Shane Commentary

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

10/17/2020

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.

 


 

Cattlemen Divided over APHIS Electronic Tag Proposal

10/17/2020

Control of bovine diseases in the U.S. and compliance with trade restrictions require positive identification of individual animals to establish a history of movement, vaccination status, age and location.  The USDA Animal Plant Health Inspection Service previously announced that RFID electronic ear-tags as used in the EU will be introduced to the U.S. and will be required for interstate movement.

 

In comments filed with USDA on the proposal, the U.S. Cattlemen’s Association (USCA) accepted the principle of identification for the purpose of traceback stating, “Knowing where diseased and at-risk exposed animals are as well as were they have been and when, it is indispensible to emergency response and ongoing disease control and eradication programs.”   

 

In contrast R-CALF USA is strenuously opposed to RFID tags and advocates retention of metal numeric ear tags. This is consistent with the 1900s approach of the organization that hearkens back to the freedom of the Wild West. Metal tags are impermanent and can be changed at will.  R-CALF maintains that there is a hidden mandate in the APHIS proposal and they have objected to registration of farms as a prerequisite for shipping cattle interstate.

 

The National Cattlemen’s Beef Association filed comments supporting RFID traceability enabling the industry, federal and state regulators to respond rapidly to any animal health emergency.

 

The U.S. Cattlemen’s Association provided a number of suggestions that they would like to be incorporated into the APHIS program due to take effect on January 1st 2023.  Security is obviously an issue and USCA requested that databases should be held in-state and only shared with the USDA as required.  The USCA suggested that 840-series EID tags should be used reflecting cattle born and raised in the U.S.  It was recommended that metal and electronic tags should continue parallel with metal tags as the industry adapts to an electronic system.  USCA requested that identification numbers for farm premises should not be required to obtain EID tags.

 

The FSIS has awarded contracts for up to eight million low-frequency RFID ear tags with provision for additional purchases over the following five years.  Greg Ibach, USDA Undersecretary for Marketing and Regulatory Programs stated, “USDA continues its commitment to protecting our nation’s animal agriculture by increasing traceability in the cattle and bison sectors – in this case, by providing free RFID tags to interested producers.  Since 2018 the U.S. beef industry has cooperated with APHIS operating RFID systems in pilot programs in Kansas, Florida and Texas.

 

 

The Final Rule will take effect in January 2022 when USDA would no longer approve of metal ear tags with the official USDA shield.  The following year RFID tags would become the only identification devices approved as an official means of identification for cattle.

 

 

Opposition to RFID or an alternative electronic identification system mounted by the Montana based R-CALF USA  is regarded as retrograde and inconsistent with the needs of the U.S. cattle industry with respect to trade and the control of any future emerging disease.


 

U.S. Mink Farmers Encounter COVID

10/13/2020

Following extensive losses among mink farms in the EU, it was inevitable that farmers in the U.S. would encounter the disease.

 

Utah has experienced COVID-19 in mink operations that have been quarantined.  The disease has now appeared in mink farms in Wisconsin with high mortality, parallelingthe situation in Holland, Denmark, and Spain.  That mink are susceptible to COVID-19 should be expected given that ferrets, a closely related species, are used as experimental animals.

 

Epidemiological investigations in the EU demonstrated that SARS-CoV-2 was transmissible from humans to mink and vice versa and accordingly mink on affected farms were depleted.  The issue of suppressing mink farming as a public health and welfare issue has caused deep division in Poland where there is support for a ban as in the Netherlands.


Culled mink in Denmark

 

State and Federal officials have yet to address the issue of COVID-19 in mink and have not provided details as to the disease status of specific farms or the status of owners and caretakers with regard to infection.  Simply quarantining farms will probably not be effective given that asymptomatic humans may introduce or disseminate infection.

 

The decision to depopulate affected mink farms in Holland was based on the concern that a more virulent strain of SARS-CoV-2 might emerge through mutation in a dense population of confined animals in close contact with humans.


 

Texas Court Shuts Broiler Farm Following Odor Litigation Alleging Nuisance

10/04/2020

A State District Court in Henderson County, TX. issued a cease and desist order against a contractor for Sanderson Farms.  At issue were complaints by residents of the area alleging odor resulting in “irreparable injury through substantial and unreasonable nuisance”.  The judge ordered the contractor to cease operations within five miles of any boundary of plaintiffs’ properties.

