Editorial

Demise of Family Farms?

10/09/2019

Secretary of Agriculture, Dr. Sonny Perdue recently opined on the possible disappearance of family farms when addressing a national dairy conference. According to Reana Kovalcik of the National Sustainable Agricultural Coalition, this sentiment is reminiscent of the “get big or get out” wisdom prevailing in the 1980s. The plight of family farmers was recognized by three previous administrations, but no support programs have been able to reverse the decline in farm families.

Due to efficiency through technology, GMO and mechanization, five percent of U.S. farms are responsible for 75 percent of value of agricultural products. The efficiency of U.S. farmers exceeds their counterparts in any part of the world. Small-scale, multi species and crop farming that sustained families in the 18th and 19th centuries no longer represent a viable model.

The poultry industry represents an outstanding exception. The contractor system allows farmers to make use of their land and labor to produce broilers, turkeys and eggs on a scale appropriate to their resources, but enabling an integrator to apply economies of scale in feed production, hatching and processing. It is ironic that the previous Obama Administration was opposed to aspects of the contract system and attempted to impose limits on integrators that would ultimately have been to the detriment of independent farmers allied with integrators.

The National Sustainable Agriculture Coalition that purports to defend the rights of family farms criticizes Secretary Perdue and the Administration for current policy. Unfortunately, they do not present an alternative other than to suggest “bold changes in our country’s farm policy to reverse trends and revitalize our farms economies in rural America”.

With even partial resolution of the trade war with China and an improving economy, all farmers should benefit. There will be areas of agriculture in which over-production and consequently lower prices endanger survival. Subsidies and support programs can go only so far in maintaining  inefficient farmers. In a free-market economy only the most productive operators with a saleable product will survive over the long term.

 



 

Poultry Industry News

STOP PRESS

10/14/2019

Do We Have Any Trade Agreement With China?

 

Following a statement from the White House Friday afternoon at the termination of the October 10th and 11th Ministerial-level negotiations to resolve the trade conflict the DOW- index soared 500 points before retreating 200 points on second thoughts by investors.

Since there was no written communiqué there is no firm appreciation of what may or may not have been decided. The disparity between the comments by the President on Friday on the “Conclusion of Phase 1” and the subsequent interpretations and conflicting statements emanating from Beijing are disconcerting. Comments by the Secretary of the Treasury a participant in the discussions and Former Secretary Lawrence Summers cast doubt on the actual outcome of the two-day meeting.

  • It appears that the U.S has deferred threatened tariffs effective October 15th but there is no decision concerning the second round scheduled for mid-December
  • There is an indication that China has an intention of purchasing up to $50 billion in agricultural commodities from the U.S. but no specifics as to products, quantities or timing have been forthcoming.
  • China has requested a subsequent negotiating session to review outstanding trade and structural issues before consenting to a Phase1 agreement. This would  presumably be signed by President Trump and Premier Xi at a Summit to take place in November

 

There is effectively no ‘Grand Deal’, not even a ‘Part-Deal’ only an understanding to re-convene. The October event can best be characterized as a ‘Truce’ despite hype and spin.


 

USDA-WASDE FORECAST #593 October 10th 2019

10/10/2019

OVERVIEW

The October 10th 2019 USDA WASDE Report was released on due date despite the relocation of many ERS personnel from Washington D.C. to Kansas City. Projections for the 2019 corn and soybean harvests for the October WASDE are based on actual yield and harvested area with progressive updating as the season has advanced. The current unknown is the effect of predicted mid-October frost and snowfall on yield for a late-planted crop in Illinois, Iowa and Nebraska.

The corn acreage to be harvested was determined from planting completed in June at 89.9 million acres (81.8 million in 2018) down 0.2 percent from the September WASDE. In 2019 soybeans will be harvested from 75.6 million acres, down 0.3 percent from the September estimate (88.3 million acres in 2018)

The USDA projected corn yield was raised 0.1 percent to 168.4 bushels per acre, (178.9 bushels in 2018) despite late planting and delayed development. Soybean yield was reduced 2.1 percent to 46.9 bushels per acre from September, (52.1 bushels in 2018). Yield values presume suitable climatic conditions through completion of the harvest.

