Economic Development / Proteins / Technology

Costco Eyes September 2019 Start-Up for Poultry Processing

By Kevin T. Higgins, Managing Editor

May 18, 2018

September 2019 is now the expected start-up date for Costco Wholesale Inc.’s poultry processing operation in Fremont, Neb., according to Craig Wilson, vice president and general merchandising manager.

Groundbreaking for the $275 million project occurred in June, with summer 2019 the preliminary target for commissioning.

In a panel discussion at the Food Safety Summit, Wilson said the facility will have a capacity of 2 million birds a week.

Operating under the name Lincoln Premium Poultry, a captive supplier to Costco, the project will include a hatchery and feed mill on the 414-acre site. The processing plant will have a footprint of approximately 380,000 sq. ft.

Icelandic OEM Marel is the lead equipment supplier. The highly automated plant, which will include three slaughter lines, is expected to require a staff of 800, down from a preliminary estimate of 1,200.

While water emersion is the chilling process for almost all U.S. chickens, Costco will deploy an air-chilled system. The first such system in North America is used by Tecumseh, Poultry, based in nearby Waverly, Neb. Tecumseh was founded 20 years ago and goes to market under the Smart Chicken label.

The facility is expected to supply one third of the rotisserie and raw chicken sold at Costco’s U.S. stores. To develop a raw-material supply chain, Costco is assisting farmers within a 100 miles radius to invest in and build chicken houses, providing up front capital of $120,000-$240,000 to new growers and extending 15-year purchase contracts. Most of the 125 growers being sought will be new to poultry growing.

Vision grading and robotic packing systems are among the automation advances, as is live-bird handling. While most poultry processors receive birds in outside bays, the Fremont plant will receive them in climate-controlled inside locations. Controlled atmosphere stunning is another element of the humane handling program.

According to Nebraska Gov. Pete Ricketts, the project’s economic impact on the state is expected to be $1.2 billion per year.

The project expands the $140 billion retailer’s manufacturing footprint, which also includes ground beef and hot-dog processing plants and a Canadian bakery.