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So, for the first time, Walmart is working directly with livestock producers to create its own Angus beef supply chain.
"This has become a very important priority for the company," said Scott Neal, senior vice president of meat at Walmart, in an interview with CNN Business. "The meat is the center of the plate" and "leads the customer to the store", he added.
Customers demand transparency in the way their food is produced. Neal said, "Trust in our food system is becoming more and more important." Working directly with ranchers and feeders will give Walmart greater visibility in the meat supply chain.
Walmart is also seeking to control some of the beef production in order to take over its suppliers. Possessing one's own beef stock could strengthen Walmart's position when negotiating prices with companies.
"I think we all know the market dynamics of what happens when you generally operate in duopoly.This is not so good for the customer," Foran told analysts Friday.
The entry of Walmart into the industry poses a threat to Tyson, which depends on the company. Walmart is Tyson's biggest customer, accounting for over 17% of the meat company's sales, according to the filed documents.
Tyson, however, dispelled fears that Walmart's move would hurt his business.
"Our business is strong with Walmart and they have been an excellent partner for many years," Tyson chief executive Noel White told analysts last month.
"What motivates such a decision is if we see a consolidation of supply," Foran said. Prices for Walmart's milk suppliers have increased, leading the company to explore other options.
Walmart does not want to provide each of its more than 4,700 stores with his own milk, but "that gives us some weight" when negotiating contracts with his distributors, he added.
Other retailers are also taking control of their food supply chains in order to control costs.
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