 

The order apparently ignored the Texas Right to Farm Statute.  Evidence was entered that the Texas Council on Environmental Quality has previously attempted to force the defendant farmer to reduce odor but without alleviating the problem.


 

China Extending Bans on Food Imports Based on the Presumption of COVID-19 Contamination

09/29/2020

Recently the General Administration for Customs for the Government of China imposed bans on two U.S. poultry plants in addition to numerous hog and beef plants and suppliers in Latin America. In September, China suspended imports from seafood suppliers in Brazil, Indonesia and Russia again without acceptable levels of transparency regarding assays.

 

The justification was alleged contamination of outer packaging and products with COVID-19 virus. Release of scientific data justifying this action has not been forthcoming. It is questioned whether China is using COVID-19 to intimidate exporters or is in fact engaged in a program of self-deception relating to COVID-19 or reflects a cover-up.

 

The situation attained a new dimension in late September with the Beijing Municipal Commerce Bureau calling on importers to discriminate against exporting nations with "severe novel- coronavirus outbreaks".  The Bureau has urged monitoring of prevalence rates in exporting nations and has advised government-affiliated importers to avoid sourcing product from areas that are severely affected with COVID-19.


 

Whole Foods’ John Mackey Believes Online Grocery Shopping will Decline

09/21/2020

Yahoo Finance quotes John Mackey, CEO of Whole Foods Market, a subsidiary of Amazon, as stating, “COVID was a tremendous accelerant for online grocery shopping and people that have never done it before did it for the first time.”  He added, “But once the pandemic is fully behind us, however long that will take, the surge in online grocery will slow.”  Mackey believes that shoppers will resume normal patterns after the COVID crisis has ended. His boss, Jeff Bezos may however disagree with this prediction.

 

Before the advent of COVID, many chains were upgrading stores to provide a destination shopping experience.  This is evident in the new Wegman’s locations in the Mid-Atlantic and especially in North Carolina where the company has proposed four additional stores in addition to the Morrisville NC. store opened during late August. 


John Mackey

 

When the COVID vaccine is administered to a high proportion of U.S. residents and if incidence rates decline to a level that encourages a feeling of safety, shoppers will return to stores.  The habits of generations will not be extinguished by the relatively short-term restrictions imposed by COVID.  There will be a pent-up demand for personal shopping. Although hybrid and omni- channel sales of groceries will be part of the retail picture for a few years, shoppers will return to stores to experience the benefits of personal selection and to satisfy the inherent need for socialization and human interaction.

 


 

Trying to Make “Less than Thoroughly Cooked” Burgers Safe

09/07/2020

Studies are in progress in the UK to render “less than thoroughly cooked” (LTTC) burgers safe with respect to foodborne bacterial infections. This is a dangerous exercise in futility.

 

I hearken back to a surgery lecture in 1963 when Professor C.F.B. Hofmeyer raised the question of how to spay a cat using nail clippers, eyebrow tweezers, sewing scissors, a crochet needle, a fork and a teaspoon.  Over the succeeding ten minutes, lively discussions ensued involving all forms of innovation and make-do.  Then came a questioning voice from the class. Why? A spay is an elective procedure unlike performing an emergency tracheostomy on an asphyxiating patient as a last resort.  That was the answer that Hoffie wanted.  If there was no real emergency or imperative to improvise then to paraphrase the Nike motto “Just don’t do It”.

 

The University of Liverpool has evaluated bacterial infections associated with undercooked beef including STEC, Salmonella and Campylobacter and has suggested a variety of modalities alone or in combination.  These include thermal treatment of carcasses with hot water, steam pasteurization and lactic acid washes, as permitted in EU packing plants. Unfortunately none of these measures can consistently and effectively reduce the hazard of foodborne infection to an acceptable (zero?) level.

 

It is however possible to eliminate aerobic bacterial pathogens from patties using physical treatments such as electron beam or gamma radiation but these technologies are unfortunately disfavored by consumers despite the fact that they are beneficial and innocuous.

