Editorial

Demise of the Gig Economy

09/17/2019

The employment of thousands of non-employee “independent contractors” has changed the relationship between workers and those that pay them. Rise of the “Gig Economy” over the past ten years since the onset of the Great Recession has facilitated the emergence and growth of new enterprises. Uber and Lyft among similar companies rely on the labor of part-time workers devoid of benefits and regular income. The food and retail industries have benefited through enterprises such as DoorDash, Instacart and Shipt offering home and workplace delivery of groceries and prepared foods.

The realization that the relationship between contractor and service provider may be less than benevolent and in some cases downright abusive has led to scrutiny and opposition to the system. Legislation to restrict abuse and potential exploitation is now a reality on both coasts, bellwethers of social change. California has enacted AB5 that will designate contractors as employees eligible for health and other benefits including sick-leave and insurance. New York City has imposed a $17 per hour minimum wage over and above expenses for drivers of ride-hailing services. These action is mirrored in similar laws and regulations introduced in the EU reclassifying gig workers as employees.

Obviously the need to pay competitive wages and to provide benefits will impose additional costs on consumers who have benefitted from lower cost compared to comparable conventional services. The viability of enterprises that developed by combining digital technology, web-based communication and the availability of workers willing to provide services is now in jeopardy.  Even with the current unregulated structure, Uber and Lyft are non-profitable and have no definitive business plan to generate a return for shareholders.

It is axiomatic that social and business trends that emerge on the coasts eventually become accepted in the fabric of our Nation. There are strong forces promoting fair and equitable treatment and remuneration for contract workers. Unions such as the Teamsters and the Service Employees International have exerted political pressure at the city and state levels and have used web-based media to amplify their cause. The three most vocal and socialistically inclined frontrunners for the Democratic nomination have endorsed California AB5 and Governor Cuomo of New York state is considering similar legislation.

 

Companies employing contract workers are activating low-key opposition pointing out the financial benefits to consumers of their services. There is the distinct possibility of a ballot initiative to overturn AB5 in California with over $60 million committed by Lyft and Uber. That public-traded companies are being considered as exploiters of vulnerable workers has questionable optics especially when investors are disillusioned with returns.

 

 A demise of the gig economy will lead to services becoming more expensive and constrained. The upswing in home delivery of food and groceries will be reversed with implications for supermarkets and restaurants and ultimately Amazon the 800 lb. gorilla in the corner. The reality of restrictive legislation compelling reclassification of contractors as employees, which in fact they are, will send investors to other sectors and further diminish market capitalization and funding for expansion. We may be observing the twilight of large-cap service providers depending on the gig-economy.   

 



 

Poultry Industry News

Broiler Week

09/13/2019

Weekly Broiler Production and Prices

Chick Placements.

The Broiler Hatchery Report released on September 11th confirmed that a total of 227.6 million eggs were set during the week ending September 7th, up five percent compared to the corresponding week in 2018. A total of 180.9 million day-old chicks were placed among the 19 major broiler-producing states during the week ending September 7th. This was one percent more than in the corresponding week in 2018. Total chick placements for the U.S. amounted to 188.7 million. Claimed average hatchability was 82.7 percent for eggs set three weeks earlier. Broiler chick placements for 2019 through September 7 th amounted to 6.72 billion, one percent more than YTD 2018.

Broiler Production

According to the September 13th USDA Broiler Market News Report (Vol. 66: No. 37) for the short processing week ending September 7 th 2019, 148.9 million broilers were processed during the week at an average live weight of 6.22 lbs. (6.26 lbs. last week) and a nominal yield of 76.0 percent. The number of broilers processed was 0.1 percent less than the corresponding processing week in 2018. Processed (RTC) broiler production for the week was 711.9 million lbs. (323,609 metric tons), 1.0 percent more than the corresponding week in 2018. Production YTD of RTC in 2019 is 27.77 million lbs. (12,621,635 metric tons), 2.2 percent more than in 2018 YTD.


 

Turkey Week

09/13/2019

Weekly Turkey Production and Prices

Poult Production and Placement:

The September 16th edition of the USDA Turkey Hatchery Report, issued monthly, documented 26.0 million eggs in incubators on September1st 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.


