By Jamie Martin
Capitalism typically encourages private control of commerce within a competitive, decentralized market. However, Walmart’s decision to control the entire beef supply chain challenges the concept of a free market. By taking charge of everything from cattle genetics and feeding to slaughter and retail sales, Walmart is creating a closed, vertically integrated system for beef.
This shift towards vertical integration means that Walmart can dictate both the production and pricing of beef. With full control over the beef supply, Walmart can influence consumer demand by adjusting prices. For example, by raising beef prices, Walmart could encourage customers to purchase other meats like chicken or pork. This limits competition in the beef market, giving Walmart more power.
The shift to such a closed system can also hurt smaller ranchers. Walmart’s control of beef production and pricing could make it difficult for ranchers to maintain profitability, especially when they are not part of Walmart’s exclusive system.
Walmart’s approach is like what has been happening in the broader U.S. beef industry, where four large packers control most of the fed cattle slaughter. These packers can adjust slaughter rates and import cheaper beef, which affects domestic cattle prices. When imported beef is sold as domestic, it decreases demand for U.S. cattle and reduces prices for ranchers.
If Walmart and the beef packers gain more control over the industry, it could limit the potential for growth in the domestic beef market. To protect U.S. ranchers, it’s crucial to implement stronger antitrust laws, differentiate imported beef with labeling, and consider tariffs on cheap beef imports.
Photo Credit: istock-123ducu
Categories: National