Editorial

China Lifts Unjust Ban on Import of Live Breeding Chicks from the U.S.

According to Reuters the Ministry of Agriculture and Rural Affairs announced on their official website that live chicks from the U.S. will be eligible for importation for breeding purposes. Beijing unjustly imposed a ban on all poultry products from the United States in 2015 allegedly due to outbreaks of avian influenza that in the case of broiler strains were not in regions affected by the outbreak. 

 

This action was politically motivated and was an attempt to force U.S. primary breeders to supply great-grandparent level chicks to establish self-generating programs in China. This would have obviated the necessity of importing grandparent packages at regular intervals but would have created the danger of China establishing competitive products to those supplied by primary breeders located in the U.S. The action taken by China in 2015 was inconsistent with then recognized World Organization of Animal Health (OIE) principles of regionalization and in defiance of the reality that the poultry industry in China had and still is affected by endemic avian influenza represented by numerous strains.

 

Li Jinghui of the China Poultry Association, commented that the change in policy would benefit major primary breeders including Cobb-Vantress, Aviagen and Hy-Line all of whom have achieved or are in the process of attaining OIE Compartment status. Essentially the self-serving about-face by China is necessitated by the shortage of protein occasioned by an uncontained outbreak of African swine fever that has depleted sow herds and possibly reduced production by 25 to 35 percent. Shortage of domestic-produced protein coupled with the ongoing disruption to imports caused by COFID-19, has social and political implications for the Central Government.

 

Rest-assured that when expedient, some form of strong-arming will re-emerge to accomplish the goals of self-sufficiency in poultry genetics and ultimately World competition following established patterns of misappropriation of intellectual property and commercial coercion.

 

Poultry Industry News

COMMODITY REPORT: February 21st 2020.

Corn and soybean prices declined proportionately this past week, with both commodities down 0.5 percent. Increases in price were expected after signing Phase-One of the trade agreement with China and ratification of USMCA by Congress. Prospects for commodity exports to China are currently restrained by the restrictions imposed by the ongoing coronavirus outbreak.

 

Uncertainties still include:-

  • The extent and timing of soybean purchases by China in 2020. The U.S - China Phase-1 agreement incorporating U.S. tariff rescissions, promised purchases of agricultural commodities, concessions on some structural issues by China and strengthened enforcement provisions
  • Exports of soybeans to China have resumed with 7.7 percent of projected shipments for 2019/2020 consigned during October and November. The market is now less optimistic that future shipments of soybeans to China will take place according to the quantities promised by the Administration after signing the Phase-One agreement.
  • Justifiable uncertainty regarding the extent of the coronavirus epidemic in China and its effect, in addition to possible spread to other Asian nations.

 

Questions still exist:-

  • Traders are reviewing projected ending stocks and taking into account the relative sizes of both corn and soybean harvests in 2019. The volume of exports of soybeans to China is still uncertain.
  • Brexit is now a certainty after the Conservative Party plan was approved by the House of Commons with a legal departure on January 31st 2020 and a final customs break at the end of January 2021.
  • A U.S. trade agreement with the U.K. should be concluded in 2020 but trade with the U.S. will be conditioned by commitments to the E.U. by the departing nation. A bilateral agreement appears in jeopardy over disagreements over the use of Huawei communications equipment by the U.K.
  • The relationship with the E.U. is tenuous especially with the threat of retaliatory tariffs by the U.S. on food products from France and auto imports from Germany.

 

Compared with February 14th 2020 close, the CME quotation for March corn posted at close of trading on February 21st 2020 was down 2 cents per bushel to 376 cents. Soybeans, expected to be the beneficiary of the Phase-One agreement, were down 5 cents per bushel to 888 cents.

 

For the consecutive years 2017 through 2019 the U.S. supplied 34.4 percent of soybean requirements for China amounting to 95.5 million metric tons. This was followed by a decline to 16.9 percent of 88.5 million metric tons in 2018 and 16.6 percent of 88.0 million metric tons in 2019.

 

China placed orders for one million metric tons of soybeans from Brazil during the first week of February 2020. A total of 20.5 million metric tons has been ordered for delivery through May 2020. This quantity is equivalent to 754 million bushels or 42 percent of the projected total U.S. export of soybeans in 2020 as documented in the February 2020 WASDE #597. The purchases by China from Brazil are attributed to competitive prices compared to the U.S.