 

Status of 2019 Corn and Soybean Crops

09/16/2019

The USDA Crop Progress Report released on September 16 th documented progress in both corn and soybeans after a slow start to planting that is expected to negatively impact yields as documented in the September WASDE Report available in this edition. Current crop condition for both soybeans and corn are 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

September 8th

September 16th

5-Year Average

Corn Dough %

Corn Dented %

Corn Mature %

Corn Harvested %

89

55

11

0

93

68

18

4

98

87

39

7

       

Soybeans Setting Pods %

Soybeans Dropping leaves %

92

0

95

15

100

38

       

Corn will be mature 25 days after the early dent stage implying harvest during late September through early October. Yield is reduced if corn fields are exposed to frost. Cold temperature before harvest contributes to higher moisture content requiring drying and susceptibility to Fusarium leading to DON contamination.

Crop Condition

V. Poor

Poor

Fair

Good

Excellent

Corn 2019

Corn 2018

4

4

10

8

31

20

44

47

11

21

Soybeans 2019

Soybeans 2018

4

3

10

7

32

23

45

49

9

18

 

Parameter

V. Short

Short

Adequate

Surplus

Topsoil moisture: Past Week

11

22

55

12

Past Year

9

19

63

9

Subsoil moisture: Past Week

9

22

59

10

Past Year

11

20

61

8


 

COMMODITY REPORT September 16th.

09/16/2019

December corn was up 1.1 percent on CME trading at noon September 16 th following release of the September 12th WASDE and a promise of a reduction in tariffs by China. November soybeans advanced 0.3 percent on favorable trade news and token orders. Soybean meal was 1.7 percent higher.

Release of the September WASDE documenting lower corn supply but fractionally higher ending stocks resulted in an increase in futures prices as indicated in the table below. Soybeans responded to a reduction in yield, production and ending stocks with higher prices on the CME. The price of Soybean meal increased proportionately with soybeans.

The promise of resumed negotiations with China has rekindled optimism over at least partial resolution of the trade conflict. Resumption of talks at the sub-ministerial level are scheduled for late September with bilateral ministerial discussions to take place in early October in Washington. The August series of on-again-off-again tariff announcements suggested intractability by both the U.S. and China. Current consensus is that there will not be any complete resolution of the trade dispute before the end of 2019. The White House announced new tariffs effective September 1 st but delayed until mid-October with a further escalation scheduled for mid-December. The Administration categorically denied a rumor that the U.S. would accept a partial agreement during the morning of Thursday 12th but subsequent impromptu comments on the White House lawn suggest that a series of limited agreements may be negotiated.

The continuous stream of conflicting statements by White House and Government of China spokespersons over the months since the dispute began is disconcerting to the commodities market and has contributed to price fluctuation.

The following quotations were posted by the CME at noon on Thursday September 16th compared with values for September 12th (in parentheses).

COMMODITY

 

Corn (cents per bushel)

Dec. 373 (367)

March '20 385

Soybeans (cents per bushel)

Nov. 898 (895)

Jan. '20 910

Soybean meal ($ per ton)

Dec. 298 (293)

Jan. '20 300

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

COMMODITY CHANGE FROM PAST WEEK

Corn: Dec. quotation up 4 cents per Bu            (+1.1 percent)

Soybeans: Nov. quotation up 3 cents per Bu     (+0.3 percent)

Soybean Meal: Sept. quotation up $5 per ton.   (+1.7 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 comments on the weekly USDA Crop Progress Report and the September 12th WASDE posted in this edition.

In June some concessions were promised by China to reduce coercive trade practices and clarify dispute resolution. Subsequently U.S. negotiators claim that China backtracked on structural issues hence the threat of more stringent tariffs and embargos on trade with tech. companies in China.

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 adversely affected by the August 9th decision by the EPA to grant 31 and to deny six waivers to refineries. This action, according to the Renewable Fuels Association decreased demand by 1 billion gallons of biofuel. This was reflected in a sharp decline in the value of a RIN from 20 to 11 cents. Ethanol value is languishing. The price was $1.38 per gallon on September 16th ($1.34 per gallon on August 30 th).

Unless shipments of corn and especially soybeans to China resume in volume, which is unlikely, despite pre-discussion concessions, the financial future for row-crop farmers for the 2019 harvest 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. On July 25th the USDA announced a $16 million package to support agriculture with Market Facilitation funds to be distributed in three tranches. The first payment of $2.5 billion has been made with the remainder for the third quarter through the Farm Services Agency under authority of the Commodity Credit Corporation. 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.


