Costco plans to beef up animal antibiotics policy
- Costco Wholesale Corp. has revised its animal welfare policy to restrict animal antibiotics to therapeutic use under the supervision of a licensed veterinarian. The warehouse club retailer also said by or before December 2020, it would assess the feasibility of eliminating the routine use of medically important antibiotics for prevention of disease among supplier farms.
- The updated policy will extend to Costco's $300 million Lincoln Premium Poultry plant under construction in Fremont, Nebraska, which is slated for completion in September 2019. According to Meat + Poultry, this will be the first time a retailer has assumed risks associated with meat production from farm to fork.
- The policy revision follows a Costco shareholder resolution filed this past summer by As You Sow, a California-based non-profit foundation. "We are particularly encouraged by the company’s plans to create mechanisms through which they will be able to verify supplier compliance with their antibiotics policy," Christy Spees, the group's environmental health program manager, said in a release. "This is a significant undertaking, and one that we hope will cause a ripple of change in the meat industry and set a standard for other retail chains."
By updating its animal antibiotics policy, Costco appears to be responding to a number of external pressures. The company posted a lengthy explanation of the financial and other risk factors it views as inherent to the issue.
"The failure to provide adequately for the welfare of animals throughout Costco’s supply chain could have significant adverse effects on the business and operations of the company and its investors," the company stated.
As You Sow had previously filed a shareholder resolution asking Costco to phase out the use of medically important antibiotics. The resolution claimed that the company had pledged to do so in 2015 for chicken, but had not given a timeline, update or announced antibiotics policies for beef and pork. That isn't the kind of publicity a well-known retailer in the competitive grocery industry relishes.
As You Sow has also introduced antibiotics-related shareholder resolutions to investors of McDonald's Corp., Yum Brands and Sanderson Farms. And it has forced companies to make changes. Sanderson Farms, a vocal pro-antibiotics poultry producer, announced Nov. 30 that it would stop using two antibiotics considered medically important for humans in disease prevention by March 1 of next year.
Costco has a lot to lose if it doesn't respond to consumer and investor pressure and adapt its policies to current trends. The public health implications alone could be alarming to consumers. The World Health Organization said the overuse of medically necessary antibiotics in animal agriculture has led to antibiotic-resistant bacteria that could cause 10 million deaths annually by 2050.
Then there are also the business reasons. Costco recently decided to bring poultry production in-house, and the retailer sold about 87 million rotisserie chickens last year. It has kept them at a price of $4.99 since 2009. The Nebraska facility now under construction is expected to process 2 million chickens per week, which could considerably enhance Costco's private-label stocks and its supply of the popular item — especially if the chickens are marketed as not being given antibiotics for growth promotion or feed efficiency.
Other retailers have paved the way to make such changes. Whole Foods was an early adopter of a no-antibiotics-ever pledge. A.C. Gallo, the retailer's president and COO, stated in 2012 that the company's suppliers of beef, pork and poultry adhered to its standard of using no antibiotics, growth hormones or animal byproducts in feed.
Since Amazon bought Whole Foods last year, other poultry producers that sell products to the retailer have aligned their antibiotics use and other production policies to comply with Whole Foods standards, according to Bloomberg. In 2017, Giant Food, part of Ahold Delhaize, debuted a private-label pork brand with no antibiotics, joining the antibiotic-free and growth hormone-free turkeys it introduced the previous year.
Retailers also have a big incentive to shift to antibiotic-free meat since Nielsen figures show sales have significantly exceeded those of conventionally raised meat. While the store price may be higher, consumers are not only demanding it, but have been willing to pay more for it, showing Costco and others that following the trend can be a wise and lucrative move.
Correction: In a previous version of this article, Perdue's antibiotics policy was mischaracterized. The company started converting to antibiotic free chicken in 2011, and eliminated antibiotics in 2016.