China’s Poultry report asks for food safety promise from Yum! Brands, Inc.& McDonald’s Corporation- YUM & MCD

After a report by China Central Television proclaiming that chicken arbitrarily fed by antibiotics and hormones of growth may have been sold by McDonald’s Corporation (NYSE:MCD) and Yum! Brands, Inc. (NYSE:YUM).

Yingtai Food Group Co. and the Liuhe Group Co. are suppliers to many including McDonald’s Corporation (NYSE:MCD) and KFC. As per the state broadcaster report, the inspection of the chickens was not carried out properly before the delivery by the Yingtai Food Group Co. and the Liuhe Group Co. while buying them from the farmers.

The government of China has broken down on the violations in food safety after firstly traced contaminated baby formula and other cases that involved chemical additions in pork and reprocessed cooking oil being used outraged the entire community. A team has been sent to Shandong province by the Ministry of Agriculture to inspect reports of wrong use of antibiotics in chickens. It has also recommended strengthening of the drug monitoring in livestock and poultry by veterinary officials.

Yum! Brands, Inc. (NYSE:YUM) since August, has closed buying from Liuhe Group Co.

The Illinois-based McDonald’s- Oak Brook yesterday stopped the trade with Liuhe Group Co. It is also worth noticing here that in a span of two years, there were no rejections by the company to be returned to Liuhe Group Co. China has accounted for approximately 44 percent of Yum! Brands, Inc. (NYSE:YUM)’s revenue. Though no separate figures have been provided by McDonald’s Corporation (NYSE:MCD) for sales in China, there are plans in place by the same to deploy 2000 stores across the nation by the year end.

Sichuan New Hope Agribusiness Co. acquired Liuhe Group Co. in 2011 and Sichuan New Hope Agribusiness Co. is New Hope Group Co.’s listed unit and Liu Yonghao is its chairman. The entity together was named New Hope Liuhe Co Ltd. (SHE: 000876).

The subsidiaries of Henan Shuanghui Investment & Development (SHE: 000895) prepare food products and it ended trade of supplies from Yingtai Food Group Co. from May. This was done due to the fact that the supplied products were unsuccessful in meeting the standards of the company.

Shares of McDonald’s Corporation (NYSE:MCD) were down by 0.89% to close at $89.71

Shares of Yum! Brands, Inc. (NYSE:YUM) were down by 2.74% to close at $67.16

Shares of New Hope Liuhe Co Ltd. (SHE:000876) were down by 3.24% and trading at CNY 11.34.

Shares of Henan Shuanghui Investment & Development (SHE:000895) were down by 0.40% and currently trading at CNY 55.08

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Published by Viraj Shah

Viraj Shah has done M.Com (Finance) and currently pursuing CFP. He is a technical analyst who tracks US markets along with other global markets like India very closely. He is very passionate about stocks and believes that money can always be made in market.

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