Editorial

Problems in the Food Delivery Space

07/22/2019

Laura Foreman writing for Dow Jones and Heather Hadden for The Wall Street Journal document problems relating to profitability among food delivery companies mirrored by the concerns of restaurants with regard to reliability and cost.  There is a considerable amount of substitution and replacement of delivery companies as a result of frequent decisions to change made by restaurants. 

 

Faced with low margins from home-delivered orders, chains are sharpening the pencil and constantly negotiating lower delivery charges. Problems relating to incorrect orders and delays can theoretically be solved by integrating software and the ordering procedures with the objective of obtaining compatibility between the delivery company and the restaurant served.  Achieving a mutually acceptable relationship may be unattainable over the short term since the degree of partnering required is consistent with a long-term commitment that chains are disinclined to accept. For example McDonald’s is currently negotiating with DoorDash, and Grub-Hub in addition to Uber Eats that currently serves 9,000 McDonald’s units.

 

Notwithstanding obvious questions relating to intermediate and long-term profitability of food delivery, funding continues to be offered to privately held company including DoorDash and Post Mates that have raised $1.7 billion and $0.5 billion respectively.  It is probable that fragmentation in the industry and a declining demand for home delivery will further impact profitability.  Key Banc quoted in the Dow Jones article noted that the growth in adoption of home delivery by restaurants grew 10 percent between February and June of 2019 compared to 36 percent for the corresponding period in 2018.

In addition to reducing fees and commissions, restaurant chains are demanding that their delivery services offer promotional discounts and increased expenditure on marketing.  Disinclination to use delivery services is especially evident in chains with a high proportion of franchisee operators. On the distaff side consumers are obviously balancing quality considerations and cost with the convenience of home delivery. In all but high-density urban areas, demand is apparently shrinking.

 

The pizza segment of the food industry is the obvious loser in the rise of home delivery introduced by QSRs and casual dining restaurants.  Traditionally pizza was the only option for home delivery other than a few local oriental take-out downtown and suburban restaurants.

Rich Allison, CEO of Domino’s Pizza commented that deals between delivery companies and restaurant are hurting sales of his company and he anticipates that the current situation will not “let up soon”.  Allison noted, “Investors are very willing to lose a lot of money in the near term.”  Domino’s will maintain its fleet of delivery drivers and has shied away from Grub-Hub, DoorDash and their clones. 

Autonomous vehicle delivery is a long way in the future but it is possible however that in some areas scooters and bicycles can be used for delivery. These alternatives can replace automobiles that are environmentally less acceptable than pedal-cycles or electric-powered vehicle and tricycles. 

 



 

Poultry Industry News

Updated USDA-ERS Poultry Meat Projection for 2019

07/17/2019

The USDA-Economic Research Service released production and consumption data on July17th for broilers and turkeys covering 2018 (revised) and 2019 (forecast) together with a projection for 2020.

Broiler data for 2019 was essentially unchanged from the June 2019 report. Production in 2019 will increase by 1.2 percent compared to 2018 to 19.60 million metric tons (43,106 million lbs.) RTC. Per capita consumption in 2019 was unchanged from the June report at 42.2 kg. (92.9 lbs.) Exports will represent 16.6 percent of RTC production in 2019 attaining 3.244 million metric tons (7,137 million lbs.) This is based on the presumption that the USMCA concluded in September 2018 will be approved by Congress and by the legislatures of Canada and Mexico by the end of the third quarter.

Turkey production will remain almost unchanged in 2019 compared to 2018 at 2.666 million metric tons (5,865 million lbs.) RTC. Per capita consumption will remain at 7.3 kg. (16.1 lb.) during 2019, a 1.4 percent downward projection despite promotions and introduction of further-processed items. Export volume will be 0.285 million metric tons (627 million lbs.).

Forecast values for production and consumption of RTC turkey in 2019 are considered to be optimistic given 2019 prices, egg settings, poult placements, disposal of hen poults, weekly production levels, live weights and inventory. The USDA projection presumably takes into account that the recently concluded USMCA, if ratified by the legislatures of the U.S and Canada, will avert tariffs. This will maintain market share in Mexico despite growing competition from Chile and other nations in Latin America.

