Tuesday February 4 Ag News

Nebraska Farm Bureau Sets 2020 Agriculture Policy Priorities

The Nebraska Farm Bureau Board of Directors have set the organization’s public policy priorities for 2020. Each year the Board identifies priorities to guide the organization in its efforts to support Nebraska’s farm and ranch families.

“There are many issues that impact our farms and ranches. It’s no secret that when agriculture does well, our rural communities thrive, and our entire state benefits. To that end, it’s imperative we focus on the areas where we can do the most good in helping our members be successful,” said Steve Nelson, Nebraska Farm Bureau president. “At the end of the day, every policy issue we work on is connected in some way to helping our members keep their operations viable in a world where weather, markets, technology, and other economic forces are constantly changing.”

Nebraska Farm Bureau’s state policy priority list for 2020 includes:
-    Reducing Nebraska’s overreliance on property taxes and seeking a more balanced system to fund education.
-    Growing Nebraska’s livestock sector and value-added agriculture.
-    Expanding farm and ranch access to high quality broadband service statewide.
-    Proactive engagement on both state water quality and quantity issues.
-    Making sure regulations are workable for Nebraska farms and ranches.

Nebraska Farm Bureau’s national policy priority list for 2020 includes:
-    Continuing to promote and work to expand international markets for Nebraska agricultural products.
-    Ensuring federal regulations and federal programs work for farm and ranch families including:
          + Appropriate allocation of federal assistance to expand broadband access in rural areas;
          + Protecting farmers’ access to modern farming technology, veterinary medications, and crop protection tools;
          + Proper implementation of renewable energy mandates;
          + Monitoring conservation compliance implementation and appeals process;
-    Defending animal agriculture production and supporting policies to enhance profitability.
-    Ensuring farmers and ranchers can meet their labor/workforce needs.

“Our mission is to enrich the lives of Nebraska’s farm and ranch families and by working in these areas we can help create opportunities for our members to prosper,” said Nelson.



Ethanol Board invites fuel retailers to E15 Workshop Feb. 20 in Lincoln

Dan O’Neill, president and CEO of Kwik Stop Convenience Stores, attended an E15 Retailer Workshop. Now, O’Neill will be adding blender pumps for E15, E30 and E85 at five Kwik Stop locations. According to the Board, O’Neill is one of many attendees who have given positive feedback and plan to start the process of selling E15.

“Since January 2019, we’re aware of more than 30 new E15 locations in Nebraska, bringing the total to more than 85 in the state,” said Roger Berry, Nebraska Ethanol Board administrator. “And that number is quickly growing. It is very encouraging and it shows that retailers are seeing the value in adding E15. We’re hosting these free workshops to make the process even easier. Our speakers present but also answer questions about regulations, share the hiccups they may have faced, and talk about grants to make implementation more affordable.”

The Board will host its third E15 Workshop Feb. 20 at Hyatt Place in downtown Lincoln, from 1:30 to 5 p.m. Robert White, VP of Industry Relations with Renewable Fuels Association (RFA), will kick off the workshop as keynote. According to RFA, there was enough E15 sold in 2019 to fuel nearly 650,000 vehicles for the entire year. RFA noted there are many reasons for continued optimism, including the USDA’s new Higher Blends Infrastructure Incentive Program that is in the works, and the administration has committed to streamline E15 labeling and to reduce other barriers.

Some retailers have been reluctant to retrofit their pumps for E15 due to misconceptions about cost and installation.

“Many gas stations can begin to sell E15 with very little investment in their current infrastructure,” Berry said. “That’s why we are holding this complimentary workshop to debunk the myths and allow retailers to hear firsthand from others who’ve gone through the process.”

Berry explains that the installation depends on everyone’s unique circumstances, but it can be as simple as a quick switch.

“If a pre-blended E15 is available at the rack where the fuel retailer sources their fuel, they can often times replace one of their current choices, such as an 89-octane mid-grade that they generally sell less of, with very little to no investment. The retailer does not have to install the more expensive blender pumps in order to sell E15.”