 

The following extracts from the January 10th 2020 edition of the USDA Grain Stocks Report indicate the levels of storage on farms and in fields and off-farm for corn and soybeans in early December 2019.

  • Corn stored in all positions on December 1, 2019 totaled 11.4 billion bushels, down five percent from December 1 st 2018. Of the total stocks, 7.18 billion bushels are stored on farms, down four percent from a year earlier. Off-farm stocks, at 4.21 billion bushels, are down six percent from a year ago. The September through November 2019 data indicated disappearance at 4.52 billion bushels, compared with 4.54 billion bushels during the same period last year.
  • Soybeans stored in all positions on December 1 st 2019 totaled 3.25 billion bushels, down 13 percent from December 1st 2018. Soybean stocks stored on farms totaled 1.53 billion bushels, down 21 percent from a year ago. Off-farm stocks, at 1.73 billion bushels, are down five percent from December 2018. Indicated disappearance for September through November 2019 totaled 1.22 billion bushels, up eight percent from the same period a year earlier.

 

The following quotations were posted by the CME at close of trading on February 21st 2020 compared with values for February 14 th 2020 in parentheses reflecting specified months for delivery.

COMMODITY

 

Corn (cents per bushel)

March 376 (378)

May 380 (381)

Soybeans (cents per bushel)

March 888 (893)

May 896 (903)

Soybean meal ($ per ton)

March 289 (291)

May 295 (297)

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

COMMODITY CHANGE FROM PAST WEEK

Corn: March quotation down 2 cents per bushel          (-0.5 percent)

Soybeans: March quotation down 5 cents per Bushel  (-0.5 percent)

Soybean Meal: March quotation down $2 per ton        (-0.7 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 February 11th WASDE #597 under the STATISTICS tab.

Prices of commodities are influenced by projections of ending stocks from the 2019 harvest, 2020 exports and domestic use.

 

Two tranches of support funding were advanced in 2018 amounting to $12 billion as “short-term” compensation for disruption in trade as Market Facilitation Payments (MFP).

On July 25th the USDA announced an additional $16 billion MFP package to support agriculture with funds to be distributed in three tranches. Regulations framed in terms of the June 2019 Additional Supplementation Appropriations for Disaster Relief Act determined eligibility. Funds amounting to approximately $8.8 billion were distributed based on the higher of either 50 percent of the producer’s calculated revenue or $15 per acre, provided a cover crop was planted.

The second MFP payment in November 2019 was $3.6 billion. The third payment, of $3.6 billion, was disbursed during the first week of February 2020.

USDA Chief Economist Robert Johansen speaking at the 96th Agricultural Outlook Forum indicated that U.S. agricultural commodities to the value of $14 billion would be imported by China in 2020, far short of the $40 to $50 billion per year promised by the White House in terms of the Phase-1 Agreement.

Additional requests are being made by industry groups for 2020 MFP payments and these will be justified by evidently delayed and ultimately lower imports by China President Donald J. Trump stated that the Federal Government would “provide additional aid to U.S. farmers as needed until recently negotiated trade deals with China, Mexico, Canada and other countries fully kick in”. MFP payments would be funded by tariff revenue, representing a transfer of funds from consumers to the agricultural sector


 

Broiler Week

Weekly Broiler Production and Prices

Chick Placements.

The Broiler Hatchery Report released on February 19th 2020 confirmed that a total of 237.7 million eggs were set during the week ending February 15th 2020, three percent higher than the corresponding week in 2019. A total of 184.0 million day-old chicks were placed among the 19 major broiler-producing states during the week ending February 15th 2020. This was five percent more than in the corresponding week in 2019. Total chick placements for the U.S. amounted to 192.2 million. Claimed average hatchability was 81.7 percent for eggs set three weeks earlier.

 

Broiler Production

According to the February 21st 2020 USDA Broiler Market News Report (Vol. 607: No. 08) for the processing week ending February 15 th 2020, 171.0 million broilers were processed during the processing week at an average live weight of 6.20 lbs. (6.23 lbs. last week) and a nominal yield of 76.0 percent. The number of broilers processed was 5.8 percent more than the corresponding processing week in 2019. Processed (RTC) broiler production for the week was 805.6 million lbs. (366,195 metric tons), 7.7 percent more than the corresponding processing week in 2019. For YTD 2020 Processed (RTC) production attained 5,601 million lbs. (2,546,190 metric tons), 7.7 percent more than YTD 2019.

