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Bloomberg: Chipotle May Allow Some Antibiotic-Treated Beef:
After years of touting naturally raised meat, Chipotle Mexican Grill Inc. is considering changing its standards to allow beef treated with antibiotics into its restaurants amid a supply shortage.
The burrito seller is evaluating using meat from cattle treated with antibiotics because of an illness, which currently isnt permitted to be sold in its restaurants, Chris Arnold, a spokesman for Denver-based Chipotle, said in an e-mail. The company still wouldnt use beef from animals that had been given antibiotics to prevent disease and promote weight gain, he said.
Many experts, including some of our ranchers, believe that animals should be allowed to be treated if they are ill and remain in the herd, Co-Chief Executive Officer Steve Ells said today in an e-mailed statement. We are certainly willing to consider this change, but we are continuing to evaluate whats best for our customers, our suppliers and the animals.
The possible change in Chipotles practices comes as U.S. beef production is projected to plunge to a 21-year low next year, threatening higher costs and making it tougher for the restaurant chain to get enough meat to fill customers burritos.
While Arnold said the motivation for the potential change wouldnt be to increase its supply of steak, Chipotle hasnt been able to get enough naturally raised beef to meet customer demand. This year, about 80 percent to 85 percent of the beef sold at Chipotles more than 1,500 stores has been naturally raised, compared with almost 100 percent last year, Arnold said.
Every year we need 20 to 25 percent more of everything than we did the year before, and the beef supply isnt keeping up as well, he said.
New Suppliers
For that reason, Chipotle is trying to find new cattle suppliers and also is considering using different cuts of meat for its steak and barbacoa shredded beef burritos, he said. The chain also sells naturally raised grilled steak in rice bowls and salads at its new Asian-themed store, ShopHouse.
If Chipotle allows sick animals treated with antibiotics to remain in its supply chain, it will increase the amount of beef available to the company, said John Nalivka, a former U.S. Department of Agriculture economist and president of commodity researcher Sterling Marketing Inc. in Vale, Oregon.
That opens up their supply quite a bit, he said. Chipotle will be able to buy cattle outside the USDAs Never Ever 3 program, which says cattle may never be given antibiotics, growth promotants or fed anything with animal byproducts.
Thats really the piece that will add the greatest supply if you take that stipulation away, said Nalivka, who says supply is dwindling.
While the chain expands -- sales have more than doubled to $2.73 billion during the four years up to 2012 -- its had trouble getting enough naturally raised food.
Weve had real challenges from a supply standpoint with our meats, steak in particular, Ells said during a conference call on July 18. Theres a different supply and demand formula thats going on right now. The supply just seems to be tight right now.
Production Decline
Thats because cattle ranchers havent yet recovered from last years drought that made it more expensive for farmers to feed animals. Production in the U.S. will decline 5.5 percent in 2014, retreating for the fourth straight year, according to USDA data. The herd on July 1 was the smallest for that date since at least 1973, according to the average of four analyst estimates compiled by Bloomberg.
Fred Wacker, owner of Cross Four Ranch in Miles City, Montana, and a beef supplier to Chipotle and Whole Foods Market Inc., says sick cattle that are given antibiotics are taken out of the naturally raised program at his farm. He wouldnt do anything differently if Chipotle changes its standards.
That doesnt change anything for me, he said. Were on never-ever, guaranteed all natural -- I would like them to keep on the path that they were to use all the straight natural that they can.