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The corporate raider taking aim at McDonald’s over the treatment of pigs

Why Carl Icahn launched an animal welfare-focused proxy fight against the fast food giant.

The McDonald’s arches logo alone against a dark and cloudy sky. Luke Sharrett/Bloomberg via Getty Images

Carl Icahn, the billionaire activist investor, is known for spearheading hostile takeovers of underperforming companies on Wall Street, so it seemed odd when he bought a small stake in McDonald’s and last month nominated two new directors to its board, since the company has outperformed its fast food competitors in recent years.

But Icahn’s rancor wasn’t directed at the company’s financial performance. Rather, it was directed at how pigs in the company’s supply chain are treated.

The fight has made headlines in the business press in recent weeks, but its origins go back a decade. In 2012, after pressure from Icahn and the Humane Society of the US, McDonald’s pledged that it would end the use of gestation crates for pregnant pigs — which confine the animals so tightly they are unable to turn around for months at a time — throughout its supply chain by the end of 2022.

Now that 2022 has arrived, Icahn argues the company is far from following through on its commitment, and he’s ready to take action. (Disclosure: I briefly worked with Icahn’s daughter at the Humane Society of the US in 2012 and 2013.)

“Animals are one of the things I feel really emotional about,” Icahn told the Wall Street Journal, noting that he and his wife have three dogs and that he has a particular soft spot for pigs.

In the US pork industry, a majority of the 6 million female breeding pigs, or sows, are confined in 7-by-2-foot gestation crates for the duration of their four-month pregnancies, which take a physical and mental toll on the animals. “It’s not life,” animal welfare scientist Temple Grandin told a reporter in 2012. “The way I look at [gestation crates] is: How would you like to live in an airline seat?” Notably, Grandin is a longtime adviser to McDonald’s on animal welfare.

Sows in gestation crates at a pig breeding farm.
Harold Hoch/MediaNews Group via Getty Images

The industry’s better alternative for sows is “group housing” — placing a couple dozen sows together in a large pen. Even in group housing systems, though, sows still spend a few weeks after each birth in a “farrowing crate” — a confined space slightly larger than a gestation crate — as they nurse their piglets.

In response to Icahn’s campaign, McDonald’s told the Wall Street Journal that over 60 percent of its US pork is from “confirmed pregnant sows” not housed in gestation crates, and that by the end of the year, it’ll be at 85 to 90 percent.

That makes it sound as though McDonald’s is falling just a little short of its goal and that Icahn is being petty. But according to Josh Balk of the Humane Society, McDonald’s neglects to make clear that this statement’s wording allows its suppliers to confine sows for the first four to six weeks of their 16-week pregnancies, at which point they’re confirmed pregnant.

The practice is pervasive in what the industry calls “group housing” pork production, meaning that even sows supposedly raised in group environments are still individually confined in gestation crates for a little over three months of the year, since they average a little over two pregnancy cycles per year.

In other words, most “crate-free” pork is in reality only partially crate-free. Icahn and the Humane Society want McDonald’s to go all the way by not allowing its suppliers to use gestation crates at all, which they argue was the company’s stated goal in 2012.

“McDonald’s [policy] has gone from pigs ‘never being in a gestation crate,’” says Balk, “to now allowing explicitly more than three months every year, unable to turn around.”

When reached for comment, McDonald’s referred me to its February 20 press release in response to Ichan’s campaign. The release states that McDonald’s is “sourcing U.S. pork from confirmed pregnant sows not housed in gestation crates.”

In the pork industry, “confirmed pregnant” means the sows were kept in gestation crates for the first four-six weeks of their pregnancy.

McDonald’s also reiterated to me that its policy was guided by the pork industry and the American Association of Swine Veterinarians, whose definition of group housing uses the “confirmed” language as well. The association’s definition doesn’t specify the number of weeks for pregnancy confirmation, though a spokesperson with the association told me, “Confirmation of pregnancy can typically occur between 35 and 45 days of gestation.”

It’s an issue throughout the pork industry. Most “group housing” producers still confine sows in gestation crates for the first four-six weeks of their pregnancies because some studies have found that mixing newly pregnant sows together in large pens can increase rates of aggression, injury, and stress. However, researchers say findings are inconsistent, and have also found that these challenges could potentially be minimized through changes in flooring, environment, diet, and management.

And these concerns about mixing newly pregnant sows together in their first few weeks have to be weighed against the immense suffering imposed by confining them in gestation crates instead: sores, foot and leg injuries from lying on concrete all day, reduced bone strength, and distress, boredom, and frustration, evidenced by the bite marks on the bars of their crates and the pigs swaying their heads side to side.

