We recently tried some wagyu pre-made ground beef patties. They were priced right, and our taste test rated them very good. They came from Walmart.
Walmart’s acceleration from only Select grade beef to Choice and some Prime has been pretty fast by retailer standards. Sam’s Club carries Prime briskets and steaks.
In 2021, we visited a diversified beef outfit in Augusta, GA, FPL Food, that has a purebred cattle operation, a feedlot and a packing plant. And, in an unusual twist, it also manages a processing plant for Walmart. All of this was designed to take advantage of feed and cattle in Georgia for southeast retailers and food service operations.
Back in February in this column, we covered some of the hurdles smaller packing plants (1,500 head/day) face in competing with the large-scale majors. Those considerations came from Bill Rupp, a major packer veteran of Cargill and JBS. Rupp was a consultant on the Sustainable Beef project in North Platte, NE. He said at last year’s National Western Red Meat Club that it was the one plant proposal he had reviewed that had realistic potential. The participation of local ranchers and feeders would be critical to its success.
The challenges of capital and key customers were solved for Sustainable Beef when Walmart announced it would take an equity position, specifically to source top-quality Angus beef. Walmart will have a minority stake, board representation and get the majority of plant output. The project broke ground in September and plans to be operational in late 2024, with cows being one-quarter of the harvest.
Walmart said it wanted the investment and partnership to support cattle ranchers and family farmers, and the plant “complements Walmart’s regeneration commitment to improve grazing management.” It has pledged to protect and restore 50 million acres.
By contrast, American Foods Group (not one of the Big Four but a strong player in processing), broke ground on a 2,400-head complete harvest and processing facility in Wright City, MO. The $800 million plant will be about 30 miles west of the greater St. Louis area and expects to open by 2024’s end. The company already has four harvest and processing facilities plus two ground beef processing plants and two case-ready processing plants in Wisconsin, Minnesota, South Dakota and Nebraska.
American Foods President and Chief Operating Officer Steven Van Lannen said the company is responding to beef demand and the need for processing capacity. The company is a privately-owned unit of Minnesota’s Rosen’s Diversified. American Foods’ headquarters are in Green Bay, WI, and the company supplies a full range of beef for food service and retail.
Tyson will begin construction this fall on a $200 million expansion and upgrade of its plant in Amarillo, TX. The work will include improved water and energy conservation and efficiency and some automation. And for workers it will include improved safety, ergonomic processes and comfort. Staffing is to remain about the same.
True West’s new plant in Jerome, ID, is slated to be operational in 2022. It will eventually handle 1,500 head/day and is a joint project of Agri Beef and regional ranchers and feeders.
USDA has also announced a nearly $20 million grant to Greater Omaha Packing Co. The grant will help pay for a $100 million expansion over four years to add 700 head/day of capacity to its current 2,400-head harvest.
The beef plant whose plans are newest is Producer Owned Beef, projecting a 3,000 head/day plant near Amarillo. Construction is to begin in 2023, with expectations for the plan to be operational in late 2025. The plant is literally to be producer owned; cattlemen will have to be part-owners to sell cattle to the plant, with estimates that 100 cattle operations could participate.
The plant is being designed to treat and use the plant’s water to irrigate hay, silage and wheat through center pivots. Cattlemen from anywhere can invest and sell cattle to the plant, but cattle have to be fed in the Texas, New Mexico and Oklahoma Panhandle area.
Cassie Fish, executive vice president of Producer Owned Beef, said the goal is to capture the margin from the processing side to put back into the local production chain.
Probably the biggest question about the new capacity is how it will mesh into the cattle cycle and drought. After that will be the labor to run these plants.
For those questioning the operation of the beef production chain, the sometimes gradual, sometimes sudden response of boxed beef and cattle prices has again demonstrated that supply and demand still rules. And despite tough times for consumers and the economy in general, beef demand continues to show that people will pay for high-quality beef. — Steve Dittmer, WLJ columnist
(Steve Dittmer is the author of the Agribusiness Freedom Foundation newsletter. Views in the column do not necessarily represent the views or opinions ofWLJor its editorial staff.)