Metric values for the broiler and turkey segments of the U.S. poultry meat industry are tabulated below:-

 

 

Parameter

2018 (actual)

2019 (forecast)

% Difference 2020 2018 to 2019 (projection)

Broilers

     

Production (m. metric tons)

19.364

19.595

+1.2 19.705

Consumption (kg per capita)

42.0

42.2

+0.7 42.1

Exports (m. metric tons)

3.213

3.244

+1.0 3.295

Proportion of production (%)

16.5

16.6

-0.6 16.7

       

Turkeys

     

Production (m. metric tons)

2.672

2.666

-0.2 2.682

Consumption (kg per capita)

7.4

7.3

-1.4 7.1

Exports (m. metric tons)

0.278

0.285

+2.5 0.286

Proportion of production (%)

10.4

10.7

+2.9 10.7

Subscribers are referred to the weekly updates of production and inventories of broilers and turkeys posted weekly on CHICK-NEWS

Source: Livestock, Dairy and Poultry Outlook -July17th 2019


 

WEEKLY COMMODITY REPORT

07/18/2019

Price of corn sharply down, soybeans static with neither orders from China nor progress in trade talks.

The following quotations for the third quarter were posted by the CME at

close of trading on Friday July 19th compared with values for Friday July 12th (in parentheses).

The market responded with a downward turn for corn this past week accompanied by stasis in the soybean market. The latest WASDE released on July 11th documented the anticipated harvests with greater certainty compared with previous months. Corn planted in 2019 is up 3 percent over 2018 to 91.7 million acres and although late, due to saturated fields, will produce a crop of 13.9 billion bushels. Planted soybean acreage is down 10 percent compared to 2018 to 80.0 million acres, anticipated to produce 3.8 billion bushels.

The absence of any substantial news regarding resolution of the trade dispute with China and a continuous stream of conflicting statements by White House spokespersons over the months since the dispute began is disconcerting to the commodities market and has contributed to price fluctuation.

COMMODITY

 

Corn (cents per bushel)

Sept. 432 (455)

Dec. 437 (455 Sept.)

Soybeans (cents per bushel)

Aug. 901 (902 July)

Sept. 906 (905)

Soybean meal ($ per ton)

Aug. 311 (313 July)

Sept. 313 (314)

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

COMMODITY CHANGE FROM PAST WEEK____________________

Corn: Sept. quotation down 23 cents per Bu (-5.1 percent)

Soybeans: Aug. quotation down 1 cent per Bu (-0.3 percent)

Soybean Meal: Aug. quotation down $2 per ton. (-0.6 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:-

COMMENTS

Subscribers are invited to the review of the weekly USDA Crop Progress Report posted in this edition for the rate of crop emergence and condition.

Some concessions have been promised by China on reducing coercive trade practices and clarifying dispute resolution although U.S. negotiators claim that China has backtracked on structural issues hence the threat of more stringent tariffs and embargos on trade with tech companies in China. From an agricultural perspective the question of delays by China in approving new GM cultivars has yet to be settled.

Prices will be influenced by the trend in stock levels, area planted in 2019 and crop progress through the remainder of the season.

For comparison commodity prices posted by the Dalian Mercantile Exchange in $US per short ton* during mid- July 2019 with comparable CME values in parentheses were:

Corn $255 ($157)

Soybeans $453 ($300)

Soybean meal $377 ($311)

*(conversion Rmb6.8=$US1)

The July 11th 2018 WASDE Report #590, projected that 91.7 million acres of corn would be planted in 2019 to produce 13.88 Billion bushels. The WASDE projected 80.0 million acres to be planted to soybeans. The 2019 soybean crop is projected to attain 3.85 Billion bushels according to the July WASDE. The levels of production and ending stocks for the two commodities are based on completion of planting, projections of harvest area and yield. The WASDE to be published in mid-August will confirm the projected yields and ending stocks of corn and soybeans respectively.

See the WASDE posting summarizing the July 11th USDA-WASDE Report #590 in this edition documenting price projections and quantities of commodities to be harvested, processed and exported from the 2019 harvest. The Quarterly USDA Grain Stocks Report was posted on the July 5 th edition of EGG-NEWS.

Unless shipments of corn and especially soybeans to China resume in volume, which is unlikely, the financial future for row-crop farmers appears bleak despite the release of two tranches of support funding in 2018 amounting to $8 billion as "short-term" compensation for disruption in trade. A further allocation of $14.5 billion to producers under the Market Facilitation Program was announced on May 23rd for the 2019 crop. Promises of imports by China can't buy seed, fertilizer and fuel


 

Turkey Week

07/19/2019

Weekly Turkey Production and Prices

Poult Production and Placement:

The July 15th edition of the USDA Turkey Hatchery Report, issued monthly, documented 29.0 million eggs in incubators on July 1st 2018 (27.9 million eggs on June 1st 2019) and up 1.5 percent (0.4 million eggs) from July 1 st 2018.

