be able to survive when all these big companies set high expectations,” he said.
Sustainability is usually defined to include business value, environmental value and social value, he said.
Business value includes factors such as increased revenue, reduced costs, enhanced brand value, and managing risk. Environmental values are counted to be to conserve resources and minimize environmental impacts. Social values cover employees and the community, he said.
Wal-Mart’s category sustainability profiles have not been released for public review, though he said top tier suppliers can access it.
The profile for potatoes includes questions about fertilizers, greenhouse gas emissions, irrigation, pesticides, soil erosion, labor rights, worker safety and supply chain mapping, Dlott said.
While the Whole Foods approach talks about growing practices, Wal-Mart is more interested in specific resource use and resource use efficiencies, he said.