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Costco Wholesale Corp. (NASDAQ:COST) Under Fire as Egg Supplier Accused of ‘Inhumane’ Conditions for Hens

Costco Wholesale Corporation (NASDAQ:COST) is under fire from an animal welfare group after an investigation found the company’s egg supplier maintained “inhumane” and unsanitary conditions at a Pennsylvania farm.

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The Humane Society of the United States released a video of an April-May undercover investigation at a Hillandale Farms facility. The footage revealed hens laying eggs in tiny cages (67 square inches per bird) next to dead birds. The report also found broken eggs scattered on the ground and dead chickens lying on the floor.

“This is the type of inhumane, unhygienic and unsustainable practice that has no place in Costco’s egg supply chain,” said Paul Shapiro, vice president of farm animal protection, in a statement Tuesday.

Shapiro alluded to a 2007 report in which Costco assured the public it would only buy eggs from cage-free hens. But it failed to achieve this goal. He warns these types of conditions can lead to food safety risks, including salmonella, citing a report from the Center for Food Safety.

Costco Silent, Hillandale Farms Comments

Costco has not spoken publicly about the video.

Hillandale Farms did comment on the video and placed the blame on an activist who was hired by the company and asserted the worker avoided farm procedures. The employee has since been fired. The company did note that the video clips “do not reflect our high standards” and is simply “an isolated incident.”

The egg supplier stated that it has asked two independent food safety and veterinary experts to review its operations. It added it has brought in tougher measures to improve the supply process and boost employee training.

Industries and agencies remarked on the report, including the United Egg Producers, an organization that represents a majority of U.S. egg producers.

Chad Gregory, president of United Egg Producers, said his group was deeply troubled by the video. He explained the operations “are not consistent with the federal Egg Safety Rule” or meet the high standards for egg safety and the care of hens.

The new findings comes as the food industry faces strong pressure from animal rights groups, consumers and regulatory bodies.

There is major concern that the food industry is not maintaining high standards for chickens, cows and pigs. Some of the demands include larger crates and cages for animals and the reduction of drugs in poultry production.

Companies are Responding to Consumer Demands

Starbucks Corp. (NASDAQ:SBUX) and Nestle SA (VTX:NESN) both announced earlier this year they would be gradually phasing out eggs made from caged hens.

In March, Costco confirmed it was phasing out the sale of meat made from chickens and other animals injected with antibiotics. However, it did not provide a precise date for reaching this aim.

Last month, Wal-Mart Stores, Inc. (NYSE:WMT) said it would be informing suppliers to stop raising animals in cramped crates and in other inhumane conditions. The retail giant also asked suppliers to limit the unit of antibiotics in meat and seafood products.

Costco revenues are up three percent and profits have been higher in the last three quarters.

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