The September USDA projection of the ending stock for corn was lowered by 11.9 percent from the September WASDE to 1,929 million bushels. Ending stock for soybeans will be 28.1 percent lower than the September estimate at 460 million bushels. Projections for ending stocks for both corn and soybeans have influenced recent CME price quotations concurrently with reports on trade negotiations with China. It is presumed that projections are based on the assumption that there will not be a complete settlement of the trade dispute with China during the fourth quarter of 2019. China failed to commit to purchases following the June meeting between President Trump and Premier Xi at the G-20 Meeting in Osaka. Some orders representing four percent of projected 2019 exports of soybeans were forthcoming in September after the August G-7 Summit in France. In mid-September, China rescinded a ban on all agricultural imports from the U.S. imposed on August 4th. This followed the announcement of a delay in introducing a September 1st threatened tariff of 10 percent on imports from China valued at $300 billion not already subject to duty.


 

Weekly Broiler Production and Prices

10/11/2019

Chick Placements.

The Broiler Hatchery Report released on October 9th confirmed that a total of 219.0 million eggs were set during the week ending October 5th, up one percent compared to the corresponding week in 2018. A total of 171.4 million day-old chicks were placed among the 19 major broiler-producing states during the week ending October 5 th. This was five percent more than in the corresponding week in 2018. Total chick placements for the U.S. amounted to 178.8 million. Claimed average hatchability was 82.6 percent for eggs set three weeks earlier. Broiler chick placements for 2019 through October 5th amounted to 7.46 billion, two percent more than YTD 2018.

Broiler Production

According to the October 11th USDA Broiler Market News Report (Vol. 66: No. 41) for the processing week ending October 5th 2019, 175.4 million broilers were processed during the week at an average live weight of 6.37 lbs. (6.38 lbs. last week) and a nominal yield of 76.0 percent. The number of broilers processed was 4.7 percent more than the corresponding processing week in 2018. Processed (RTC) broiler production for the week was 838.6 million lbs. (381,185 metric tons), 5.2 percent more than the corresponding week in 2018. Production YTD of RTC in 2019 is 31.12 million lbs. (14,147,122 metric tons), 2.6 percent more than in 2018 YTD.


 

Weekly Turkey Production and Prices

10/11/2019

Poult Production and Placement:

The September 16th edition of the USDA Turkey Hatchery Report, issued monthly, documented 26.0 million eggs in incubators on September 1st 2019 (29.1 million eggs on August 1st 2019) and up 5.5 percent (1.52 million eggs) from September 1st 2018.

A total of 24.25 million poults were hatched during August 2019 (25.23 million in July 2019) representing a decrease of 1.6 percent from August 2018.

A total of 22.73 million poults were placed on farms in the U.S. in August 2019, (24.34 million in July 2019), amounting to 6.5 percent less than in 2018. This suggests disposal of 1.50 million poults during the month. Assuming all tom poults were placed, 12.4 percent of July-hatched hen poults or 36.2 percent of all August-hatched poults in August 2019 were not placed.

For the twelve-month period September 2018 through August 2019 inclusive, 288.58 million poults were hatched and 259.30 million were placed. This suggests disposal of 14.6 million poults. Assuming all tom poults were placed 10.1 percent of hen poults or 5.0 percent of all poults hatched during the period were not placed.


 

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

10/13/2019

Export data for the first eight months of 2019 indicate a moderate increase in exports of broiler parts in comparison to the corresponding period in 2018. The overwhelming impression from this and progressive monthly 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 exports of broiler parts for the period attained 2,110,794 metric tons, 0.7 percent more than the corresponding period in 2018 (2,095,320 metric tons). Total value of exports declined by 2.4 percent to $2,199 million ($2,147 million).

During January-August 2019 the National Chicken Council (NCC), citing USDA-FAS data, documented exports of 2,269,613 metric tons of chicken parts and other forms (whole and prepared) valued at $2,368 million with a weighted average unit value of $1,062 per metric ton, 1.3 percent higher in unit value compared to the first eight months of 2018 ($1,076 per metric ton).

