LOS ANGELES, March 31 (Reuters) - McDonald's Corp MCD.N, the largest purchaser of potatoes in the United States, has agreed to take steps towards reducing pesticide use in its domestic potato supply, shareholder groups said on Tuesday.

Following the agreement, the Bard College Endowment, Newground Social Investment and the AFL-CIO Reserve Fund withdrew a shareholder proposal that, if approved, would have required the company to publish a report on options for reducing pesticide use in its supply chain.

The investors said McDonald’s has agreed to survey its U.S. potato suppliers, compile a list of best practices in pesticide reduction and recommend those best practices to its global suppliers. It also will share its findings with investors and include the findings in its annual corporate social responsibility report.

McDonald’s, the world’s largest fast-food chain, did not have an immediate comment on the agreement.

“Because McDonald’s has such a commanding presence in the marketplace, this commitment offers the promise of significant reductions of pesticide use -- which will benefit consumer health, as well as farm workers, local agricultural communities, and the environment,” said Newground Social Investment Chief Executive Bruce Herbert, who is also a member of the Board of Directors of the Institute for Children’s Environmental Health.

Had the agreement not been reached, the resolution would have appeared in the company’s upcoming proxy statement and come up for a vote at the company’s shareholder meeting later this year.

The three investor groups teamed with Investor Environmental Health Network to engage McDonald’s in talks about pesticide reduction.

Dr. Richard Liroff, executive director at the Investor Environmental Health Network, said that some of McDonald's largest U.S. potato suppliers include ConAgra Foods Inc CAG.N unit Lamb Weston and privately held J.R. Simplot Co.

“We welcome McDonald’s stepping up to the plate and look forward to supporting the company’s efforts to reduce pesticide use in the future,” Liroff said.

“These are early steps,” said Liroff, who said McDonald’s must first know where it stands in terms of pesticide use in potato supplies before it can set targets for reduction.

He said food companies like Sysco Corp SYY.N, General Mills Inc GIS.N, and Campbell Soup Co CPB.N already have shown that cutting pesticide use can makes sense from both an environmental health and business perspective.

There was no immediate reply from ConAgra and J.R. Simplot to calls for comment. (Editing by Phil Berlowitz)