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Subsidizing Sustainability: The Role of the State and Civil Society in Implementing Wal-Mart’s Local Produce Sourcing Program

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Law and the Transition to Business Sustainability

Part of the book series: Perspectives on Sustainable Growth ((POSG))

Abstract

Theories of governance remind us that even in the context of neoliberal political economic governance, the state still has a role to play in facilitating the conditions that create the free market, as well as in participating in new types of arrangements that have formed to address the challenges of regulating global economic spheres. Often referred to as hybrid governance, these new arrangements blur the traditional responsibilities of actors from the public and private sectors, as well as from civil society. This chapter draws on theories of hybrid governance to analyze how the Wal-Mart Corporation implements its sustainability initiative in the agri-food system by drawing on the resources and activities of public and non-profit organizations. Based on qualitative research that includes a content analysis of Wal-Mart’s publicly available documents, as well as fieldwork in both the US and Honduras, this chapter demonstrates how state policies and programs facilitate the implementation of Wal-Mart’s sustainability initiative, which in the agri-food system takes the form of local produce sourcing. As an illustration of the role of the nation state in the present era of neoliberal globalization, this chapter demonstrates both how national policies created the conditions for the emergence of Wal-Mart as a powerful player in the food retailing industry, domestically and internationally, and how the state plays a role in the implementation of Wal-Mart’s programs, often through public/private partnerships. This chapter finds that relationships between Wal-Mart and public and non-profit organizations allow the company to outsource the costs, risks and responsibilities of developing local supply chains. Therefore, Wal-Mart’s sustainability program relies on public subsidies to operate. This chapter considers the implications of public subsidization of a transition to sustainability in the context of corporate sustainability initiatives.

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Notes

  1. 1.

    The terms “free market” and “self-regulating market” reflect liberal and neoliberal economic laissez faire perspectives that the market operates independently and efficiently without state interference (Smith, 1925). However, Polanyi (1944) describes a “double movement,” first towards reliance on the self-regulating market, and then a countermovement as society must protect itself from the negative effects of relying on the market to provide public goods. The term “self-regulating market” is therefore used in this chapter to refer to the market that, while maintained by state policies, nonetheless eschews state interference and this countermovement of social regulation.

  2. 2.

    In the context of liberal and neoliberal economic theories, market failures are seen to occur when the self-regulating market fails to distribute resources and benefits efficiently (Bator, 1958; Mendell, 1989; Randall, 1983; Salamon, 1987). While the self-regulating market is often seen as creating the conditions to promote social welfare and create public goods, other theorists believe that the market will always create social inequalities and disruption, hence the need for state regulations in neoclassical economics, or civil society organizations in neoliberal economics (Mendell, 1989; Polanyi, 1944; Salamon, 1987). At the same time, the conditions that constitute “market failures” are also socially constructed and perceived. For example, the exclusion of small-scale producers from international agricultural markets, and their subsequent migration from rural areas to take on manufacturing jobs in industrialized zones, can be viewed alternately as the market working efficiently or as a negative repercussion of the market that needs to be redressed (Busch, 2010).

  3. 3.

    Wal-Mart is the largest supermarket in the world by both sales and market share, followed by Carrefour (based in France), Tesco (based in Great Britain) and Metro (based in Germany); these four companies have operations throughout the world, including Central and South America, India and China (Hendrickson & Heffernan, 2002; Loeb, 2013; Lord, 2006).

  4. 4.

    Originally these standards were called EurepGAP, but the name was changed in 2007 to reflect their increasingly global influence, including the participation of US-based corporations such as Wal-Mart, Wegmans and McDonalds (Bain, 2010a; Campbell, 2005; “EUREPGAP,” n.d.). Today, GlobalGAP is the most popular form of food safety certification with over 100,000 producers certified worldwide (“GlobalGAP,” n.d.).

  5. 5.

    Despite these trends, Honduras has higher rates of agricultural employment (36.3 % of its population in 2005) and lower rates of urbanization (50.6 % of the total population in 2010) than most other Central American countries (Edelman, 2008).

  6. 6.

    Between 2011–2013 StrikeForce was expanded to include Colorado, New Mexico, Nevada, Alabama, Alaska, Arizona, North Carolina, North Dakota, South Carolina, South Dakota, Texas, Utah and Virginia (Secretary Vilsack Launches USDA “StrikeForce” Initiative to Boost Rural Economic Growth and Opportunity , 2013).

  7. 7.

    The Millennium Challenge Corporation was a US foreign aid initiative developed during the G.W. Bush administration, in part with the goal to improve livelihoods in developing countries in order to suppress terrorism. It was controversial in its implementation, since countries needed to meet a certain number of pre-established criteria that essentially excluded many of the poorest countries from participating (Soederberg, 2004).

  8. 8.

    Of the 27 producers interviewed in the US, seven did not sell to Wal-Mart at the time of this study. Of these seven, two had discontinued relationships with Wal-Mart; three had been contacted by Wal-Mart, or had contacted it, but had decided not to sell to the company; and two sold to other supermarkets through a food hub. Growers who had failed relationships with Wal-Mart and food hubs that did not to sell to the company were included in this study because it was determined that their perspectives were useful in evaluating the factors that led to the success, or lack thereof, in establishing and maintaining these commercial relationships.

  9. 9.

    After this research was conducted, GlobalGAP came out with a new standard called localg.a.p. designed to increase the ability of small-scale producers in developing countries to become certified (“localg.a.p.,” n.d.).

  10. 10.

    For example, a recent report from the Democratic staff of the Committee on Education and the Workforce used data from Wisconsin’s Medicaid program to estimate Wal-Mart’s costs to taxpayers in that state; they found that “one 300-person Wal-Mart Supercenter store in Wisconsin may result in a cost to taxpayers of $904,542 per year—about $3,015 per employee,” (The Low-Wage Drag on Our Economy: Wal-Mart’s low wages and their effect on taxpayers and economic growth, 2013; emphasis in original).

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  1. North Carolina State University, Raleigh, NC, USA

    J. Dara Bloom

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    Daniel R. Cahoy

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    Jamison E. Colburn

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Bloom, J.D. (2014). Subsidizing Sustainability: The Role of the State and Civil Society in Implementing Wal-Mart’s Local Produce Sourcing Program. In: Cahoy, D., Colburn, J. (eds) Law and the Transition to Business Sustainability. Perspectives on Sustainable Growth. Springer, Cham. https://doi.org/10.1007/978-3-319-04723-2_4

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