The NCC breakdown of chicken exports during January-August by proportion and unit price for each broiler category for 2019 compared with 2018 (with the unit price in parentheses) comprised:-

· Chicken parts 96.2%; Unit value $980 per metric ton ($1,004)

· Prepared chicken 2.4%; Unit value $3,571 per metric ton ($3,562)

· Whole chicken 1.4%; Unit value $1,157 per metric ton ($1,036)

The following table prepared from USDA data circulated by the USAPEEC, compares values for poultry meat exports in January-August 2019 with corresponding figures for 2018:-

 

PRODUCT

JAN-AUG. 2018

JAN-AUG. 2019

DIFFERENCE

Broiler Meat

     

Volume (metric tons)

2,095,320

2,110,794

+15,474 (+0.7%)

Value ($ millions)

2,148

2,139

-9 (-0.4%)

Unit value ($/m. ton)

1,025

1,013

-12 (-1.2%)

Turkey Meat

     

Volume (metric tons)

179,190

190,441

+11,251 (+6.3%)

Value ($ millions)

402

431

+29 (+7.2%)

Unit value ($/m. ton)

2,243

2,263

+20 (+0.9%)

Chicken Paws

     

Volume (metric tons)

113,680

117,191

+3,511 (+3.1%)

Value ($ millions)

178

145

-33 (-18.5%)

Unit value ($/m. ton)

1,566

1,237

-329 (-21.0%)

COMPARISON OF U.S. POULTRY MEAT EXPORT DATA FOR JAN-AUG. 2019 COMPARED TO JAN-AUG 2018

EXPORTS OF BROILER PARTS JAN.-AUG. 2018

Total broiler parts exports during the first eight months of 2019 compared with the corresponding period in 2018 decreased by 0.7 percent in volume and declined 0.4 percent in value. Unit value decreased 1.2 percent from $1,025 per metric ton to $1,013 per metric ton.

The U.S. broiler industry sells mostly leg quarters, an undifferentiated commodity, in a relatively static and price-sensitive market against competition from other exporters and the domestic production in importing nations. The gain in value of the U.S. Dollar relative to the currencies of Brazil, Argentina and Thailand adversely impacts competitiveness.

The top five importers of broiler meat represented 46.1 percent of shipments during the first eight months of 2019. The top ten importers comprised 64.5 percent of the total volume.

Mexico was the largest importer of broiler meat from the U.S. during the eight-month period with a volume of 449,614 metric tons representing 21.3 percent of volume and 19.1 percent of total value at a unit price of $907 per metric ton. Unit value during August 2019 rose 22.2 percent to $952 per m. ton compared with August 2018. With a 9.0 percent higher volume, total value increased by 11.2 percent.

Cuba continued as the 2nd ranked importer during Jan.-Aug. 2019 with 8.5 percent of volume (178,446 metric tons) but 7.0 percent of value ($150.7 million) attributed to the product mix with a unit price of $844 per metric ton. Cuba increased imports by 300 percent over the eight-month period and 137 percent in August (27,335 metric tons) compared to August 2018 and retained 2nd rank among destinations during the month. It is hoped that this trade worth $161 million in 2017 and $154 million during 2018 will not be compromised by injudiciou
 


COMMODITY REPORT: OCTOBER 15th.

10/15/2019

Soybeans have moved up since October 9th attributed to:-

 

  • Muted optimism over the as yet non-documented outcome of the October 10/11th Ministerial-level trade negotiations between the U.S. and China.
  • Prospects of exports of soybeans to China.

 

Uncertainties still exist:-

 

  • Traders are waiting to see the effect of severe weather in the upper Midwest on crops planted late in 2019.
  • Quality and yield of 2019 corn and soybeans
  • Brexit and the U.S. relationship with the U.K and the E.U.
  • Unpredictable political situation delaying ratification of the USMCA .

 

Compared with close of trading on October 9th, on October 15 th at 14H30 EDT December corn was unchanged. The November soybean quotation, vulnerable to trade conflicts with China was up 1.1 percent despite orders in September amounting to 4 percent of projected 2019 exports. The October 11th negotiations apparently elicited an intention by China to import an unspecified quantity of "U.S. agricultural commodities" over a non-disclosed time period. December soybean meal was unchanged from the 9th October quotation.

The promise of successful negotiations to resolve the trade dispute with China is still glowing, albeit dimly, with announcements by the White House following Ministerial-level talks on October 10th and 11 th in Washington. Current consensus is that there will not be a comprehensive resolution of the trade dispute before the end of 2019. Some observers say not before the 2020 election. In August the White House announced new tariffs but the mid-October portion was deferred as a result of the negotiations. No further decision on when and if escalation scheduled for mid-December will occur.

The continuous stream of conflicting statements by White House and to a lesser extent, Government of China spokespersons over the months since the dispute began is disconcerting to the commodities market and has contributed to price fluctuation. The absence of a post-negotiation written communiqué was characterized by Michael Pillsbury, interviewed on CNBC on Monday October 14th as "It is hard to say what was agreed".