 

Cargill Invests in Vegetable-Protein Production

09/04/2019

In an August 28th release, Cargill Inc. announced investment of $75 million in PURIS, a producer of pea protein. This capital investment is intended to double production from the Dawson, MN plant. The facility will support farmers in the U.S. producing peas and will contribute to sustainability given the nitrogen-fixing ability of legume crops. It is anticipated that full production at the Dawson plant will be attained in late 2020.

Laurie Koenig of Cargill noted “As consumer demand increases for plant-based proteins, we want to make sure that Cargill with our partner PURIS can deliver on that demand with great-tasting sustainable pea protein for customers in North America and across the World”.

PURIS will own and operate three facilities in North America dedicated to production of pea protein. These comprise Turtle Lake, WI; Oskaloosa, IA and Dawson, MN.


 

Campbell’s Soup Reports on Q4 and FY 2019

09/04/2019

In a press release dated August 30th, Campbell’s Soup Company reported on the 4th quarter and FY 2019 ending July 28th. For the Quarter the company posted a net loss of $8.0 million on sales of $1,780 million with a EPS of $(0.03). For the corresponding fourth quarter of fiscal 2018, Campbell’s Soup Company earned $94 million on sales of $1,745 million with an EPS of $0.31. During the fourth quarter of fiscal 2019 the company reported “other expenses” of $128 million compared to income of $66 million for Q4 2018. For the 12-month period, the company earned $211 million on sales of $8,107 million less than in fiscal 2018 with net earnings of $261 million on net sales of $6,615 million.

For the 12-month period, Meals and Beverages represented 53 percent of net sales with the remaining 47 percent from snacks. The Meals and Beverages segment generated a 20.9 percent operating margin compared to 13.6 percent from snacks. Earnings from the Meals and Beverages segment were down 9 percent compared to Fiscal 2018, but Snacks were up 34 percent.

Campbell’s Soup achieved some pricing strength during fiscal 2019 and apparently settled disputes with major customers including Walmart.

In commenting on results Mark Clouse, president and CEO noted “we made significant progress against our 2019 strategic initiatives namely:  improving our in-market performance; over delivering our cost savings program; strengthening our relationship with key retailers; focusing the portfolio on our two core businesses in North America and completing the divestiture of Campbell Fresh and announcing the divestiture of Campbell International”.

Sale of non-profitable components reduced long-term debt from $7.10 billion to $7.99 billion during FY2019. The Campbell’s Soup Company balance sheet posts assets of $13.15 billion of which 56.5 percent is represented by intangibles presumably brands. Following the expensive foray into organic and fresh including a major loss on Bolthouse Foods and other acquisitions under the previous president and CEO Campbell Soup is apparently returning to its core competence.


 

Presumed Limited Outbreak of IBD in New Zealand

09/08/2019

A poultry farm near Otago is under quarantine following a provisional diagnosis of infectious bursal disease due to Type 1 virus.

 

Authorities are currently working to confirm the diagnosis and characterize the virus which is exotic to the poultry industry.  Previously in 1993 New Zealand encountered a limited outbreak of IBD introduced into the nation in contaminated or mislabeled vaccine from Singapore.  Affected flocks were eradicated. 

 

New Zealand has a unique status with respect to avian disease and authorities are diligent to prevent introduction of a wide range of infections that could affect both domestic poultry and the fragile and endangered native avifauna.

 

In recent years New Zealand is has become a major supplier of grandparent-level breeding stock to China and other Asian nations following establishment of maximum biosecurity farms with elite-level stock.

 

It is anticipated that authorities will release information on the extent of IBD Type 1 following an extensive survey and an epidemiologic investigation as to the source and possible mode of dissemination of the virus that may have occurred.


 

OSHA Establishes Alliance with Poultry Associations

09/11/2019

According to a release on September 4th the U.S. Department of Labor, Occupational Safety and Health Administration (OSHA) has established an alliance with the major associations representing the poultry industry.  The objective will be to share information and training resources to extend the improvements in worker safety achieved over the past 25 years. Participants in the signing ceremony included Laren Sweatt, Deputy Assistant Secretary of Labor for OSHA, Mike Brown, president of the National Chicken Council, Joel Brandenberger, president of the National Turkey Federation and Matt Spencer, Director of HR and Safety Programs for USPOULTRY.

