Editorial

Where are we with the China Negotiations?

02/12/2019

Following the January 31st negotiations in Washington involving a high-level delegation headed by Vice President He a U.S. group of negotiators headed to Beijing. It is unclear what progress has been made based on conflicting comments from the White House and members of the Cabinet.  The fact that no specific date has been set for the proposed meeting between the presidents of the U.S. and China is a disquieting observation.

It is understood that the May 2018 statement of requirements by the U.S. concerning trade and more importantly structural issues, has been reduced to approximately 140 specific items by Beijing.  Approximately 30 items are regarded by Beijing as non-negotiable.  These include a commitment to cease industrial espionage and subsidies to state-affiliated companies that compete with U.S. and E.U. manufacturers. With regard to trade, the U.S. is demanding that the negative deficit should be reduced to $200 billion annually within two years.  A further point of contention is the demand by China that cloud-computing services have servers located in China. Not only would this blatantly restrictive requirement  provide China with the potential to control data, the international community would also be vulnerable to illegal access by the Government.

 

Even if an agreement is achieved on the major trade issues the question of enforcement has yet to be discussed.  Unless an agreement is reached before March 1, the U.S. has threatened to increase tariffs from 10 percent to 25 percent on approximately $250 billion on Chinese imports.  In the event of the two parties failing to achieve either a moratorium or a partial agreement, international trade will be impacted since China will be forced to divert exports to the E.U. and Asia. Their alternative is to reduce production that will lead to unemployment and social instability. 

 

Economists have warned of a “contagion effect” leading to currency wars, devaluation and stagflation especially affecting developing nations.  Dow Jones has reported on the projections by Pamela Cooke-Hamilton, Head of International Trade at UNCTAD.  If exports from China are reduced by approximately $250 billion annually, U.S. companies would only benefit by six percent of this potential, with China retaining 12 percent, despite tariffs.  The E.U. would be the primary beneficiary of a break between China and the U.S., capturing $70 billion of existing trade and with Japan, Mexico and Canada each acquiring at least $20 billion.

 

Current events clearly indicate the dangers of the Law of Unintended Consequences with dire implications for the economies of both the U.S. and China.

 



 

Poultry Industry News

Weekly Turkey Production and Prices

02/15/2019

Poult Production and Placement:

The February 15th edition of the USDA Turkey Hatchery Report, issued monthly, (the latest after the Federal shutdown) documented 28.1 million eggs in incubators on February 1 st 2018 (27.8 million eggs on January 1st 2019) down 1.0 percent (0.3 million eggs) from February 1st 2018.

A total of 22.6 million poults were hatched during January 2019 (23.1 million in December 2018) and down 6.8 percent from January 2018.

A total of 20.2 million poults were placed on farms in the U.S. in January 2019, (19.9 million in December 2018), 10.4 percent less than in January 2018. This suggests disposal of 2.4 million poults during the month. Assuming all tom poults were placed, 21.5 percent of hen poults or 10.7 percent of all January 2019 poults hatched were not placed.

For the twelve-month period February 2018 through January 2019 inclusive, 284.0 million poults were hatched and 263.5 million were placed. This suggests disposal of 20.3 million poults. Assuming all tom poults were placed 14.3 percent of hen poults or 7.2 percent of all January 2019 poults hatched were not placed.


 

Weekly Broiler Production and Prices

02/15/2019

Chick Placements.

The first Broiler Hatchery Report released on February 13 th after the Federal shutdown confirmed that a total of 228.3 million eggs were set during the week ending February 9th, one percent more than in the corresponding week in 2018. A total of 175.5 million day-old chicks were placed among the 19 major broiler-producing states during the week ending February 9th. This was three percent higher than the corresponding week in 2018. Total chick placements for the U.S. amounted to 183.2 million. Claimed average hatchability was 82.1 percent for eggs set three weeks earlier. Broiler chick placements for 2019 through February 9th amounted to 1.01 billion, 1 percent more than YTD 2018.

Percent hatch figures for the weeks during the shutdown were:- January 12 th 80.2; January 19th 81.2; January 26th 79.5.

