My friend Lisa recently sent me a link to a reddit post about Walmart and farmers. I found it intriguing so I decided to look into it further. The post is as follows:
As a former employee of a vegetable farm, let me give you an explanation of how selling vegetables to Wal-Mart works. First you make an agreement with Wal-Mart to sell them X bushels of produce at Y price/bushel. You spend the entire week ramping up production, bringing in more pickers and hiring more packers to ensure you get your X bushels of product. You are especially picky about the quality of your product, because Wal-Mart's business represents a dynamic increase in sales and you want to impress them. You have everything picked, packed and prepped for Wal-Mart's pick-up (they always want to make the pick-up, rather than pay you to deliver) on Friday.
This is where it gets fun. The truck doesn't take the fruit to the nearest refrigerated Wal-Mart Distribution Center. Instead, it goes another day out of its way, to unload. When it gets there, the unrefrigerated fruit is inspected again. It's now been 5 or 6 days since it was supposed to be delivered to the refrigerated distributorship and there's been about a 30% loss of product. You're contacted by Wal-Mart and told that the product was not in the agreed upon condition and that they will be deducting a loss-penalty of 50% to your agreed upon price and will not be paying for the 30% of lost product. However, they will keep that lost product and use it in some sort of paste or juice or other form of private label Great Value product that can use the product. You protest Wal-Mart's unilateral negotiation and they tell you that they can refuse delivery of the product and have it shipped back to you, but you'll pay for the shipping (Pay Wal-Mart's trucks, not yours). You threaten to sue, and they remind you that they have a 100millon dollar retainer with the very best lawyers money can buy, and that while you will probably win the case, you'll be in litigation for at least 10 years (because Wal-Mart's already paying these guys anyways) and at best you'll get your agreed upon price, while paying your own lawyers $400/hour for 10 years to sue them for what amounts to $50,000.
So you swallow your pride, you take your 75% loss on the signed contract and then they ask you if you'll be able to make your next shipment, as per your contract, Wal-Mart has the ability to extend, however, because China is selling them Lead contaminated produce at 10% what you're selling, they're renegotiating the prices for "market value"
And thats when you send them the stuff you throw out when you sell to Krogers.
EDIT: bluegender is correct
TL;DR - Wal-Mart screws their suppliers, laughs at lawsuits, and then demands you uphold your end of the contract, all in the name of saving you money.
Unfortunately, probably afraid of lawsuits from Wal-Mart there doesn't appear to be more info out there. There was a response to this post from someone whose family was in agriculture saying that this was a typical scenario for Wal-Mart.