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Costco making transition to cage-free egg policy

Company to ban cages for animals across global egg supply chain, says animal welfare can impact share price

7 December 2020, at 1:00am

Costco Wholesale, the world’s second largest retailer, will transition to a new animal welfare policy that includes banning cages for animals in its global egg supply chain over time. The move covers Costco’s growing international footprint, which includes mainland China, Taiwan, Japan, South Korea, Mexico, Australia, Canada and Europe. Costco stock has risen 28% this year, with the company set to report its most recent quarterly earnings next week.

“We are in the process of making that transition [to cage-free eggs],” noted Josh Dahmen, Financial Planning and Investor Relations Director for Costco in an email to investors this week. “We will continue to increase the percentage over time, with a goal of eventually getting to 100%, although this may take several years in some countries, due to issues with availability.” Costco is the first U.S. retailer to issue a global policy on the confinement of animals in its supply chain.

Yesterday, the Chinese government-affiliated media outlet China Food Safety News reported that construction was underway on a new 50,000-hen cage-free egg laying farm being built to supply eggs to Costco in mainland China. Costco launched its first store in mainland China in 2019, amassing over 200,000 members in its first few months, with additional stores set to open next year. International locations account for nearly a third of Costco’s total store count; as of 2019, Costco reported it had 239 international stores.

The company’s decision comes in the wake of criticism from NGOs and Asian-American celebrities, including The Walking Dead star Eleanor Matsuura and Grammy-nominated musician Steve Aoki, who accused the company of animal cruelty and discriminating against Asian customers. Studies by the European Food Safety Authority and others found caged egg farms have higher rates of contamination from key salmonella strains compared to cage-free farms. The sale of caged eggs has been banned in recent years in Costco’s home state of Washington as well as in California, Oregon, Michigan, Massachusetts and Colorado.

“In addition to focusing on animal welfare because it is the right thing to do, Costco believes failure to do so would create risks for the business and its shareholders,” the company noted in its updated animal welfare policy. “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.”

“We applaud Costco for this landmark decision to use only cage-free eggs throughout its global supply chain,” said Kirsty Tuxford, Program Manager with Lever Foundation, a Pennsylvania-based animal protection non-profit that worked with Costco for the past two years on making the commitment. “Costco’s move will spare millions of animals from being confined for their entire lives in cages so small they can barely turn around. We commend Costco for being the first U.S. retailer to address this key animal welfare and food safety issue throughout its global supply chain.”