 

Broiler Prices

The USDA National Composite Weighted Wholesale price on February 21 st 2020 was down 3.2 cents per lb. from the previous week to 78.4 cents per lb. compared to 89.2 cents per lb. during the corresponding week of 2019; 90.6 cents per lb. for January 2020 and 92 cents per lb. for the three-year average.


 

Turkey Week

Weekly Turkey Production and Prices

Poult Production and Placement:

The February 13th edition of the USDA Turkey Hatchery Report, issued monthly, documented 27.5 million eggs in incubators on February 1st 2020 (28.3 million eggs on January 1st 2020) and down 2.8 percent (0.8 million eggs) from February 1st 2019.

A total of 24.0 million poults were hatched during January 2020 (22.4 million in December 2019) representing a decrease of 3.0 percent from January 2019.

 

A total of 21.4 million poults were placed on farms in the U.S. in January 2020, (20.3 million in December 2019), 5.1 percent more than in January 2019. This suggests disposal of 1.3 million poults during the month. Assuming all tom poults were placed, 10.8 percent of January-hatched hen poults or 5.4 percent of all January 2020-hatched poults were not placed.

 

For the twelve-month period February 2019 through January 2020 inclusive, 283.0 million poults were hatched and 258.1 million were placed. This suggests disposal of 12.6 million poults. Assuming all tom poults were placed 8.9 percent of hen poults or 4.5 percent of all poults hatched during the period were not placed.


 

STOP PRESS

Transport Stasis and Congestion in China Now Affecting U.S. Ports

 

According to a CNBC airing on February 25th the Port of Charleston, S.C.  is now impacted by the severe congestion in seaports in China resulting from restrictions imposed to control COVID-19.

 

Containers of chicken feet are accumulating along with products from hi-tech manufacturers and auto plants. By the same token factories are running short of components from China.

 

The interconnectivity of trade, reliance on just-in-time ordering and the magnitude of disruption in China mean that no industrial nation is “immune” from the effects of COVID-19.

 


 

Bunge Reports Loss for Q4

In a February 12th release, Bunge Limited (BG) reported Q4 and FY2019 results for the quarter ending December 31st 2019.  The Company posted a loss of $68 million on sales of $10.78 billion.  Earnings per share from continuing operations were negative $0.48. Comparative figures for the corresponding quarter of 2018 were loss of $1.74 on sales of $11.543 million with an EPS of negative $0.51.

 

For FY2019 BG lost $1.32 billion on sales of $41.14 billion.  For FY2018, the company posted a net income of $233 million on sales of $45.74 billion with an EPS of $1.57.  It is noted from the consolidated earnings data that for FY2019 gross margin was 1.3 percent or $542 million.  Commodity traders including the ABCD behemoths certainly conform to their characterization in The Economist as  "Shoveling Pennies".

 

The results posted are at variance with the optimistic comments of Greg Heckman, CEO who stated "as we look back across 2019 our team executed well despite the complex environment and the substantial changes that are underway at Bunge.  Looking ahead to 2020 we will remain nimble and prudent in order to maximize the earnings potential of our global platform”.


 

Elanco Animal Health Reports on Q4 and FY 2019

In a February 19th release, Elanco Animal Health (ELAN) reported on Q4 and FY 2019 ending December 31st 2019.  For the quarter, Elanco lost $9.5 million on revenue of $787 million with a  negative EPS of $0.03. For the comparable fourth quarter of fiscal 2018, Elanco posted a profit of $16.4 million on revenue of $799.3 million.  This quarter included an income tax benefit of $18.6 million.

 

For fiscal 2019, Elanco generated a net profit of $67.9 million on revenue of $3.071 billion with a $0.18 EPS. Comparable figures for fiscal 2018 were a net profit of $86.5 million on revenue of 3.067 billion with an EPS of $0.28

 

For the quarter, companion animal sales represented 34 percent and food species, 64 percent of revenue. In providing guidance for FY 2020, the company projected revenue of between $3.05 and $3.11 billion with an adjusted EPS range of $1.09 to $1.16 or a diluted EPS of $0.04 to $0.16.

 

In commenting on results the company recorded a decline in sales of Paylene® their propriety brand of ractopamine and Rumensin® supplement for cattle.  Elanco Animal Health noted an improvement in volume of poultry vaccines sold.