Broiler Production

According to the USDA Broiler Market News Report (Vol. 66: No.07) for the processing week ending February 9th 2019, 162.0 million broilers were processed at an average live weight of 6.12 lbs. (6.11 lbs. last week) and a nominal yield of 76.0 percent. The number of broilers processed was 0.4 percent less than the corresponding processing week in 2018. Processed (RTC) broiler production for the week was 747.4 million lbs. (339,726 metric tons). Production YTD of RTC in 2019 is 4.45 million lbs. (2,023,725 metric tons), 1.1 percent more than in 2018.


 

WEEKLY COMMODITY REPORT

02/15/2019

The following quotations for the months as indicated were posted by the CME at close of trading on Friday February 15th together with values for the reference months in parentheses. The market showed a mild decline for soybeans coupled with stagnation in corn compared to previous weeks.

COMMODITY

 

Corn (cents per bushel)

March 375 (374)

May 383 (382)

Soybeans (cents per bushel)

March 908 (916)

May 921 (931)

Soybean meal ($ per ton)

March 306 (307)

May 310 (311)

Changes in the price of corn, soybeans and soybean meal this past week were:-

COMMODITY             CHANGE FROM PAST WEEK

Corn: March quotation up 1 cent per Bu. (+0.3 percent)

Soybeans: March quotation down 8 cents per Bu (-0.9 percent)

Soybean Meal: March quotation down $1 per ton (-0.3 percent)

  • For each 10 cent per bushel change in corn:-

The cost of egg production would change by 0.45 cent per dozen

The cost of broiler production would change by 0.25 cent per pound live weight

  • For each $10 per ton change in the price of soybean meal:-

The cost of egg production would change by 0.40 cent per dozen

The cost of broiler production would change by 0.25 cent per pound live weight

COMMENTS

Soybean prices recently firmed in response to reports of drought in areas of Brazil. Approximately 20 percent of the crop projected to be 117.2 million metric tons is at risk. The market has now factored in decreased production in Brazil and Argentine.

There is fluctuating optimism concerning the outcome of the ongoing negotiations between China and the U.S. initiated at the dinner meeting during the G-20 Summit between the delegations from the U.S. and China led by their respective Presidents. Statements by members of the Administration concerned with the issue on February 8th suggest a likely extension of the March 31st deadline to raise tariffs from ten percent to twenty-five percent on over $200 billion in annual imports from China. In return China has agreed to purchase an unspecified quantity of agricultural commodities in addition to energy and heavy equipment from the U.S. to offset the negative balance of payments. An initial order of 1.5 million tons was placed in December 2018, the first since June. The USDA announced on January 7th that orders have been placed for an additional 3 million tons to be shipped before September 2019. China has hinted at a six-year agreement to purchase soybeans mainly due to concern over drought in Brazil. Negotiations are apparently in progress as denoted by shuttles between Beijing and Washington but without any disclosure of specifics. Markets are buffeted by conflicting reports from the Administration.

According to the February 8th 2018 WASDE Report #585, (the first issued after the December 24th 2018 Federal Shutdown), 81.7 million acres of corn will be harvested in 2019 to produce 14.42 Billion bushels. The soybean crop is projected to attain 4.54 Billion bushels from 88.1 million acres harvested. The levels of production for the two commodities are based on preliminary pre-planting projections of yield and acreage to be planted. Ending stocks were revised based on anticipated domestic use and exports.

See the WASDE posting summarizing the February 8th USDA-WASDE Report #585 under the STATISTICS tab documenting price projections and quantities of commodities to be produced, used and exported from the 2019 harvest.

Unless shipments of corn and soybeans to China resume in volume, as projected, the financial future for row-crop farmers appears bleak despite the release of two tranches amounting to $12 billion as "short-term" compensation for all producers of commodities and livestock. Corn farmers will not be placated by the promise of a year-round E-15 blend since the logistic problems of delivery to consumers and legal challenges will delay any positive price benefit. Oversupply of ethanol with the current 10 percent addition (read BTU dilution) mandate is evident from the February 15th spot price of $1.32 per gallon that has not changed materially in six weeks compared with a 2018 peak in late March of $1.60. Exports have been constrained by the retaliatory tariffs imposed by China on U.S. ethanol. Some refiners are reducing production and mothballing corn-fermentation plants.