A total of 22.9 million poults were hatched during June 2019 (23.6 million in May 2019) and a decrease of 1.8 percent from June 2018.

A total of 21.5 million poults were placed on farms in the U.S. in June 2019, (22.0 million in May 2019), amounting to 5.0 percent less than in June 2018. This suggests disposal of 1.4 million poults during the month. Assuming all tom poults were placed, 12.4 percent of June-hatched hen poults or 6.2 percent of all June-hatched poults in 2019 were not placed.

For the twelve-month period July 2018 through June 2019 inclusive, 288.7 million poults were hatched and 261.4 million were placed. This suggests disposal of 27.4 million poults. Assuming all tom poults were placed 18.8 percent of hen poults or 9.4 percent of all poults hatched during the period were not placed.


 

Broiler Week

07/19/2019

Weekly Broiler Production and Prices

Chick Placements.

The Broiler Hatchery Report released on July 17th confirmed that a total of 231.8 million eggs were set during the week ending July 13th, up one percent compared to the corresponding week in 2018. A total of 180.3 million day-old chicks were placed among the 19 major broiler-producing states during the week ending July 13 th. This was one percent higher than the corresponding week in 2018. Total chick placements for the U.S. amounted to 188.2 million. Claimed average hatchability was 82.6 percent for eggs set three weeks earlier. Broiler chick placements for 2019 through July 13th amounted to 5.22 billion, one percent more than YTD 2018.

Broiler Production

According to the July 19th USDA Broiler Market News Report (Vol. 66: No. 29) for the processing week ending July 13th 2019, 171.8 million broilers were processed during the week at an average live weight of 6.10 lbs. (6.20 lbs. last week) and a nominal yield of 76.0 percent. The number of broilers processed was 3.7 percent more than the corresponding short processing week in 2018. Processed (RTC) broiler production for the week was 818.7 million lbs. (372,119 metric tons), 7.1 percent more than the corresponding week in 2018. Production YTD of RTC in 2019 is 21.33 million lbs. (9,695,334 metric tons), 1.8 percent more than in 2018 YTD.

Broiler Prices

The USDA National Composite Weighted Wholesale price on July 19 th 2019 was down 6.7 cents per lb. from the previous week to 86.1 cents per lb. compared to 111.4 cents per lb. during the corresponding week of 2018; 94.6 cents per lb. for June 2019 and 105 cents per lb. for the three-year average.

The USDA Southern States (SS) benchmark prices in cents per lb. (rounded to nearest cent) as documented in the Broiler Market News Reports July 19th 2019 are tabulated with a comparison with the previous week:-

Product

USDA SS. Past week

Cents/lb.

USDA SS. Previous week

Cents/lb.

 

Difference.

%

Whole Index

54

55

-1.8

Tenderloins

188

190

-1.8

B/S Breast

104

109

-4.6

Whole Breasts

93

93

Unchanged

B/S Thighs

126

126

Unchanged

Whole Thighs

53

52

+1.9

Drumsticks

34

34

Unchanged

Leg Quarters

39

39

Unchanged

Wings (cut)

186

187

-0.5

.

The USDA posted live-weight data for the past week ending July 13 th 2019 and YTD 2019 were:-

Live Weight Range (lbs.)

<4.25

4.26-6.25

6.26-7.25

>7.76

Proportion past week 2018 (%)

18

30

26

26

Change from 2017 YTD (%)

-4

0

+5

+7

During the past week broilers for QSR and food service (live, 3.6lb. to 4.3lb.) represented 18 percent (last week 23 percent) of processed volume.

On July 15th 2019 cold storage holdings at selected centers amounted to 77,566 lbs., 0.4 percent higher than an inventory of 77,874 lbs. on July 1st 2019.

According to the most recent July 22nd USDACold Storage Report, issued monthly, stocks as of June 30 th 2019 compared to June 30th 2018 showed differences with respect to the following categories:-

  • Total Chicken category declined by 5.8 percent to 836.2 million lbs. (380,100 metric tons) on June 30th 2019 compared to 888.0 million lbs. (403,629 metric tons) on June 30th 2019 2018

  • Leg Quarters were down by 36.7 percent to 54.1 million lbs. consistent with the data on exports albeit at lower unit revenue as documented in the monthly export report.