 

Pilgrim’s Pride Reports on Q4 and FY 2019

In a press release dated February 20th Pilgrim’s Pride Corp. (PPC) announced results for Q4 and FY 2019 ending December 29th 2019.

 

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 US$ x 1,000 except EPS)

4th Quarter Ending

Dec. 29th 2019

Dec. 30th 2018

Difference (%)

Sales:

$3,063,489

$2,650,789

+11.5

Gross profit:

$201,395

$111,848

+80.1

Operating income:

$85,792

$26,635

+263.0

Pre-tax Income

Net Income Notes1 and 2

$110,9161

$92,235

$(29,171)

$(8,227)

+480.0

+1,221.0

Diluted earnings per share:

$0.37

$(0.03)

+1,333.0

Gross Margin (%)

6.6

4.2

+57.1

Operating Margin (%)

2.8

0.9

+211.0

Profit Margin (%)

3.0

(0.3)

+1,000.0

Long-term Debt:

$2,276,029

$2,295,190

-0.8

12 Months Trailing:

     

Return on Assets (%)

6.3

   

Return on Equity (%)

16.2

   

Operating Margin (%)

5.7

   

Profit Margin (%)

3.2

   

Total Assets Dec. 29th / Dec. 30th 2018

$7,102,364

$2,295,190

+19.8

Market Capitalization

$6,070,000

   

Note 1. Gain on sale of previous purchase $56.8 million.

Note 2. Tax benefit $20.9 million

For FY 2019 PPC earned $456.5 million on revenue of $111,4 million with an EPS of $1.83. Comparative values for FY 2018 were net earnings of $246.8 million on revenue of $111,4 million with an EPS of $1.00.

 

52-Week Range in Share Price: $19.34 to $ 33.67 50-day moving average $28.32

Market Close 20th February $25.38 21st February post-release 13H00 $24.35

Forward P/E 9.3 Beta 0.7 PEG ratio 0.7

Pilgrim’s Pride is controlled by JBS. S. A. of Brazil with 78.8 percent of equity.

In commenting on results Jayson Penn, CEO of Pilgrim's Pride stated
“While overall global market conditions including U.S. commodity chicken improved during 2019, our team members have continued to deliver on our strategy, achieving a significant increase in relative performance compared to last year and to our industry competition. Our diverse global footprint has contributed to well-balanced and more consistent results against different specific market conditions. We maintain our approach to the successful Key Customer strategy, which is the basis for our strong growth. While our product portfolio is already differentiated, we are investing to further innovate, and increase our capacities and capabilities to meet customer demand. We expect value-added, specialty products to account for a meaningfully larger portion of our total results over the next few years as we continue to de-emphasize the mix of more volatile commodity sales and strengthen our margin profile,”

 


Jayson Penn CEO

He added “In Q4, our operating performance in the U.S. has continued to improve, driven by our partnership with Key customers and the relentless focus on executing and delivering the best results possible despite changes in market conditions. Within our case-ready and small-bird businesses, strong demand, especially from QSR customers, has continued to outstrip supply. The commodity sector has continued to be challenging but we experienced improved market conditions compared to 2018. Our U.S. Prepared Foods continues to evolve, reflecting the investments made over the last few years.”

 

“Weak macro conditions during Q4 in Mexico contributed to uncertainties in consumer spending and demand, especially in traditional markets. Although volume growth was solid, prices were below seasonal expectations. Despite the difficult market environment in Q4, our Mexican business has continued to perform well operationally versus the industry, and was able to generate an improvement in results during fiscal 2019 compared to 2018.”


 

Hormel Foods Reports on Q1 FY2020

In a February 20th release, Hormel Foods Corp (HRL) reported on Q1 of Fiscal 2020 ending January 26th 2020.

 

For the quarter, the company posted net income of $242.95 million on sales of $2.384 billion, and generated an EPS of $0.45. Comparable figures for the first quarter of Fiscal 2018 were net income of $241.52 million on revenue of $2.360 billion with an EPS of $0.44. Although Hormel exceeded consensus estimates on the top line, a one cent miss on EPS resulted in a 6.0 percent decrease in the price of HRL to $45.43 at market close on Thursday, February 20th.