The loss inflicted on farmers by the trade war with China is a gain for livestock producers who will benefit from lower feed costs. It must be recognized that the hog and poultry industries have experienced higher costs for a decade as a result of the RFS, a gift that keeps on giving. The mandate is a boon to Midwest politicians, corn growers and ethanol refiners at the expense of anyone in the U.S. who eats or uses any form of transport.


 

Sad Passing of Toby Moore

02/18/2019

It is with deep sadness that we record the passing of our friend Toby Moore. He left us on Friday 15th at the age of 68 in his hometown of Snellville GA. after a long fight with colonic cancer, diagnosed in 2010.

 

Born in Jefferson County Toby was a graduate of the School of Journalism at the University of Georgia, subsequently working as a reporter and then as a PR spokesperson for Goldkist. He served as the Editor of the USAPEEC MondayLine for 24 years and was instrumental in advancing the image of U.S. poultry among importing nations.

 

He served in the U.S. Navy and was a member of the Georgia National Guard and was deployed to Bosnia and Desert Storm.

 

He will be remembered for his helpfulness to colleagues in the industry and his good humor. He bore the pain and inconvenience of his diagnosis with fortitude and dignity. He frequently opined that he had experienced much that the World had to offer and regretted that many children afflicted with cancer would not have his opportunities to travel and live their lives as he had done.

 

A celebration of his life will be held on Sunday February 23rd. at Coleman Chapel in Wadley GA at 11am with a burial thereafter.

 

We extend deepest condolences to his widow Victoria, children and grandchildren. He will be sadly missed.


 

Zoetis Reports on Q4 and FY 2018

02/18/2019

In a press release dated February 14th Zoetis Inc. (ZTS) announced results for the 4th Quarter and Fiscal 2018 ending December 31st 2018.

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as $ x 1,000 except EPS)

 

4th Quarter Ending December 31st.

2018

2017

Difference (%)

Sales:

$1,564,000

$1,460,000

+7.1

Gross profit:

$1,020,000

$1,003,000

+1.7

Operating income:

$475,000

$532,000

-10.7

Pre-tax Income

Net Income*

$418,000

$345,000

$430,000

$81,000

-2.8

+325.9

Diluted earnings per share:

$0.71

$0.16

+343.8

Gross Margin (%)

65.2

68.6

-5.0

Operating Margin (%)

30.3

36.4

-16.8

Profit Margin (%)

22.0

5.6

292.9

Long-term Debt:

$6,443,000

$4,953,000

+25.5

12 Months Trailing:

     

Return on Assets (%)

12.2

   

Return on Equity (%)

71.7

   

Operating Margin (%)

32.4

   

Profit Margin (%)

24.5

   

Total Assets

$10,777,000

$8,586,000

+30.1

Market Capitalization

$45,670,000

   

*Q4 2017 included a tax provision of $350 million compared to $73 in Q4 2018.

Q4 2018 included $55 million designated as "other income"

52-Week Range in Share Price: $77.00 to $85.94

Market Close Feb.14th $88.70

Market Open Feb. 15th post release; $92.70; Market close 15 th; $95.38

Forward P/E 24.7

For FY 2018 ZTS earned $1.42 billion on sales of $5.83 billion with an EPS of $2.93. In comparison ZTS posted earnings of $864 million on sales of $5.31 billion with an EPS of $1.75

For the U.S. ZTS in FY 2018 posted an operating income of $1.815 billion (up 11 percent over FY 2017) on sales of $2.87 billion. International sales of $2.89 billion generated an operating income of $1,399 billion, 13 percent higher than in FY 2017.

Of U.S. sales in FY 2018, 44 percent was derived from the Livestock Segment compared to 63 percent for international sales.

The percentage distribution of FY 2018 sales by species comprised:-

  • Cattle 55.6
  • Swine 21.0
  • Poultry 16.5
  • Fish and other 6.9

For FY 2018 R&D represented 7.4 percent of revenue.
 

