Walmart's Complete Trashing of Society (the poor, workers, middle class, consumer products) and Now the Food Supply

  FOOD  

AlterNet / By Arun Gupta

Why Walmart Is a Threat to Organic Food

Walmart will turn organic food into another low-cost input that shortchanges consumers, workers and the environment for a fast buck.   

May 1, 2014 

Only after I decided to pursue freelance journalism fulltime, thereby joining the ranks of low-wage workers, did I enter a Walmart for the first time. It was in Southern California, in the spring of 2012, and I was trying to go easy on my wallet as I crammed my car with supplies before embarking on a cross-country reporting tour.

I reluctantly ventured inside a Walmart near San Diego, but I discovered immediately why its slogan, “Save Money, Live Better,” is a lifeline for the economically distressed. In the average superstore there’s a phenomenal142,000 separate items at astonishingly low prices: button-down shirts for $10, a large bag of potato chips for a buck, a fat tube of toothpaste for two bucks, 25 cents for a metal fork, 10 oranges for a dollar. One former Walmart worker in California told me everyone he knew shopped there because, “Walmart is cheap as shit and it’s convenient.”

So when Walmart announced in April that it was invading organic turf by introducing the Wild Oats food line in 2,000 stores, some food-justice advocates were excited about the possibilities. They believe that Walmart's buying power, which accounts for a 33 percentshare of groceries sold nationwide, will enable it to offer lower prices for consumers, expand the market for organic farmers, and lessen the use of toxic pesticides and global-warming fertilizers. It’s a classic win-win, showing how the free market can solve problems it helped create.

It’s wishful thinking. Alarm bells should be ringing now that Walmart is going organic. One Walmart executive explains it will “disrupt” the organic market by reducing inefficiencies and encouraging consolidation. Lower prices for consumers mean fewer organic farmers, declining farm incomes and agricultural wages, and remaining farmers will be forced to industrialize further to produce more goods at lower prices.

Walmart is so powerful it’s been termed a “monosopy,” meaning it can set prices for vendors. By bringing its practice of hammering suppliers to cut costs, quality and standards to organic it will tempt farmers to bend and break organic rules to pare expenses. If American farmers refuse to accept its dictates, Walmart can outsource production to Mexico, China and Chile as it’s done with manufacturing, and is already happening with organic food. Other retailers will probably take advantage of Walmart’s move by demanding lower prices from organic farmers and pocketing higher profits just because they can. This happened in the California grocery strike in 2003 when Safeway, Kroger and other chains slashed the wages and benefits of 59,000 unionized workers based solely on Walmart’s announcement it was going to build 40 supercenters in the state.

In terms of improving the dismal diet of most Americans, Walmart’s mastery of supply-chain logistics has been implicated as a cause of obesity. Many Wild Oats products are outright junk food or barely nutritious, including tortilla chips, heavily processed “skillet” meals, and cookies. Undercutting other retailers on the price of canned organic vegetables won’t change much. Poor diet is not due to a lack of access as 92 percent of Americans say they have “easy access to fresh affordable produce.” Government data in the mid-'90s found that a paltry 3 percent of Americans got the proper daily intake of vegetables and “at least 1 serving daily of a dark green or orange vegetable,” the most nutritious vegetables. It’s unlikely that dismal number has improved. A recent large-scale survey by Johns Hopkins Bloomberg School of Public Health found that vegetable consumption actually fell between 1988 and 2002, and another governmentstudy revealed “no significant change” from 2000 to 2009.

So what’s Walmart’s game? It’s hoping to fatten its bottom line, not reduce America’s waistline. In all likelihood Walmart is trying to lure more affluent customers to overcome stagnating sales and win over critics who link its business methods to poor health.

When I walk into a Walmart supercenter anywhere in the country, the fruit and vegetables look ample, the quality passable, and the prices rock-bottom. But fresh foods occupy a postage stamp-sized portion of stores where aisles packed with chips, sweets or colas can stretch 100 feet. The prominent display of fresh produce in a Walmart is like salads on the McDonald’s menu, which amount to a piddling two to three percent of sales in U.S. outlets: They bestow a halo of health on the rest of the store’s offerings.

Peering into the carts of other Walmart shoppers I spot far more five-pound logs of hamburger meat, 36-ounce cartons of corn flakes, stacks of frozen pizza, and gallons of fruit punch than melons or bunches of kale. For dog-tired parents trying to shop while corralling hyper children, processed junk is their lifeline, especially given how many use food stamps. It’s cheap, convenient and the kids like it.

The families will pay with lives shortened by obesity-related diseases. Taxpayers will pick up much of the healthcare tab. And Walmart will laugh all the way to the bank. A study by Charles Courtemanche and Art Carden, “Supersizing Supercenters? The Impact of Walmart Supercenters on Body Mass Index and Obesity,” found Walmart accounted for 10.5 percent of the rise in obesity from 13 percent of the public in 1960 to 34 percent in 2006. According to the authors, Walmart’s “innovations” led to 6.6 million more Americans obese today, based on the company’s “distribution technology that lowers the prices of food and other consumer goods.”