The following quotations were posted by the CME at 14H30 EDT on October 15 th compared with values for October 9th (in parentheses).

COMMODITY

 

Corn (cents per bushel)

Dec. 393 (393)

March '20 404 (405)

Soybeans (cents per bushel)

Nov. 933 (922)

Jan. '20 947 (936)

Soybean meal ($ per ton)

Dec. 308 (309)

Jan. '20 310 (311)

Changes in the price of corn, soybeans and soybean meal over five trading days were:-

COMMODITY CHANGE FROM PAST WEEK

Corn: Dec. quotation unchanged                       ( 0 percent)

Soybeans: Nov. quotation up 11 cent per Bu      (+1.2 percent)

Soybean Meal: Dec. 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 0.44 cent per dozen

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

COMMENTS

Subscribers are referred to the comments on the weekly USDA Crop Progress Report and the October 10th WASDE #593 posted in this edition.

Prices of commodities will be determined by estimates of ending stocks as influenced by the 2019 harvest, exports and domestic use.

The corn price was influenced by the October 4th decision by the EPA to establish a level of 15 billion gallons of ethanol to be blended into the gasoline consumed in 2020. Existing restraints to E15 use will be lifted. Future waivers to "small" refineries will be restrained and the RIN process will be streamlined. Ethanol price trades in a narrow range reflecting declining domestic and export demand and was set at $1.43 per gallon on October 15th ($1.34 per gallon on August 30 th; $1.50 on October 9th.)

Unless shipments of corn and especially soybeans to China resume in volume, which is unlikely in 2019, the financial future for row-crop farmers for the upcoming harvest appears bleak despite the release of two tranches of support funding in 2018 amounting to $12 billion as "short-term" compensation for disruption in trade.

On July 25th the USDA announced an additional $16 million package to support agriculture with Market Facilitation funds to be distributed in three tranches. The first payment of $2.5 billion was made with the remainder for the third quarter disbursed through the Farm Services Agency under authority of the Commodity Credit Corporation. A total of $5.4 billion was distributed in September Payments will be based on a value corresponding to the higher of 50 percent of the producer's calculated payment or $15 per acre, provided a cover crop is planted.

The magnitude of the second (November 2019) and third (January 2020) payments will be decided according to prevailing conditions. Regulations framed in terms of the Additional Supplementation Appropriations for Disaster Relief Act of 2019 enacted in June will determine eligibility. One million applications were received for the initial round in 2018 with 420,000 applications since July 2019 to date.


 

Status of 2019 Corn and Soybean Crops

10/15/2019

The USDA Crop Progress Report released on October 15th documented continued slow progress in maturation and harvesting both corn and soybeans after a delayed start to planting due to flooding. The deficit with respect to 2018 is evident in that only a quarter of the corn and soy crops have been harvested compared to half the crop in 2018. The delay in planting is expected to negatively impact yields as documented in the October 10th WASDE Report # 593 accessible under the STATISTICS tab. Current crop condition for both soybeans and corn are highly variable as to time of planting and generally inferior to the 2018 harvest as tabulated below. High topsoil moisture levels were evident in comparison with the corresponding weeks in 2018 until the past week. 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

October 6th

October 13th

5-Year Average

Corn Dented %

Corn Mature %

Corn Harvested %

93

58

14

96

73

26

100

92

49

       

Soybeans Dropping leaves %

Soybeans Harvested %

72

14

85

26

93

49

       

Corn will mature 25 days after the early dent stage implying harvest commencing late September as recorded extending through late October. Yield is reduced if corn and soybean fields are exposed to frost. Cold temperature before harvest contributes to higher moisture content requiring drying and susceptibility to Fusarium infection leading to DON contamination. Unseasonable freezing temperatures and up to 2 feet of snow were experienced in the Dakotas and some Northern corn/soy states during the Columbus day weekend. As yet the effect is not noticeable in the CME corn price although experience suggests that for each one percent decline in corn yield price increases by three to six cents per bushel. This said, 2019 is like no other year given trade disputes and political uncertainty.