In commenting on results Juan Ramo´n Alaix, CEO stated, "Zoetis delivered another year of strong performance in 2018 and executed on investment plans that continue to strengthen our product portfolio across the continuum of care." He added "We achieved 10% operational revenue growth for the year growing revenue across all of our core species, major markets and therapeutic areas. We also grew our adjusted net income faster than sales, at 31% operationally, as we continue to deliver on our long-term value proposition."

Alaix concluded "Looking ahead, we will continue to build on our strategic investment plans to support the growth of our core business, and in evolving spaces such as diagnostics, devices, digital and data analytics.. We remain committed to funding investments that will help us maintain our leadership and growth, while returning excess capital to shareholders."

Guidance for FY 2019 included:-

  • Revenue of $6.18 to $6.30 billion

  • Net income of $1.65 to $1.70 billion

  • EPS of $3.42 to $3.52.


 

Pilgrim’s Pride Reports on Q4 and FY 2018

02/07/2019

In a press release dated February 13th Pilgrim's Pride Corp. (PPC) announced results for the 4th Quarter and Fiscal 2018 ending December 30th 2018

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as $ x 1,000 except EPS)

4th Quarter Ending

Dec. 30th 2018

Dec. 31st 2017

Difference (%)

Sales:

$2,656,789

$2,742,352

-3.1

Gross profit:

$111,848

$261,804

-57.3

Operating income:

$23,635

$155,917

-84.8

Pre-tax Income

Net Income

$(29,171)

$(7,324)

$119,778

$134,337

-124.4

-105.5

Diluted earnings per share:

$(0.03)

$0.54

-105.6

Gross Margin (%)

4.2

9.5

-55.8

Operating Margin (%)

0.9

5.6

-83.9

Profit Margin (%)

Neg.

4.9

-

Long-term Debt:

$2,295,190

$2,635,617

-12.9

12 Months Trailing:

     

Return on Assets (%)

5.1

   

Return on Equity (%)

12.7

   

Operating Margin (%)

4.6

   

Profit Margin (%)

2.3

   

Total Assets

$5,931,202

$6,248,652

-5.1

Market Capitalization

$5,000,000

   

52-Week Range in Share Price: $14.83 to $26.95

Market Close Feb. 13th pre-announcement $20.43; Open 14 th post-announcement $19.52. Close 15th $20.01

Forward P/E 9.6 Beta 1.2

For FY 2018 PPC earned $246.8 million on sales of $10.94 billion with an EPS of $1.00; For FY 2017 earnings were $694.6 million on sales of $10.77 billion with an EPS of $2.79
 

In commenting on results Bill Lovette, CEO stated "In the U.S. we endured a very challenging environment in commodity chicken, slower than expected recovery from weather disruptions at some complexes, partially offset by an improvement in operating results from Prepared Foods. In Europe we improved the performance through expected synergies but were impacted by higher feed inputs as a result of a drought that will be passed to our prices in coming quarters. Our Mexican operations produced a very strong first half, a weaker than seasonal Q3, followed by a rebound in Q4. The diversity of our portfolio of bird sizes, geographical market exposure, our culture and our people, are what fundamentally differentiate us from the competition, giving us the potential to reduce volatility and generate higher margins over time, and the results for 2018 represented the power of that strategy. As we begin 2019, conditions in the U.S. commodity markets including exports are already recovering, supporting OECD-FAO data that over the longer term chicken as a protein will continue to outperform in terms of growth potential globally,"

Lovette continued "results from Prepared Foods are accelerating in momentum with a strong 15% increase in volume in the U.S. and 33% increase in Mexico, reflecting the investments we made over the past few years to grow capacities and capabilities to meet customer expectations. The build out for innovation and marketing to drive future strong growth continues. We believe the prospects for more growth remain and the improvement in performance is sustainable. To further support the growth initiatives, we are also transitioning to a more innovative package design."

