NORTH PLATTE, NE — It’s long odds; starting up a 1,500 +head per day beef processing plant and expecting to stay in business. Cattlemen have tried establishing their own beef processing operations before, with limited success. New operations can’t bring to bear the economies of scale that the ‘big four’, owned primarily by Brazil and China interests, can…and do.
But hold your horses.
There’s a new partnership in town that could change the face of worn-out equations with modern marketing dynamics that could change the outcome.
(Or, it’s just more evidence of retail-integration into the cattle and beef business. The jury is still out on such relatively new – and few – partnerships.)
The latest development comes from a group of Nebraska ranchers and U.S. supermarket giant Walmart that has signed an agreement to acquire a minority stake in Sustainable Beef LLC, the rancher-owned beef processing company based in North Platte. Walmart will hold a minority interest in Sustainable Beef, with local investors and the project’s founding ranchers holding the majority, according to Sustainable Beef CEO David Briggs.
Walmart’s equity investment is part of a broader strategic partnership to source top-quality Angus beef from Sustainable Beef LLC’s new beef processing facility. This partnership helps supplement the current beef industry and provides additional opportunities for ranchers to increase their business, according to a news release from Walmart. As part of the investment, Walmart will also have representation on Sustainable Beef’s board of directors.
Sustainable Beef, LLC is building a new, modern beef processing facility on a 400-acre site east of North Platte. The plant will expand marketing opportunities for cattle producers, said Trey Wasserburger, one of the initial investors, who ranches south of North Platte. Sustainable Beef’s plans are to process 400,000 head per year (about 1,500 head per day), 100,000 of which will be cows. The plant would employ 875 workers and is expected to generate another 1,000 jobs in supporting businesses. Groundbreaking is scheduled in October 2022, with the facility opening in late 2024.
Impetus for the project grew during the COVID-19 pandemic and supply chain disruptions that caused financial hardship within the beef industry.
“At Walmart, we are dedicated to providing high-quality, affordable beef to our customers, and an investment in Sustainable Beef LLC will give us even more access to these products,” said Tyler Lehr, senior vice president of merchandising for deli services, meat and seafood, Walmart U.S. “We know Sustainable Beef LLC has a responsible approach to beef processing, one that includes creating long-term growth for cattle ranchers and family farmers. This investment provides greater visibility into the beef supply chain and complements Walmart’s regeneration commitment to improve grazing management.”
Briggs, CEO of Sustainable Beef LLC, (and longtime CEO of the Alliance-based WESTCO agricultural cooperative) says contracts have been secured with a number of cattle feeders to supply the estimated 1,500 head per day capacity the facility will have once fully operational.
“We set out on a journey two years ago to create a new beef processing plant to add some capacity to the industry and provide an opportunity for producers to integrate their business of raising quality cattle with the beef processing portion of the industry and do it in a sustainable manner, said David Briggs, CEO of Sustainable Beef LLC. “During this journey we found that Sustainable Beef and Walmart aligned on continuing to improve how we care for our animals and crops and provide consumers the positive experience of enjoying quality beef.”
Besides Walmart’s financial involvement, Briggs said, the federal Farm Credit System is the other major player in Sustainable Beef’s nine-figure financing for building the plant. Continued inflation, he said, has driven the estimated cost past the $325 million organizers have quoted for months. Briggs said he won’t confirm exact figures because they’re now considered proprietary information.
Briggs adds the local investors will own the majority of the company, including western and central Nebraska ranchers who are among founding members. That feature allows Sustainable Beef to maintain the “cooperative hybrid” business model that has been the organizers’ goal, said Briggs.
