One of the world’s largest supply chains is opening a case-ready beef plant and establishing its own angus supply chain.
Walmart’s new meat processing facility in Thomasville, Georgia is creating a lot of buzz in the industry. The 200,000 square foot facility opened earlier in February. It’s an effort by Walmart to establish its own angus supply chain from start to finish.
CoBank recently released a report about the plant.
“I think the first implications could be for the consumer,” says Will Sawyer, an economist with CoBank. “The Walmart consumer will have products available to them they haven’t seen before.”
Sawyer says the plant could create a push to higher-graded genetics. He believes the plant and the way it is run will be a test from the start to see if the industry changes from here.
“I think we’ll see many more retailers, maybe even a few restaurants get into the animal protein business,” says Sawyer.
He believes an end-to-end supply chain will not eliminate the beef packer today.
“As we know, beef packing capacity is in short supply,” says Sawyer. “This may one day, if the test goes well, we could see additional beef packing capacity. Who might own that capacity? That could be interesting.”
He says this is coming at a time when the industry suffered a hit with lack of capacity after the Tyson fire back in 2019.
However, there are some stipulations with its beef. CoBank says in its report how Walmart will need to convince customers that the attributes of this beef which is hormone free, traceable and potentially of higher grade, may make it not only worth buying but a reason to pay a premium.
“We are going to be adding capacity on the hormone free side,” says Sawyer. “[However, hormone free cattle are only] a few percent of the industry today. We will see if that customer is willing to pay that premium when it hits shelves the next few months.”
Sawyer says U.S. cattle producers, feeders, and packers will not likely suffer any significant near-term changes from Walmart’s entry, but its success could very well lead Walmart to make a bigger move in the future.