 

The U.S. poultry industry has implemented improvements in ergonomics, worker training and has applied advances in processing equipment to achieve lower rates of injury and accidents. Since 1994 recordable injuries have declined by 83 percent although there is a collective commitment to improve overall health and safety for all employees.


 

Class Action Suit Filed Against the Boiler Industry Alleging Collusion over Labor Costs

09/11/2019

A class-action suit was recently filed inthe Baltimore Federal court by Handley, Farah and Anderson, a Washington, DC-based law firm. Named Defendants include18 leading broiler integrators, AgriStats and consultant Webber, Meng, Sahl and Company.  The Plaintiffs allege that numerous instances of direct collusion occurred involving regular consultation on labor rates among regional processors.  It is also claimed that through the intermediary of Webber, Meng, Sahl and Company, that labor rates were compiled and disseminated at annual meetings in Destin, FL. concurrent with USPOULTRY seminars for the U.S. industry.  The complaint also implicates AgriStats since historical data circulated could have been used by subscribers to ascertain labor rates for complexes within their areas of operation.

 

Peter Carstensen a professor at the University of Wisconsin Law School and a former antitrust lawyer for the DOJ was quoted as stating, “As a pure antitrust matter it looks really strong, like there was a pattern of coordination in shared control over wages.”  Carstensen also commented on the use of AgriStats data.  He commented, “The kind of information that AgriStats is producing for its subscribers, the detailed wage information, raises serious concerns because it gives everyone involved a basis to restrict and limit how they compete”.

 

The current lawsuit parallels an ongoing class action suit alleging collusion in pricing.  Discovery in this case is currently on hold following intervention by the DOJ that is investigating possible criminal activities. 

 


 

Flock Awards Recognize Top Ross Performance

09/11/2019

In a September 11th release, Aviagen announced winners of awards for exceptional broiler breeder performance in 2019.

Based on 2018 flock records, Ross 708 and Ross 308 performance awards were made for the following categories:-

  • Top number of eggs produced per hen-housed to 65 weeks
  • Top number of hatching eggs produced per-hen housed to 65 weeks
  • Top percentage hatch to 65 weeks
  • Top number of chicks produced per-hen housed to 65 weeks

To be eligible, a farm complex must submit all records of depleted flocks received from Aviagen for the previous year, with a minimum requirement of six flocks.

In addition to rewarding the achievement of recipients, the Flock Award program offers customers real data on depleted flocks for benchmarking.

Aviagen began the Flock Award program in 2014 to recognize the skill and dedication of valued Ross customers. Subsequently Aviagen expanded the program to more achievement categories.

In commenting on awards Randall Vickery, Regional Technical Manager for Aviagen stated:-

"the story of our North American Ross customers is one of growth and success, as we continue to see increases in year-on-year performance. We congratulate this year's winners and commend their talent in stockmanship and teamwork,"

The Aviagen's VP of Sales, Frank Dougherty added that the North American Customer Support Team cares about their customers and devotes time and energy to add value to their businesses" He added "we're committed to helping our customers stay competitive by continually improving on past success. It is the skilful management and attention to detail of our customers, combined with the close collaboration of our team that makes the winning performance of our Flock Award recipients possible."

2018 Ross 708 award winners

Ross 708

Category

Aviagen customer

Gold

Top Egg Producer

George's Inc., Harrisonburg, Va.

Silver

Top Egg Producer

Peco Farms, Pocahontas, Ark.

     

Gold

Top Hatching Eggs

Pilgrim's Pride, Broadway, Va.

Silver

Top Hatching Eggs

George's Inc., Harrisonburg, Va.

     

Gold

Top Chicks

Sanderson Farms, Adel, Ga.

Silver

Top Chicks

Sanderson Farms, Kinston, N.C.

     

Gold

Top Hatch

Sanderson Farms, Adel, Ga.

Silver

Top Hatch

Sanderson Farms, Laurel, Miss.

 

2018 Ross 308 Award Winners

Ross 308

Category

Aviagen customer

Gold

Top Egg Producer

International Poultry Breeders, Rison, Ark.

