DOJ Criminal Investigation of Collusion in the Broiler Industry Expands

In May 2020 the Department of Justice (DOJ) indicted Jason Penn, then CEO and marketing executive Roger Austin of Pilgrim's Pride and their counterparts Mikell Fries, CEO and Scott Brady of Claxton Foods on charges of price collusion The DOJ has now indicted additional broiler industry managers alleged to have been involved in collusion. The charges brought by the Department of Justice carry sentences of up to ten years in prison and a fine of $1 million.


 Although news reports have implicated an additional three companies, they are in fact not involved other than having apparently innocently employed marketing personnel fired by Tyson Foods.  In the process of defending a class action civil lawsuit, an internal investigation by Tyson Foods demonstrated irregularities.  To their credit the company immediately approached the DOJ and negotiated a leniency arrangement, obviously with the assurance of cooperation.  Ex-Tyson employees who migrated to other companies have been charged including Timothy Mulrenin, William Kantola and Brian Roberts.  In deference to the situation, CHICK-NEWS is withholding the names of companies that employed ex-Tyson marketing personnel presumably without knowledge of their previous activities.


Bill Lovette, former CEO at Pilgrim's Pride who retired in March 2019 has been indicted on evidence that he either actively participated or condoned illegal activity during his tenure.  His successor Jason Penn was first placed on administrative leave on June 15th, but then was terminated on September 25th, succeeded by Fabio Sandri the CFO of Pilgrim’s Pride.


It is however apparent that in addition to Pilgrim's Pride and Claxton Foods the principal subjects of the May indictments, other integrators may have been involved in allegations of price fixing and additional indictments may be forthcoming.


The DOJ inquiry suggests that illegal activity occurred as early as 2012 and extended until 2019 based on documentation of the alleged collusion. Since the May indictments the DOJ has probably "turned" lower-level individuals as is the practice with white-collar criminal investigations.


The intervention by the DOJ placed a hold on the class-action civil suit alleging collusion among major broiler integrators over an extended period.  An aspect of this case relates to indirect collusion through subscribing to the Agristats® subscription benchmarking service documenting historical cost and sales data. The plaintiffs allege that data disseminated by Agristats® enabled integrators to manipulate supply through strategic placement of breeder replacement flocks thereby maintaining higher wholesale prices.  It is noted that in an early stage of the civil lawsuit Fieldale Farms settled with the plaintiffs for a substantial figure subject to their cooperation with the law firms involved.


The attitude of the Department of Justice is exemplified in the statement of Makan Delrahim, the Assistant Attorney General for the Antitrust Division who stated, "executives who choose collusion over competition will be held to account for schemes that cheat consumers and corrupt our competitive markets". Delrahim prosecuted Christopher Lischewski CEO of Bumble Bee Seafoods who pleaded guilty to charges relating to collusion in participating in a scheme to rig the canned tuna market. He was sentenced to 40 months in Federal prison and fined $100,000.  Starkist a co-colluder with Bumble Bee was subject to a civil penalty of $100 million.


It would be advantageous for the broiler industry if this case were to be disposed of as soon as possible to avert further degradation of image. The criminal indictments could be settled with guilty pleas avoiding further negative publicity. Then there is the question of the civil case. With guilty pleas or verdicts the plaintiffs only have to justify their damages since the outcome of a trial is predictable.


(see the Commentary on Pilgrim's Pride settlement with the DOJ below in this edition)


Poultry Industry News

Comparison of Commodity Prices in China with CME Quotations.

The relative prices expressed in US$ per short ton for corn, soybeans and soybean meal, December delivery, were downloaded from the Dalian Commodity Exchange website reflecting major contracts at close of trading on October 15th.  These values were compared with the spot price at noon on the CME indicated in parentheses. 



Dalian CE

52-week range

CME 09/02









Soybean Meal





* short ton with exchange rate CNY 6.7=US$1


It is evident that due to the higher price of feed, producers of hogs, eggs and conventional broilers in China are at a disadvantage in production cost compared to their counterparts in the U.S. and Brazil.


Large eggs (57g) traded on the Dalian exchange at 33 cents per dozen.



COMMODITY REPORT: October 16th 2020.

  • The financial and economic implications of the COVID-19 pandemic continue but gradual easing over an extended period is expected as society struggles to return to a “new normal” with recent noteworthy upsurges in incidence in both rural and urban areas of the U.S. Markets do not appear to be influenced by the imminent General Election on November 3rd.
  • Commodity prices this past week were mixed and fluctuated, influenced by export orders, lower projections for 2020 crop yields, ending stocks projected in the October 9th WASDE Report and the September Grain Stocks Report. Corn showed an increase of 2.0 percent for the week despite lack of orders from China but responding to a shipment to Mexico and in anticipation of large orders from China. Soybeans fell 1.3 percent in price this week despite orders booked by China and other nations and projected lower ending stocks attributed to a downward revision of yield and associated factors. Soybean meal rose by 1.7 percent disproportionate to soybeans.
  • Since July 10th year-to-date exports and 2020/2021 market-year orders for corn have attained 7.54 million metric tons (297.0 million bushels) but with a single order this past week. Exports and orders for soybeans amounted to 18.2 million tons (666.2 million bushels) of which 20 percent was ordered during September. Approximately 0.65 million metric tons (2.4 million bushels) was ordered this past week
  • Prospects for commodity exports to China during the 2020/2021 market year that began on September 1st for corn and soybeans have improved. China adjusted their domestic short-term demand for soybeans as a result of an apparent increase in the hog herd after severe losses in 2019 and early 2020 from African swine fever. White-feathered chicken production has now recovered after COVID disruptions and on QSR demand. China is also taking advantage of shipping rates that are rising sharply in order to build inventory. The Baltic Dry Index was 1,860 in mid-October 2019, fell to 744 in April 2020 and is now at 1,471.