  • The Breasts and Breast Meat category was down by 2.1 percent to 177.7 million lbs. attributed to increased domestic demand from food service and retail.

  • Wings showed a 22.7 percent decrease, contributing to a stock of 63.0 million lbs. reflecting seasonal demand and increased consumption presumably during featured sports events.

  • Paws and Feet decreased by 28.9 percent to 26.1 million lbs. as a result of variable but increased demand from Hong Kong but at a progressively lower unit price.

  • It is noted that the Other category comprising 390.3 million lbs. represented a significant 46.7 percent of inventory on June 30th 2019. The high proportion in the Other
     


Crop Progress

07/22/2019

Status of 2019 Corn and Soybean Crops

The USDA Crop Progress Report released July 22nd documented progress in both corn and soybeans after a slow start to planting that is expected to negatively impact yields as documented in the July WASDE Report posted under the Statistics Tab. Current crop condition for both soybeans are corn inferior to the 2018 harvest as tabulated below and in the accompanying images. High topsoil moisture levels are evident in comparison with the corresponding week in 2018.

CHICK-NEWS and EGG-NEWS will report on the progress of the two major crops as monitored by the USDA through the end of the 2019 harvest in October.

WEEK ENDING

Crop

July 14th

July 21st

5-Year Average

Corn Silking %

Corn Dough %

17

-

35

5

66

10

       

Soybeans Emerged %

Soybeans Blooming%

Soybeans Setting pods %

100

22

-

100

40

7

100

66

28

       

Crop Condition

V. Poor

Poor

Fair

Good

Excellent

Corn 2019

Corn 2018

3

3

10

6

30

19

47

50

10

22

Soybeans 2019

Soybeans 2018

3

2

9

6

34

22

46

52

8

18

 

Parameter

V. Short

Short

Adequate

Surplus

Topsoil moisture: Past Week

5

19

64

12

Past Year

13

25

57

5

Subsoil moisture: Past Week

3

15

70

12

Past Year

12

25

58

5


 

U.S. Broiler and Turkey Exports for January-May 2019.

07/06/2019

Export data for the first five months of 2019 indicate a moderate increase in export of broiler parts in comparison to the corresponding period in 2018. The overwhelming impression from this and previous comparisons is the consistent erosion in unit price. This is attributed to the fact that leg quarters comprise over 95 percent of exports. This product represents a low-value commodity lacking in pricing power. Exporters of commodities are subjected to competition from domestic production in importing nations. Leg quarters are vulnerable to trade disputes and embargos based on real or contrived disease restrictions.

Total broiler exports for the period attained 1,309,989 metric tons, 1.6 percent more than the corresponding period in 2018 (1,289,344 metric tons). Total value of exports declined by 6.4 percent to $1,253 million ($1,338 million).

During January-May 2019 the National Chicken Council (NCC), citing USDA-FAS data, documented exports of 1,351,487 metric tons of chicken parts and other forms (whole and prepared) valued at $1,248 million with a weighted average unit value of $923 per metric ton, 9.2 percent lower in value compared to the first five months of 2018 ($1,017 per metric ton).


 

Robert Bosch to Divest Packaging Unit

07/10/2019

Robert Bosch, GmbH the giant electronics multinational and automotive parts supplier will divest its packaging and technology division.  The operation employs over 6,000 and is involved in the manufacture of specialized machinery for food and pharmaceutical packaging.  The business is valued at close to $1 billion with the most likely acquirer, CVC Capital Partners.

 

According to a Friday July 5th article in the Wall Street Journal CVC manages $76 billion in assets and has recently purchased a number of large companies.  Consolidation in packaging is evidenced by the $4 billion acquisition of RPC Group in the UK by Barry Global Group. Leaders Solutions in the EU was purchased for $500 million by U.S.-based Center Bridge Partners.


 

Campbell Soup to Invest in Promoting Soups

07/12/2019

Mark Clouse, CEO of Campbell Soup has recommended an investment of $70 million in the soup business over the coming three years according to an article by Micah Maidenberg in the July 8 edition of The Wall Street Journal.  Campbell will be forced to invest in promotion of their soup business in the face of falling sales.  Campbell Soup has only achieved a year-over- year gain in sales for two years during the past decade.  In 2018 the company recorded a seven percent decline in soup sales compared with an industry average of a gain of three percent. 