 

So we come down to whether it is worthwhile to play burger roulette with LTTC food preparation.  Those wishing to consume dangerous foods such as fugu or undercooked meat including steak tartar should do so at their own risk but should not in any way inflict their dietary predilections on the very young or the elderly.  Fortunately most bacterial infections and foodborne parasites can be treated, although incurring direct and consequential costs and more than occasionally with permanent disability.  This is illustrated by the case of U.S. Marine Corps. recruits in California who consumed undercooked beef, resulting in about 400 cases of E. coli O175: H7 infection.  The most seriously affected Marines suffered hemolytic uremia syndrome, neural changes and arthritis requiring joint replacement, representing career-ending complications.

 

Basically scientists should not waste their time attempting to overcome challenges that are analogous to Don Quixote’s windmills. Either cook burgers to 165 F through to the center for at least 30 seconds and apply onions and lots of ketchup. Alternatively just consume the LTTC patty but first indemnify the cook restaurant, and meat packer.


 

Administration to Investigate Importation of Seasonal Produce from Mexico

09/06/2020

Possible restrictions on seasonal importation of fruit and vegetable from Mexico follows  reports released on September 1st by the office of the U.S. Trade Representative and the USDA, following Congessional hearings on August 13th and 20th. 

 

Proposed action will  include:

  • Initiation of discussions with officials in Mexico over the next three months to address concerns relating to strawberries and other produce
  • Working with U.S. growers to initiate a WTO investigation
  • USDA will develop a market promotion strategy emphasizing U.S. produce

 

The U.S. recently concluded and ratified the USMCA. If Mexico is complying with the agreement,  punitive action would be contrary to the USMCA.  If Mexico is within its rights to export seasonal fruit and produce then it is up to domestic producers to make use of their resources to outcompete imports.

 

Initiating trade wars to satisfy one or other segment of agriculture or industry results in inevitable retaliation.  There is obvious concern for the volume of poultry exported to Mexico, our largest customer.  For the first half of 2020, Mexico imported 335,054 metric tons of chicken valued at $292 million; 76,539 metric tons of turkey meat ($185.6 million); 6,320 metric tons of egg products ($16.9 million) and 23 million dozen eggs ($16.9 million).  The Administration should be careful in evaluating the unintended consequences of any action that might engender enmity and retaliation.


 

Doubt Concerning the Efficacy of Convalescent Plasma for COVID-19 Patients

08/30/2020

Despite the much-heralded announcement on Sunday, August 23rd that convalescent plasma from patients recovered from COVID-19 was a groundbreaking therapy for COVID-19, specialists in infectious diseases and immunology have questioned the value of antibodies.  The Administration has previous touted hydroxychloroquine as a panacea, again without scientific support and justification and it now appears that convalescent plasma is the new "miracle".

 

In an opinion article in the New England Journal of Medicine, editor Dr. Paul Sax noted that the justification for accepting that convalescent plasma was highly effective and was able to “reduce mortality by 35 percent” was based on incorrect interpretation of preliminary data.  Randomized trials of convalescent plasma have in fact been disappointing and the claim that this approach was "powerful therapy" and "had an incredible rate of success" is unsubstantiated at best.

 

The NIH meta analysis involved a comparison among groups of patients that received convalescent plasma with either high or low antibody titer.  There was no negative control and comparisons were confounded by other treatments and supportive therapy administered to the participants.  A careful examination of data and statistical analysis did not support the Administration assertions apparently derived from unpublished studies.

 

What is disconcerting is the fact that Dr. Stephen Hahn, the Commissioner of the FDA, responsible for approval of convalescent plasma to treat COVID-19 was apparently either unaware of the discrepancy or failed to interpret data for which he subsequently apologized. Notwithstanding the FDA has extended Emergency–use authorization for hyperimmune plasma as a therapy. There is obvious concern over the potential for raising false hopes based on incomplete and non-peer reviewed data.

 

In his comments, Dr. Sax noted "I have not heard from a single infectious disease specialist who believes that approval of convalescent plasma was supported by existing data".  Sax continued "convalescent plasma may work to help people with COVID-19, but if it does, we do not know how much or who are the most likely to benefit or how to select the right donors".  Sax, representing the medical profession, notes that the evaluation of convalescent plasma comprised "70,000 anecdotes tied together by individual reports and separate observational studies".  Sax along with reputable and experienced members of the medical community recognizes the need for randomized controlled clinical trials on hyperimmune plasma currently being performed in a number of nations.


