The Good News is – it’s Good NewsWritten by Dennis Sun
Published: 19 November 2011
Whenever Wal-Mart makes a change or tries something different, there is always a loud thunder overhead, as they’re one of the “big boys” in retail.
Wal-Mart is the largest grocery merchant in the U.S., with sales of $260 billion, and over half of that from groceries. As we all realize, Wal-Mart is not just big, it is huge, and not only in America, but the world over.
When Wal-Mart announced a couple weeks ago that they would add Choice beef products to the meat counters in all of their stores – some 3,800 of them in the U.S. – beef producers welcomed the news while other retail grocers were left scratching their heads.
Wal-Mart will still offer Select cuts of beef, in keeping with their tradition of low-cost items, but we hear for the last three months they’ve been buying Choice beef. It is, in part, a larger effort to bring the company out of a sales slump in their U.S. stores; they have had nine consecutive quarters of sales declines in stores open at least a year. They wanted to bring in new customers with more upscale merchandise and an organic food products line, but I guess it didn’t go over too well.
Some say this will increase the price of Choice beef and lower the price of Select beef, which makes sense, and it is said that it’s already happening, due to the lowering of Select prices. For those who follow the Choice-Select spread and understand it, I envy you. I always thought it was like being in tune with the futures markets – it’s hard to get an understanding, but once you get a grasp it makes sense. Selling more Choice beef is good for cattle producers in Wyoming. Drovers CattleNetwork says, “Currently we produce 63 percent Choice carcasses and 29 percent Select carcasses in the U.S.”
What we don’t know yet is what the effects will be of the other Wal-Mart decisions. They just announced plans to purchase and sell $1 billion worth of food grown by one million smaller-sized farmers around the world. They also expect to double sales of locally purchased produce in the U.S. by the end of 2015. Unless things change drastically in Wyoming, I don’t see it happening here.
The plus of all of this is that Americans will eat a better beef product, while on the ranch and feedlot we won’t just think in terms of more and more pounds of just beef. In the recent past, many thought that, with the narrow spread of Select to Choice, they were giving away the Choice product. Hopefully selling the higher quality product at Wal-Mart will help the Wyoming producer.
There are those suppliers for Wal-Mart who really get nervous whenever there is a change from Bentonville, Ark., as they are so big. Wyoming produces some of the best beef and lamb in the U.S. We stand behind our products, and we hope Wal-Mart will, also.