Walmart’s entrance into beef supply chain not expected to drive near term changes in cattle industry


The Fence Post reports, In January Walmart, the largest food retailer in the U.S., officially entered the beef business after opening a case-ready beef plant in Georgia. Walmart created an end-to-end beef supply chain and is part of its goal of improving the quality of its food offering.

“Walmart sees opportunity and is moving up the supply chain at a time of historically high margins for beef processors,” said Will Sawyer, animal protein economist with CoBank. “We believe their current beef strategy is something of a test, not only for Walmart and its suppliers but also its customers.”

The new plant cuts and prepares steaks and roasts produced by Walmart’s Angus beef supply chain for 500 stores in Florida, Georgia, and Alabama.

“While Walmart’s new beef strategy could make waves for the industry in the future, in its current state we don’t see it shifting the price and leverage dynamics of U.S. beef production,” Sawyer said. “By our calculations, this new supply chain will account for less than 5% of Walmart’s U.S. beef business and less than 0.5% of U.S. beef production.”

It is unlikely U.S. cattle producers, feeders, and packers will suffer any significant near-term changes from Walmart’s entry, but if Walmart finds success it could set it up to make a bigger move in the future.