Redefining Farm-to-Fork: Costco Sets New Protein Precedent

Key Points

• In September 2019, the U.S. poultry sector is expected to gain a new producer as retailer Costco is slated to open its new chicken complex in eastern Nebraska.
• Costco's $400 million chicken processing plant will redefine 'farm-to-fork' as a food retailer takes ownership of the chicken supply chain all the way to the farm level.
• If successful, others in food retail or foodservice could make similar efforts of deeper integration into meat production, but beef and pork will prove more challenging than poultry due to the greater complexity of supply chains and market risk.
• Some foodservice companies with relatively high profit margins will be discouraged from diversifying into meat production and processing where margins are typically lower.
• Chicken remains the best opportunity to build a fully integrated supply chain, in addition to secondary and further processing opportunities in all three major proteins.

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