Gold

Top Hatching Eggs

Keith Smith, Hot Springs, Ark.

Gold

Top Chicks

OK Foods, Inc., Ft. Smith, Ark.

Gold

Top Hatch

OK Foods, Inc., Ft. Smith, Ark.

 

 

About Aviagen

Aviagen is based in Huntsville, AL. with a number of wholly-owned operations across the United Kingdom, Europe, Turkey, Latin America, India, Australia, New Zealand, and the U.S., and joint ventures in Asia. Aviagen employs more than 4,600 people and has a distribution network serving customers in more than 100 countries.

For further information, please visit www.aviagen.com.


 

Research on Histomoniasis Highlighted

09/12/2019

The September issue of the Alltech Feeding Times contained an interview with Dr. Robert Beckstead of the Prestage Department of Poultry Science at North Carolina State University.  Dr. Beckstead is an acknowledged specialist in protozoal parasitalogy with a focus on histomoniasis (“blackhead”).  Studies on prevention of this disease are necessary since effective drugs used to suppress and cure the disease have been withdrawn based on carcinogenicity.

 

The Beckstead Laboratory has developed a model to screen candidate compounds. Work conducted over the past three years has shown a negligible success rate for a number of prebiotics, botanicals and other compounds evaluated. Dr. Beckstead is currently evaluating transmission among flocks and factors exacerbating clinical disease.  The health of flocks is critical to the severity of infection.  Obvious flocks with a predisposition to histomoniasis demonstrate some form of intestinal dysfunction.

 

Some compounds demonstrating in vitro antiprotozoal activity in laboratory trials have yet to be evaluated in living birds.  The challenge according to Dr. Beckstead is to encapsulate candidate compounds so that their anti-protozoal action takes place in the cecum.  Some promise has been shown by essential oils but determination of the critical dose is necessary since at high levels these potential therapeutic compounds are deleterious.

 

Click here to view the full interview.

 


 

Trade Disputes Impacting Investment in U.S. Manufacturing

09/12/2019

Economists recently surveyed highlighted that uncertainty over trade is restricting investment in manufacturing capacity. The report was carried in the September 6th edition of The Wall Street Journal.  Small-business confidence is declining concurrently with the Manufacturers’ Purchasing Managers Indexes with respect to Japan, South Korea, the UK and Germany. 

The report also noted that some production capacity in China is relocating to other Asian nations to avoid U.S. tariffs. Contrary to the intent of tariffs there does not appear to be a trend towards a return to the U.S.  Survey-company HIS Markit was quoted as stating, “trade wars and tariffs remain the biggest concerns among producers and the escalation of global trade war tensions in August encourage further risk aversion.” 

 

Uncertainty has resulted from decisions relating to imposition of tariffs on classes of goods without notice has resulted in a disinclination to place orders. It is axiomatic that business abhors uncertainty. An executive of a company manufacturing LED lighting commented, “Just give me the ability to plan and make smart business decision.  This lack of certainty is really, really hard.” The same could be said of any farmer as to whether to plant soybeans or corn or an alternative crop to be harvested six months hence.


 

Bayer Absolved of Criminal Responsibility for Researching Opponent in France

09/12/2019

As a tactic to defend glyphosate after Bayer acquired Monsanto in 2018, a public relations firm was commissioned to develop a list of politicians and public figures opposing the herbicide.  The dossier on politicians, media personalities and bureaucrats included personal details. 

 

The law firm Sidley and Austin reviewed the list which included non-public information but determined that there was no evidence of illegal surveillance.  The list was intended to develop a public relations strategy to advocate Monsanto’s position to the public.  A similar decision was reached by the German Council for Public Relations.

 

In an attempt to reestablish goodwill, Bayer hired Matthais Berninger a former Green Party politician to lead its public affairs initiative.  According to an article by Ruth Bender in the September 7 edition of The Wall Street Journal Berninger publically apologized for the list of politicians and potential influencers in France before it was established that the action was legal.  Notwithstanding the opinion obtained by Bayer, the office of the French Prosecutor is apparently investigating the action by Bayer and its public relations advisor.

