Why I'm Excited that Walmart Bought into Sustainable Beef

By Jennifer Hill

A plan to improve the heavily skewed beef market by building an independent packing plant in the heart of beef country hit the national news scene again last week when media outlets picked up the story that Walmart bought a minority share of Sustainable Beef LLC, the planned packing plant in North Platte, Nebraska. The story ignited a fire storm of debate, infighting and complaints from fellow beef producers.

Critics immediately declared the new investor a bad idea, likening Walmart to Tyson without giving the issue much thought. And it’s a shame, because this new investor really is a great thing for both Sustainable Beef, LLC and the ranchers who will feed into their plant. As ranchers we’ve been crying foul on the Big Four packers for years. While some believe further regulation is the best course to taming their monopolistic like control over the entire beef industry, I have consistently maintained that a private, free market competition based approach will not only be more successful at improving live cattle prices, but will also do us all the great favor of keeping more government out of our operations. Sustainable Beef, LLC is one of several proposed plants announced in the wake of 2020 and anyone with a brain celebrated these entrepreneurs seeking to create rail space. Sustainable Beef was immediately unique with a vision of a producer owned packing plant processing 1,500 cattle per day, a proposition that was previously unheard of. Of course they will need partnerships with retailers and investors, and why not the biggest of the bunch?

One of the least logical complaints repeated over and over again about the Walmart partnership is their current shelf space given to imported meat. If that’s your primary concern then how is Walmart’s deal with a domestically sourced beef plant anything but a great move? In fact, Walmart’s senior VP of meat stated that they are on a mission to make “the beef that America eats better.” Instead of throwing MCOOL or other new and costly labeling regulations at us (because if you’re being honest with yourself you know the packers will only pass those costs down to the ranchers, again), I can now chose to sell my cattle into a program that will then place those animals directly in a Walmart cooler where consumers can confidently purchase American beef. If domestically sourced beef is truly worth the premium that MCOOL advocates claim it will bring, we are about to witness proof of concept. Walmart is already a major buyer of American beef, so if you think you aren’t currently supplying them anyway, you are kidding yourself.  

Another complaint levied at the partnership is a Tyson comparison. Walmart is big, so is Tyson, so how can this be ok? Yes, Tyson is completely vertically integrated and that has  greatly diminished the American poultry farmer. Tyson owns the entire process, from chick hatching through meat distribution. Walmart is a retailer who has purchased a minority share of a packing plant, a partnership that helps Walmart address concerns about domestic sourced beef and improves Sustainable’s access to consumer markets. Cattle feeders risked their relationships with the Big Four by investing in a plant that will take two years to build, leaving the monopolistic big players plenty of time to enact retribution. My hat is off to them for risking so much and I honestly cannot blame them for welcoming minority shareholder help from bigger guns.

The reality is that competition in the packing sector was never going to happen without major, corporate backing. Construction of Sustainable is estimated at $397 million. With current inflation and labor issues, I doubt that price tag holds. If you truly believe that competition is the best medicine for market woes then you must realize that competition was never going to occur without strategic partners who have deep pockets. Why not a retailer? And why not the biggest retailer of them all?  

Perhaps what really bothers the nay-sayers is that Sustainable Beef, LLC has done all of this on their own. They formed a group of like-minded individuals, worked their tails off to get funding, approvals and support, and despite more hurdles being thrown at them than you or I can fathom they are still moving forward, without the help of any membership based rancher advocacy groups. All at a time when those same groups have worked very hard to convince us that we cannot possibly find success in the agriculture space without them and their machine. It’s no wonder that their mouthpieces are uneasy.

Or perhaps the negativity stems from a bit of that old green monster, jealously. Lord knows that the beef business hasn’t been great for a lot of players in the last few years and it can be hard to look at a group of entrepreneurs finding success and making big moves without a bit of envy. But at the end of the day if you don’t like Sustainable Beef, LLC’s partnership with Walmart then you have a very simple solution, don’t sell to them or the feedlots that feed into them. Or better yet, band together with your own like-minded individuals and build another new packer to do things your way! The more competition, the better off we all are. Of course it is easier to cut a check to whatever your flavor of rancher advocacy group is and hope they can twist the legislative arm into rescuing you. I mean it hasn’t worked in the last 75 years, but maybe this time, right?

Was the partnership move an unexpected surprise? Yes. And it’s ok if it takes some time to wrap your head around. However if you turn off your visceral reaction to the word “Walmart” and think logically about the needs of the American rancher and beef consumer it’s hard to deny that a partnership between the two that completely cuts out the Big Four is a good move.

Daylight Burners may remember the May 18th episode which featured an interview with Trey Wasserburger, a key player in the plant. If you didn’t catch that interview I’d highly recommend going back and giving it a listen here.