What Does WalMart’s Move Mean to Ag?

Greetings from a damp, chilly Midwest!

Forecast rain totals over the next couple of days have been reduced slightly, but widespread 1 to 3 inch amounts will halt already delayed planting progress from Nebraska to Ohio, says Chris Ries, market analyst in northeast Iowa.

The extended forecast is also a bit wetter, with above normal chances for rainfall next week. Temps will be cool after Tuesday, mostly 3 to 8 F below normal, slowing dry down time over the balance of the 10-day forecast.

Monday’s USDA Crop Progress report showed Corn Planted at 19% complete vs. 6% last week, 5% last year and 28% for the 5-year average (putting the crop 9% behind the average).

As far as corn planting progress, Ries says if the current forecast holds, expectations for corn are to be about 13% behind the 5-year average next Monday. He notes that while rains are delaying early corn planting progress, they are also improving drought conditions in the western Corn Belt.

“Increased planter power is also important to note,” said Ries. “Strong farm income in recent years has been reinvested in more productive equipment that allows farmers to get their crops planted in less time, reducing the risk associated with wet spring weather.”

In other news… about a week ago, Walmart, the largest grocer in the US, said it will carry about 100 Wild Oats organic food items with a new, more affordable price point – a 25% savings over other organic brands.

“We know our customers are interested in purchasing organic products and, traditionally, those customers have had to pay more,” said Jack Sinclair, executive VP of grocery at Walmart US. “We are changing that and creating a new price position for organic groceries that increases access. This is part of our ongoing effort to use our scale to deliver quality, affordable groceries to our customers.”

Walmart says customers are asking for more affordable organic foods, citing 91% of Walmart shoppers would consider purchasing products from an affordable organic brand at the retailer.

“At Walmart, we are focused on offering customers choice,” added Sinclair. “We know our customers count on us to provide them with affordable access to all of the groceries they are looking for. Organics are no exception.”

Sinclair told MarketWatch that Walmart is “trying to disrupt the market” and questioned what makes organic products more expensive.

Several have said this could be the death of the organic farm because with Walmart’s price cut, organic farmers will lose their premium price.

Shaun Haney, founder of RealAgriculture.com, said recently in a blog post, “As margins shrink for organic farmers, they will be forced to either leave the business or find economies of scale through farm size growth.” (Read his full post here.)

Do you think Walmart’s move will impact organic farmers and/or agriculture in general? I'd love to hear from you. Email me at [email protected] or on Twitter @SarahMikesell.

Have a great week!
~Sarah