Crop Condition

V. Poor

Poor

Fair

Good

Excellent

Corn 2019

Corn 2018

4

4

11

8

30

20

44

47

11

21

Soybeans 2019

Soybeans 2018

4

3

10

8

33

23

45

48

8

18

 

Parameter

V. Short

Short

Adequate

Surplus

Topsoil moisture: Past Week

10

16

55

19

Past Year

4

9

64

23

Subsoil moisture: Past Week

10

18

56

16

Past Year

7

13

64

16

 

The USDA Grain Stocks Report released September 30th documented old crop corn stocks in all positions on September 1 st 2019 totaling 2.11 billion bushels, down one percent from September 1st 2018. Of the total stocks, 753 million bushels (34 percent) are stored on farms, up 22 percent from a year earlier. Off-farm stocks, at 1.36 billion bushels, are down 10 percent from a year ago. June to August 2019 data indicated disappearance of 3.09 billion bushels, compared with 3.16 billion bushels during the same period last year reflecting combined domestic and export demand.

Old crop soybeans stored in all positions on September 1st 2019 totaled 913 million bushels, up 108 percent from September 1st 2018. Soybean stocks stored on farms totaled 265 million bushels (29.0 percent), up 162 percent from a year ago. This suggests that farmers are holding old crop soybeans in anticipation of a settlement of the trade dispute with China e
 


Amazon Plans Grab-and-Go Stores

10/02/2019

Following successful testing in 16 Amazon Go stores in Seattle, San Francisco, Chicago and New York City, Amazon intends opening more “Just Walk Out” stores ranging from 1,200 to 2,400 square feet. Bloomberg reported that Amazon may open up to 3,000 Go stores by the end of 2021. Analysts have estimated that the business may achieve revenue of $4.5 billion within five years. Given that the smallest Amazon Go test store is only 450 square feet in extend, the modules could be located in airports, on university campuses and office complexes. If free-standing and located in store fronts in urban locations this format could cut into sales by conventional C-stores, traditional tiendas and mom-and-pop groceries.


 

Ahold Delhaize to Test U.S. Cashier-Free Technology in Holland

10/03/2019

Ahold Delhaize is evaluating AiFi technology with the creation of a Nano Store in their home base of Zaandam in the Netherlands. Customers will swipe a payment card on entering the store and internal scanning systems will record items taken from the shelf or returned, to record the items purchased. On completion of shopping a display at the exit will indicate the items purchased and the total cost. The system to be used by Ahold was developed in conjunction with Domestic Banking who will be responsible for payment. It is not necessary for customers to register in advance or download any app to obtain accessibility and convenience.

The AiFi automation system combines artificial intelligence, scalable sensor fusion technology and advanced computing to track purchases and calculate payment. The CEO of the Albert Heijn banner owned by Ahold stated “technological innovations follow each other at breakneck speed and offer endless opportunities. Convenience for our customers comes first.” He added “this latest concept not only makes shopping easy due to its autonomous nature, but this plug-and-play store can be placed in locations where there is a temporary need for a small store such as offices or on university campuses. It is self-evident that stores can operate 24/7 with minimal employee cost.”


 

Grocery Manufacturers Association to be Renamed the Consumer Brands Association

10/03/2019

In a September 26th release, the Grocery Manufacturers Association announced a change in their name to the Consumer Brands Association (CBA), effective January 2020. This reflects a restructuring of the organization under Geoff Freeman, president and CEO. He stated “we represent an industry of iconic brands that are innovative, forward-looking and touch the lives of every American”. He added, “as the new Consumer Brands Association, we are making a game-changing shift to unite the totality of the consumer packaged goods industry”. The CBA will advocate for improved sustainability of packaging, meaningful regulations and enhanced supply chain management and generating consumer trust.

Jeffery L. Harmening, Chairman of the Board of the CBA and the CEO of General Mills noted “renaming and rebranding this organization is symbolic of a larger realignment with industry priorities and our desire to have a more open and transparent dialog with policymakers, customers and consumers”.

Over the past few years the Grocery Manufacturers’ Association has been impacted by defections of long-standing members including the Campbell Soup Company over the issue of non-GM labeling and related concerns.


 

BRF Admits to Bribing Meat Inspectors

10/08/2019

Following the 2017 scandal referred to as “Operation Weak Flesh” numerous meat and poultry plants in Brazil were closed. BRF was implicated and currently 12 plants are banned from export to the European Union. It is alleged that $4.5 million was paid in bribes over years preceding the 2017 revelation.

BRF replaced management and the Ministry of Agriculture has expressed confidence with the 2,500 food inspectors currently in service in an attempt to restore confidence among international customers.