 


 

Urgent Need for Agricultural Inspectors and Veterinarians for CBP

09/12/2019

Senator Gary C. Peters (D-MI) co-sponsored the Protecting Americas’ Food and Agricultural Act of 2019 (S 2107) together with Senators John Cornyn (R-TX) and Debbie Stabenow (D-MI).  The Bill is intended to address the shortage of agricultural technicians, specialist and veterinarians at U.S. ports of entry.  An allocation would fund the U.S. Customs and Border Protection Agency with an additional $107 million to hire agricultural specialists, $74 million to hire technicians and $23 million for K-9 teams.

 

If the U.S. is to effectively prevent introduction of African swine fever, pork introduced into the U.S. clandestinely in containers or by travelers must be interdicted.  In March, USDA beagles identified pork smuggled from China and the one-million pound shipment was disposed of.  Japan has identified African swine fever virus in meat samples in the luggage of tourists from China as previously reported in postings on CHICK-NEWS and EGG-NEWS. 

 

During 2018 CBP officials seized 1.7 million prohibited items at points of entry and found 17,000 consequential pests.  Currently veterinarians average 15 to 25 hours of overtime per week due to the vacancies that exist.  Spending on interdiction is far more beneficial than enduring the cost and disruption from an exotic disease.


 

Philippines Confirms ASF

09/12/2019

The Secretary of Agriculture for the Philippines, William Dar confirmed that mortality among backyard hogs in Rizal Province is in fact due to African swine fever.  Given the prevalence of the infection in Southeast Asia, this comes as no surprise. Investigations are in progress to determine the route of introduction.  The Department of Agriculture has imposed quarantines and limited transport of live hogs and meat products and has banned imports from all nations reporting ASF to the OIE.

 

The Philippines is the World’s tenth largest pork producer with a domestic herd of 13 million head.  Following mortality and diagnosis, culling will be carried out. Depletion of more than 7,000 animals has already taken place.

 

Given the structure of the pork industry in the Philippines that mirrors China with only one third of the national herd in commercial farms, control will be extremely difficult especially in the absence of a vaccine. 

 

In the short term, chicken consumption will increase as an alternative animal protein.


 

Antibiotic Treatment of Pre-Term Infants Results in a Drug Resistant Biome

09/12/2019

Studies conducted at the National Institute of Child Health and Human Development, a branch of the National Institutes of Health demonstrated that pre-term infants receiving prolonged antibiotic therapy demonstrated less diverse bacterial gut populations.  Bacteria within the microbiome contained genes resistant to antibiotics including those not administered. 

 

The long-term effects of genome changes in the microbiome are unknown.  The authors noted that antibiotic treatment during infancy may be associated with the development of allergies, obesity, inflammatory bowel disease or even diabetes in subsequent life.  The comparisons between pre-term infants treated with antibiotics and those not receiving antibiotics suggest that limiting the diversity of microbial communities predisposes to selection of potentially pathogenic species with suppression of beneficial bacteria.

 

It is possible that similar mechanisms exist in domestic livestock although it is noted that the pre-harvest life span of hogs and poultry is shorter than in humans.

 

*Gasparrini, A.J. et al Persistent metagenomic signatures of early-life hospitalization and antibiotic treatment in the infant gut microbiota and resistome. Nature Microbiology (2019)


 

Kroger Evaluating Plant-Based Meat Substitutes

09/13/2019

Kroger in association with the Plant Based Foods Association (PBFA) will install a series of three-foot sets in meat departments for a 20-week trial on acceptability of alternative-meat products.  Approximately 60 stores have been selected for the evaluation in Colorado, Indiana and Illinois.

 

Marcellus Harris, commodity manager in the Kroger meat department noted, “The test which emerged from our partnership with PBFA will allow us to gain insight regarding how best to merchandise the category and connect with consumers.”

 

Julie Emmett, Senior Director of Retail Partnerships for the Plant Based Foods Association stated, “We are confident that this test will demonstrate that plant-based meat sales will increase even more when consumers have easy access to them.”

 

Kroger has introduced a Simple Truth Plant Based a line of meatless burgers and grinds.  The collection will be extended to deli slices, sausages and other items also under the Simple Truth brand.

 

Meat substitutes are the second largest plant-based food category with sales up ten percent over YTD 2018 to $801 million representing two percent of retail packaged meat sales.  Although plant-based meat substitutes have demonstrated a rapid growth rate, it should be remembered that the proportions reflect a small base.