The following quotations for delivery in the months as indicated were posted by the CME at close of trading on October 16th compared with values posted on October 10th (in parentheses) reflecting specified months for delivery.



Corn (cents per bushel)

 Dec. 402 (394)

March ‘21 407 (402)

Soybeans (cents per bushel)

 Jan. ’21 1,051 (1,065)

March ’21 1,038 (1,047)

Soybean meal ($ per ton)

 Dec. 368 (362)

March ‘21 355 (364)

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



Corn: Dec. quotation up 8 cents per bushel (+2.0 percent)

Soybeans: Jan. quotation down 14 cents per bushel (-1.3 percent)

Soybean Meal: Oct. quotation up $6 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


Uncertainties still include:-

  • There are questions as to whether China will satisfy quantitative obligations in terms of the Phase One Trade during calendar 2020. The Agreement signed in mid-January incorporated U.S. tariff rescissions, promised purchases of agricultural commodities (valued at $36.5 billion in 2020 and $43.5 billion in 2021), concessions on some structural issues by China and strengthened enforcement provisions. For the first half of calendar 2020 China imported agricultural commodities to the value of $7.3 Billion


  • Domestic U.S. soybean and soybean meal demand is now less constrained by COVID-induced cutbacks in the intensive livestock and poultry sectors.


According to the October WASDE, corn to be harvested in calendar 2020 is expected to attain 14,722 million bushels with ending stocks projected at 2,167 million bushels. Final values will be modified by actual yield influenced by weather conditions and export volume. Compared with the October 9th at close of trading the CME quotation for corn on October 16th was up 8 cents per bushel for December delivery to 402 cents, adding to the 15 cent per bushel advance from the preceding week. The Friday October price was the highest since January 24th 2020 at 387 cents per bushel.


The social restrictions imposed in the U.S. as a result of COVID-19 will reduce ethanol demand by 1.5 billion gallons or 10 percent of projected 2020 requirement accepting a nominal ten percent addition to gasoline. More than thirty percent of U.S. ethanol fermentation capacity is off-line at present and the outlook for increased demand is questionable. Ethanol was priced higher at $1.43 per gallon on October 16th up 32 cents per gallon (28.8 percent) reversing the decline from the previous week and compared with a five-year low of $0.92 per gallon on March 26th. Concurrently gasoline at $1.17 per gallon (quoted, New York Harbor) is 26 cents per gallon lower than ethanol but has a 63 percent higher BTU rating.


With more plants producing ethanol in the 4th quarter, DDGS is now available but at a higher price than in the second quarter. Eastern Corn-belt product was priced at $165 per ton on October 13th, $11 higher than the previous week but $35 per ton less expensive than October 15th 2019.


Soybeans are the beneficiary of the Phase-One agreement with China but down 14 cents per bushel to 1,051 cents for January 2021 delivery. The USDA anticipates a 2020 crop of 4,268 million bushels, but this value is subject to continuing drought in some states. Ending stocks according to the October WASDE projection will attain 290 million bushels.


On October 16th the BRL exchange with the CNY was 0.84, (up 0.01 from the previous week). The conversion of the US$ to the CNY was set at 6.7 on October 16th, unchanged from the previous week.


For 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. The USDA anticipates that soybean imports by China will amount to 95 million metric tons during the 2020-2021 market year.


The following extracts from the September 30th 2020 edition of the Quarterly USDA Grain Stocks Report indicate the levels of storage on farms and in fields and off-farm for corn and soybeans.


  • “Old crop corn stocks in all positions on September 1, 2020 totaled 2.00 billion bushels, down 10 percent from September 1, 2019. Of the total stocks, 751 million bushels are stored on farms, down 8 percent from a year earlier. Off-farm stocks, at 1.24 billion bushels, are down 12 percent from a year ago. The June to August 2020 indicated disappearance is 3.02 billion bushels, compared with 2.98 billion bushels during the same period last year. Based on an analysis of end-of-marketing year stock estimates, disappearance data for exports, and farm program administrative data, the 2019 corn for grain production is revised up 2.67 million bushels from the previous estimate. Corn silage production is revised up 715 thousand tons. Planted area is revised to 89.7 million acres, and area harvested for grain is revised to 81.3 million acres. Area harvested for silage is revised to 6.62 million acres. The 2019 grain yield, at 167.5 bushels per acre, is up 0.1 bushel from the previous estimate. The 2019 silage yield, at 20.2 tons per acre, remains unchanged from the previous estimate”.