In projecting forward Lovette stated "we are continuing to improve the performance of our European (Moy Park) operations. Margins have increased since the acquisition just a year and a half ago, and are moving in a positive trajectory. The integration is better than expected and we have extracted both operating and product synergies with our other geographical facilities. The cost of feed inputs
 


Industry Groups Support Selected Messages From the State of the Union Address

02/12/2019

The president and CEO of the National Retail Federation expressed the views of retailers that Congress should cooperate in a bipartisan way to support growth in the U.S. economy. Areas of concern to the NRF include improving infrastructure, enhancing innovation in manufacturing and advancing the development of workers. Matthew Shay called for an end to trade wars and restoration of balanced relationships.

Jennifer Houston, president of the National Cattleman’s Beef Association called for swift ratification of the USMCA by Congress. Houston stressed the need for access to foreign markets, especially in Asia and Europe. It is noted that the Administration unilaterally withdrew from the Trans Pacific Partnership without concluding bilateral negotiations with Korea, Japan creating a vacuum to be exploited by competitors including China. Negotiations with the E.U. are currently complicated by the imminent withdrawal of the U.K. from the E.U.


 

U.S. Consumers Demonstrating Super Bowl Fatigue

02/12/2019

The National Retail Federation estimated that consumers spent $14.8 billion over the Super Bowl weekend compared to $15.3 billion in 2018. This decline was also reflected in the marked reduction in the Super Bowl 2019 viewing audience. It is estimated that the CBS live airing drew 98.2 million viewers, down 5 percent from 2018 and compared to the top rating in 2014 attaining 114.4 million.

Subsequent to the initial release on viewership, CBS added approximately 12 million who watched the game to the total of who watched the game contributing to a potential viewership of 112.7 million. It is estimated that 61 million attended parties, 44 million hosted events and 13 million watched in restaurants, bars and hotels.

TV viewership can be correlated with demand for chicken wings both bone-in and boneless. In the week leading up to the Super Bowl, wings featured at $2.47 per pound compared to $2.98 in 2018. The relatively lower price of boneless and skinless breasts in 2019 favored boneless wings. There was a gradual rise in the wholesale price of wings from mid-December onwards which was augers well for the March Madness phase of increased consumption.  

Due to the Federal shutdown, specific details on wings in cold storage have not been released since December 21st that reflecting November 30th 2018 inventory. The cold storage report to be issued mid-February will determine whether the November 30th stock of 99.6 million pounds will decline given that this value was 31 percent higher than on November 30th 2017. Wings averaged $1.87 per pound at wholesale during the week preceding the Super Bowl and increased by 0.5 percent during the past week.


 

Meal Delivery a Two-Edged Sword

02/12/2019

It is estimated that three percent of all restaurant orders in 2018 were delivered to homes and offices. The trend towards convenience and E-mail ordering is fueling sales operators of both QSRs and full-service restaurants are questioning the economics of delivery. Obviously pizza parlors, specialty caterers and Chinese restaurants have employed home delivery to their advantage especially in high-density urban and suburban areas for decades. The problem now relates to low-value QSR meals that detract from store revenue and impose additional costs to the consumer. It is estimated that a $4 Big Mac order reduces revenue by 80 cents. The value may rise to 40 percent of many orders, eliminating positive margin. According to an article in the February 9th edition of The Wall Street Journal by John D. Stoll, delivering a meal costing less than $10 “does not make economic or strategic sense”.

The alternative to home delivery is to enhance convenience. Waiting times can be reduced by “order-ahead” and designating pick-up parking spaces or installing windows for the convenience of customers.

Stoll points to the lack of quantitative data on the effectiveness of home delivery relative to cost. Although consumer satisfaction and volume may be increased, home delivery may cannibalize in- store sales resulting in lowered margins and profitability.

The quality of food subjected to home delivery is also in question. Fries do not travel well even if temperature is maintained and food may lose texture and flavor in transit. The most important deterrent to home delivery will however be cost and ultimately consumers will have to balance convenience against expenditure.


 

Whole Foods Market Data

02/12/2019

Since the acquisition of Whole Foods Market by Amazon in 2017, the parent company has consolidated financial data restricting release of sales and profit performance.