Additionally, some of the cost burdens can be relieved through various grant programs that award qualifying retailers money for equipment and infrastructure to offer higher blends of ethanol fuel.

To see the full agenda and to register, please visit ethanol.nebraska.gov.

Previous participants have said:
       “I found the Fuel Retailer’s E15 Workshop to be fascinating. It was very informative and I learned a lot about the ethanol industry. We already sell some E15, but this inspired me to work toward making the switch to E15 at more locations. I also learned some good ideas to better promote the product and grow our sales.”

       “We have been pondering whether to take on E15. With what I learned and will be sharing with my team, I feel pretty strongly that we will be making the move. The E15 workshop was very educational and helpful.”

The workshop is free thanks to the event sponsors: Midwest Petroleum Equipment, Nebraska Corn Board, Renewable Fuels Nebraska, Nebraska Fuel Retailers Association, and the Nebraska Ethanol Board. Light snacks and beverages will be provided throughout the afternoon.

Recent stats from Growth Energy report there are 2,081 retail locations in 30 states offering E15. The increase in E15 sales will provide an additional value-added market for Nebraska farmers and ethanol plants who experienced a challenging last year. Weather, the strain of tariffs that have cut U.S. exports drastically, and the EPA’s indiscriminate approval of small refinery exemptions (SREs) are weighing heavily on the industry. Fuel retailers who offer E15 will not only be driving customers seeking lower costs and environmental change to their stores, they will have a real impact on Nebraska’s farmers and economy, Berry said.



 2020 BEEF FEEDLOT ROUNDTABLES IN BRIDGEPORT, LEXINGTON, WEST POINT

Beef feedlot managers, owners, employees, and allied industries will learn new information related to feedlot nutrition and health at Nebraska Extension’s 2020 Beef Feedlot Roundtables Feb. 18-20 in Bridgeport, Lexington and West Point.

University and industry representatives will speak about improving the safety and health of employees, open pen management and repair and beef sustainability.

Employee safety is always a priority and various resources will be provided to address that issue. With recent weather challenges, discussions will center around pen maintenance options such as roller compacted concrete and the use of fly ash.

New research pertaining to beef sustainability and the beef industry as a whole will be shared. A Nebraska research update from Nebraska Feedlot Extension Specialist Galen Erickson will conclude the program. Topics from the 2020 beef report include water, shade, implants and more.

Pre-register online at https://go.unl.edu/2020roundtable by Feb. 14. Cost is $20 for those who preregister and $30 for those who have not preregistered. Payment for both will be collected at the door.

Registration begins at 12:30 p.m. at each location with welcome and introduction at 1 p.m. Roundtables will conclude at 4:30 p.m. Refreshments will be served at the meeting.

Exact dates and locations are as follows:
    BRIDGEPORT: Feb. 18, Prairie Winds Community Center, 428 N Main St.
    LEXINGTON: Feb. 19, Dawson County Extension Office, 1002 Plum Creek Parkway
    WEST POINT: Feb. 20, Nielsen Community Center, 200 Anna Stalp Ave.

For more information or to request a registration form, contact Galen Erickson at 402-472-6402 or gerickson4@unl.edu.

2020 Beef Feedlot Roundtables are sponsored by Nebraska Extension and the Nebraska Beef Council.



Deadline to comment on new rule for conservation program approaching

The U.S. Department of Agriculture is now accepting public comments on its rule addressing the Environmental Quality Incentives Program (EQIP).

The new rule, a result of changes made as part of the 2018 farm bill, was announced in December. The deadline to comment is Feb. 18.

EQIP is one of the nation’s largest conservation programs. It helps producers make conservation work for them by investing in practices that conserve natural resources while improving agricultural operations. In 2018, there were approximately 13.7 million acres covered under active and completed contracts.

