Wal-Mart Produce

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.

Now the fun begins. The Wal-Mart inspector starts going through the produce that you picked and prepped for a Friday pick-up, at 6:30pm Tuesday. He/she immediately begins marking crates as below agreed upon quality, assuring you that you will be compensated full-price for these crates, and that he/she is just marking them so that the produce that is below grade is sent to Mexico or something. Finally, the inspector allows the fruit to be packed into Wal-Mart's non-refrigerated truck at about 8 o'clock. Again, you're paying your employees to wait to do this the whole time. They close up the truck, and tell you that you should receive your payment in a few weeks, and have you sign a receipt.

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. 

Michael Pollan comments on this for the New York Times. 
Wal-Mart’s big-foot entry into the organic market is bad news for small organic farmers, that seems obvious enough. But it may also spell trouble for the big growers they’ll favor. Wal-Mart has a reputation for driving down prices by squeezing its suppliers, especially after the suppliers have invested in expanding production to feed the Wal-Mart maw. Once you’ve boosted your production to supply Wal-Mart, you’re at the company’s mercy when it decides it no longer wants to give you a price that will cover the cost of production, let alone enable you to make a profit. When that happens, the notion of responsibly priced food will be sacrificed to the need to survive, and the pressure to cut corners will become irresistible."

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.