  • “Old crop soybeans stored in all positions on September 1, 2020 totaled 523 million bushels, down 42 percent from September 1, 2019. Soybean stocks stored on farms totaled 141 million bushels, down 47 percent from a year ago. Off-farm stocks, at 382 million bushels, are down 41 percent from last September. Indicated disappearance for June - August 2020 totaled 858 million bushels, down 2 percent from the same period a year earlier. Based on an analysis of end-of-marketing year stock estimates, disappearance data for exports and crushings, and farm program administrative data, the 2019 soybean production is revised down 333 thousand bushels from the previous estimate. Planted area is unchanged at 76.1 million acres, but harvested area is revised to 74.9 million acres. The 2019 yield, at 47.4 bushels per acre, is unchanged from the previous estimate”.



Subscribers are referred to the October 9th WASDE #605 in this edition and the results of the 2020 Pro Farmer 7-State Tour retrievable under the Search TAB.


The President opined on July 10th that he is “not contemplating a second phase of a trade agreement with China”


Approximately $16 billion will be disbursed under the Coronavirus Food Assistance Program (CFAP). As of August 10th, $7.1 Billion was distributed. An additional $14 Billion relief package was announced by the Administration on September 18th with a proportion already distributed.


Broiler Week

Weekly Broiler Production and Prices


Chick Placements.

The Broiler Hatchery Report released on October 14th 2020 confirmed that a total of 223.6 million eggs were set during the week ending October 10th 2020, two percent more than in the corresponding week of 2019 and 1.4 percent (3.1 million eggs) more than the previous week. A total of 168.7 million day-old chicks were placed among the 19 major broiler-producing states during the week ending October 10th 2020. Total chick placements for the U.S. amounted to 177.3 million, three percent less than the corresponding week in 2019 and 2.5 percent (4.6 million chicks) less than the previous week. Claimed average hatchability was 82.3 percent for eggs set three weeks earlier, (82.6 percent for the previous week). Cumulative placements for the period January 4th through October 10th 2002 amounted to 7.61 billion chicks, one percent lower than the corresponding period in 2019.


Broiler Production

According to the October 16th 2020 USDA Broiler Market News Report (Vol. 67: No. 42) for the processing week ending October 10th 2020, 168.3 million broilers were processed during the past week (last week 169.7 million) at an average live weight of 6.48 lbs. (6.44 lbs. last week) and a nominal yield of 76.0 percent. The number of broilers processed was 3.6 percent less than the corresponding processing week in 2019. Processed (RTC) broiler production for the week was 828.8 million lbs. (376,751metric tons), (830.6 million lbs. last week) 1.8 percent less than the corresponding processing week in 2019. For YTD 2020 Processed (RTC) production attained 32,342 million lbs. (14,701,000 metric tons), 1.2 percent more than YTD 2019.


Broiler Prices

The USDA National Composite Weighted Wholesale price on October 16th 2020 was up 2.8 cents per lb. from the previous week to 67.9 cents per lb. compared to 78.5 cents per lb. during the corresponding week of 2019; 63.6 cents per lb. for September 2020 and 83.0 cents per lb. for the three-year average. The USDA Composite price has now been relatively stable albeit at a depressed value for over eight weeks. Price moved up 22 cents per lb. from a bottom of 52.7 cents per lb. recorded during the last week of April. The decline during April and May was attributed to the collapse of the food service segment following imposition of COVID-19 restrictions.


Turkey Week

Weekly Turkey Production and Prices

Poult Production and Placement:

The October 15th edition of the USDA Turkey Hatchery Report, issued monthly, documented 27.0 million eggs in incubators on October 1st 2020 (26.0 million eggs on September 1st 2020) and down 7.8 percent (2.3 million eggs) from October 1st 2019.


A total of 21.9 million poults were hatched during September 2020 (21.0 million in August 2020), representing a decrease of 2.4 percent from September 2019.


A total of 19.3 million poults were placed on farms in the U.S. in September 2020, (21.0 million in July 2020), 4.0 percent less than in September 2019. This suggests disposal of 2.5 million poults during the month (1.6 million in August 2020). Assuming all tom poults were placed (an unsubstantiated estimate in a fluctuating demand for products), 22.9 percent of September-hatched hen poults or 11.4 percent of all September-hatched poults were not placed.


For the twelve-month period October 2019 through September 2020 inclusive, 277.2 million poults were hatched and 253.8 million were placed. This suggests disposal of 23.4 million poults. Assuming all tom poults were placed, (representing a broad assumption), 16.8 percent of hen poults or 8.4 percent of all poults hatched during the period were not placed.


Turkey Production:

The October 16th 2020 edition of the USDA Turkey Market News Report (Vol. 67: No. 42) confirmed the following provisional data for turkeys slaughtered under Federal inspection:-

  • For the processing week ending October 10th 2020, 1.758 million young hens were slaughtered during the processing week at a live weight of 16.8 lbs. (last week 1.794 million at 16.6 lbs.). During the corresponding week in 2019, 1.702 million hens were processed, 3.2 percent less than the current week. Ready-to-cook (RTC) hen weight for the week attained 23.7 million lbs. (10,788 metric tons), 6.1 percent more than the corresponding processing week of 2019. Dressing percentage was a nominal 80.5. For YTD 2020 RTC hen production attained 930.5 million lbs. (422,933 metric tons), 1.1 percent less than during YTD 2019.
  • For the processing week ending October 10th 2020, 2.061 million toms were slaughtered at 43.3 lbs. compared to 2.268 million toms processed during the previous week at 43.8 lbs. For the corresponding processing week in 2019, 2.594 million toms were processed. Ready-to-cook tom weight for the week attained 71.9 million lbs. (32,685 metric tons), 18.1 percent less than the corresponding processing week in 2019. Dressing percentage was a nominal 80.5 percent. For 2020 YTD, RTC tom product attained 3.27 million lbs. (1,486,147 metric tons), 2.9 percent less than for the YTD 2019.
  • The National average frozen hen price during the past week was 114.0 cents per lb., down 1.0 cent per lb. from the previous week and up 17 cents from the three-year average. The following prices rounded to nearest cent were documented for domestic and export trading on October 16th 2020:-


Updated USDA-ERS Poultry Meat Projection for 2020-2021.