 

China Makes Token Concessions on Trade

09/13/2019

Consistent with past practice, China has announced that some U.S. products will be exempt from tariffs in advance of sub-ministerial meetings in late September.  Sixteen products were exempted including drugs for cancer therapy, lubricants, fish meal and whey. On Friday September 13th China announced that additional tariffs on some agricultural products including soybeans and pork would not be imposed through September 2020.

 

On September 13th China announced that additional tariffs on some agricultural commodities including soybeans and pork would be deferred until September 2020. The announcement stimulated interest by importers

 

The concession by China was welcomed by the White House. The U.S. will reciprocate by delaying previously announced tariff increases until mid-October.


 

Tyson Invests in New Wave Foods

09/13/2019

Tyson Ventures, a subsidiary of Tyson Foods has completed an investment in New Wave Foods.  Proceeds will be used to develop plant-based alternatives to seafood.

 

Mary McGovern, CEO of New Wave Foods stated, “Our plant-based shrimp cooks and tastes just like the real thing and it matches the texture, taste and versatility of shrimp fresh from the ocean.”

 

Amy Tu, president of Tyson Ventures commented, “We are excited about this investment in the fast-growing segment of the plant-based protein market.”  Tu added, “This continues our focus of identifying and investing in companies with disruptive products, breakthrough technologies related to our core business so we can continue to serve growing global population. 


 

Costco Project in Nebraska Encounters Opposition

09/13/2019

Progress has been made in completing the industrial components of the Lincoln Premium Poultry project based in Freemont, NE. to supply Costco with rotisserie chickens. Shortly after Labor Day, a token quantity of broilers were processed mainly to establish that machinery was functional and to train workers.

There is still considerable opposition in rural areas regarding permitting of grow-out farms.

 The projected total production volume will attain 2 million birds each week and 70 out of the 125 growers have either signed with the company or expressed an interest.  Thirty growing sites are under construction.  Opposition to the project which will consume corn and soybeans produced in Nebraska and offer employment has resulted in delays in approval of farms.  As of the end of August, approximately 40 grow-out farms were approved but solid opposition is in evidence in many counties.  Advocacy groups opposed to intensive livestock production have demanded a moratorium on CAFOs in some counties.  These groups cite unrealistic and unsubstantiated claims intended to impede granting of permits to erect farms. 

 

It appears that a North Carolina company, Gallus Capital LLC intends to erect 132 grow-out houses which opponents maintain is contrary to the concept of family farming originally proposed by Lincoln Premium Poultry LLC acting on behalf of Costco Wholesale Inc.  The original plan called for 100 or more farming families to raise broilers in four-barn farms but only 70 farmers have been contracted.  Gallus Capital intends erecting 10 to 16-barn operations each holding 45,000 birds.  The petition demanding a moratorium on CAFOs has been criticized by Nebraska governor Pete Ricketts who referred to supporters of the initiative as “radical anti-agriculture groups” according to an article by Leah Douglas in Fern’s AG Insider published on September 10th.

 

In reviewing the plan for location of farms in eastern Nebraska and adjoining western Iowa, it is evident that the complex will deliver chicks and feed and transport live broilers to the Freemont plant over long distances.  Farm locations over 70 miles from the Fremont plant and feed mill are far in excess of the range in the southeast and will add to operating cost and stress on broilers.


 

Dr. Eric Jensen Elected President of AAAP

09/17/2019

Dr. Eric Jensen, Vice President of Veterinary Services for Aviagen was elected president of the American Association of Avian Pathologists (AAAP) at the 2019 Annual Meeting during August. Dr. Jensen has served on the Board of Directors of AAAP for five years and Was President-elect in 2018.

Aviagen is a long-standing supporter of THE AAAP and has pledged $5,000 as a Platinum Sponsor in addition to donating $5,000 to four Preceptor Scholarship Awards for 2019. Dr. Jensen joined Aviagen in 1995 as a program veterinarian and assumed his current role as Vice President of Veterinary Services in 2015. He earned DVM and MAM degrees from the University of Georgia.


 

John R. Tyson Appointed Chief Sustainability Officer for Tyson Foods

09/17/2019

In a September 10th release, Tyson Foods announced the appointment of John R. Tyson as Chief Sustainability Officer with immediate effect. He will report to Noel White, president and CEO of the company. He succeeds Justin Whitmore who will now be responsible for the Alternative Protein business.

