Costco Wholesale logo

COST - Costco Wholesale News Story

$425.28 3.9  0.9%

Last Trade - 29/07/21

Consumer Cyclicals
Large Cap
Market Cap £134.30bn
Enterprise Value £132.11bn
Revenue £134.29bn
Position in Universe 60th / 7008

FEATURE-Addicted to antibiotics, Chile's salmon flops at Costco, grocers

Thu 23rd July, 2015 2:00pm
By Anthony Esposito 
    SANTIAGO, July 23 (Reuters) - Chile's salmon farmers are 
using record levels of antibiotics to treat a virulent and 
pervasive bacteria, driving away some U.S. retailers including 
Costco Wholesale Corp  COST.O , which is turning to 
antibiotic-free Norwegian salmon. 
    The coastal waters of Chile, the world's second-largest 
producer of salmon, are awash with a bacteria known as SRS, or 
Piscirickettsiosis. The bacteria causes lesions and hemorrhaging 
in infected fish, and swells their kidneys and spleens, 
eventually killing them. 
    Unable to develop an effective vaccine, Chilean farmers have 
been forced to increase antibiotic use. In 2014, the industry 
produced around 895,000 tonnes of fish and used 563,200 
kilograms (1.2 million pounds) of antibiotics, according to 
government and industry data. Antibiotic use had risen 25 
percent from 2013.   
    In contrast, Norway, the world's largest salmon producer, 
produced around 1.3 million tonnes of fish and used 972 kilos of 
antibiotics in 2013. (Figures for last year were not immediately 
    Chilean officials say their salmon is safe and the 
antibiotics have been approved by U.S. food and drug regulators. 
    Still, amid growing concerns in the U.S. food industry that 
heavy use of antibiotics in animals can spawn drug-resistant 
superbugs and endanger human health, Costco told Reuters in 
April that it would reduce imports of Chilean salmon. 
    "The whole industry is starting to shift," said Jeff Lyons, 
who oversees fresh foods at Costco, the No. 3 U.S. retailer.  
    "If I was to ask you your biggest concern on produce, you 
might say pesticides. When we ask people in protein, generally 
it's going to be hormones or antibiotics." 
    Costco used to buy 90 percent of the 600,000 pounds of 
salmon fillet it needs per week from Chile, accounting for about 
8.5 percent of Chilean salmon exports to the United States. 
Costco said it intends to buy 60 percent of its salmon from 
Norway, cutting Chilean imports to 40 percent. 
    A former executive at a Chilean salmon producer said 
Costco's move could hurt the local industry's reputation and 
spur other retailers to follow suit. 
    In recent years, U.S. grocery chains Whole Foods Market Inc 
 WFM.O  and Trader Joe's have gradually phased out Chilean farm 
salmon in favor of antibiotic-free fish caught in the wild. 
    "This is the beginning of a change in seafood," said Tobias 
Aguirre, the executive director of FishWise, a seafood 
consultancy that works with retailers such as Safeway  MRWAY.UL  
and Target Corp  TGT.N . Target has also eliminated farmed 
salmon from its shelves.  
    "Other retailers will look at their lead and try to better 
understand why Costco made this move, and I think they will 
follow," Aguirre said. 
    To be sure, not every salmon buyer is that worried about 
antibiotics. Chile exported $4.4 billion worth of salmon in 
2014, up 24 percent from the previous year, according to 
industry group SalmonChile. 
    For some buyers, costs are paramount. Brazil's biggest 
retailer, GPA SA  PCAR4.SA , which buys some 3.6 million 
kilograms of Chilean salmon per year, said demand for 
antibiotic-free fish in the South American giant is small, and 
the high cost of importing from Norway is a deterrent. 
    "The greatest demand in the Brazilian market is for fresh 
salmon, purchased, for now, from Chile mainly due to logistics," 
GPA said in an email. 
    Chilean salmon producers said there is no reason for 
consumers to worry. Farmers do not administer antibiotics for 
months before harvesting the fish, so any traces of the drugs 
that remain in the salmon when it reaches consumers are within 
tolerance levels, they said. 
    "The final product consumers eat has no antibiotics," said 
Ricardo Garcia, chief executive of salmon producer Camanchaca 
 CMN.SN , which reported nearly $500 million in sales last year. 
    "This is only something given to sick fish so they don't 
die. It's not something preventive," he said. 
    The U.S. Food and Drug Administration said in a statement 
that inspections of Chilean salmon have not found unapproved 
drug residues this fiscal year, which began on Oct. 1, and "any 
article of food that appears to be adulterated or misbranded at 
importation is refused admission" into the country. 
    In recent months, the U.S. food industry has taken an 
increasingly tough stance against antibiotics due to concerns 
that overuse may diminish their effectiveness in fighting 
disease in humans. Wal-Mart Stores Inc  WMT.N , for instance, is 
pressing meat, seafood, dairy and egg suppliers to reduce their 
use of antibiotics.  ID:nL6N0NM58A  
    Speaking in general terms, the FDA said it has "concerns 
about the improper use of medically important antibiotics in 
food products derived from animals, as this practice is one 
factor that can contribute to antimicrobial resistance in 
    Antibiotic-resistant strains of the SRS bacteria have 
emerged in Chile's salmon farms, according to a November 2014 
study on the government's National Fisheries website. 
    "The bacteria will respond for a few years to the 
antibiotics treatment but afterward will become stronger and 
resistant," said Alex Munoz, vice president for South America at 
the Oceana environmental group in Chile. 
    Salmon producers in Chile say they are aware they should 
reduce their dependence on antibiotics, but they do not expect a 
significant change since efforts to find an SRS vaccine have so 
far been unsuccessful. 
    In Norway, intensive research has produced vaccines against 
most bacterial infections found in salmon farms.     
    "We're faced with a reality in Chile, unlike Norway, where 
we haven't developed vaccines for the Chilean market, leading us 
to often correct things with the use of antibiotics," said 
Gerardo Balbontin, chief executive of Blumar  BLU.SN , which 
exports a tenth of its salmon production to Costco.  
    The government acknowledges it has a problem on its hands. 
    "The use of antibiotics is an issue for us," said Eugenio 
Zamorano, head of Chile's aquaculture department. "All companies 
(in Chile) use antibiotics to a lesser or greater extent." 
    As well as working towards finding a vaccine, Zamorano said 
"genetic improvements" in salmon could be part of the solution. 
 (Additional reporting by Terje Solsvik in Oslo, Yuka Obayashi 
in Tokyo and Brad Haynes in Sao Paulo; Editing by Rosalba 
O'Brien and Tiffany Wu) 
@ReutersChile)(; +562-2370-4253; Reuters Messaging: 
© Stockopedia 2021, Refinitiv, Share Data Services.
This site cannot substitute for professional investment advice or independent factual verification. To use it, you must accept our Terms of Use, Privacy and Disclaimer policies.