The rule changes include creating a new enrollment option of incentive contracts and incentive payments, providing for an advance payment option for historically underserved producers, and offering increased payments for producers participating in the EQIP-Organic Initiative. It also expands opportunities for farmers and ranchers to participate in the Conservation Innovation Grant program, through innovative on-farm conservation and building soil health trials.

“The Center for Rural Affairs is a strong supporter of EQIP because it offers farmers and ranchers a valuable entry into conservation by offering cost-share for individual conservation practices,” said Anna Johnson, policy manager for the Center. “The comment period is an extremely important time for farmers’ and ranchers' voices to be heard, as USDA is required to read and address each comment they receive.”

The Center has created a guide for submitting a comment at cfra.org. Anyone needing assistance can email annaj@cfra.org or kateh@cfra.org or call 515-215-1294.

Farmers and ranchers interested in enrolling in EQIP can contact their local NRCS office. In 2020, the USDA’s Natural Resources Conservation Service is expected to make $1.2 billion available nationwide for EQIP enrollment.

“We encourage farmers and ranchers interested in starting new conservation activities to apply to participate in EQIP,” Johnson said. 



Farm Succession Workshop in Pender to Offer Planning Strategies, Financial Tools

Nebraska Extension in Thurston County will host a two-part farm succession workshop in Pender for agricultural landowners, ranchers and farmers thinking about how they should proceed with plans to retire, exit or transfer the farm or ranch business. 

The series will be held March 12 and March 16, 1:30-3:30 p.m. each day, at the Pender Fire Hall, 314 Maple St.

Presenters will include Allan Vyhnalek, a Nebraska Extension educator, and Brandon Dirkschneider, a certified financial planner. Vyhnalek specializes in farm succession in the Department of Agricultural Economics at the University of Nebraska-Lincoln and Dirkschneider is a certified farm transition coordinator.

 “Retiring or passing the farm to the next generation is difficult to think about and is an admission of your own impending demise,” said Allan Vyhnalek. “However, it is a necessary step and, with good planning, can be made as painless as possible.”   

The workshop is free, but registration is requested and can be completed by contacting Nebraska Extension in Thurston County at 402-385-6041.

The sessions will cover the importance of having a plan, proper family communications and proper family negotiations, as well as tools for estate planning and other financial strategies.

“Reactions from past participants can be summarized into one comment:  most wished that they had attended this workshop years earlier,” said Vyhnalek. “This program gives a good outline of the process farm and ranch businesses need to take to start or restart that process.” 

Two-part farm succession workshop
March. 12, 2020 and March 16, 2020
1:30-3:30 p.m.
Pender Fire Hall
314 Maple St.
Pender, NE 68047
Registration: 402-385-6041

For more information on Extension resources for transition in Nebraska, visit https://agecon.unl.edu/succession.



UNMC, Nebraska Extension offer Tractor Safety Course to Teens Across Nebraska this Summer

Members of the Central States Center for Agricultural Safety and Health at the University of Nebraska Medical Center, College of Public Health will provide a tractor safety course in May and June of 2020 at 11 sites across Nebraska in partnership with Nebraska Extension. The course provides extensive training on tractor and all-terrain vehicle safety with a variety of hands-on activities. Instilling an attitude of ‘making safety a priority’ and respect for agricultural equipment are primary goals of the course.

Teens 14 or 15 years of age who work on farms, or others who are interested in learning about safe farming practices, are encouraged to register for the Nebraska Extension Tractor Safety & Hazardous Occupations Course. Anyone under age 14 is not eligible to take the class.

Federal law prohibits children under 16 years of age from using certain equipment on a farm unless their parents or legal guardians own the farm. However, certification received through the course grants an exemption to the law allowing 14- and 15-year-olds to drive a tractor and to do field work with certain mechanized equipment.

Susan Harris-Broomfield, University of Nebraska Extension Educator reports that a common cause of agricultural-related injuries and deaths in Nebraska is overturned tractors and ATVs. She emphasized that this course is designed to train students how to avoid these incidents as well as many other hazards on the farm and ranch.