The USDA-Economic Research Service released updated production and consumption data on October 16th 2020 for broilers and turkeys covering 2019 (revised), a projection for 2020 and a forecast for 2021.


Broiler RTC production in 2020 was unchanged from the September report to reflect a 1.5 percent increase for 2020 over 2019 to 20.27 million metric tons RTC (44,602 million lbs.). Processing rates in March and April were depressed due to COVID-19 despite demand. Per capita consumption in 2020 is projected to be 1.6 percent higher than in 2019 at 43.8 kg. (96.4 lbs.). Exports will represent 16.2 percent of RTC production in 2020 attaining 3.293 million metric tons (7,246 million lbs.) representing both RTC and feet.


The projection presumably takes into account exports to China in 2020 following signing of the Phase-1 Trade Agreement on January 15th 2020. Disruption in shipping attributed to the COVID-19 outbreak restricted exports to China during the first quarter of 2020. China and Hong Kong combined imported 347,620 metric tons of chicken products with feet predominating during the first eight months of 2020 valued at $498 million.


For 2021 RTC production is expected to increase 1.1 percent from 2020 to 20.48 million metric tons, (45,060 million lbs.) with a 0.7 percent increase in per capita consumption to 44.1 kg (97.0 lbs.). Exports are projected to decrease 0.6 percent to 3.30 million metric tons (7,260 million lbs.)


Turkey production for 2020 was reduced by 1.9 percent to 2.594 million metric tons RTC, (5,702 million lbs.). Per capita consumption is forecast at 7.2 kg. (15.8 lb.) during 2020, 1.4 percent less than 2019 despite promotions and introduction of further-processed items. Export volume for 2020 is expected to decline 0.250 million metric tons (550 million lbs.) Forecast values for production and consumption of RTC turkey in 2020 are considered to be realistic, given the prevailing economy, lower poult placements, disposal of hen poults, weekly production levels and inventories.


USDA projected an increase in turkey RTC production in 2021 to attain 2.622 million metric tons (5,770 million lbs.) with decreases in per capita consumption to 7.1 kg (15.7 lbs.) and a 3.6 percent increase in exports of 259 million metric tons (570 million lbs.)


The export projections do not allow for a breakdown in trade relations with existing partners including China nor the emergence of catastrophic diseases including HPAI and vvND. Metric values for the broiler and turkey segments of the U.S. poultry meat industry are tabulated below:-


Subscribers are referred to the weekly updates of production and inventories of broilers and turkeys posted weekly on CHICK-NEWS and the review of monthly export data under the STATISTICS tab.



    2019 (revised)     



       2021           Difference %

  (forecast)     2019 to 2020





Production (m. metric tons)



        20.463                 +1.1

Consumption (kg per capita)



          44.1                   +0.7

Exports (m. metric tons)



         3.300                  +0.2

Proportion of production (%)



          16.1                   -0.6









Production (m. metric tons)



        2.622                    +1.1

Consumption (kg per capita)



          7.1                       -1.3

Exports (m. metric tons)



       0.259                     +3.6   

Proportion of production (%)



          9.9                      +3.3     

Source: Livestock, Dairy and Poultry Outlook –October 16th 2020



Status of 2019 Corn and Soybean Crops

The USDA Crop Progress Report released on October 19th documented the 2020 corn and soybean crops as almost mature and ahead of the 5-year average due to the earlier start in 2020. Over half of the 2020 corn crop has been harvested, significantly more than at this time last year. Almost three quarters of the soybean crop is in, progressing at a higher rate than the corresponding week of last year.


The condition of both corn and soybean crops deteriorated in late August and early September as a result of drought. The condition of corn and soybeans has improved following rains in the Midwest and both crops are moderately superior to the 2019 season. The USDA did not assess the condition of the soybean crop this past week and values reflecting October 11th are shown in the table below. Iowa and N. Dakota stand out as having poor soybean condition. Corn in Iowa, Colorado and Pennsylvania is suboptimal in quality contrasted to Minnesota, Wisconsin and Kentucky with corn superior to other states.


Subsoil and surface moisture levels denote some relief from drought conditions except in Western and Pacific states. Both topsoil and subsoil moisture levels are similar to the past week. The corn-belt has experienced unseasonal high temperatures in combination with elevated humidity that may predispose to mycotoxicosis in the 2020 corn harvest. 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 2020 harvest in November.


Reference is made to the October 9th WASDE Report #605 in this edition, documenting actual 2020 acreage, and projected yields and ending stocks for corn and soybeans. The Pro Farmer 7-State Crop Tour projected corn and soybean yields of 177.5 and 52.5 bushels per acre. These were respectively, lower than USDA estimates that were revised to 178.4 and 51.9 bushels per acre in the October 9th WASDE Report.






