Economic Tidbits

Walmart Sliding Down the Food Chain

Walmart has moved down the food chain in the beef industry. In January, the nation’s largest grocer opened a case-ready beef processing plant in Georgia. According to Will Sawyer, lead economist with CoBank, the plant will prepare steaks and roasts for sale in 500 Walmart stores in the Southeast.

As part of the effort, Walmart is coordinating with cattle producers up and down the supply chain to create a seamless chain from the cow herd through processing. The cattle will be sourced from 44 Farms and Prime Pursuits in Texas, fed at Mc6 Cattle Feeders, processed by Creekstone Farms, then further packaged in the Walmart facility in Georgia. Walmart’s goal is to produce high-grading, hormone-free, beef and to offer their customers more transparency.

Walmart’s move to create an end-to-end supply chain is like the Costco poultry project in Nebraska except that it does not appear Walmart will own the animals. Sawyer estimates “the new supply chain will account for less than 5 percent of Walmart’s U.S. beef business and less than 0.5 percent of U.S. beef production.” Many industry observers will be watching the project closely to see if consumers are willing to pay more for these quality attributes and see if Walmart’s coordination of the supply chain leads to greater profits. If so, expect more projects like this to come.

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