Cost of the course is $60 and includes educational materials, instruction, supplies, and lunch.
The first day of class will cover the required elements of the National Safe Tractor and Machinery Operation Program, hands-on participation, concluding with a written test which students must pass to attend the second day of training.

The second day of training will include a driving test and equipment operation and ATV safety lessons. Students must demonstrate competence in hitching and unhitching equipment and driving a tractor and trailer through a standardized course. Instructors will also offer education about safe behaviors and laws for ATVs, utility-task vehicles (UTVs), and other off-road vehicles (ORVs).

Instructors for the course are members of the Central States Center for Agricultural Safety and Health: Aaron Yoder, Ph.D., Ellen Duysen, MPH; UNMC graduate student Alyssa Damke; and Nebraska Extension educators Troy Ingram, Randy Saner, Chandra Giles, and John Thomas.

Classes begin at 8 a.m. or 9 a.m., depending on location, and end times vary depending on the number of participants.  If classes do not fill to the minimum of 10 participants, an option will be offered to do Day 1 training online and Day 2 in person.

Dates, training site locations, and site coordinator phone numbers include:
May 28 & 29 – Wayne, Fairgrounds (402) 375-3310;
July 1 & 2 – Weeping Water, Fairgrounds, (402) 267-2205;

For more information or to register, contact the appropriate Extension office above.  The registration form is located at kearney.unl.edu.




New Videos Are Geared Toward Alternative Producers

Three new video resources were added to the Pork Information Gateway (PIG) today to aid producers who focus on raising pigs using alternative methods of production. Two videos focus on biosecurity and one on sourcing feed.

“The Pork Information Gateway offers extensive resources for producers, educators, Extension staff and even students,” said Beverly Durgan, director of Extension at the University of Minnesota and U.S. Pork Center of Excellence (USPCE) board of director chairman. “The new videos are the perfect addition to the online library, especially at a time when producers are strengthening their biosecurity and sourcing their feed more strictly.”

The new videos are:
    Alternative Pork Production: How Diseases can be Transferred to the Farm,
    authored by Dave Stender and Kristin Olsen, Iowa State University.
    Alternative Pork Production: Keeping Disease off the Farm, authored by Stender and Olsen.
    Sourcing Feed for Alternative Production Systems, authored by Jonathan Holt, North Carolina State University.

The scripts for the videos were completed in partnership with North Carolina State University and Iowa State University and funded by the USPCE. PIG, which is managed by the USPCE, is a free online resource library for producers, educators, industry professionals and youth.

“The biosecurity videos demonstrate how important such things as a line of separation are,” said Chelsey Van Genderen, USPCE program manager. “The other video depicts what a producer should look for when sourcing the ingredients for their feed. Understanding the importance in these areas can help make producers better caretakers of their pigs.”

These resources are a great starting point for alternative, small or beginning farmers, Van Genderen noted. They add to the existing fact sheets, how-to guides and videos already available on the PIG on a variety of topics.

In addition, the Pork Checkoff recently updated its webpage, Alternative Pork Production https://www.pork.org/production/niche-pork/, for producers seeking direct information on education, research and promotions applicable to them.



RFA Analysis Finds Record E15 Sales in 2019

A new Renewable Fuels Association analysis found that approximately 500 million gallons of E15 were sold nationwide in 2019, setting a new record and proving that the Trump administration’s elimination last summer of an obsolete regulatory barrier is working. However, sales would have been even stronger if not for the Renewable Fuel Standard compliance exemptions granted by EPA to dozens of refineries.

E15 sales in Minnesota—the only state that tracks monthly purchases of higher ethanol blends—increased by nearly a third in 2019, compared to 2018. The review by RFA Chief Economist Scott Richman extrapolated the Minnesota data nationally, finding that 499 million gallons of E15—containing 75 million gallons of ethanol—were sold across the country in 2019.