 

American Humane Promotes New Deal for Animals

08/25/2020

Founded in 1877, The American Humane Association has been at the forefront of responsible animal care.  Recently Dr. Robin Ganzert issued the ten tenets of the American Humane New Deal.  These include:

 

  • Ending wet-market slaughter and sale of animals
  • Ending global cat and dog meat trade
  • Ensuring independent humane inspection of farms and related biosecurity measures
  • Ensuring independent oversight of animals in all forms of entertainment
  • Intensifying humane inspection of zoos and aquariums worldwide
  • Ending organized poaching and trade in bush meat
  • Establishing and enforcing ethical standards for global animal tourism
  • Enhancing safety standards for animals in transit
  • Expanding the use of service and therapy dogs

 

A tenth item comprises “immediately stopping unnecessary tax payer-funded testing on animals”.  The emphasis is on unnecessary.  Advances in medical science require structured, justified, and humanely conducted research in accordance with existing federal and state legislation and approval and oversight by IRB programs.  Examples of unnecessary testing include the Draize Test, introduced by the FDA in 1944 and establishing MLD50 levels for chemical compounds requiring sacrifice of vast numbers of rodents. With the exception of aspects of animals in research where “unnecessary” can be subjective, as a Veterinarian involved in intensive livestock production for over 50 years, the American Humane New Deal is strongly supported.


 

Oxfam America Unjustly Criticizes Chicken Industry Over COVID Response.

08/17/2020

A recent report produced and circulated by Oxfam America claims that U.S. broiler integrators are "backsliding" over protection of workers from COVID.  Established facts clearly indicate that most broiler producers were proactive in devising and implementing protective measures including distancing, installation of barriers between workstations and providing PPE at the outset of COVID.  Incidence rates among workers in poultry processing plants compare favorably with corresponding records of infection in red meat plants and other industries.

 

Tom Super of the National Chicken Council condemned the Oxfam report as a "union propaganda piece".  He stated, "the health and safety of the essential employees working to keep chicken on our tables has and continues to be the industry's number one priority". 

 

As with welfare and humane handling of live chickens, the health and safety of workers is critical to maintaining production volume and profitability. The industry has collectively modified procedures by staggering shifts, implementing additional sanitation, decontamination, employee education and providing PPE and workstation barriers.  Following a sharp increase in incidence rate in April when COVID-19 emerged, cases have fallen precipitously attesting to the measures implemented by the industry.  Some of the Oxfam allegations may have been valid in April, but they are certainly exaggerated or distorted in relation to practices reflecting the Industry from late May onwards. 

 

It is extremely difficult to differentiate between community and plant-acquired infection.  This is especially the case in some areas in southern states where clusters have emerged.  Detailed epidemiologic evaluations of community and plant-related infection have yet to be conducted.  Unfortunately processing of chicken is not an activity that can be conducted from home and the concentration of workers in a plant is unfortunately necessary to maintain production. 

 

It is however evident that a higher level of mechanization and robotics will be required going forward to reduce manual labor in processing.  Technology is available, but the relatively low wage rates and availability of workers has inhibited capital investment in automation.  With higher rates, bonuses and support costs per worker including testing, PPE and sick leave, the pendulum is swinging in the direction of mechanization and technology. This is currently in use in the EU where availability of workers and their wage rates have predicated mechanization.


 

Call for Inexpensive, Rapid, Home-deployed Antigen Tests for COVID-19

08/03/2020

Prominent epidemiologists and medical professionals are advocating the introduction of inexpensive rapid antigen immunoassay tests, similar to a home pregnancy test.  Prototypes of tests are currently under evaluation, but will lack the sensitivity of laboratory PCR assays.  The demand for rapid tests is based on the reality that PCR assays may not yield a result for most citizens even those wit symptoms for periods up to 10 days.  It is critical to establish whether an individual is infectious at a point in time and to initiate quarantine and contact tracing based on a positive assay.  Opening schools, fitness clubs, and many other applications that will be required to establish a semblance of normalcy obviously requires rapid results from testing.