October 4th

October 11th

5-Year Average

Corn Mature (%)

Corn Harvested







Soybeans Dropping Leaves (%)

Soybeans Harvested










Crop Condition

V. Poor





Corn 2020 (%)

Corn 2019 (%) *

* late planting











Soybeans 2020 (%)

Soybeans 2019 (%)*

 * late planting N/A












V. Short




Topsoil moisture: Past Week





Past Year





Subsoil moisture: Past Week





Past Year






Sysco Corp Testing Electric Delivery Vehicles

Sysco Corporation is now testing Freightliner eCascadia Class-8 tractors for deliveries in the San Franciso metropolitan area. The eCascadia trucks manufactured by Daimler Trucks North America have a 250-mile range.


Neil Russell, Vice President of Cooperate Affairs for Sysco stated, "we are excited to partner with Daimler Trucks North America on this important work".  He added "collaborating with manufacturers to develop new truck models that can meet this specialized requirements of food delivery is a vital step towards reducing our impact on the planet".

eCascadia Freightliner Semi


Sysco is a member of the Freightliner Electric Vehicle Council that included J.B. Hunt and    Wal-Mart among other fleet owners.  The Council is evaluating costs of operation and identifying and resolving obstacles to deployment of electric vehicles.


Richard Howard, Senior Vice President Sales and Marketing for Daimler Trucks North America stated, "our customers provide important and continuous feedback and contribute to our ongoing design and innovation of vehicles".


World Animal Protection Promoting Fifty Percent Reduction in Meat Consumption

World Animal Protection, a UK-based organization using welfare as a cloak for a vegan agenda is promoting their Meating Halfway campaign to reduce consumption of red meat and poultry by half. 


The Center for Consumer Freedom funded by agribusiness characterized the campaign as an example of  "the politics of incrementalism".  The Center considers that the call for a 50 percent reduction in meat consumption is merely a less radical position then total abstinence from meat. 


It must be remembered that World Animal Protection is in partnership with Compassion in World Farming to create standards for farm animal welfare some of which are being adopted by U.S. producers.


Neither welfare nor sustainability are the objectives of organizations such as World Animal Protection.  Their avowed intent is to eliminate intensive livestock production and then proceed  to ban all animal consumption.



Cargill Donates $1 Million to World Food Program

Cargill Inc. has matched the Nobel Peace Prize award with a donation of $1 million to the United Nations, World Food Program. This donation matches the amount that accompanies the Prize and recognizes the recipient's efforts to combat hunger, help build a world free of conflict and to prevent the use of food as a weapon of war.


Michelle Grogg, Vice President of Corporate Responsibility at Cargill stated, "this one million dollar contribution builds on our twenty-year partnership to address food insecurity and advance farmer livelihoods around the world.  We encourage others to join in and support the World Food Program as it will take all of us working together to end systemic hunger and ensure a safe sustainable and affordable food system for all".


Randy Russell, the U.S. Board Chair of the World Food Program stated, "we are grateful to our long-standing partner Cargill for their significant commitment to the support of our program".


Although the generosity and commitment of Cargill Inc. is recognized and lauded, we should also take into account that there are almost fifteen million children in the U.S. currently deprived of adequate nutrition as a result of the COVID-19 pandemic and accompanying job losses. Hunger does not only occur in overpopulated regions in underdeveloped far-off nations beset with strife and severe weather—it is on our own doorstep.



Dietary Supplementation with Dried Egg Product Ineffective Against Coccidiosis

A recent trial* failed to demonstrate any benefit from supplementing diets with an egg-derived compound apparently demonstrating an anti-Interleukin-10 effect.  Challenging caged broilers with Eimera tenella and E. acervulina reduced weight gain, feed intake and feed conversion compared to uninfected controls.  Neither oocyst shedding, serochemistry nor hematological parameters were improved by administration of the egg-based anti-IL-10 additive.


*Abdul Rasheed, M.S. at al Poultry Science doi.org/10.1016/j.psj.2020.09.012


Update on Compliance by China with Phase One Trade Agreement

According to the January 2020 Phase-One Trade Agreement, China was committed to the purchase of $36.5 billion in agricultural products in 2020.  Through August the total stood at $10.7 billion approximately 13 percent below the value shipped for the corresponding period in 2017 before the initiation of the trade conflict with China.


According to an October 6th report by the U.S. Census Bureau, the U.S. shipped agricultural products to China in August amounting to $2.15 billion. During the month soybean exports were valued at $881 million, cotton at $215 million and corn at $190 million.


 During September, representing the new market year, soybean shipments to China probably exceeded four million tons, the highest for September since 2017.  Although there were no recorded shipments of corn to China in September, a volume of 1.2 million tons was shipped in August representing a record for any month since October 1995.


NCI Launches SeroNet

The National Cancer Institute (NCI) has launched the Serological Sciences and Network for COVID-19 referred to as SeroNet.  This program will increase the capability of diagnostic laboratories and researchers to quantify antibody response to COVID-19.  This capacity will improve knowledge of how COVID-19 infection affects immune function and will be critical in monitoring the response to vaccination programs and as an aid in understanding the epidemiology of COVID-19.


The funding for SeroNet amounting to $300 million was provided as part of the Health Care Enhancement Act intended for "developing, validating, improving and implementing serological testing and associated technologies".  SeroNet represents half of the Congressional allocation.


