February 9, 2017 / 2:03 PM / 6 months ago

Sanderson Farms faces shareholder vote on curbing antibiotic use

3 Min Read

LOS ANGELES, Feb 9 (Reuters) - Sanderson Farms Inc investors on Thursday will vote on a shareholder proposal requesting the third-largest U.S. poultry producer phase out the use of medically important antibiotics for growth promotion and disease prevention.

Sanderson is the only large U.S. chicken producer that has not made a commitment to limit its use of those drugs, as public health experts raise the alarm about the link between farm use of antibiotics and the rise of human infections from drug-resistant bacteria, also known as "superbugs."

Institutional Shareholder Services (ISS), a major proxy advisory firm, recommended investors vote for the proposal, saying industry and regulatory trends are moving toward antibiotic-free chicken production. ISS also said Sanderson is lagging its peers and faces reputational and regulatory risks as a result.

Sanderson has recommended a vote against the proposal, filed by shareholder activist group As You Sow on behalf of the Gun Denhart Living Trust and other investors.

The company says it does not use antibiotics for growth promotion but that it does use them to prevent disease in its chickens.

Sanderson on Jan. 24 sent a letter to shareholders urging them to vote against the proposal, or to change their vote to a no.

"We have been successful in marketing our company as a low-cost producer of quality, wholesome and safe poultry products," the company said in the shareholder letter.

"We believe some producers and restaurants have introduced antibiotic-free chicken in part to gain a marketing advantage by attempting to sell what they describe as a premium chicken product, for significantly higher prices," the company said.

Sanderson Farms added that its customers are not demanding antibiotic-free chicken and that very little of the product is sold in the customer markets it participates in.

Sanderson Farms in its proxy said it uses two antibiotics considered "highly important" to fighting infections in humans - gentamicin and virginiamycin.

Tyson Foods Inc, the nation's largest chicken producer, in 2015 removed gentamicin from company hatcheries.

More than 70 percent of medically important antibiotics in the United States are sold for livestock use. Scientists have warned that the routine use of antibiotics to promote growth and prevent illness in healthy farms animals contributes to the rise of dangerous, human "superbug" infections, which kill at least 23,000 Americans each year and pose a significant threat to global health. (Reporting by Lisa Baertlein in Los Angeles; Editing by Bill Trott)

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