McDonald’s Corporation’s recent decision to require its meat suppliers to phase out the use of certain antibiotics for animal growth promotion is a watershed event for the meat production industry. McDonald’s, the largest single buyer of meat in the U.S., and much of the world, is using its buying power to manage a growing array of attributes linked to its products and brand identity including consumer “intangibles” related to social responsibility, sustainable food supply, animal welfare, and human health. Other companies, both in the fast food industry and in grocery stores, are likely to take similar steps to manage product attributes related to human health. Responding to these new requirements will reinforce changes already underway in the meat supply industry, opening new avenues for product differentiation, tightening the links between meat suppliers and their customers, and spurring new investment in quality assurance and traceability.

In the beef industry, assuring compliance with buyers’ specifications regarding the use of antibiotics will:

require the development of new and better systems for identity preservation and tracking.
• encourage feedlot operators to find new techniques for “finishing” cattle efficiently without the use of some antibiotics that are currently used for growth promotion.
• reinforce an ongoing market shift toward value-based product differentiation and branded meat produts.

In the poultry industry, vertical integration will make it easier for suppliers to comply with buyers’ specifications regarding antibiotics use than in the beef and pork sectors. Several of the largest U.S. poultry producers have already begun to phase out the use of antibiotics, for animal growth promotion, that are significant to human health. In the pork industry, the challenges of influencing such product attributes are roughly comparable to those in the beef industry. Overall, the new policy announced by McDonald’s will lend further impetus to industry-wide changes.