 

Since the 1990’s Campbell Soup has experimented with variations and innovations including introduction of Select Harvest, Slow Kettle, Simply Home and other variations without materially improving sales and potentially margin. The introduction of private brands of equivalent quality to Campbell Soup products but at significantly lower prices has eroded market share for the Company. The advent of club stores and deep discounters has shifted demand from traditional supermarkets where Campbell previously had a prominent presence.

 


 

ASF Scams Emerging in China

07/16/2019

According to a Reuters posting on July 12th, criminal gangs are coercing small-scale producers to sell live healthy hogs at a deep discount following illegal dumping of dead pigs on or adjacent to their farms and then claiming that the herd would die of African swine fever (ASF).

 

The Ministry of Agriculture and Rural Affairs issued a statement on the practice, “All localities should be vigilant and actively guard against this illegal action.”  Provincial and government officials are indirectlyfor the situation under which scam artists can dupe producers. This activity indicates the lack of rapid diagnostic resources available to farmers.  Either a herd is infected with ASF or it is not.  The distinction can and should be supported by rapid diagnosis. 

 

Given previous experience during 2002 in Thailand in the face of an outbreak of H5N1 HPAI, a catastrophic disease, charlatans emerged from the woodwork offering ineffective vaccines and medication to avert infection and losses.  This only complicates control and eradication. The confusion is exacerbated by diffusion of jurisdictional authority and institutional incompetence.  This situation can be contrasted with the intention of USDA-APHIS to mount a comprehensive ASF simulation exercise in late September to determine the resources and organizational structure required to effectively control an outbreak should the virus be introduced into the U.S.


 

U.N. Revises Population Forecast

07/16/2019

Based on recent data on fertility rates, the U.N. has revised world population growth with the latest estimates of 9.7 billion in 2050 and 10.9 billion in 2100.  This is a significant reduction from previous forecasts, reducing world population by 37 million in 2050 and 310 million at the turn of the century.

 

It is generally considered that a fertility rate of 2.1 is required to maintain the population of a nation with a range of current mortality rates.  Birthrates in some countries in Africa including Kenya and Nigeria have now stabilized at the critical figure of 2.1 years before the previously projected period.  India is showing a slightly lower fertility rate but given the size of population, any small reduction in rate will have a profound impact over a 50-year period if the trend is maintained.

 

Nations including Italy, Japan and South Korea have fertility rates lower than 1.1 indicating a future decline in population.  South Korea will have only 50 percent of its current population in 2010 unless immigration or reunification compensates for the loss.

 

U.N. predictions of population growth are important in both national and international planning involving development and resource allocation. This is especially important in relation to agricultural technology and the declining availability of arable land and water coupled with the reality of climate change.


 

Concern Over Imposition of a Tariff on Chicken by South Africa

07/16/2019

According to the July 8th edition of USAPEEC MondayLine, the South African Association of Meat Importers and Exporters has entered a complaint opposing the anticipated decision of the International Trade Administration Commission to impose a 60 percent increase in the tariff on bone-in and boneless chicken. This will effectively eliminate the U.S. and the E.U. as exporters to South Africa.

The issue was scheduled to be reviewed by courts in October, but an interim tariff could be imposed. This would be in conflict with the African Growth and Opportunity Act (AGOA) that was previously used as leverage in negotiations to exempt U.S. chicken from anti-dumping duties.

In 2017, chicken imports amounted to 524,250 metric tons increasing by 2.9 percent in 2018 to 539,300 metric tons. Brazil supplied 65 percent of imports followed by the U.S. at 17 percent and Argentina with 5 percent. In January 2019, 45 percent of imports comprised mechanically deboned meat, 3 percent frozen boneless portions and 11 percent frozen carcasses. Bone in portions comprised 37 percent of imports in 2018.

The USDA estimates total broiler production to be 1.37 million metric tons or 74 percent of consumption amounting to 1.84 million metric tons. Given a total population of 50 million, consumption would be 81 pounds per capita. This figure is misleading given that a significant proportion of the population is economically disadvantaged and cannot consume commercially produced poultry. Consumption of the approximately 40 million economically active consumers in South Africa would place consumption at about 100 pounds per capita.


 

JBS SA Receives Significant Benefit Through Federal Mitigation Program

07/16/2019

JBS USA, owned and controlled by parent company JBS SA of Brazil received $78 million under the USDA Mitigation program intended to assist farmers disadvantaged by the ongoing trade dispute with China. Data on recipients was collected by the Midwest Center for Investigative Reporting and their findings were circulated by Reuters.