SpartanNash Issues Stock Warrant to Amazon.com Inc

SpartanNash (SPTN) ranked fifth among U.S. food distributors has issued warrants to an Amazon subsidiary, NV Investment Holdings covering 5.4 million shares valued at $96.4 million. This potentially makes Amazon the largest single investor in SpartanNash. The Company has signed a long-term agreement with Amazon for distribution and logistics.


The Company operates twelve grocery and seven military DCs in addition to 155 supermarkets in nine states.  The SpartanNash distribution network includes 2,100 independent grocers.


SpartanNash (SPTN) has a market capitalization of $737million and trades with a forward P/E of 9.9.  The company has traded over the past 52-weeks from $9.00 to $23.94 with a 50-day moving average of $17.95.  The company has recorded a trailing 12-month operating margin of 1.1 percent and a profit margin of 0.5 percent.  Return on assets attained 2.6 percent and on equity 7.0 percent.  Announcement of the Amazon warrant resulted in $4.25 increase in share price at the opening on Friday October 9th. This must have stung short speculators since 10.5 percent of the float was short as of September 30th. At close of trading on October 14th SPTN traded at $20.36.


South Korea Impacted by African Swine Fever

According to Reuters, citing the official Yonhap Korean news agency, an outbreak of African swine fever was diagnosed on a farm in Gangwon Province on Thursday October 8th. This is the first time in approximately 12-months that authorities have had to cull herds to control ASF. An outbreak in November 2019 resulted in depletion of close to 500,000 hogs housed on 15 farms.


In the absence of a vaccine, biosecurity is the only preventive measure and control involves depletion, quarantine measures and intensified surveillance.


Given that ASF has emerged in South Korea, it is difficult for that nation to ban imports from Germany based on World Organization for Animal Health (OIE) guidelines.  The source of ASF in South Korea has not been determined but may be associated with the presence of endemic ASF in wild boars near the demilitarized zone separating North and South Korea.  The ASF problem in Germany is confined to wild boars that have strayed from Poland and may by now have infected the German population of feral hogs.  There have been no reports of an outbreak in any commercial or backyard hog operation in Germany irrespective of size.


USDA Forecasts Global Production and Trade in Chicken Meat

The October 9th Livestock and Poultry Report documented two percent higher production in 2021 World production of broiler meat attaining 102.9 million metric tons.  China will increase production of chicken meat, predominately as white-feathered broilers in 2021 to 15.3 million metric tons 2.7 percent above the 14.85 million metric tons in 2020.  U.S. production will increase by one percent in 2021 to 20.47 million metric tons.  


Total non-U.S. broiler production will increase by 2.4 percent to 80.1 percent or 82.46 million metric tons out of the world total of 102.93 million metric tons. China will represent 14.9 percent, Brazil 13.8 percent, the European Union 12.2 percent, the Russian Federation 4.6 percent compared to the U.S. with 19.9 percent.


The significant importers will include Japan (1.1 million metric tons); China (0.9 million metric tons); Mexico (0.89 million metric tons) and six other nations ranging from 0.32 million metric tons to 0.6 million metric tons.


The major exporters will be Brazil (3.9 million metric tons); the U.S. (3.3 million metric tons); the European Union (1.5 million metric tons) and Thailand (0.92 million metric tons).  Six other nations will each export between 0.15 million metric tons and 0.47 million metric tons.


In 2021, total imports will amount to 9.96 million metric tons and total exports 12.19 million metric tons.


The values projected by USDA exclude chicken feet.



International Poultry Scientific Forum to be Virtual in 2021

The Southern Poultry Science Society (SPSS) has announced that the 2021 International Poultry Scientific Forum will take place as a virtual meeting January 25th and 26th in conjunction with the week during which the IPPE was scheduled to take place.


The SPSS is soliciting abstracts for the virtual program that will include oral and poster presentations and incorporate the usual student competition and Keynote Lecture. 


Abstract submission is open until October 28th.  Information is available on both the SPSS and USPOULTRY websites.  Additional information is available from Dr. Mary M. Beck, Executive Secretary of the SPSS at <mbeck@poultry.msstate.edu>.



AGR Partners and StepStone Group Complete Ownership of Green Plains Cattle Company

GR Partners LLC together with co-investor StepStone Group have completed the purchase of Green Plains Inc. acquiring all the outstanding equity. AGR and StepStone Group completed the purchase of half of the shares in Green Plains Cattle Company during September 2019.


Green Plains Cattle Company is the fourth-largest U.S. cattle feeder with a total capacity of more than 355,000 head spread among six feed lots in three southwestern states.


AGR Partners is an investment firm based in Davis, CA. with an office in Chicago, IL. specializing in food companies and agribusiness concerns.


J&F Investments Fined $256 Million over Corruption

J&F Investimentos S.A. the family-controlled holding company of JBS S.A. and hence subsidiaries was fined $256 million in a settlement with the U.S. Department of Justice over  violation of the Foreign Corrupt Practices Act.


The agreement arises from gross corruption in Brazil between 2005 and 2017 when J&F Investimentos and subsidiaries bribed officials to obtain sweetheart loans and preferential treatment from the Government of Brazil.