 

In a January 31st conference call, Brian T. Olsavksy, senior vice president and CFO provided some data on performance of the subsidiary.  In the commentary accompanying the Amazon.com Inc. report on Q4 and FY 2018, the company noted the benefit of Amazon Prime and Prime Now in enhancing sales.  Apparently grocery delivery is available in 60 U.S. metro markets and pickup service has been extended to 20 areas.

 

Olsavksy claimed that the growth in same store sales for Whole Foods approached 6 percent for the past year although actual in-store sales have declined by 3 percent with the apparent discrepancy attributed to on-line orders.

 

Due to the lack of transparency concerning Whole Foods Market we will probably never know how the company is performing.

 


 

Conagra to Close Boulder Office of Pinnacle Foods

02/12/2019

In move to centralize decision making and to reduce costs, Conagra will close the Boulder Brands business of Pinnacle Foods, acquired in 2018.  The facility will remain open through 2019 but ultimately 100 jobs will be eliminated. Employees will be offered alternative positions in other Conagra locations.


 

Beef Industry in Poland Suffers Multiple Complications

02/12/2019

The European Commission is currently investigating an abattoir located in Mirsk in Southwest Poland.  It is alleged that the facility processed cattle demonstrating clinical signs of disease at ante-mortem.  The practice was revealed by a television station which obtained undercover videos.

 

The second problem relates to the diagnosis of an atypical case of bovine spongiform encephalopathy (BSE; “mad cow disease”).  Obviously an investigation is in progress to determine whether the atypical case involved an individual animal with sporadic changes as has been recognized in Canada, the U.S. and other nations.


 

John Prestage Elected Board Chairman of USPOULTRY for 2019 Term

02/15/2019

John Prestage, Senior Vice-president of Prestage Farms, was elected Chairman of the Board of Directors of the U.S. Poultry & Egg Association during the 2019 International Production & Processing Expo. He previously served as Vice-Chairman and takes over from 2018 chairman Tom Hensley who will serve as Immediate Past Chairman.

Greg Hinton, Vice-president of Sales for Rose Acre Farms, was named Vice-chairman of USPOULTRY.

Mike Levengood, Vice-president, Chief Animal Care Officer and Farmer Relationship Advocate for Perdue Foods, was named Treasurer.

Mikell Fries, president of Claxton Poultry, was named Secretary.


 

Walmart Considering Alternative to Sainsbury Deal

02/15/2019

Since there is doubt as to the eventual conclusion of the proposed merger of ASDA the U.K. subsidiary of Walmart and leading supermarket chain Sainsbury, Walmart is obviously considering alternatives.  As noted previously Walmart wishes to exit the highly competitive U.K. market along with rationalization of international investments.  The company divested 80 percent of their business in Brazil in 2018 based on a low return.  Although the transaction with Sainsbury which will leave Walmart with 42 percent of the combined company without the obligation of management, appears to be an optimal solution, if regulatory authorities reject the deal, the $10 billion enterprise in the UK will probably be acquired by an investment group for real estate value and the cash flow generated.

 

Blackstone and KKR previously attempted to buy Sainsbury, suggesting that the Walmart-ASDA business would be equally attractive.  Unknowns in the equation include Brexit that may materially affect the supermarket business based on the cost of importing food from the EU. A second consideration will be the projected decline in property values that would inevitably occur following a separation of the U.K. from the EU.

 

In a related matter, Walmart purchased a majority interest in Indian E-commerce Company Flipkart for $16 million in 2017.  Subsequently a series of regulations devised by the Government of India have cast a shadow on this investment. New regulations to restrict the activities of both Walmart and Amazon have been imposed to protect the interests of family-owned retailed stores.


 

China to Exempt Major Brazilian Companies from Tariffs

02/18/2019

Following representations made by major protein exporters in Brazil, China has agreed to exempt 14 companies including BRF and the JBS Group from anti-dumping tariffs on chicken products. Following an investigation initiated by China in August 2017, negotiations resulted in an agreement that producers in Brazil would maintain a floor price based on production costs.