Other U.S. pork producers receiving mitigation payments included Tyson Foods Inc., Goodman Food Products, Seaboard Foods LLC, Cargill Meat Solutions Corp. and Native American Enterprises LLC. Pork represented 27 percent of JBS USA revenue amounting to $5.0 billion during the first quarter of 2019.  A spokesperson for the company stated “We operate U.S. pork plants processing American hogs raised by U.S. farmers who are the true program beneficiaries”. The spokesperson added “Like other companies in the program, our sole intent for participating in the program is to support U.S. producer prices and help our American producer partners”.

Following criticism by Senator Chuck Grassley (R-IA), WH Group of China, the owner of Smithfield Foods, was excluded from the mitigation program in November 2018.


 

Aviagen Concludes 2019 Production Management School

07/16/2019

During the period June 2nd through 27th, 35 students from 19 nations underwent training in the Aviagen Production Management School. Participants included veterinarians, production managers, hatchery specialists and related fields.

The program was held in the new Research and Training Center in Huntsville. The program comprised 75 sessions including classroom instruction and hands-on demonstrations. Course content was supplied on tablets for future reference and use.

Topics discussed included biosecurity, economics, management, health and welfare and nutrition all with the objective of enhancing financial return from both parents and commercial broilers.


 

McCain Invests in Nuggs

07/17/2019

Canadian-based McCain Foods has invested in New York start-up Nuggs to manufacture a vegetable-based chicken nugget substitute. Nuggs has patented technology to produce a simulated chicken nugget using pea protein. McCain Foods will provide production expertise and marketing through a network of potato products, snacks and food items produced in plants in Canada and the U.S.


 

Merger of Canadian Poultry Cooperatives

07/17/2019

Exceldor based in Quebec is combining with Granny’s Poultry Cooperative headquartered in Manitoba. Anticipated synergies from the merger will accrue from a reduction in freight costs and rationalization of products from plants.

According to a press release by Exceldor “The main objective is to create a large co-operative that will be a leader in the poultry sector in Canada with operations in Quebec, Ontario and Manitoba while keeping its ownership in the hands of producers”. Under the Exceldor name the combination will incorporate 400 producers in the four provinces and will achieve $1 billion in annual sales with 3,500 employees.

The CEO of Exceldor Rene Proulx noted “With this merger and its stake in other meat companies Exceldor is becoming a key player across Canada enabling us to better serve our customers nationally and to generate value for our members, employees and partners”. Exceldor has four processing plants in Quebec, a turkey processing plant in Ontario and a new distribution center near Montreal.

The merger has been approved by the Federal Competition Bureau of Canada.


 

BASF Experiences the Effect of Late Planting in the U.S. and Downturn in Consumer Confidence

07/17/2019

For the most recent quarter, sales posted by BASF the multinational chemical manufacturer based in Germany, posted revenue of $17.1 billion, down 4 percent from the corresponding quarter in fiscal 2018. Earnings before interest and taxation amounted to $1.1 billion, 47 percent below Q2 of fiscal 2018.

The company ascribed late planting and reduced acreage of soybeans in the U.S. to a reduction in pesticide and seed sales but commented that uncertainty over the ongoing trade dispute of China was a factor in reducing sales. The company admitted to underestimating the duration of the trade dispute which was expected to have been resolved months ago. The sentiments expressed by the management of BASF are reflected in warnings from Cortiva the seed and agri-chemical company derived from the Dow-DuPont merger.

BASF also experienced a downturn in sales in their automotive division including paint, mainly due to reduced sales of automobiles especially in China where the market has declined by 12 percent. The company is also of the opinion that trade tensions between the U.S. and China have negatively impacted the economy of that nation. Forward projections place GDP growth at 6.2 percent in China for the coming quarter, the lowest in recent years.


 

Simmons Plant in Gentry Approaching Completion

07/17/2019

Under construction since January 2018, the Simmons Poultry broiler processing plant is approaching completion. Located between Gentry and Decatur along Arkansas Highway 59 the facility is located on a 870 acre tract.

The plant will be supplied by 300 contractors in northwest Arkansas and adjoining Oklahoma. Projected throughput is 420 birds per minute and the plant will employ 1,500 including 700 new jobs in addition to the 800 currently working at a nearby Decatur AR. Simmons plant.

Simmons estimates the capital cost will attain $300 million and will make a considerable contribution to the local economy with an annual wage bill of $86 million in addition to taxes and revenue for water and other services.