Batista Brothers

More than $148 million was paid to officials at BNDES a state-controlled bank.  Proceeds were used to purchase meat production companies throughout the world including in the U.S.  Approximately $5 million was paid to executives of Petros a state-controlled pension fund that allowed a merger benefiting J&F.  An additional $25 million was paid in bribes to Caixa a state-owned and controlled bank.


The U.S. Department of Justice claimed jurisdiction since U.S. banks were used to facilitate bribery by processing transactions and effecting payments. 


In Brazil, J&F paid a fine of $1.4 billion and was obliged to contribute $414 million to social projects.  In view of the magnitude of the fines in Brazil, the Department of Justice reduced the $256 million penalty by half given cooperation by the company.


In a separate issue, JBS S.A. paid the Securities and Exchange Commission $26.9 million for contravention of SEC regulations. 


On Tuesday October 13th, Pilgrim’s Pride Inc. a subsidiary controlled by JBS S.A. paid a fine of $110 million to settle allegations of collusion arising from a criminal investigation.  A class action civil lawsuit will now proceed following intervention by the Department of Justice.


Details of the activities of the Batista brothers over the past three years were documented in a series of posts and can be retrieved by entering ‘Batista’ in the search block.


COVID Will Influence Seasonal Turkey Consumption

According to an October 8th article in The New York Times COVID restrictions and an emerging disinclination for families to gather in large groups will affect turkey sales. Smaller gatherings obviously will reduce the demand for large birds with selection shifting from whole roasters to breasts, wings and legs.


A survey conducted by Chicago-based Numerator involving the attitudes of 2,000 shoppers suggests that 70 percent of consumers will modify their usual Thanksgiving and Christmas festivities.


In addition to COVID, the economic situation and uncertainty will reduce spending on gifts with half of the respondents intending to spend less in 2020 than in previous years.  Only six percent of those surveyed envisage purchasing more over the 2020 Christmas and New Year periods.


Sysco Pivots to New Merchandising Initiatives

The appointment of Judith Sansone to the position of Executive Vice-president and Chief Commercial Officer signals a move by Sysco to broaden their market scope from the food service sector that has declined sharply since the advent of COVID-19.


In her role, Sansone will be responsible for merchandising, marketing, pricing, digital sales enablement, a customer loyalty program and developing new channels for sales. Previously Sansone was the Chief Merchandising officer for CVS Health.


Sysco (SYY), as with other suppliers to the food service segment was severely impacted by COVID restrictions including restaurant and University closings. For FY 2020 ending June 27th the Company earned $215 million on revenue of $52.9 billion with an EPS of $0.42. Comparable values for FY 2029 were net earnings of $1.7 million on revenue of $60.1 billion and an EPS of $3.20. The 12-month trailing operating margin is 3.0 percent and the profit margin 0.4 percent. The returns on assets and equity are 5.0 and 11.6 percent respectively. SYY has traded over the past 52-weeks from $26.00 to $85.96 with a 50-day moving average of $63.71. Shares closed at $65.78 on Friday October 16th.

Judith Sansone



Jack in the Box Testing Raised & Rooted™ ‘Unchicken’ Sandwiches

Jack in the Box will test market sandwiches incorporating Tyson Food’s Raised & Rooted™ alternative chicken launched in 2019.  The product is manufactured using pea protein and will be presented in sandwiches creating a texture and taste similar to real chicken.


Jennifer Kennedy, Chief Product Officer for Jack in the Box stated, "we are delivering an industry leading innovation with the first plant-based chicken sandwich at retail in the U.S.".  She added, "we are excited to meet the growing demand for meatless alternatives with our new unchicken sandwiches providing indulgent taste, crispy crunch and savory flavor in a new plant-based option".

David Ervin, VP of Marketing for the Raised & Rooted Brand stated, "we are excited to be partnering with Jack in the Box to bring us delicious taste people have come to love from our plant-based nuggets and tenders to even more people with the unchicken sandwiches".  The new plant-based products are available through December 12th in Monterey and Salinas, CA and Reno, NV.


Hybrid Turkeys Appoints Technical Service Specialist

Hannah Menges has joined the Hybrid Turkeys Technical team and will work with customers in the North American market.  Hannah is a graduate of Pennsylvania State University and has interned with poultry producers to gain experience including breeding.


Trevor Aitchison, Director of Business Development for Hybrid Turkeys stated, "as the industry and our business continue to evolve, I am excited to highlight our newest team member".  He added this confirms our commitment to customer support and indicates just one of the ways we are contributing to a sustainable industry for many years to come".

Hannah Menges


Trend in Sales of Meat Substitutes

Wendy Nicholson an analyst with City Group documented a 39.1 percent increase in sales of all vegetable-based meat substitutes during September compared to the corresponding month in 2019.  In comparison, fresh meat sales increased by 10.9 percent.


Within the meat- substitute segment, Kellogg Morning Star Brand led with a 30.6 percent share of the market followed by Beyond Meat at 21.4 percent and Impossible Foods at 4.3 percent. Beyond Meat recorded a decline in successive monthly sales in the face of competition from other vegetable-based brands.


Nicholson noted "we view this favorable trend as consumers have both destocked their freezers from pre-COVID levels and continue to purchase at elevated rates even as fresh-meat sales have also continued to pick up". 


Pilgrim’s Pride to Expand Cold Spring MN Plant

On October 9th Pilgrim’s Pride announced a $75 million expansion to a plant located in Cold Spring, Stearns County, MN.


