Walmart expands their stake in meat processing with investment in Sustainable Beef, LLC
Walmart announced an investment this week in a Nebraska-based meat processing company that will afford the retail giant a minority stake in Sustainable Beef, LLC. The rancher-owned company is based in North Platte. According to a press release, Walmart’s equity investment is part of a broader strategic partnership to source top-quality Angus beef from Sustainable Beef LLC’s new beef processing facility. This partnership helps supplement the current beef industry and provides additional opportunities for ranchers to increase their business. As part of the investment, Walmart will also have representation on Sustainable Beef’s board.
According to the release, the investment will allow Sustainable Beef to open their facility in late 2024, with groundbreaking in September. The facility is expected to create more than 800 new jobs and additional processing capacity of 400,000 annually for the cattle industry.
David Briggs, CEO of Sustainable Beef, LLC, said crews are currently on site, a moment that has been two years in the making. He said it’s a happy day for North Platte. For cattle producers, it means more shackle space is in the works.
“We’re only going to be about 1½% of the national cattle supply but just having another purchaser will add a little more competition out there,” he said.
He said Sustainable Beef, LLC, has secured contracts with a number of cattle feeders to supply the estimated 1,500 head per day capacity the facility will have once fully operational.
“We need every packing plant in the nation running full steam to feed our country,” he said. “We just wanted to add additional shackle space because we’ve had more cattle than shackle space the last couple of years. It’s a true co-op model, the producers who wanted to participate in this, they’ll have a place they own to process their own cattle.”
He said the agreement with Walmart has allowed the project to go from conception from the cow calf guy who breeds his cattle to the right genetics, all the way to the consumer.
“We have everybody in the board room with the same idea,” he said. “We have to make this whole system work and we have to provide a consistent, quality product to the consumer. We have put together a special organization and time will tell how it works.”
Walmart, as the largest retailer in the nation, brought together what he calls the 4Cs- city, cattle, capital, and consume the beef, with the latter being the largest obstacle. Walmart has the market for the beef, he said, and Sustainable Beef has the quality cattle on the front end through their producers. It also provides transparency to the consumer who, he said, could know the story of the cut of beef all the way back to the ranch.
Sustainable Beef LLC will work with cattle feeders and ranchers to follow the Five Freedoms set forth in Walmart’s 2015 Animal Welfare Position: freedom from hunger and thirst; freedom from discomfort; freedom from pain, injury or disease; freedom to express normal behavior; and freedom from fear and distress.
As part of the company’s position on antibiotics use, producers will be asked to adopt and implement American Veterinary Medical Association Judicious Use Principles of Antimicrobials.
Walmart is one major retailer promoting their commitment to the economic viability of the nation’s cattle ranchers. In January of 2020, the company announced the opening of a facility that supplies case-ready Angus beef cuts, such as steaks and roasts from the new supply chain to 500 Walmart stores in the southeast, including Georgia, Alabama and Florida. The facility brought 200 jobs to the area in addition to $12,500 in grants made by the company to the Georgia Wildlife Federation, the local police force, and Second Harvest of South Georgia.
In 2019, the retailer announced their partnership with rancher Bob McClaren’s 44 Farms in Texas. According to reporting in Progressive Farmer, in addition to selling seedstock, 44 Farms includes two feeder-calf programs: the NeverEver3 (NE3) feeder calf program and the new Prime Pursuits feeder-calf program for Walmart. With the Walmart program, beef produced will come from cattle that meet these criteria: no hormones added, predominantly “Angus Strong” genetics, able to meet USDA’s definition of Angus, weaned for a minimum of 45 days, have no more than 90 days between the youngest to oldest in a group, and subject to minimal sort by a 44 Farms representative to ensure uniformity. According to the article, in 2019, 100,000 head were required and were fed by Mc6 Cattle Feeders, Inc., in Hereford, Texas, and the remainder in a Nebraska feedyard. The cattle were then slaughtered at Creekstone Farms in Kansas and packaged at FPL Food in Georgia, which was expected to add 250 jobs and 200 jobs respectively. The beef was marketed under the McClaren Farms label in Walmart stores in Alabama, Florida, Georgia, Mississippi and South Carolina.
INVESTING IN CATTLE RANCHERS
Walmart called the investment in Sustainable Beef LLC the latest step in the retailer’s commitment to increasing access to high-quality beef at an affordable price for its customers, while boosting capacity for the beef industry and ensuring long-term economic viability for cattle ranchers.
Baxter Anders, who, along with his wife, owns two of South Dakota’s biggest auction markets, said Walmart’s investment into meat packing comes as no surprise.
“As far as the plant itself, it makes perfect sense for them to have Walmart as a partner — it ensures a buyer for their product,” he said.
He pointed out that the commercial-sized plant planned for North Platte is not a competitor for the smaller local plants that will process a few head per day. “Those smaller plants are selling a pound of hamburger or a few steaks to customers, along with processing carcasses to be sold direct to consumers. Walmart obviously has a different customer base. Their customers aren’t as concerned about supporting local businesses.”
Will the Walmart investment be a boon for local producers and feeders? Will they buy cattle locally, use cattle from their 44 Farms partnership, or use imported cattle? Of course, that remains to be seen, said Anders. “Obviously they (Walmart) will do what makes money and only what makes them money. If something works for them, they are going to do it,” he said.
Anders does expect Walmart’s recent entrance into cattle procurement and now processor ownership is likely to mean a better experience for their beef customers.
“I would say it would very much improve the quality of meat at Walmart. They are procuring great cattle. The cattle they buy in this area are quality cattle – they were good long before Walmart and 44 Farms,” he said.
In their news release, Walmart references a “commitment to improve grazing management.”
“We know Sustainable Beef LLC has a responsible approach to beef processing, one that includes creating long-term growth for cattle ranchers and family farmers. This investment provides greater visibility into the beef supply chain and complements Walmart’s regeneration commitment to improve grazing management,” said Tyler Lehr, senior vice president of merchandising for deli services, meat and seafood, Walmart U.S.
Anders said he is acquainted with producers in his region who are involved in Walmart’s 44 Farms program, which in general provides a buy-back for certain producers who buy 44 Farms bulls from the Texas program and meet a list of requirements. He has heard mixed reviews from those he’s talked to. As for Walmart’s commitment to improving grazing management, Anders said, “It’s what’s coming down the chain. It seems like some people are intrigued by it, they can get a little more for their cattle, but to me, it’s a way for Walmart to control the numbers.”
Anders said most ranchers are knowledgeable grass managers. “Some of them tell me, I’m not selling cattle, I’m selling grass. Why would they want a huge corporation telling them how to manage their place? Someone with no ties to the land, no sentimental ties. I’m not saying we can’t take advice from someone now and then who also has ties to the land, like NRCS (Natural Resources Conservation Service). Those people know the grass in the area. But something like this is all about control over the top of the rancher’s head. It’s not a way to manage grass but a way to manipulate supply in the arrangement they have with the rancher.”
Still, Walmart’s investment into the packing industry comes as no surprise and may be the start of more retail integration into the packing industry, he said.
Sens. Angus King, I-Maine, Joni Ernst, R-Iowa, Tina Smith, D-Minn., and Chuck Grassley, R-Iowa, have introduced a bill to double USDA’s Market Access Program (MAP) and Foreign Market Development (FMD) Program funding.
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