Walmart expands stake in meat processing with investment in Sustainable Beef, LLC

Walmart announced this week an investment in a Nebraska-based meat processing company that will give the retail giant a minority stake in Sustainable Beef, LLC. The ranch-owned company is based in North Platte. According to a press release, Walmart’s capital investment is part of a broader strategic partnership to source high-quality Angus beef from Sustainable Beef LLC’s new beef processing facility. This partnership helps complement the current beef industry and provides additional opportunities for ranchers to grow their businesses. As part of the investment, Walmart will also have representation on Sustainable Beef’s board.

According to the announcement, the investment will allow Sustainable Beef to open its facility in late 2024, with ground breaking in September. The facility is expected to create more than 800 new jobs and an additional processing capacity of 400,000 per year for the cattle industry.

David Briggs, CEO of Sustainable Beef, LLC, said teams are now in place, a moment that has been two years in the making. He said it’s a happy day for North Platte. For cattle producers, that means working on more tack room.



“We’re only going to be about 1½ percent of the national cattle supply, but just having another buyer will add a little more competition there,” he said.

He said Sustainable Beef, LLC, has contracted with a number of cattle feedlots to provide the estimated 1,500 head per day capacity the facility will have once fully operational.



“We need every packing plant in the nation running at full steam to feed our country,” he said. “We just wanted to add some extra tack room because the last few years we’ve had more cattle than tack room. It’s a real co-op model, producers who wanted to participate in it would have a place they own to work their own cattle.”

WALMART AGREEMENT

He said the agreement with Walmart allowed the project to go from conception by the boy raising his cattle to getting the genetics right, all the way to the consumer.

“We have everyone in the boardroom with the same idea,” he said. “We have to make this whole system work, and we have to deliver a consistent, quality product to the consumer. We have created a special organization and time will tell how it works.”

Walmart, as the nation’s largest retailer, has brought together what it calls the 4Cs – city, livestock, capital and beef consumption, with the latter being the biggest obstacle. Walmart has the beef market, he said, and Sustainable Beef has the quality cattle through its producers. It also provides transparency for the consumer, who, he said, can know the history of a cut of beef all the way back to the ranch.

Sustainable Beef LLC will work with cattle feeders and ranchers to pursue the five freedoms outlined in Walmart’s 2015 Animal Welfare Position: freedom from hunger and thirst; freedom from discomfort; freedom from pain, injury or disease; freedom of expression of normal behavior; and freedom from fear and suffering.

As part of the company’s stance on antibiotic use, manufacturers will be asked to adopt and implement the American Veterinary Medical Association’s Principles for Judicious Use of Antimicrobials.

Walmart is one of the major retailers promoting its commitment to the economic viability of the nation’s livestock producers. In January 2020, the company announced the opening of a facility that supplies ready cuts of Angus beef 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 the company provided to the Georgia Wildlife Federation, local police and Second Harvest of South Georgia.

In 2019, the retailer announced its partnership with farmer Bob McLaren’s 44 farms in Texas. According to reports in Progressive Farmer, in addition to selling seed stock, 44 Farms includes two calf feeder programs: the NeverEver3 (NE3) calf feeder program and the new Prime Pursuits calf feeder program for Walmart. With the Walmart program, the beef produced will come from cattle that meet these criteria: no added hormones, mostly “Angus Strong” genetics, meeting the USDA definition of Angus, weaned for a minimum of 45 days, with no more than 90 days between from the youngest to the oldest in a group and subjected to minimal sorting by a representative of 44 farms to ensure uniformity. According to the article, 100,000 head were needed in 2019 and were fed by Mc6 Cattle Feeders, Inc., in Hereford, Texas, with the rest at a feedlot in Nebraska. The cattle were then slaughtered at Creekstone Farms in Kansas and packaged at FPL Food in Georgia, which were expected to add 250 and 200 jobs, respectively. The beef is sold under the McClaren Farms label at Walmart stores in Alabama, Florida, Georgia, Mississippi and South Carolina.

INVESTING IN BEEF BREEDERS

Walmart called the investment in Sustainable Beef LLC the latest step in the retailer’s commitment to increase access to high-quality, affordable beef for its customers, while increasing beef production capacity and ensuring the long-term economic viability of ranchers.

Baxter Anders, who owns two of South Dakota’s largest auction markets with his wife, said Walmart’s investment in meatpacking is no surprise.

“As far as the plant itself, it makes perfect sense for them to have Walmart as a partner — it guarantees a buyer for their product,” he said.

He pointed out that the commercial-size plant planned for North Platte is not competitive with smaller local plants that will process several heads per day. “These smaller plants sell half a kilo of hamburger or a couple of steaks to customers, along with processing carcasses to sell directly to consumers. Walmart obviously has a different customer base. Their customers are not as concerned about supporting local businesses.”

Will the Walmart investment be a boon for local growers and grocers? Will they buy cattle locally, use cattle from their 44 Farms partnership, or use imported cattle? Of course, that remains to be seen, Anders said. “Obviously they (Walmart) are going to do what makes money and only what makes them money. If something works for them, they’ll do it,” he said.

Anders is really looking forward to Walmart’s recent foray into cattle supply, and now ownership of the processor will likely mean a better experience for their beef customers.

“I would say it will greatly improve the quality of the meat at Walmart. They procure great cattle. The cattle they buy in this area are quality cattle – they were good long before Walmart and 44 Farms,” he said.

In its news release, Walmart mentions a “commitment to improving grazing management.”

“We know Sustainable Beef LLC has a responsible approach to beef processing that includes creating long-term growth for ranchers and family farmers. This investment provides greater visibility into the beef supply chain and complements Walmart’s commitment to regeneration to improve pasture management,” said Tyler Lehr, senior vice president of merchandising for deli, meat and seafood, Walmart USA

Anders said he is aware of producers in his region who participate in Walmart’s 44 Farms program, which generally provides buybacks for certain producers who buy 44 Farms bulls from the Texas program and meet a list of requirements. He’s heard mixed reviews from those he’s spoken to. As for Walmart’s commitment to improving grazing management, Anders said, “That’s what comes downstream. It seems 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 farmers are experienced turf 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 run their place? Someone with no ties to the land, no sentimental ties. I’m not saying we can’t take advice from someone from time to time who also has ties to the land, like the NRCS (Natural Resources Conservation Service). These people know the grass in the area. But something like this is related to control over the head of the breeder. This is not a way of managing the grass, but a way of manipulating the supply in the agreement they have with the farmer.

Still, Walmart’s investment in the packaging industry is no surprise and could be the start of greater retail integration into the packaging industry, he said.

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