Wal-Mart claims 91 percent of its shoppers “would consider purchasing products from an affordable organic brand at the retailer.” But for five years Walmart’s all-important same-store sales have stagnated, and it admits “our customers are living paycheck to paycheck.” During the early stages of the economic downturn that began in 2007 more affluent shoppers traded down to Walmart, but once their fortunes improved they migrated to Target and Amazon. This indicates that Wild Oats is not aimed at existing customers who are unlikely to buy extra-virgin olive oil, much less an organic version.

One group who won’t be buying Wild Oats is 1 million Walmart store associates, who comprise nearly 1 percent of the U.S. workforce and average $17,800 a year in wages based on a 40-hour week. “Ally,” who asked to remain anonymous, earns $270 a week before taxes because her supercenter in Kentucky defines full time as 34 hours a week. Her husband makes $700 per week assembling machinery, giving them a combined income of $50,000 a year. They earn too much to qualify for government aid, but their income is chewed up by rent, utilities, car, insurance and gas, cell phones, healthcare, and $600 a month in student loans.

Ally says they are so cash-strapped, “We’ve had to go to McDonald’s and take napkins to use as toilet paper…. My shoes fell apart and I had to rubber-band the soles back on.”

For food, Ally said, “For the two of us we spend $50 a week on groceries, sometimes $25. For lunch I’ll bring a Michelina frozen dinner, it costs 98 cents.” Her voice rising in frustration, Ally continued. “I would like to eat healthier, but we can’t afford to eat healthier. Almost everything we eat is a frozen TV dinner or canned food. I can’t afford raw chicken or raw hamburger.”

Those chickens and cows were imprisoned in a fecal hellhole and dosed with antibiotics and hormones during their brief lifespans, but their meat still might be healthier compared to the highly processed foods Ally eats. Those foods are so devoid of life they can sit around a warehouse for years before being consumed.

“Nicole” lives in Kentucky with her mother and the two of them work at different Walmarts. They spend $70 a week on groceries and their meals come out of boxes, cans and freezer bags. Working as a cashier, Nicole claims half her customers use food stamps. For these shoppers a splurge is a gallon of conventional milk for the kids. They are not going to break the bank by shelling out three dollars more for organic milk, the price differential at many Walmart stores. The poor are expert at calculating how many calories they can purchase per dollar, and a sack of fatty, starchy chicken nuggets that fills a lot of bellies is going to beat out a few pounds of carrots and broccoli every time.

This is the Walmart effect that revolutionized goods distribution, and in turn, the U.S. economy. Its supply chain starts with pushing manufacturing jobs overseas by demanding that suppliers continually lower costs, and ends with low-paid part-time workers earning few benefits and fewer rights by enforcing a zero-tolerance policy for unions. Studies show when a new Walmart store opens in a county in America, on average 150 jobs are lost, $1.4 million in retail wages evaporate, pay shrinks in the grocery and merchandise sectors, and poverty rises.

Walmart manufactures low-income workers who are dependent on the processed junk it sells because the one place workers like Ally and Nicole can easily trim household costs is the food budget. This is true for most Americans as we spend a smaller portion of our household budget on food than any other country in the world. That low cost is directly linked to farmers' shrinking share of the food dollar. As of 2008, farmers received less than 16 cents of every dollar spend on food in America. The problem is not that food is too expensive it’s too cheap. If Walmart becomes a major player, the entire organic sector will suffer.

Case in point is Horizon Milk, which controls 40 percent of the organic milk market and crowds the shelves of many Walmarts. For nearly a decade the Wisconsin-based Cornucopia Institute has been filing formal complaints against Horizon’s parent company, Dean Foods, charging it with running huge concentrated animal feeding operations that violate federal organic standards, using conventionally raised heifers in its operations, and adding illegal additives to its milk. These practices allegedly enable it to undersell small organic milk producers, pushing them out of business. Just two months ago, in February, Cornucopia accused the USDA of abdicating responsibility by not cracking down on Dean Foods. The watchdog states Dean Foods has used its flush coffers to lobby for protection in Washington, becoming the organic version of the too-big-to-fail banks. Cornucopia claims one study showed that Horizon milk has lower levels of beneficial nutrients than nearly all of its other organic competitors.

It’s not just Walmart. As organic has passed the $30 billion mark in revenue in the United States, big food interests are successfully watering down the standards such as by allowing moresynthetic ingredients in organic food. Food justice advocates fear that Walmart will intensify that pressure, adapting organic food to its needs as another low-cost input that shortchanges consumers, workers and the environment for a fast buck. And they will probably turn out to be right.

Arun Gupta is a co-founder of The Indypendent and the Occupied Wall Street Journal. He is writing a book on the decline of America empire for Haymarket books.