 

Hormel Foods Corporation owns Jennie-O Turkey Store, and the results of this subsidiary reflect conditions in the turkey industry for the quarter. Sales for the Jennie-O division increased 2.8 percent from Q1 2019 to $330.13 million in Q1 2020. Profit for the division increased 1.7 percent to $38.55 million. Jennie-O represented 11.1 percent of company revenue but contributed 13.1 percent to operating profit. During the first quarter of 2019, Jennie-O represented 13.6 percent of sales and 11.8 percent of profit.

 

In commenting on results, Jim Snee, Chairman, President, and CEO stated “It is encouraging to see Jennie-O Turkey Store deliver a second consecutive quarter of volume, sales, and profit growth while continuing to gain back Jennie-O lean ground turkey distribution.”

 

Hormel maintained guidance for Fiscal 2020 noting expected strong performance from Jennie-O.

 

Hormel has traded over the past 52 weeks from $37.00 to $48.86 with a 50-day moving average of $46.58. The 12-month trailing operating profit margin was 12.1 percent with a profit margin of 10.3 percent. The company generated a return on assets of 8.7 percent and a return on equity of 16.9 percent. HRL has a market capitalization of $24.4 billion and trades with a forward P/E of 24.4.

 

The results of the Jennie-O Turkey Store subsidiary of Hormel auger well for the turkey industry, which has achieved higher unit revenue and presumably margins during the past five months, attributed, in part, to more conservative polt placement and increased exports.


 

USPOULTRY Foundation Hosts Twelve FFA Groups To 2020 IPPE

The USPOULTRY Foundation hosted the top twelve teams of the National Future Farmers of America Poultry Evaluation Career Development Event (CDE) to the 2020 International Poultry Expo.

 

The opportunity was funded in part by Prestage Farms and Sanderson Farms for the CDE Teams. John Prestage, outgoing USPOULTRY Foundation Chairman stated "we have been a long-time supporter of the FFA Poultry Evaluation and we believe that the IPPE is a great opportunity for  these teams to see the range of career opportunities available to them in the poultry and egg industry and to experience the world's largest annual trade show for the poultry, meat and feed industries."

 

In addition to exposing FFA members to career opportunities they were provided an opportunity to review products and technology on the show floor.


 

Ahold Delhaize Closes Mid-West Division of Peapod

The Midwest Division of Peapod will close on February 18th according to a February 12th release by holding company Ahold Delhaize.  The division serves customers in Illinois, Wisconsin, and Indiana and closure will include a food plant in Lake Zurich, IL. and distribution facilities in Chicago, Milwaukee and Indianapolis.  Approximately 500 jobs will be affected, but the holding company has indicated that employees will be offered alternative positions or severance and transition support will be extended. 

 

According to Supermarket News the Midwest division generated close to $100 million of Ahold Delhaize U.S. Revenue. The decision was made to allow Peapod to focus on markets with strong density of store-location and regional market share.  The holding company operates 2,000 stores on the East coast including Stop & Shop, Giant Food, Food Lion and Hannaford.

 

Peapod Digital Labs, a service-related subsidiary will be developing and deploying new technologies to rationalize delivery services including same-day and next-day delivery and expedite routing by integrating in-store and online purchases.

 

Peapod is a pioneer in home delivery and was established in 1989 becoming public in 1997.  The company was inquired by Ahold USA in 2000.


 

Shipping Companies Impacted by Coronavirus in China

A series of EU and Asian container ship operators are budgeting for losses for the first half of 2020. This is due to the fact that port congestion, disruption of transport infrastructure and low factory output have all combined to reduce demand for shipping.

 

CEE Intelligence, based in Denmark, providing shipping statistics, estimates that 350,000 containers have been removed from global trade since the outbreak of COVID-19 in China.

 

Crude and natural gas shipments are down by nearly half across China’s main ports of Shanghai, Tianjian, and Ningbo. It is estimated that daily freight rates for crude tankers have dropped by half since the beginning of 2020.

 


 

QSR's Post Sales Gains in January

The NPD CREST Performance Alert recorded a two percent increase in total restaurant transactions for the retail sales weeks of January 6th through February 2nd 2020.

 

QSR chains grew transactions by over two percent during the period compared to the corresponding four weeks in January 2019.  In contrast the full-service restaurant segment did not benefit from increased sales. Customer transactions in casual dining restaurants declined by four percent and by two percent in mid-scale family dining restaurants.

 

NPD attribute the increased demand to milder January weather compared to the extreme conditions at the beginning of 2019 when regions in the northeast and the mid west were impact by a polar vortex and above average rainfall.


