Wednesday, March 21, 2018

Is Walmart Mooving Into Farming? (WMT)

Apologies for the headline, I can't stop myself.

From CB Insights:

Walmart is applying for a range of patents using drones to automate farming. The move could support its grocery business and give the giant greater control over its supply chain.
As Walmart goes head to head with Amazon, it is focused on shortening its supply chain and improving its grocery delivery business — including patenting automated storefronts in people’s homes and technology that can help improve online food shopping.

Today, we picked up on a signal that Walmart is looking to manage more of its supply chain at the source.

The retail giant applied for a series of 6 patents targeting farm automation. The applications propose using drones to identify pests attacking crops, monitor crop damage, spray pesticides, and pollinate crops.

To compete against Amazon, Walmart has been busy building up its grocery business. Last year, Walmart started offering same-day grocery delivery in certain areas. It also acquired delivery startup Parcel and just last month partnered with Instacart to roll out same-day delivery for its Sam’s Club business.

Walmart has even piloted a smart lock partnership, so Walmart delivery people could unload grocery orders directly into shoppers’ fridges when they’re not home.Amidst all this competition, we also know brands and shoppers are moving toward more natural food products and transparent labeling.
By taking more control over how its produce is grown, Walmart could a) potentially save on costs, by vertically integrating its food supply chain, b) manage crop yields more effectively, and c) increase its emphasis on transparency and sustainability to attract shoppers....MORE
Additionally, Walmart is getting into the dairy business in a big way. From WITF, Harrisburg, PA:
Milk processor cancels farm contracts as Walmart makes own milk
As if low milk prices aren't nerve-wracking enough, dairy farmers are worrying about getting a steady monthly milk check.

Milk processors face dramatic changes in the marketplace. They buy the farmers' milk, or at least most still do.

"The fluid milk market has always been competitive, but we're in unprecedented times," said Reace Smith, a spokeswoman for Dallas-based Dean Foods.

Dean Foods, branded as Swiss Premium, is ending contracts this spring with more than 100 farmers in eight states, including Pennsylvania. The company's reasons: Consumers are drinking less milk, and other companies are entering or expanding their presence in milk processing.

Industry observers say a recently constructed Walmart milk plant in Fort Wayne, Indiana, played a major role in Dean Foods' decision. The new plant will bottle 100 million gallons of milk annually for 600 Walmart stores.

"By operating our own plant and working directly with the dairy supply chain in the Midwest, we'll further reduce operating costs and pass those savings on to our customers so that they can save money," said Tony Airoso, senior vice president of sourcing strategy for Walmart U.S.

Americans are drinking 28 percent less milk than they drank in 2000, 42 percent less than in 1970. Cheese and yogurt consumption has increased, but not enough to mend the hole in a farmer's pocket.
U.S. farmers meanwhile have more cows, each increasingly producing more milk, according to the U.S. Department of Agriculture. The industry is producing about 350 million more gallons of milk each year than the year before, Smith said.

Local milk processors are taking other actions....MORE