Icahn’s objections relating to weeks and percentages might seem like splitting hairs, but what McDonald’s does next could have ripple effects for the entire food system, for as go the Golden Arches, so goes the fast food industry. Some in the animal welfare community credit McDonald’s with accelerating the broader shift toward cage-free eggs after it pledged in 2015 to source exclusively cage-free eggs by 2025 (the company is almost two-thirds of the way toward achieving its goal). If McDonald’s can eliminate gestation crates from its supply chain, its competitors might be forced to catch up, creating a domino effect in much the same way it did with cage-free eggs.

But if the company stands firm against Icahn and his proxy fight, it could further entrench one of the cruelest devices in today’s food system — one that confines pigs in a way that would be criminal if done to a dog or cat.

The complex crate-free bacon supply chain, explained

When Icahn called on McDonald’s to eliminate gestation crates from its supply chain by the end of the year, the company defended itself by saying “the current pork supply in the U.S. would make this type of commitment impossible.”

That could be true. A new California law bans the sale of pork from crated sows, but according to a March 2021 report by agribusiness financier Rabobank, less than 4 percent of the US pork supply at the time met California’s crate-free requirements, far from enough to meet the state’s demand, let alone McDonald’s too. However, the supply is now likely much higher than 4 percent, as some of the country’s biggest pork producers have stated in recent months that they’ll supply California with compliant pork.

But McDonald’s statement also belies the leverage it has over its suppliers. I spoke with a former high-level decision-maker at Burger King’s purchasing cooperative, RSI, who spoke on condition of anonymity, about McDonald’s response to Icahn. In his opinion, “‘Impossible’ is a strong word. It’s difficult. It’s not easy for them to get this resolved.” Despite that, in his opinion, “[McDonald’s hasn’t] made the effort necessary” to reach its commitment.

The company has used its leverage to force changes among its meat suppliers in the past, and according to Balk, it could’ve spent the last two decades using that leverage — it buys 1 percent of all US pork — to push its suppliers to meet its 100 percent crate-free goal. (The company listed “explore sow gestation housing alternatives” as a goal as early as 2002.)

The “impossible” comment also contradicts what some of the nation’s largest pork producers say about the matter: Hormel, Clemens Food Group, Seaboard, and Tyson Foods have all publicly stated that they can supply California with crate-free pork, which requires even more space per sow than what is standard in the industry, though at least for the time being, McDonald’s would have to compete with California grocery stores for it.

McDonald’s is far from alone in falling behind on its gestation crate pledge. Dozens of fast food chains, grocers, and food manufacturers have made similar promises too, winning praise from media and animal welfare groups when announced, only to have mixed success on follow-through. The exceptions are Chipotle, which achieved a gestation crate-free supply in 2020, and Whole Foods, which has prohibited gestation crates since 2003.

But McDonald’s is doubling down on its insistence that its anti-gestation-crate policy doesn’t allow its suppliers to still use them when it sounds like it does, and even though some other big food companies, such as Burger King, have acknowledged this problem in their supply chain and at least say they’ll work to change it. Panera Bread has been more specific, noting that as of 2019, 41 percent of its pork came from farms that never use crates.

“It would be one thing if McDonald’s said, ‘We pledge to get rid of gestation crates, we aren’t there yet but we’re going to keep going and here’s our plan to get there,’” Balk of the Humane Society says. “But that’s not what McDonald’s is doing. Instead, they’ve failed to meet their very public promise to get rid of gestation crates, and now they’re actively allowing gestation crates. That’s the real issue.”

The animal rights movement changed how big business buys meat and eggs

Ending the extreme confinement of farmed animals — sows in gestation crates, egg-laying hens in cages, calves in veal crates — became a flagship campaign for the animal protection movement in the early 2000s, which has seen significant success despite resistance by agribusiness. Fourteen states have passed laws to ban or restrict the use of cages and crates, some of which have forced animal agriculture to overhaul operations.

Combined with the hundreds of food companies that have been pressured to phase out cages and crates from their supply chains, factory farming today looks a little less grim than it did 15 years ago. Today, nearly one-third of eggs are cage-free, a number that is expected to climb as state laws go into effect and the egg industry constructs new cage-free operations.

The suffering in America’s animal agriculture system is still immense; extreme confinement is just the most viscerally disturbing practice on a long list of horrors one would find when they step inside any of America’s thousands of factory farms — cage- and crate-free farms included — where nearly all meat, milk, and eggs are produced.

But progress is progress. If the effort to eliminate the worst cruelties prevalent in industrialized animal farming succeeds, it’ll likely take decades and a pluralistic approach, everything from grassroots activism to lobbying politicians and, yes, even proxy fights on Wall Street.