 

BRF Recalls Product

02/18/2019

According to press reports confirmed by a posting on the BRF website, the company is recalling approximately 400 metric tons of chicken meat. The products were processed at the Dorados plant in Matto Grosso do Sul in early November. Approximately 75 percent of the quantity potentially infected with Salmonella Enteritidis was destined for the export market and the recall is probably moot, with the product having been consumed.

From the news report it is apparent that BRF did not apply a retain-and-test program. The incident will degrade the image of Brazilian chicken exports especially following previous allegations of improper inspection procedures and falsification of documentation that resulted in suspension of exports in 2017.

The presence of Salmonella Enteritidis contamination was reported to the Ministry of Agriculture and the National Health Surveillance Agency. It is certain that China will embargo product from the plant while conducting SE assays.


 

Phibro Animal Health Debuts Provia™ Prime

02/18/2019

Phibro Animal Health launched Provia™ Prime at the 2019 IPPE.  The product incorporates four probiotic strains of Bacillus comprising Bacillus subtilis, Bacillus licheniformis, Bacillus coagulans and Bacillus amyloliquefaciens.  Phibro have determined that the four strains result in a synergistic action promoting intestinal function.

 

The Provia™ Prime product demonstrates heat stability and a prolonged shelf-life.

 

Paulo Rezende-Napier, Product Director stated, “Healthier birds, which are better able to withstand the stress of pathogens, can help reduce costs of production, increase potential return on investment and help ensure plentiful and affordable protein for consumers.”

 

Details of Provia™ Prime can be accessed at www.pahc.com


 

Foster Farms Appoints CEO

02/18/2019

Foster Farms has appointed Dan Huber, currently COO, to the position of CEO.  He replaces Laura Flanagan who was the first non-family member to serve as CEO.

 

Prior to joining Foster Farms Dan held management positions with Oscar Mayer and Kraft Foods.  He has been active in USPOULTRY, the National Chicken Council and the National Turkey Federation.  Huber earned a bachelor’s degree in finance from the University of Colorado and has been a resident in the Central Valley for 20 years.

 

In commenting on the appointment Terry Martin, Chairman of the Board stated, “Dan is uniquely qualified to lead Foster Farms. He brings over 23 years of agribusiness, supply chain, food production, food safety, and branded sales management to this position.”

 

In early February, news media reported on discussions between Foster Farms and Tyson Foods suggesting a possible acquisition of the California-based company although there have been no further comments as to whether negotiations are in progress or have been abandoned.  It is possible that Ms. Flanagan who “resigned to pursue other opportunities” recognized the possibility of a change in ownership and elected to move a more secure position.


 

Trade Deficit with E.U. Increases in 2018

02/18/2019

According to figures released by the European Union Statistics Agency, the E.U. has a positive trade surplus with the U.S. of $158 billion in 2018.  This was approximately 31 percent higher than in 2017. The release could influence Administration policy with regard to bilateral talks on a comprehensive trade agreement.

 

There is currently consideration to impose an import tariff of 25 percent on automobiles construed as a bargaining tactic with the EU.  The Administration will be hard pressed to continue negotiations with China to achieve an equitable deal on both trade and underlying structural issues, to convince Congress to ratify the USMCA and in addition establish trade agreements with individual members of the comprehensive progressive Trans Pacific Partnership (TPP 11).

 

The U.S. finds itself in the unenviable position of having to simultaneously negotiate alliances with major trading partners following the precipitous withdrawal from agreements as a bargaining tactic. This has resulted in uncertainty with regard to new investment in production facilities and agricultural exports.

 

In July 2018, the E.U. and the U.S. agreed to work to eliminate tariffs on non-auto industrial goods, chemicals and agriculture products.  Progress on an agreement is in limbo based on demands that the E.U. import a high quantity of soybeans to replace exports to China. 

 

In September 2018 the U.S. and Japan released a statement that negotiations on a bilateral trade agreement have achieved an advanced state although many issues relating to exports of Japanese automobiles and parts and their willingness to import substantial quantities of agriculture products have yet to be resolved.