 

Broiler Consumption in India Crashes Following Unjustified Concern Over Coronavirus


Contrast in marketing poultry in India

The market for eggs and poultry in India is characterized by mass rejection of product based on rumors concerning disease and in previous years, outbreaks of avian influenza have crashed markets. The current episode involving coronavirus is inexplicable other than in the social context of India.  There have only been three coronavirus cases confirmed in India all of whom were contracted outside the nation but consumer demand dropped by half within a week.

 

Vast pockets of populations in India frequently demonstrate the characteristics of insects  responding to pheromones in response to unsubstantiated or outlandish rumors whether relating to political claims, inter-ethnic strife, child abduction or food safety.  The trend has been intensified by unrestricted false postings on social media including Whats App and other message platforms.

 

The Government has been slow to refute rumors and to reassure consumers that coronavirus is not present in India and also cannot be transmitted through eggs or poultry meat.

It is calculated that the poultry industry in India lost as much a $200 million over three weeks as demand for both eggs and broiler meat declined by 50 percent with a corresponding reduction in  market price through the entire convoluted chain of distribution from small farms to wet markets through dealers and from processors to retail stores.

The reduction in price has had a knock-on effect for feed compounders and also traders in soybean meal and grains. Inevitably the interruption in production during February will result in increased prices in March and April when consumption attains normal levels.


 

Czech Republic Attempting to Control HPAI

The second case of H5N8 highly pathogenetic avian influenza in the Czech republic was diagnosed on a farm in the Pardubice region.  The outbreak will require culling of 140,000 chickens and some turkeys.  Appropriate responses framed in terms of World Organization for Animal Health (OIE) have been implemented. The Pardubice region is in the north central quadrant of the Czech Republic and shares a common border with Poland. 


 

Kerry Doughty Receives NTF Lifetime Achievement Award

Kerry Doughty was the recipient of the 2020 National Turkey Federation Lifetime Achievement Award. He was presented with the award on February 15th at the NTF annual convention by Randy Day, CEO of Perdue Farms.

 

Doughty can look back on his 46 years of involvement in the food industry joining Butterball LLC as Executive VP of Sales, Marketing and Research in 2007.  He was responsible for the first no-antibiotics-ever program for turkeys, introduced organic product lines and established the Butterball animal care and well-being program.  In his distinguished career Doughty was an Urner Barry Poultry Person of the Year and has served on the NTF Executive Committee since 2014. He was the 2019 NTF Chairman and prior to his retirement was CEO of Butterball LLC.


Kevin Doughty (left) presented with NTF Lifetime Achievement Award by Randy Day, Perdue Farms

 

U.K. Bacterial Survey of Chicken Demonstrates Benefit of Antibiotic Ban

A study released on June 1st 2019, conducted by the Foods Standards Agency of the U.K. Government, demonstrated the benefit of banning administration of specific antibiotics to livestock. The 2018 study surveying retail meats was conducted in compliance with the E.U. Harmonized Surveillance of Antimicrobial Resistance RDFS102109. Samples assayed included whole chicken, chicken breast, leg quarters and drumsticks with and without skin.

A sharp reduction in E.coli resistant to cefotaxime, a third-generation cephalosporin was observed compared to the previous study conducted in 2016.  In the present study 42 E.coli samples out of 309 were resistant to cefotaxime with three different resistance genes identified.  None of the isolates from poultry meat demonstrated the presence of carbapenem or colistin resistance. 

 

In 2012, the British Poultry Council banned the use of third and fourth-generation cephalosporin for flocks producing poultry meat in the U.K.

 

 


 

Appalling Burger King TV Advertisement

In an attempt to justify the addition of preservatives to menu items, Burger King is screening a 45-second video of a Whopper® undergoing mold deterioration.

 

The time-lapse video is distressingly distasteful. The message that preservatives are beneficial inserted at the end of the screening is lost in the ghastly slow-motion depiction of the apparent 30-day deterioration of the sandwich.

 

Irrespective of the intent, the exercise certainly does not enhance the image of Burger King or the iconic Whopper® product. In any event sandwiches do not sit around at room temperature for thirty days undergoing bacterial and fungal degradation so the reference to preservatives is irrelevant.

 

The mold video was a lousy idea from the start and somebody in authority (other than their creepy “King”), with a modicum of taste should have pulled the switch on this sophomoric foray into brand destruction. The McDonalds clown is laughing.


