Walmart opens first owned and operated beef packaging plant

As part of its efforts to build an end-to-end supply chain for Angus beef, Walmart (NYSE:WMT) opened its first owned and operated meat processing and packaging facility using beef sourced from Sustainable Beef LLC.

“This is the first case-ready facility fully owned and operated by Walmart, and that milestone ensures we’re able to bring more consistency, more transparency and more value to our customers,” Walmart’s VP of Food said in a statement.

Sustainable Beef LLC, in which Walmart has a minority stake, will provide the 300,000+ square-foot facility with Angus cuts which will then be packaged and distributed to Walmart (NYSE:WMT) stores across the Midwest.

While the Olathe facility will be the first Walmart-owned and operated beef packaging facility, the company also packages Angus beef at a 201,000 square foot facility operated by FPL Foods in Thomasville, Georgia.

Walmart’s increased efforts at vertical integration may be good for consumers, but producers worry that Walmart’s (NYSE:WMT) market dominance could impact competition within the beef industry.

“They are creating a temporary new marketing outlet for their animals, but if the whole industry follows this model, it will reduce options for themselves and other producers,” says Bill Bullard, CEO of R-CALF, a cattle producers’ advocacy group said to Successful Farming.

For Sustainable Beef, however, the partnership with Walmart (WMT) means the company now has a reliable buyer while Walmart (WMT) has a consistent source of beef without negotiating with individual ranchers or meat processors. Walmart (WMT) will also have greater control over feed prices and the sources of Sustainable’s livestock, giving Walmart (WMT) further price stability.

Grocery sales account for nearly two-thirds of Walmart’s U.S. revenue.