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Sanderson Farms shareholder proposal on antibiotics fails

LOS ANGELES: A Sanderson Farms Inc shareholder proposal requesting the third-largest U.S. poultry producer phase out the use of medically important antibiotics for growth promotion and disease prevention failed to pass on Thursday, its backers said.

Sanderson is the only large U.S. chicken producer that has not made a commitment to limit its use of those drugs, as public health experts raise the alarm about the link between farm use of antibiotics and the rise of human infections from drug-resistant bacteria, also known as "superbugs."

While the non-binding proposal did not receive enough votes to pass, investor support hit 30 percent, according to supporters of the resolution, which was submitted by activist group As You Sow on behalf of the Gun Denhart Living Trust and other investors.

Sanderson's shareholder meeting was not webcast and the company did not immediately release vote results.

Institutional Shareholder Services (ISS), a major proxy advisory firm, recommended that investors support the proposal, saying industry and regulatory trends are moving toward antibiotic-free chicken production. ISS also said Sanderson is lagging its peers and faces reputational and regulatory risks as a result.

Sanderson, which recommended a vote against the proposal, said it does not use antibiotics for growth promotion but that it does use them to prevent disease in its chickens.

"We have been successful in marketing our company as a low-cost producer of quality, wholesome and safe poultry products," Sanderson said in a Jan. 24 letter sent to shareholders.

"We believe some producers and restaurants have introduced antibiotic-free chicken in part to gain a marketing advantage by attempting to sell what they describe as a premium chicken product, for significantly higher prices," the company said.

Sanderson Farms added that its customers are not demanding antibiotic-free chicken.

Sanderson Farms in its proxy said it uses two antibiotics considered "highly important" to fighting infections in humans - gentamicin and virginiamycin.

Tyson Foods Inc, the nation's largest chicken producer, in 2015 removed gentamicin from company hatcheries.

Some 70 percent of antibiotics vital for fighting infections in humans are sold for use in meat and dairy production.

Scientists have warned that the routine use of antibiotics to promote growth and prevent illness in healthy farm animals contributes to the rise of dangerous, human "superbug" infections, which kill at least 23,000 Americans each year and pose a significant threat to global health.

(Reporting by Lisa Baertlein in Los Angeles; Editing by Bill Trott and Paul Simao)