 

Tyson Foods Comments on Restraints Raised by Coronavirus Outbreak in China

In a February 19th statement to analysts, Dean Banks, president of Tyson Foods noted that export sales to China have been impacted by port congestion and logistic restrictions imposed on operation of cold stores at points of entry and dislocation of transport.

 

Banks noted that sales of pork to China during the past quarter were up six-fold compared to the corresponding period in 2018.

 

Based on the depletion of the national hog herd, as a result of African Swine Fever, Tyson considers that despite temporary challenges, future orders will continue at rising levels.


 

Allen Harim Foods Plant Resumes Operations

The Allen Harim Foods plant in Harbeson, DE resumed operation on February 15th after a period of suspension implemented by the FSIS on February 12th.  No specific reasons have been provided for the action by FSIS but it is understood that noncompliance involved sanitary violations.  Allen Harim Foods addressed apparent deficiencies with a list of future corrective actions.

 

An FSIS spokesperson noted that the plant will be subject to 90 days of more intensive USDA inspection following the shut down and inspectors will monitor compliance with the list the list of improvements.


 

Dairy Farmers of America to Acquire Dean Foods Assets

Dairy Farmers of America (DFA), a farmer-owned cooperative, will acquire production assets of Dean Foods including liabilities for a consideration of $425 million.

 

Dean Foods filed for Chapter 11 Bankruptcy protection in November claiming extensive losses on dairy products due to reduced demand from consumers.

 

In commenting on the transaction, the CEO of Dean Food, Eric Beringause stated “we have had a relationship with DFA over the past twenty years and we are confident in their ability to succeed in the current market and serve our customers with the same commitment to quality and service they have come to expect.”

 

The transaction must be approved by the Bankruptcy court and will be subject to a higher offer.  The Department of Justice has apparently begun probing the transaction and accordingly DOJ approval will be required.


 

Seaboard FY 2019 Report Documents Butterball Loss

On February 19th 2010 Seaboard Corporation (SEB) released results for Q4 and FY 2019 ending December 31st 2019.  The company is a conglomerate with segments dedicated to pork production, grain milling, commodity trading, marine transport and power generation. Seaboard owns half the equity in Butterball LLC.

 

For FY 2019 SEB earned $283 million on revenue of $6,840 million with an EPS of $242.78. Comparable values for FY 2018 were a loss of $17 million on revenue of $6,843 with an EPS of ($14.61) Seaboard has a market capitalization of $4.55 billion with 78 percent of equity held internally. The 12-month trailing operating margin was 0.8 percent with a profit margin of 0.3 percent. Return on assets and equity were below one percent. During the past 52 weeks share price has ranged from $3,538 to $4,743 with a 50-day moving average of $3,999.

 

Seaboard owns half of Butterball LLC. and the performance of this non-incorporated subsidiary, producing 0.5 million tons of product annually, is reflected in the Seaboard Corp. SEC Q10 submission. For FY 2019 Butterball lost $42 million compared to a loss of $32 million in FY 2018.

 

The SEC 10-K report includes the following statement:- The Turkey segment, accounted for using the equity method, represents Seaboard’s investment in Butterball. The increase in loss from affiliate for 2019 compared to 2018 was primarily the result of higher production and other costs, including interest, partially offset by higher prices for turkey products sold.  Management is unable to predict future market prices for turkey products or the cost of feed. Based on market conditions, management currently cannot predict if this segment will be profitable in 2020.

 

The increase in income from affiliate for 2018 compared to 2017 was primarily the result of higher logistics and production costs and lower volumes of turkey products sold in 2018, partially offset by Seaboard’s proportionate share of the Illinois plant closure during 2017. Butterball closed a further processing plant located in Illinois and recognized fixed asset impairment charges and accrued severance.

 


 

USDA-APHIS Webinar on Poultry Disease

USDA-APHIS will present a free webinar Defend Your Flock from Poultry Disease: Know the Signs and How to Respond.

 

The Defend the Flock Program promotes biosecurity by emphasizing including checklists based on NPIP principles.

 

The webinar will be presented on February 27th at 14h30 EST.  Participants will receive guidance and information on biosecurity by APHIS veterinarians and state poultry extension personnel.  Additional information is available at <www.aphis.usda.gov/animalhealth/defendtheflock>.