In commenting on his appointment, John R. Tyson stated “Taking care of our people on our planet is a priority for Tyson Foods. We are uniquely positioned to lead within the global food system and therefore we must continue challenging ourselves to be stewards of our natural resources while striving to feed the world safely, affordably and with delicious food”.

During the past few years, Tyson Foods has made strides applying sustainability as noted in their progress report. The company has established relationships with World Resources Institute to develop science-based targets to reduce greenhouse gas emissions by 30 percent before 2030. The company has also partnered with the Environmental Defense Fund to promote sustainable farming practices on two million acres of corn.

John R. Tyson is the fourth generation family member in the Company and is currently a lecturer at the Sam M. Walton School of Business at the University of Arkansas. Tyson earned a baccalaureate degree in economics from Harvard University and an MBA from Stanford University Graduate School of Business. He has experience in investment banking with JP Morgan in the areas of private equity and venture capital.


 

Kalmbach Feeds Participates in Chamber of Commerce Meeting

09/17/2019

The September 5th meeting of the Wyandot County, OH. Chamber of Commerce was held at the office of Kalmbach Feeds, a strong supporter of the Chamber. The meeting was addressed by Senator Rob Portman (R-OH). He discussed legislation to encourage growth including tax reform law, job creation and specifically a Career and Technical Education initiative.


 

Brazil and Mexico Working Towards Free-Trade Arrangement

09/17/2019

Mexico has ratified the USMCA but the legislatures of both the U.S. and Canada have yet to endorse the arrangement signed over a year ago.

Brazil has become more aggressive in promoting exports under President Jair Bolsonaro. In meetings with his counterpart in Mexico, Marcos Troyjo, Deputy Economy Minister for Foreign Trade for Brazil emphasized the capacity of his country to supply agricultural products. A close connection between Brazil and Mexico could impair trade that has traditionally benefitted U.S. poultry producers.


 

McDonald’s Advances Technology with Acquisition of Apprente

09/17/2019

McDonald’s Corporation has announced the acquisition of Apprente founded in 2017 in Mountainview, California. The company develops voice-based platforms to facilitate oral communication. The technology will expedite orders at drive thru’s and kiosks.

During the past year, McDonald’s has incorporated acquired startups into their McD Tech Labs established to evaluate and adapt technology to the specific requirements of the Company global portfolio. In April, McDonald’s acquired Dynamic Yield the developer of decision logic technology now incorporated in over 8,000 restaurants in the U.S. with plans to extend to Australia during 2019. McDonald’s also invested in Plexure a mobile app vendor to incorporate this technology at the customer interface.

In commenting on the Apprente acquisition Steve Easterbrook, president and CEO of McDonald’s Corporation stated “building our technology infrastructure and digital capabilities are fundamental to our Velocity Growth Plan and enable us to meet rising expectations from our customers”. He added “Apprente’s gifted team and the technology they have developed will be used by McD Tech Labs, a new group integrated into our global technology team that will take our culture of innovation one step further”.

Dr. Itamar Arel, co-founder of Apprente and now a Vice-president of McD Tech Labs stated “Apprente was born out of an opportunity to use technology to solve challenging, real world problems and we are thrilled to now apply this to creating personalized experiences for customers”.


 

Shane Commentary

Sanderson Farms Receives DOJ Subpoena

09/17/2019

According to a Sanderson Farms filing with the SEC on September 9th, the Department of Justice issued a subpoena to obtain documentation with regard to an investigation of alleged collusion with respect to the price of chicken extending from 2008 to 2016.

In 2016, a civil action was filed by a group of restaurants alleging price-fixing by almost all broiler producers. A second case was initiated 2019 by a second group of Plaintiffs comprising food manufacturers. In April the Department of Justice decided to intervene and on June 27th obtained a stay of discovery on the grounds that the Department wished to protect Grand Jury proceedings. On August 4th, Tyson Foods also received a subpoena from the DOJ seeking additional documents and information.

The fact that a company receives a subpoena from the Department of Justice in no way infers guilt or complicity. The Department of Justice frequently uses subpoena powers to review documentation and after due consideration may decide that no legal action is warranted. As public companies, Tyson Foods and Sanderson Farms are obliged to make a public declaration of the Department of Justice action.

 

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