 

NCC To Emphasize Sustainability

10/08/2019

A recent National Chicken Council online survey, demonstrated that the environmental impact of chicken was statistically as important as welfare. The survey was conducted on January 14th 2019 and involved 1,000 respondents aged 20 to 60 who consumed chicken. Half of the respondents in the NCC survey indicating that they would consume more chicken if they were convinced that it was more sustainable than other protein.

Accordingly the NCC will embark on a promotional program emphasizing the improvements made by the broiler industry in conserving water, power and reducing greenhouse gas emissions.

Since 1965, advances in genetics, nutrition, disease prevention and housing technology have enhanced productivity. Compared to 1965, greenhouse gas emissions have been reduced 36 percent, farmland used to feed and produce broilers has decreased by 72 percent and water conservation now requires 40 percent of the water previously used to produce broilers.

NCC president Mike Brown commented “The sustainability in agriculture continues to be a hot topic among U.S. shoppers. We as an industry need to do a better job telling our sustainability story because it’s a great one.” He added “Resources related to broiler chicken production and their impact on the environment are key in helping the industry better communicate with consumers, customers and the media”. 


Mike Brown

 

Market Facilitation Program Will Cost $28 Billion Over Two Years

10/09/2019

In 2018, the Administration paid farmers $12 billion as compensation for losses sustained as a result of the trade dispute with China. In July 2019, the Department of Agriculture announced a $16 billion compensatory package.

USDA received 420,000 applications for 2019 compensation with stricter requirements imposed as a result of obvious irregularities associated with the 2019 payouts. The USDA  disbursed  $5.4 billion through the end of September with projected tranches in November and December depending on market price and other considerations including possible resolution of the tariff dispute.

There is an obvious question as to the source of the funding. The Administration claims that “China is paying the tariffs” which is patently wrong and also how tariffs collected on imported items from China will be used to compensate farmers. Since allocation of the funds and their source is more political than financial, it will be some time before the books can be squared. The prevailing economic wisdom is that tariffs are ultimately borne by consumers.


 

Bioelectric Detection of Woody Breast

10/09/2019

Dr. Amit Morey of the Department of Poultry Science, Auburn University has completed a research project to develop a rapid test for the presence of woody breast in fillets funded by the USPOULTRY Foundation as Project  #708 Developing and Validating a Bioelectrical Impedance Index for Rapid Detection of Woody Breast Fillets. It was possible using a handheld device to distinguish between unaffected fillets and those with connective tissue deposition characteristic of woody breast.


 

Chipotle Increases Sales but Defers on Breakfast Servings

10/09/2019

According to Chipotle CEO Brian Niccol, Chipotle will continue to concentrate on improving service in existing stores and will focus on lunch and dinner.  Growth in sales will be achieved through digital orders, and loyalty programs and where available drive-thrus. 

 

Contrary to the innovations by competitors Panera Bread, Dunkin’ Brands, McDonald’s Wendy’s and other chains, Chipotle has no plans to enter the breakfast space.  Chipotle recognizes the barrier to entry especially given that many of its 2,500 restaurants do not have drive-thru facilities, critical for the breakfast meal-period.

 

Chipotle Mexican Grill earned $91 million on revenue of $1.43 billion for the first half of FY 2019 ending June 30th The corresponding values for the first half of FY 2018 were earnings of $46.9 million on revenue of $1.27 billion. Improved performance under CEO Brian Niccol is reflected in the increase in EPS from $1.69 to $3.28 for the comparative half-year periods. The 52-week increase in share price from $383.20 to $857.90, elevated market capitalization to $22.7 billion on October 9th with a noon quotation of $819.37.

 


 

China Resumes Importing U.S. Pork

10/09/2019

Purchases of pork by China in mid-September amounted to 3,400 metric tons.  Product entered s China free of tariffs.  Increased shipments of pork will raise domestic U.S. prices and benefit chicken and turkey. 

 

As anticipated, China has achieved limited to negligible success in controlling African swine fever given the structure of the industry and the absence of an effective vaccine.  State reserves of frozen pork were released in the week preceding the October celebration of the 70th Anniversary of establishing the Communist Party of China.  Frozen reserves have a bottom and imports are required to compensate for the loss of up to one-third of the national herd.  Continuing exports of beef and pork and even the possibility of chicken will depend on the outcome of high-level talks between the U.S. and China that took place in Washington on October 10th and 11th and subsequent action on tariffs and structural issues.