 

Tyson To Promote Blended Animal and Vegetable Protein Products

Speaking at the Consumer Analysts’ Group of New York, Dean Banks, President of Tyson Foods announced that his Company will have an extended range of blended animal and vegetable- protein products by the end of 2020 with at least ten items for diverse meal times and channels. 

 

Tyson Foods currently markets blended burgers and nuggets, but the company has identified flexitarians who wish to supplement but not replace traditional meat in their diets.  Market research demonstrated that 17 percent of consumers are currently eating plant-based protein products and 69 percent suggested that they would consider buying suitable blended items.


 

Shane Commentary

Survey Reveals Attitudes Toward Plant-Based Meat Substitutes

The International Food Information Council Foundation released a survey on January 30th conducted in late December involving approximately 1,000 interviews conducted on U.S. adults.  The study included a variety of ethnic groups representative of the U.S. population. 

Half of the respondents indicated that they had eaten a plant-alternative to animal meat during the immediate past.  This group included 62 percent under 45 years of age with an equivalent proportion who had attended college.  Approximately 21 percent of Hispanics had not tried a vegetable-based meat substitute, based on lack of awareness.  In contrast only four percent of African Americans and three percent of Whites reported that they were unaware of plant-based meat substitutes.

Contrary to hype on the internet and mainstream media, taste and price were the most important motivators. Health and environmental concerns did not materially influence food purchasing decisions. Respondents were apparently driven in large measure by curiosity to try plant-based products.  Other motivators included trying to eat less meat (27 percent), environmental degradation (27 percent) and welfare (26 percent). 

When questioned why half of respondents had not consumed a plant-based meat substitute, 31 percent considered that these products would not taste as good as meat and nine percent were concerned over extreme processing.  It is considered significant that 15 percent of respondents did not believe that plant-alternatives were superior from a health perspective to meat and 14 percent considered the plant-based alternatives as too expensive. A significant 11 percent of respondents discounted the claimed environmental benefits.

An interesting distribution within the sample of 1,000 revealed that 60 percent considered themselves as omnivores, six percent vegetarians, five percent vegans and five percent pescatarians.  There is no indication of where the survey was conducted but the combination of vegetarians and vegans at 11 percent of the sample population appears extremely high compared to other survey data.

The results of the survey as posted in the February 4th edition of Baking Business confirmed a frequently-noted observation that there is a strong curiosity factor associated with plant-based meat alternatives. Commercial advertising by producers of alternatives, QSRs and web-based publicity emphasizes environmental benefits, animal welfare and health. Enigmatically these apparent attributes did not resonate with the consumers surveyed.

It is highly unlikely that the trajectory in growth and consumption over the past two years will be maintained. It is expected that demand will plateau unless manufacturers can apply economies of scale to reduce price in addition to improving taste and texture. These are evidently motivators to stimulate the purchase plant-based meat alternatives and to establish a loyal clientele.

 

GM Cowpea Cultivar Approved in Nigeria

Africa has been reluctant to embrace GM technology in part due to misleading and deceptive statements and influence by organizations, such as Greenpeace and others, opposed to the introduction of GM cultivars. Africa is especially susceptible to drought, insect predation, and other problems which could be partly resolved by using GM varieties of food crops.

 

Cotton expressing Bt, a natural insecticide, has been adopted in the U.S., India, and Egypt. The cowpea (‘Black-eyed Susan’ in the U.S.) strain Sampea 20-T is the first food crop to be approved in Africa. The cowpea a an important source of protein and energy for over 200 million people in West Africa. Unfortunately, importation is required because up to 90 percent of the domestic crop can be destroyed by a pest, the the cowpea pod borer.

 

Sampea 20-T was developed by the African Agricultural Foundation using technology provided by CSIRO of Australia. Other participants in the project included USAID, the Rockefeller Institute, and the Danforth Plant Science Center. Bayer will distribute the cultivar to family farms as a humanitarian gesture.

 

It is hoped that the success of Sampea 20-T will convince leaders in other African nations that GM crops resistant to pests benefit both farmers and consumers. It is noted that a combination of stubborness and ignorance prevented donations of U.S. corn to drought-stricken nations in Sub-Saharan Africa. Aid shipments were refused based on the unsubstantiated fear of GM ingredients. Citizens in Malawi and Zambia starved as a result of the mischievous intervention of activists in Western Europe who disseminate falsehoods regarding GM crops while secure in their own availability of food.

 

 

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