Rapid, Lateral Flow Immunoassay device to detect COVID antigen

 

We would be in a more favorable position to limit COVID-19 with a $3 test, providing results in 15 minutes with 70 percent sensitivity, than attempting to limit infection in the face of rising incidence rates using a PCR assay with 98 percent sensitivity, costing $100 and providing results in four to ten days.  The antigen detection test can in any event be repeated using PCR assay in a laboratory.  The major restraint to adoption will be FDA approval although  there are provinsions for emergency and expedited review. The National Institute of Health has funded new technology for point-of-care and laboratory use to the value of $250 million with anticipated introduction in the fourth quarter. The U.S. needs a simple and inexpensive lateral flow antigen test for home use yielding results in less than 30 minutes.


Laboratory-based PCR assays

 

Request for Compensation by Ethanol Industry Unjustified

07/23/2020

Recently the Renewable Fuels Association representing ethanol producers requested Congress to authorize disbursement of funds from the USDA Commodity Credit Corporation to support the industry.

 

Dr. Joseph Glauber, previously a Senior Economist with the USDA for over 30 years and now a Senior Research Fellow at the International Food Policy Research Institute and a Visiting Scholar at the American Enterprise Institute considers that supporting the ethanol industry would be "a bad idea".  The industry claims losses as a result of decreased revenue of $7 billion in 2020 attributed to COVID-19.  Glauber correctly points out that the major cost input in the production of ethanol is in fact corn, the substrate for fermentation.  USDA estimates that decreased ethanol production would correspond to 600 million bushels effectively lowering the price of corn received by farmers.

 

The University of Illinois has calculated that net profit to ethanol producers over the past four years has amounted to 5 cents per gallon.  The price of ethanol has fluctuated widely in recent months.  On July 17th ethanol was priced at $1.17 per gallon, down 23 cents per gallon from the previous week but higher than the five-year low of $0.92 a gallon on March 26th.  During March, approximately 50 percent of ethanol production was off-line, but with increased demand for gasoline, prices for ethanol have risen above the critical “shutdown value”.


Dr. Joseph Glauber

 

Glauber notes that thirty-three ethanol plants received between $25 million and $60 million in Small Business Administration, Paycheck Protection Program grants.  Without new legislation, transferring funds from the Commodity Credit Corporation would conflict with the Act chartering the corporation.  Funds were intended by Congress to be disbursed to farmers, not for purchasers of agricultural commodities including ethanol producers.  Legislation introduced by corn-state senators is intended to reimburse ethanol producers for the value of corn purchased between January 1st and March 31st.  Glauber considers this to be preferential treatment since it is not contemplated that grain traders would receive support funds.  The intention to subsidize ethanol plants from the Commodity Credit Corporation is construed as an unfortunate precedent and will lead to additional claims and unintended consequences. But what the heck it’s an election year and the grandkids will pay eventually.


 

Social Activist Groups File Administrative Complaint with USDA Over COVID-19

07/14/2020

A coalition of activist groups including the Food Chain Workers Alliance, HEAL Food Alliance, and the American Friends Service Committee are represented by Public Justice and Towards Justice in their filing of an administrative complaint with the USDA.  This action accuses Tyson Foods and JBS in engaging in racial discrimination during the COVID-19 pandemic, prohibited by the Civil Rights Act.

 

On March 28th an Executive Order required that all meat-packing and poultry processing plants should reopen and continue to function in accordance with the recommendations of the Centers for Disease Control and Prevention (CDC).  The complaint is based on the disproportionate number of Latino, Black, Asian and other minority groups contracting COVID-19 in packing plants operated by Tyson Foods and JBS.  It must however be recognized that the groups enumerated represent the majority of line workers in plants. The complaint requests the USDA to refer the apparent discrepancy in incidence rates among minorities to the Department of Justice.

 

In response to the complaint, the companies concerned have emphasized that measures to prevent both introduction and dissemination of COVID-19 within their facilities were in accordance with the state of knowledge at the time and conformed to CDC recommendations.  It is noted that in the early stage of outbreaks in plants, Perdue Farms and Tyson Foods acted on the advice of public health authorities and epidemiologists and proactively implemented protective measures. 

