McDonald's announced Wednesday its plan to fully transition to cage-free eggs in the U.S. and Canada over the next 10 years.
The fast-food giant's decision, lauded by animal welfare groups, could have a major impact on egg suppliers throughout the country. McDonald's USA buys about 2 billion eggs annually, a number that factors in increased projections for all-day breakfast, which is set to begin on Oct. 6, said Marion Gross, senior vice president of supply chain management for McDonald's USA.
In the U.S., about 13 million of McDonald's eggs annually already come from a cage-free environment, Gross said, but going exclusively cage-free is "a big undertaking."
"We think this is a really significant step we're making," Gross said. "It's just the next step in becoming a modern, progressive burger company."
That phrase "modern, progressive burger company" echoes the words of CEO Steve Easterbrook, who took the reins of McDonald's in March after a prolonged sales decline.
But the shift toward cage-free eggs was set in motion before Easterbrook's hiring, Gross said.
In 2003, the company set standards for the size of hen houses, requiring 5 more inches of space per bird than the industry standard, Gross said. And in 2010, McDonald's began working with the Coalition for Sustainable Egg Supply on a study, and the findings, released in March, influenced McDonald's decision, Gross said.
Most of McDonald's eggs currently come from "conventional" housing, meaning cages that allow 72 square inches per bird, Gross said. Some also come from enriched colony systems, which are larger holding areas with perches and nesting areas.
McDonald's intends to work with its existing egg suppliers and farms to transition them to a cage-free environment, which still requires a housing structure, she said. For some farms, that will mean increased costs to build the new structures, as well as new watering and waste-removal systems.
Gross called the 10-year timeline "really aggressive" for such a shift.
As for who's going to pay for the increased costs, Gross said the farms and suppliers would be responsible for new investments needed and their costs would be mitigated by the greater demand from McDonald's.
"We don't anticipate our customers will pay more because of this change," Gross said.
McDonald's buys about 2 percent of the nation's egg supply, she said. Because of that, the cage-free movement could affect the industry at large. Animal welfare groups have long called for McDonald's to require more humane practices of its suppliers.
"We wholeheartedly commend McDonald's for their announcement to go cage-free with their eggs. We have no doubt their announcement will create a ripple effect in the entire market. This signals the end of the cage age for laying hens in the U.S.," Leah Garces, U.S. director of Compassion in World Farming, said in a statement.
Randy Olson, executive director of the Iowa Egg Council, said he expected there will continue to be demand for both caged and caged-free hens, among other housing options. Decades ago, farms moved to the caged model because of increased demand for low-cost eggs, he said. Now consumer demand seems to be swinging back to the cage-free model.
Some farmers were already moving toward cage-free, Olson said, while others have no intention of changing, regardless of McDonald's decision.
In 2012, McDonald's set a 10-year timeline for phasing out gestation crates for pregnant sows.
Next up, Gross said, McDonald's intends to research and implement changes toward sourcing sustainable beef.