Prior to 2019, sales of E15 had been prohibited each year during the summer months in areas where conventional gasoline is sold. In May 2019, the EPA allowed E15 to be sold year-round by extending to it the vapor-pressure waiver that was already available for E10 blends.

As good as this news is for the ethanol industry, the data also suggest something else: The impact of small refinery waivers under the RFS definitely took a toll. On a per-station basis, sales of E15 were actually lower in the first several months of 2019 than during the same period in 2018. What changed? The EPA granted numerous RFS exemptions to small refineries, causing the price of RFS compliance credits (RINs) to plummet. Low RIN prices diminished the incentive for retailers to offer blends with higher ethanol content and reduced their ability to discount higher blends relative to gasoline.



CWT Assists Member Export Sales of Three Million Pounds in January

CWT assisted member cooperatives in securing 32 contracts resulting in sales of 1.3 million pounds of American-type cheeses, 328,489 pounds of butter, 661,387 pounds of whole milk powder and 644,852 pounds of cream cheese. The product is going to 25 customers in Asia, Central America, the Middle East, Oceania and South America. The product will be shipped during the months of January through April 2020.

These transactions will move the equivalent of 29.4 million pounds of milk on a milkfat basis overseas. This is in addition to the milk equivalent 110 million pounds of products CWT assisted members to sell in 2019 that will be shipped in 2020.

Assisting CWT member cooperatives to gain and maintain world market share through the Export Assistance program, in the long-term expands the demand for U.S. dairy products and the U.S. farm milk that produces them. This, in turn, positively impacts all U.S. dairy farmers by strengthening and maintaining the value of dairy products that directly impact their milk price.



Dairy Margins Remain Well Above DMC Trigger on Prices
NMPF

The margin for December 2019 under the Dairy Margin Coverage program was $11.95 per cwt., $0.26 per cwt. lower than the November DMC margin, with falling milk prices more than offsetting a drop in feed costs. The margin remains well above the trigger necessary for DMC assistance.

From November to December, the all-milk price dropped by $0.30 per cwt., to $20.70 per cet., and the DMC feed cost calculation was $0.04 lower. USDA’s DMC Decision Tool projected at the end of January that the DMC margin would fall sharply for that month and remain well below its late 2019 values through this spring, the slowly rise to just above $11.00 per cwt. by the fourth quarter of 2020. This drop would be mainly generated by a drop in milk prices. Other forecasts also point to a milk-price decline at the beginning of 2020, but not as steep as the USDA Tool projected. The USDA DMC Tool does not currently indicate that the DMC margin would drop below $10.00 per cwt. anytime during 2020, thus staying above the trigger level of $9.50/cwt. and generating no payments this year.

As of Jan. 27, USDA reported that 12,989 dairy operations, or 47.64 percent of operations with production histories, had enrolled in the 2020 DMC program. Many of these enrollees are operations that signed up for 5-year coverage last year. Enrolling in the DMC program at the generous coverage and affordable premiums available will always be a highly recommended risk-management option for dairy farmers.



USDA Dairy Products December 2019 Production Highlights

Total cheese output (excluding cottage cheese) was 1.11 billion pounds, 0.2 percent above December 2018 and 1.3 percent above November 2019.  Italian type cheese production totaled 471 million pounds, 1.7 percent below December 2018 and 0.7 percent below November 2019.  American type cheese production totaled 457 million pounds, 1.9 percent above December 2018 and 5.0 percent above November 2019. Butter production was 177 million pounds, 4.0 percent above December 2018 and 13.9 percent above November 2019.

Dry milk products (comparisons in percentage with December 2018)
Nonfat dry milk, human - 164 million pounds, up 15.3 percent.
Skim milk powder - 52.8 million pounds, up 4.8 percent.

Whey products (comparisons in percentage with December 2018)
Dry whey, total - 79.8 million pounds, up 7.1 percent.
Lactose, human and animal - 93.7 million pounds, down 15.1 percent.
Whey protein concentrate, total - 42.8 million pounds, down 2.2 percent.

