OMAHA (DTN) -- Walmart has announced plans to build the company's first owned and operated case-ready beef facility, which will be built in Olathe, Kansas, starting later this year.
The retailer giant stated the company is continuing its plans to develop an end-to-end supply chain for Angus beef "with a goal of providing more options for consumers seeking higher-quality meat."
Economists who follow the livestock and beef industries said Walmart's move reflects a growing trend led by traditional packers to develop more case-ready facilities in different locations from the plant where cattle are processed.
"It isn't a new thing. Other meat processing plants have case-ready or steak-cutting facilities," said Elliott Dennis, a livestock marketing and risk management professor at the University of Nebraska-Lincoln. "There is value to be captured there and it gives them more flexibility about where the meat can go."
Elliott added he wasn't aware of another retailer that has built its own case-ready facility. One reason a retailer might develop such a facility is the lack of people with meat-cutting skills at local store meat cases.
Walmart expects to employ more than 600 people at the facility, which will take larger beef cuts from a packing plant being built in North Platte, Nebraska, and will further cut and package that beef for Walmart meat cases in Midwest stores.
"Once opened, our new facility in Kansas will package and distribute a selection of Angus cuts from Sustainable Beef LLC in North Platte, Nebraska, to serve our stores across theâ?¯Midwest," the company stated.
MINORITY STAKE IN BEEF PLANT
The boxed beef will come from Sustainable Beef LLC., a plant that Walmart owns a minority stake in that was announced last year. The plant in North Platte is expected to process as much as 1,500 head a day and is targeted to open in late 2024.
Walmart's announcement ties into a plan the company initially launched in 2019 to develop an end-to-end supply chain for Angus beef.
"It's a continuation of Walmart's strategy as they highlight to be end-to-end business operations in the beef supply chain," Lee Schulz, an agricultural economist at Iowa State University, told KCUR Radio.
Schultz added cost may be another driver for Walmart as well, as beef prices have increased about 15% in the last couple of years. Beef prices are expected to continue to rise because of the smaller national herd.
"It's going to hit us like a ton of bricks next year," Schulz told the radio station. "(Beef) production is forecast to be down 7 (to) 8%. So, prices are going to start to increase."
Chris Clayton can be reached at Chris.Clayton@dtn.com
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