 

Hype Continues Over Cell-Cultured Meat

07/17/2019

A recent posting by Reuters suggested that the cost of cell-cultured meat is declining rapidly with improved technology and scale. In 2013, Mosa Meat of Holland calculated a cost of $280,000 for a burger the company now projects that it could produce a patty for $10 although not specifying a time. Biotech Foods of Spain is considering a projected price of $50 per pound, approximately 1/8th the cost cited by Future Meat Technologies of Israel last year.

It must be noted that obstacles facing commercial propagation of cell-cultured meat are immense in addition to regulatory overview and questionable broad consumer acceptance. Since the stem cells forming the basis of cultured meat are derived from animals and bovine serum is used in culture, the product cannot be regarded as vegan, representing the most qualified market for the product.

Notwithstanding claims for sustainability, there are questions over energy requirements for commercial production. According to Reuters Dr. John Lynch of the University of Oxford questions the energy impact of tissue culture unless hydro, wind or solar is used to power bioreactors and production facilities.

Despite the obvious problems, venture capital is flowing into cultured meat companies. Cargill has invested in Aleph Farms of Israel, the Merck KGaA venture capital arm of the pharmaceutical company and Sergey Brin of Google are supporting Mosa Meat.

At the present time publicity extended to cell-cultured meat is riding on the coattails of the success of vegetable-based protein including the U.S. market leaders Impossible Foods and Beyond Meat in addition to products soon to be marketed by Tyson Foods, Nestle and the U.S. subsidiary of Maple Leaf Foods of Canada. 


 

BV Science Appoints Technical Manager

07/19/2019

BV Science has appointed Dr. Maria Arendt Dashek as the Technical Manager for the range of probiotic and prebiotic products to replace antibiotic additives.

 

Maria will support the sales and market development in the U.S. of products manufactured by Vetanco SA and Dr. Bata Ltd.  Products are marketed in 37 nations but have only recently been introduced to the U.S. market.  Initially technical support will offered by Dr. Dashek for Gamaxine™, Herbanoplex™ CP and Detox™ Plus.

 

In commenting on the appointment Dave Zacek, CEO of BV Science noted, “We are extremely pleased to have someone of Dr. Dashek’s level of expertise to help fulfill our technical needs and those of our customers.”

Dr. Dashek earned DVM and PhD degrees at the University of Wisconsin and has gained experience in both the U.S. and the international market.

 

Further information on products from BV Science can be obtained by clicking on to their logo on the right side of the Welcome page.


 

Small Fire in Perdue Farms Accomac, VA Plant

07/22/2019

Firefighters responded to a small localized fire reported at 15H00 on July 17th near the live bird holding area of the Accomac, VA plant.  The fire was extinguished with minimal damage.  As a safety precaution the 1,700 employees in the plant were evacuated without injury.  Operations were temporarily halted but resumed on Thursday morning, July 18th.  Conflicting reports relating to the origin of the fire were published indicating either in a peracetic acid tank or an electrical fire.  There was no release of any chemical or injury and the plant safety procedures were followed.


 

Philippines Bans Import of German Pork

07/22/2019

Philippines justifiably banned importation of all meat from Germany.  This action follows a revelation that recent consignments from Germany originated in Poland, an EU nation which has reported cases of African swine fever.

 

The action was taken in accordance with WTO rules permitting nations to impose embargos based on health and safety considerations.

 


 

Vegetable-Based Burgers Grow in Popularity but are a Small Proportion of Total Consumption

07/22/2019

The NPD Group reported in a July 18th release that over a 12-month period ending May 2019, 230 million vegetable-based burgers were served representing a 10 percent increase from the previous year.  This volume should be viewed in relation to the 6.4 billion beef burgers sold during the past 12-months. 

 

Plant-based burgers represent 3.6 percent of servings and despite hype will in all probability plateau.  There appears to be a strong curiosity motivation leading to purchase decisions.  Given the clearly different texture and taste of plant-based and real-beef burgers, and the unjustified differential in price, growth of this segment of the QSR market may be constrained in the future. 

 

The positive publicity generated by promoters of vegetable burgers stress “health” as an attribute with low saturated fat content specifically and also sustainability as advantages over conventional beef burgers.  Indirectly these claimed attributes will favor chicken sandwiches that are gaining in popularity based on quality and price in addition to the halo attributes of antibiotic free production, sustainability relative to beef and a well-documented system of humane production and processing.