Frozen products (comparisons in percentage with December 2018)
Ice cream, regular (hard) - 49.9 million gallons, up 13.8 percent.
Ice cream, lowfat (total) - 25.2 million gallons, down 10.5 percent.
Sherbet (hard) - 1.84 million gallons, down 12.2 percent.
Frozen yogurt (total) - 3.11 million gallons, down 0.7 percent.



Thousands Gather in San Antonio for Annual Cattle Industry Convention and NCBA Trade Show

The largest annual gathering of the beef industry began today in San Antonio, where more than 9,000 cattle producers, industry partners, and stakeholders gathered for the first day of the 2020 Cattle Industry Convention and NCBA Trade Show.

The event, which continues through February 7, provides a platform for education, policy development, and networking.

“This week is about serving America’s cattlemen and women,” NCBA President Jennifer Houston said. “Our goal is to fill the convention with opportunities that add value to our attendees by delivering critical information about the state of our industry, as well as providing a platform to discuss important issues impacting individual ranchers.”

The convention will deliver an impressive speaker lineup which includes U.S. Department of Agriculture Secretary Sonny Perdue. Astronaut and retired U.S. Navy Capt. Scott Kelly will also discuss his record-breaking year in space aboard the International Space Station.

Educational opportunities are available throughout the convention, including through Cattlemen’s College, which presents cutting-edge curriculum to ranchers that helps improve returns for cattle operations.

Convention-goers may also find time to visit the seven-acre tradeshow floor that contains an educational learning lounge, policy roundtables, live cattle handing demonstrations, and horse health sessions.

NCBA’s top-tier entertainment has attendees excited as well. Thursday’s Sunset Music Festival and Friday’s 2020 Professional Bull Rider Invitational allow ample networking opportunities.

“I’m looking forward to listening, learning, and engaging with attendees as we come together over the next three days to celebrate America’s premiere protein – beef,” Houston added.



NCGA’S ANNUAL REPORT REFLECTS ON SIGNIFICANT WINS AMIDST CHALLENGING TIMES

The National Corn Growers Association’s Annual Report for the 2019 fiscal year is now available online at https://www.ncga.com/file/1752.  The report highlights memorable events and victories accomplished in a year characterized by weather and policy challenges.

“NCGA was in some pretty amazing positions in 2019. From sharing the stage with President Trump to having a beer with the Coors family after the Super Bowl attack on corn sweetener,” said 2019 NCGA First Vice President Kevin Ross from Iowa. “We are constantly prepared to engage, and we are looking for new allies and new conversations to represent corn growers better.”

Through unruly weather, flooding, sluggish markets and trade disruptions, NCGA members kept moving forward together to reach long-term, strategic goals to improve prices and the overall future of the industry. As the year ended NCGA’s grassroots efforts resulted in several major trade victories, a strong support system through the farm bill, and more opportunity for E15 and other higher-octane fuel.

“NCGA’s involvement in shaping and then implementing the farm bill is one of the true success stories of 2019,” said 2019 NCGA President and Nebraska farmer Lynn Chrisp. “Taken in conjunction with the second Market Facilitation Program payment and you have great examples of how NCGA is making a difference for members.”

Times and technology change but being heard in numbers, being persistent and doing it in a professional way still works. Whether it’s planting yourself on a member of Congress’s couch in Washington, D.C. or tweeting via your phone, everything counts, Chrisp and Ross agree.  NCGA has documented more than 12,600 messages to Congress and to various regulatory agencies in 2019, and this doesn’t count the state corn growers contacts who managed their own grassroots efforts.

The report also calls out efforts to develop new markets for corn such as biobased products and next-generation chemicals; working with the livestock industry promoting corn’s promise as a feedstock; NCGA’s efforts to expand economics-based sustainability initiatives; and NCGA’s financial statement.