 

CDC Continues Salmonella Investigation of Turkey Products

02/18/2019

According to a CDC posting on February 15th, the investigation of a multi drug-resistant Salmonella Reading is continuing.  As of February 13th, 2019, 279 confirmed cases have been documented from 41 states and D.C.  Of this total 107 have been hospitalized and one fatality was attributed to infection in California.  Since December 21st 2018, 63 new cases in 24 states have been added to list.

 

Preliminary epidemiologic laboratory studies have shown that raw turkey products are contaminated with Salmonella Reading. The outbreak strain has been recovered from raw turkey pet food, raw turkey products and most significantly, live turkeys. From an epidemiological and trace-back perspective different brands and types of turkey products from numerous locations have been implicated.  It appears that raw turkey incorporated into pet food is the source of some household infections.

 

The Public Health Agency of Canada has also identified cases of Salmonella Reading infection involving strains with a common whole genome sequence. The CDC is collaborating with the NTF and the USDA-FSIS to determine the epidemiology of the infection and to develop appropriate control measures. In the interim, the CDC has issued the usual recommendations for safe handling and storage of turkey with emphasis on appropriate cooking and also handling raw pet food.

 

Recalls since November 2018 have included 70 tons of ground turkey product by Jennie-O turkey store, followed by 80 tons in December in addition to numerous recalls by pet food manufacturers.  

 


 

HatchTech Promotes HatchCare® at IPPE

02/18/2019

At a breakfast presentation on Wednesday February 13th organized by HatchTech the technical and financial advantages of the HatchCare® system were documented. Improved growth rate and feed conversion efficiency through to broiler harvest is attributed to the opportunity for each chick to eat and drink within minutes of drying through the entire hatching period. Initiation of digestive activity and reduced stress contribute to enhanced performance compared with conventional hatching as recorded in the EU, Canada and the U.S.

 

The incremental capital cost of a HatchCare® installation is offset by financial benefits derived from lower cost per unit of live-weight harvested or alternatively from increased saleable mass. In the case of a one million chick per week installation the additional capital cost is returned in a year of operation and the discounted annual benefit over ten years exceeds the additional capital cost by at least sevenfold depending on specific circumstances relating to the hatchery capacity and utilization.

 

A Power Point set presented at the HatchTech meeting is posted for the information of Subscribers. Additional information is available on the HatchTech website www.hatchtech.nl   


Download the Presentation as a PDF file

Download the Presentation PowerPoint file

View the online slide show
 

Shane Commentary

India Moves the Goal Posts on E-commerce

02/06/2019

When confronted with any form of foreign investment or innovation India can be relied on to revert to protectionism that is the inherent default mode for the highly socialist regulated economy. In recent years, Amazon has entered the market in India through local partners closely followed by the 2017 investment of $16 billion by Walmart in domestic company Flipkart. It is estimated that during 2017 the sales of these companies amounted to $3.2 billion and $3.8 billion respectively.

 

Noting that the projected E-commerce market in India will rise rapidly from the 2018 sales value of $33 billion in 2018 the Government of India has imposed restrictions on foreign investors. This is in an attempt to protect the millions of mom-and-pop retail stores in the Nation.  

 

The regulations effectively prevent E-retailers such as Amazon and Walmart/Flipkart from selling products through subsidiaries.  This was a tactic forced on the foreign E-commerce companies following a previous restriction.  Companies can now only sell their own brands on their websites, severely restricting sales.

 

It is no coincidence that restrictions were imposed in advance of national elections.  Prime Minister Narendra Modi is vying for a second term and is pushing a “national champion” program which appeals to the middle class in addition to domestic backers of his Administration with their own E-commerce aspirations.

 

India has always been and will continue to be an unreliable investment opportunity given the socialistic inclination of the bureaucracy and the Byzantine administration overlapping state and national jurisdictions. The inefficient and possibly corrupt legal system is no help to foreign investors.  The market in India is potentially huge but artificial barriers and erratic policy decisions disfavor sinking capital into projects and apparent opportunities.

 

Visit our Companion Website
http://egg-news.com/
Dr. Simon M. Shane
Simon M. Shane
Contact     C. V.
 
Copyright 2018 Simon M. Shane