 

In a related report, Impossible Foods announced that it is now able to satisfy demand through 400 distributors.  Dennis Woodside, president of the company stated, “We are absolutely back in business.”  Production has been tripled by operating three eight-hour shifts each day.  Product will be packed in five-pound chubs in place of individual patties.  This will further increase the labor requirement at QSRs adding to the cost of ersatz burgers that now exceeds beef requiring an even greater differential at check out. 

 

It is generally inadvisable to operate a plant on a three-shift basis over an extended period.  Breakdowns are inevitable and quality problems will develop, including foreign body contamination. Prolonged high volume operation leads to employee fatigue and disaffection frequently resulting in deterioration in food safety and quality. 

 

  1. A further observation relates to the fact that if Impossible Burger can move from a shortage to satisfying the market with a three-fold expansion of production there may well be a limit to demand especially if the curiosity factor among consumers is satisfied.

 

Open Season on Feral Hogs in Texas

07/22/2019

Effective September 1st 2019 it will not be necessary to purchase a hunting license to shoot feral hogs on private lands with the permission of the landowner.

 

Wild hogs have become endemic to Gulf Coast states and represent an extreme danger in the event that African swine fever (ASF) is introduced to either Mexico or to the U.S.  Apart from the danger of ASF and possibly other exotic viral diseases, feral hogs are responsible for damage to fields estimated at $1 billion annually. 

 

Texas has apparently over 2.5 million wild hogs and it is necessary to both suppress the population and hopefully eradicate the species (Sus scrofa).  According to the Texas A&M Agrilife Extension newsletter, a license will however still be required to hunt hogs on Texas public land.

 

It will now be appropriate for adjoining states from Florida westward to extend a similar privilege to hunters year-round and to take advantage of USDA programs to reduce populations of feral hogs.


 

Hamlet Protein Appoints Sales Manager

07/22/2019

Nicole Boettger has joined Hamlet Protein as Sales Manager.  She has more than 25 years of experience in working with producers and has occupied positions of responsibility in marketing for pharmaceutical companies.  Nicole stated, “"I am excited to be part of the team at Hamlet Protein, and look forward to partnering with livestock producers to grow their awareness and acceptance of our products as part of a sustainable and safe feed program.”

 

Hamlet Protein produces an enzymatically treated soybean product which has the potential to enhance growth and feed conversion efficiency in monogastric species since anti-nutritive factors are removed in the conversion process.

 

A paper presented at the 2019 Poultry Science Association Meeting confirmed the beneficial effect of the Avistar® Hamlet Protein feed additive for chicks and poults and to reduce the deleterious effects of Clostridium perfringens challenge.


 

Articles

Probiotics Work With or Without Antibiotics

07/17/2019

Dr. Christophe Bostvironnois, Global Poultry Product Manager and Dr. John Schleifer technical services manager, North America for Chr. Hansen have authored an article explaining the function and mode of action of probiotics.  Topics considered include competitive exclusion, production of antimicrobial bacteriocins and the interaction of antibiotics and probiotics.

 

Chr. Hansen is a major biologics company based in Denmark with broad experience in the application of fermentation technology and production of Probiotics including Bacillus licheniformis.  Subscribers are referred to the complete advisory under the Article tab.

Further information on products from Chr. Hansen can be obtained by clicking on to their logo on the right side of the Welcome page.

 

Shane Commentary

Impact of Agriculture and Chicken Production on Mississippi River and Gulf Pollution with Nitrates

07/09/2019

The Wednesday, July 3rd edition of The Wall Street Journal devoted the entire page A6 to the impact of agricultural operations and chicken farms and plants in Arkansas and Mississippi on nitrate pollution. Along the 2,300 miles extending from the headwaters in Minnesota to the Gulf of Mexico the Mississippi River receives nitrates from tributaries resulting in concentrations of up to 7 mg/liter as the river passes through Louisiana. Major contributors include runoff from agricultural land in Minnesota, Iowa and Missouri. Production of hogs and chickens in Missouri, Arkansas and Mississippi add to nitrate pollution through the Missouri, White and Arkansas Rivers.

Areas of low oxygen in the “dead zone” with more than two milligrams per liter of nitrates comprise a wide band in the Gulf extending from the mouth of the Mississippi to the border between Texas and Louisiana. A number of municipalities along the lower reaches of the Mississippi River have difficulty in not exceeding the Federal standard of 10 mg nitrate per liter in drinking water and have experienced sharp increases in nitrate content since 2009.

The magnitude of the problem is now evident and it will not be long before appropriate legislation imposes restrictions on both crop farmers and livestock production including poultry.

 

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