FFA Chapters Invited to Apply for Turn the Bag Blue & Gold Program

It’s time for Turn the Bag Blue & Gold again. Throughout February, FFA chapters can apply for the 2020-21 program. Sponsored by Mycogen Seeds, this fundraising opportunity with the National FFA Organization is in its fourth year and has raised more than $93,000 for local FFA chapters, state FFA associations and the National FFA Organization.

FFA chapters can apply for the program by visiting Mycogen.com/FFA and submitting the online form by March 2, 2020. Mycogen Seeds and the National FFA Organization will review applications and accept up to 20 chapters. Selected chapters will be notified by May 1, 2020.

“Seventeen FFA chapters have participated in the Turn the Bag Blue & Gold program since its introduction three years ago,” said Blake Courtney, Mycogen Seeds Marketing Communications Manager. “Along with raising funds to support chapters, the program teaches students about agronomy, sales and customer service. Our Mycogen sales team and local retailers look forward to this mentorship experience every year.”

This fall, participating FFA members will team up with their local Mycogen territory manager and retailer(s) to offer farmers the option to purchase corn hybrids that fit their geographies. Participants earn funds for every bag of Mycogen® brand seed sold. Farmers who purchase seed from FFA members will receive the product in distinctive blue-and-gold bags with the Mycogen logo.

“We learned a lot about corn, and what producers look for in a corn package,” said Les McNally, Hugoton FFA Advisor, Hugoton, Kansas. McNally and the Hugoton FFA chapter sold Mycogen brand corn to local farmers as part of the 2019 program.

“The local Mycogen territory manager, Evan, and our local dealer spent time working with my students, FFA members, who are interested in ag sales career development,” McNally said. “We sat down and designed some fact sheets and researched information online. Then we set up appointments and met with producers after school. It was a good opportunity for the students to learn, and it made them appreciate people in their community.”

For more information and to apply for the Turn the Bag Blue & Gold program, visit Mycogen.com/FFA.



Walmart’s Entrance into Beef Supply Chain Not Expected to Drive Near Term Changes to Cattle Industry 

Walmart, the largest food retailer in the U.S., officially entered the beef business in January when it opened a case-ready beef plant in Georgia after establishing its own Angus supply chain. Creating an end-to-end beef supply chain is the latest step Walmart has taken in its vertical integration strategy for food and toward its stated goal of improving the quality of its food offering, according to a new report from CoBank’s Knowledge Exchange division.

If Walmart’s new beef plant and Angus supply chain succeed, it could lead the retail giant to take another step up the supply chain towards the producer. That could be in the form of harvesting fed cattle or through a joint venture with a current packer.

“Walmart sees opportunity and is moving up the supply chain at a time of historically high margins for beef processors,” said Will Sawyer, animal protein economist with CoBank. “We believe their current beef strategy is something of a test, not only for Walmart and its suppliers, but also its customers.”

The new plant will cut and prepare steaks and roasts produced by Walmart’s Angus beef supply chain for 500 stores in Florida, Georgia, and Alabama. Walmart will need to convince customers that the attributes of its beef, which is hormone-free, traceable, and potentially of higher grade, make it worth buying at a premium price.

“While Walmart’s new beef strategy could make waves for the industry in the future, in its current state we don’t see it shifting the price and leverage dynamics of U.S. beef production,” said Sawyer. “By our calculations, this new supply chain will account for less than 5% of Walmart’s U.S. beef business and less than 0.5% of U.S. beef production.”

However, the fact that the largest U.S. food retailer and beef buyer has entered secondary beef processing reveals the state of the industry overall as a complicated and opaque supply chain but with climbing packer margins.

U.S. cattle producers, feeders, and packers will not likely suffer any significant near-term changes from Walmart’s entry, but its success could lead Walmart to make a bigger move in the future. Other retailers will be watching how Walmart fares. Potential new entrants may also see opportunity to add value and capture margin, a reality that the rest of the supply chain should expect more of in the future.

Watch a video synopsis and read the report, “Walmart’s New Beef Plant is More Sizzle than Steak, For Now,” at cobank.com.