The project will add 50,000 square feet to the plant including worker facilities comprising a cafeteria, expanded breakroom, bathrooms, and locker rooms.  It is intended to add an additional 130 positions over the 1,200 workers.  The expansion will allow an increase in production of Just Bare™ brand whole birds and portions.


The plant originally producing under the Gold ‘n Plump brand was acquired in the purchase of GNP Poultry from the Masschoffs in late 2016 for $350 million. The following year Pilgrim’s Pride closed the Luverne, MN. plant, consolidating production.


Recently Pilgrim’s Pride donated $575,000 to the Cold Spring community as part of the Hometown Strong initiative.


Corn Rises on Dalian Commodity Exchange Due to Shortage

Hog and poultry producers in China will pay more for corn based on increased demand and a disproportionately lower availability.  Domestic crops were damaged by typhoons this year and planting was limited by a preference for soybeans. Corn for January delivery attained $340 per short ton in mid-October representing a record. On Monday October 19th at noon, corn for December delivery was quoted at 405 cents per bushel ($147 per short ton)

During September, the first month of the 2020/2021market year, China placed orders for corn but has yet to follow-through with subsequent large orders from the U.S. that are the subject of  rumors. Obviously by delaying a commitment China can wait for the most advantageous price as new-crop corn is harvested.


McDonald’s Corp and Tyson Foods to Donate to Ozarks Food Harvest

In a joint announcement, McDonald’s Corporation and Tyson Foods announced donation of 32 tons of food to Ozarks Food Harvest.  It is anticipated that this generous act will provide more than 55,000 meals to children families and seniors across the 28 county area served by the food bank.


Perdue Farms Disavows Affiliation with Eponymous Georgia Senator

The rush to judgment by users of social media is illustrated by the fact that within days of the contentious remarks by Senator David Perdue (R-GA) there were online calls for a boycott of Perdue Farms brands.


The company was forced to issue statements that the company has no connection with the Senator. Social media can be powerful in both a positive and a negative direction.


Senator David Perdue is in fact the first cousin of Dr. Sonny Perdue, Secretary of Agriculture, born George Ervin Perdue III.

Dr. Jim Perdue (left) and 4th generation Perdue sons



Shane Commentary

Pilgrim’s Pride Agrees to $110 Million Fine in Plea Agreement

Pilgrim’s Pride Corp, controlled by JBS SA, has reached an agreement with the U.S. Department of Justice, Antitrust Division with respect to allegations of collusion to manipulate prices of products.  In a company statement Pilgrim’s Pride noted that the fine was “for restraint of competition that affected three contracts for the sale of chicken products to one customer in the United States.”  The agreement apparently ends the criminal investigation by the DOJ into Pilgrim’s Pride. The company will not function under monitoring or be subject to a probationary period, providing there is compliance with the terms and provisions of the agreement yet to be publicized.


Fabio Sandri, newly appointed CEO of Pilgrim’s Pride, stated, “Pilgrim’s is committed to fair and honest competition in compliance with U.S. Antitrust laws.”  He added, “We are encouraged that today’s agreement concludes the Antitrust Division’s investigation into Pilgrim’s and provides certainty regarding this matter to our team members, suppliers, customers, and shareholders.” 


The plea agreement effectively limits the options to indicted previous CEOs Bill Lovette and Jayson Penn.  The action by the Company obviously undercuts any viable defense to be mounted by Claxton Poultry, its president and marketing personnel. 


In commenting on the plea agreement, analyst Ben Bienvenu of Stephens Inc. cited, “This largely puts the controversy in the company’s rear-view mirror.”  For his information Pilgrim's Pride is still at jeopardy from civil lawsuits initiated in 2016 but suspended as a result of the DOJ investigation.  The civil case, certainly against Pilgrim’s Pride, is now res ipsa and it is doubtful how the company can mount any convincing defense.  If Pilgrim’s Pride does not settle with plaintiffs, it is possible that a trial jury will award both direct and punitive damages that would be extremely costly. 


Apart from the financial impact of the settlement, certainly Pilgrim's Pride has undergone reputational damage that ultimately may affect not only share price, but also customer goodwill and the intended IPO of JBS subsidiaries in the U.S.  With respect to other companies under investigation, Tyson Foods, through its admissions to the DOJ, will probably escape fines but obviously documentation has been made available that may be used in prosecution of possible related crimes under investigation.


An aspect of the class action suit was that all major U.S. broiler integrators participated in indirect collusion through their subscription to the Agristats™ benchmarking system.  This aspect has yet to be considered in a trial. If the Pilgrim’s Pride plea agreement is entered into evidence, the Defendants in the civil case may be well advised to settle and not risk a jury trial with the possibility of punitive damages.


The statement by Assistant Attorney General for the Antitrust Division, Makan Delrahim, and the sentence handed down to Christopher Lischewski, CEO of Bumblebee Seafoods, who received 40 months in federal prison and a substantial fine are now a matter of record. This suggests that indicted chicken company executives previously at Pilgrim’s Pride, those at Claxton Poultry, and sales personnel previously employed by Tyson Foods may receive sentences that would serve as a disincentive to engage in restraint of trade.


The decision by Pilgrim’s Pride to enter into a plea deal with U.S. Department of Justice will expedite the end to this sorry episode that does not appear to be representative of the entire broiler industry. Prompt resolution will limit further degradation of image.



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