Yum! Brands Inc. (YUM:US) and McDonald’s Corp. (MCD:US) said they are working with Chinese suppliers to ensure the safety of food they serve after China Central Television reported the companies may have sold chicken that had been indiscriminately fed antibiotics and growth hormones.
Liuhe Group Co. and Yingtai Food Group Co., suppliers to customers including KFC and McDonald’s, didn’t properly inspect chickens they bought from farmers in Shandong province before delivering the poultry, the state broadcaster reported yesterday. The chickens may have been given unapproved antibiotic drugs and growth hormones by the farmers, CCTV said.
“We take food safety very seriously,” Yum, the Louisville, Kentucky-based operator of the KFC and Pizza Hut chains, said in an e-mailed statement after the CCTV report. McDonald’s “first priority is the safety and well-being” of its customers and it samples and tests every batch of raw material received, the restaurant-chain operator said in response to e-mailed questions.
The Chinese government has cracked down on food-safety violations after tainted baby formula was first found in 2008 and cases involving additives in pork and the use of reprocessed cooking oil followed, sparking public outrage. The Ministry of Agriculture has dispatched a team to Shandong province to investigate reports of antibiotic misuse in chickens, and urged veterinary officials to strengthen monitoring of drug use in poultry and livestock, it said yesterday.
Yum stopped buying from Liuhe in August, the food company said in its KFC microblog. The company’s e-mailed statement and microblog didn’t say if it uses poultry from Yingtai. Amy Sherwood, Yum’s vice president for public relations, didn’t immediately respond to an e-mail seeking comment on Yingtai.
Oak Brook, Illinois-based McDonald’s stopped all deliveries from Liuhe yesterday, even though the company hadn’t rejected any product from the Chinese supplier in the past 24 months, Jessica Lee, a Singapore-based spokeswoman for the chain, said in an e-mail. The company also hasn’t used Yingtai’s supplies since May 2012, according to Lee.
China, the world’s second-biggest economy, accounted for 44 percent (YUM:US) of Yum!’s revenue last year. McDonald’s, which doesn’t give separate figures for China sales, plans to have 2,000 stores in the nation by the end of next year.
Two calls to Yingtai’s headquarters in the city of Tengzhou in Shandong province weren’t answered today. A person who picked up the phone at Liuhe Group’s headquarters in the city of Qingdao, also in Shandong, said the company will release a statement later regarding the issue and declined any additional comment. She refused to give her name.
New Hope Liuhe
Liuhe Group was acquired in 2011 by Sichuan New Hope Agribusiness Co., the listed unit of New Hope Group Co., whose chairman is billionaire Liu Yonghao, the subsidiary said in a filing to the Shenzhen exchange. The combined entity was named New Hope Liuhe Co. (000876), according to the company’s website.
New Hope Liuhe sank as much as 8.8 percent in Shenzhen trading before closing 1.4 percent lower at 11.72 yuan. Two telephone calls to the general office of New Hope Liuhe’s board secretary were not answered.
New Hope Liuhe processes about 1 billion birds a year, the most in the world, according to the company’s website.
Henan Shuanghui Investment & Development Co. (000895), a holding company whose subsidiaries make food products, stopped using supplies from Yingtai starting May because products failed to meet the company’s standards, spokesman Liu Jintao said in a phone interview today. The company also stopped accepting supply from Liuhe after they saw the media reports.
Shuanghui will consider using products from the two companies again only until government said their products are qualified, the spokesman said.
The U.S. Food and Drug Administration issued in January an order that restricts certain antibiotics in livestock and fowl to prevent humans from developing resistance to drugs such as Bristol-Myers Squibb Co. (BMY:US)’s Cefzil and Keflex from Eli Lilly & Co. (LLY:US)
The antibiotics known as cephalosporins are used to treat pneumonia, skin infections, pelvic inflammatory disease, diabetic foot infections and urinary tract infections in humans, the regulator said.
To contact Bloomberg News staff for this story: William Bi in Beijing at firstname.lastname@example.org; John Liu in Beijing at email@example.com
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