 

USDA Policy on Alternative Protein

10/11/2019

In responding to questions regarding cell-cultured proteins at the World Dairy Conference in Madison WI, Secretary of Agriculture Dr. Sonny Perdue defined USDA policy concerning the innovation. He was responding to a question as to what his Department would do to protect conventional livestock production. Dr. Perdue opined “It is about having a balanced playing field. If you think USDA should deny technology in order to protect the traditional protein market, I would respectfully disagree.”

Labeling is central to the issue of both vegetable-based protein alternatives for meat and milk,. Perdue commented “Our role in the USDA is to provide transparency and correct information to consumers and let them make their choice”.

The dairy industry is especially concerned over substitutes since 20 percent of the fluid milk market has been displaced by plant-based products including soy milk, almond milk and others. The dairy industry believes that if the term “milk” is confined to products derived from cows, their markets might be restored or at least stabilized. This is an obvious misperception. By the same token, plant-based meat substitutes have emerged to considerable consumer reception and may impact the growth of the existing beef and pork industries.

Adoption of alternatives to conventional dairy and meat products is based on consumer perceptions of health and sustainability that resonate among the young and affluent. The meat industry has little to fear from cell-cultured protein, since there is little likelihood of developing products that are even remotely competitive on price given existing technological restraints.


 

Reevaluation of Micro-Mineral Requirements for Poultry

10/13/2019

The October edition of The Alltech Feeding Times justifies the use of bioplexed minerals in poultry nutrition. Traditionally minerals are supplied in inorganic form and nutrient requirements were developed from cage and pen trials conducted during the 1950s and 1960s. The specifications for zinc, manganese, copper, iron, selenium and iodine were incorporated into the 1994 edition of Nutrient Requirements of Poultry published by the National Research Council.

It is evident that the published specifications often exceed nutritional requirements resulting in accumulation of excess minerals in soil and groundwater. Research conducted in Canada demonstrated that the higher availability of bioplexed minerals could reduce dietary inclusion. Levels as low as 20 percent of NRC requirements supported egg production and growth. In addition, supplementing diets with enzymes to enhance digestion of ingredients potentiated the absorption of micro minerals.


 

Continuing Resolution to Ensure Funding through November 21st

10/13/2019

On September 19th, the House passed a continuing resolution on funding by a 301 to 123 margin. This was followed by a Senate approval on September 26th by an 82 to 15 vote. The House has passed all 12 fiscal year 2020 appropriations bills, and Senate committees have approved 10 of the 12 appropriations measures, but the full Chamber has yet to vote on the specific appropriations bills.

Governing by continuing resolution is destabilizing and inhibits even short-term planning. Government shut-downs have occurred resulting in disruption of services. The time has come to reestablish fiscal responsibility and adopt a process of budgeting and approval of appropriations.


 

Cattle Dealer Sentenced Over Gentamicin Residues

10/13/2019

Cory Gillette, a dealer in Ohio was sentenced to five years’ probation and 150 hours of community service for false statements to Federal investigators and delivering cattle treated with gentamicin to abattoirs. The drug is prohibited in animals intended for human consumption and is not approved in cattle.


 

Director of the National Bio and Agro-Defense Facility Appointed

10/13/2019

The US Department of Agriculture has announced that Dr. Alfonso Clavijo has been appointed Director of the National Bio and Agro-Defense Facility. The NBAF will be managed jointly by the Agricultural Research Service and the Animal Plant Health Inspection Service. Construction is under the U.S. Department of Homeland Security. The project is scheduled to be opened in 2021. It is appropriate that a director should be appointed at this time, as the incumbent will be need to coordinate construction, staffing and programs before completion.

Dr. Clavijo is the Executive Director of the Canadian Food Inspection Agency, National Center for Animal Disease and is responsible for diagnostic services, development of technology with special reference to emerging and zoonotic animal diseases in two large facilities. He has extensive experience in managing biosafety level-4 installations that will be the focus of the NBAAF.

Dr. Clavijo earned the 2018 President’s National Award in Leadership and People Management and he has held advisory positions with the Pan-American Health Organization, the National University in Bogota, Columbia, Kansas State University and Texas A&M University.

Dr. Clavijo earned a DVM from the National University of Bogota, Columbia in 1986, and a doctorate in microbiology from the University of Guelph in 1990.


 

Foster Farms Acquires Former Zacky Farms Ranches

10/15/2019

Following prolonged litigation relating to the bankruptcy of Zacky Farms, Foster Farms has won the bid to acquire 19 ranches operated by Zacky Farms in the Central Valley. Foster Farms will pay $31 million for the properties located in Fresno and Kings County according to a late-September court filing.

Previously industrial installations operated by Zacky in Fresno were sold to OK Produce and the Fresno Interstate Business Park. The bid by Foster Farms for the farms exceeded the Great Rock Credit offer of $21.6 million in anticipation that the properties would be leased to Pittman Family Farms. The transaction involving an additional $9.5 million bid by Foster Farms was approved by the Court.

During early 2019, there were rumors that Tyson Foods intended to make an unsolicited offer to acquire Foster Farms although there has been no official announcement on this initiative.


 

PrimaLac Reduces Intestinal lesions and Enhances Performance Following NE Challenge

10/15/2019

Supplementing broiler diets with a probiotic PrimaLac reduced the intensity of a “natural challenge” with Clostridium in litter and resulted in a superior weight gain compared to negative controls and treatment receiving virginiamycin.

 

The text can be accessed using this link:  PrimaLac Article


 

Trade Mission to Vietnam

10/15/2019

Under Secretary for Trade and Foreign Agricultural Affairs Ted McKinney will lead a U.S. Department of Agriculture trade mission to Vietnam over Oct. 15th through 18th. He will be accompanied by a large contingent of industry and government representatives intending to expand agricultural exports.

 

Vietnam was ranked fifth in importing nations for broiler parts over the first eight months of 2019 with the nation receiving 88,900 metric tons valued at $77.6 million. Imports were respectively higher by 31.5 percent in volume and 16.7 percent in value compared to the first eight months of 2018. Unit value declined from $985 per ton in 2018 to $733 per ton over the eight-month period in 2019. Prospects for a rise in export volume are predicated on a sharp decline in domestic pork production as a result of African swine fever.


 

Shane Commentary

Economy in China Probably Less Affected by Trade Dispute than U.S. Administration Claims

10/01/2019

Implicit in the success of an escalating sequence of tariffs on China is the assumption that China is hurting more than the U.S.  In an incisive article by Chao Deng in the September 25th edition of The Wall Street Journal, the effect of the trade war has been relatively mild.  During the past five years, there has been a shift from the manufacturing to the service sector and the domestic market for goods produced in China has increased reducing reliance on exports.  The Administration may be influenced by the statistic that from the initiation of the conflict through May 2019, China lost five million industrial jobs of which two million were attributed directly to the trade situation.  This figure should be compared to the total urban employment of 570 million.  The impact on lob availability is far lower than due to the changes in the structure of manufacturing which occurred between 2015 and 2017.  Data developed by the China International Capital Corporation operating under state ownership and consequently questionable in terms of accuracy, claims that through August 2019 close to 10 million urban jobs were created with a target of 11 million for 2019. While it is recognized that some unskilled workers displaced by declining exports have returned to their home villages, other have found employment in the service sector. 

 

China has not seen fit to liberalize monetary policy since they have no overt unemployment problem.  In fact China is tightening controls on credit to limit debit accumulated by independent and quasi-independent enterprises operating under government control.  According to Goldman Sachs, there does not appear to be any difference in the investment in production capacity or a decline in government revenue in provinces such as Guangdong, that are most vulnerable to trade action compared to more distant provinces with less production infrastructure.

 

It would be injudicious for the Administration to cherry pick data from China to substantiate a mutually destructive trade policy.  China is not blinking.  Resolution of the trade war initiated by the U.S. should be resolved diplomatically involving de-escalation, and negotiation of a series of agreements addressing items of contention.  This would be preferable and more likely than achieving a grand comprehensive and all-encompassing trade agreement benefiting the U.S. to the detriment of our adversary and their Made in China 2025 initiative.

 

SPONSORED ARTICLES

GI-OVO Tray for Turkey Eggs

10/12/2019

To protect the shells of turkey eggs during transport from farm to hatchery, Dutch company, GI-OVO, successor to Twinpack, has developed a special tray holding 20 eggs. This tray can be used with GI-OVO pallets sized 120x120 cm (48 square inches) or with GI-OVO plastic  crates holding 200 eggs.

According to reports from producers, the new 20-egg trays may reduce cracks by up to three percent compared to previously used trays.

All GI-OVO trays, pallets and crates are made from virgin plastic for durability. GI-OVO will supply trays in custom colors with embossing of an ID at no extra charge on orders of 10,000 trays.

For additional information access www.gi-ovo.com / sales@gi-ovo.com

 

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