 

The industry was hampered by a shortage of available PPE, the absence of reliable antigen detection tests and logistic restraints.  It is self-evident that the companies concerned together with the rest of the industry relied on employees to optimize function within their plants to sustain the supply chain from farms to consumers. It is presumed that no well-intentioned company would have knowingly or deliberately avoided their responsibilities towards employees or omitted to impose any known effective preventive measure to the detriment of their workers. 

 

The complaint by the consortium addressed to the USDA is yet another example of a meaningless, politically-inspired initiative, devoid of practical benefit to workers. The USDA would be well advised to reject the petition with appropriate justification.


 

USDA-FAS Report on Hog Slaughter in Germany

07/12/2020

USDA-FAS GAIN report GM2020-0041 released on July 5th examined the effect of COVID-19 on the livestock industry in Germany.  The ongoing and severe outbreak of COVID-19 among workers at the Tonnies plant in Gutersloh will have repercussions through the entire industry.  The plant in question is the largest hog packing facility in Germany, responsible for approximately one third of pork production, slaughtering seven million hogs in 2019.  Fifteen hundred workers at the plant have been diagnosed with COVID-19 resulting in closure since June 19th.  The outbreak has resulted in extensive community transmission resulting in a shutdown of the town located in the populous state of North Rhine-Westphalia.

 

Fallout from the outbreak includes accumulation of hogs on farms requiring transport to other slaughterhouses in Belgium and the Netherlands. Farmers in these nations consign approximately 60,000 hogs for slaughter to Germany each week.  Farmers in Ireland are also affected as they rely on the Tonnies plant to slaughter up to half of their sows that are processed into sausages and salami. 

 

Alarmed by the incidence rate in the Gutersloh plant, China has banned pork imports from the entire company.  In 2019 Germany exported 0.4 million tons of pork to China valued at $0.9 billion. Germany anticipated that due to African swine fever in China, exports to that nation would double in 2020.


Wide scale Testing in Gutersloh due to Covid Outbreak in Tonnies Plant

 

No other slaughterhouses have been closed as a result of COVID-19, but infections are continuing in packing plants especially in meat-cutting sections characterized by close proximity among workers exposed to low temperature and high humidity.  In the case of the Tonnies plant, the exceptionally high infection rate was attributed to defects in the HVAC installation that lacked filtration, facilitating the spread of virus similar to the epidemiology of Legionnaires’ disease.  Currently the air-cooling system is being updated with installation of UV irradiation and high-efficiency filters.

 

The outbreak in the Tonnies plant has focused attention on physical conditions in plants and also aspects of both animal and worker welfare.  Germany has attempted to impose higher standards than those in operation in the remainder of the EU to achieve a competitive advantage as enjoyed by Denmark.

 

It is evident that if Germany imposes higher standards in plants additional investment in robotics and other improvements will be required. German packers may lose a competitive edge from introduction of a “German standard" seal as proposed under a Federal voluntary label for pork mainly to promote the image of animal welfare.


 

Environmental Activists Petition USDA Over Disposal of Hog Carcasses

07/01/2020

Disruption in hog processing as a result of COVID-19 created the need to euthanize hogs in Iowa and Minnesota.  The Natural Resources Defense Council (NRDC) in cooperation with Earthjustice and the Center for Biological Diversity have filed a petition with the Department of Agriculture urging a ban on incineration and mass burial of culled hogs. 

 

The petition notes that the environmental justice, public health and conservation organizations, all opposed to intensive livestock production, are concerned that unrestricted, mass-carcass disposal may create imminent and substantial threats to citizens and the environment.  The petitioners also played the race card by stating in an irrelevant way "there is a growing body of evidence establishing that communities of color are suffering disproportionally as a result of COVID-19".

 

An attorney at the NRDC maintained that mass burials and incineration of hog carcasses "are among the most dangerous for human health and present a threat to drinking water".  The petitioners also managed to invoke the problems encountered in North Carolina following hurricane Bertha that resulted in overflow from manure lagoons.  This event had nothing whatsoever to do with the problem of carcass disposal as a result of euthanasia of hogs.


 

Illegal Importation of Meat Products

06/27/2020

The U.S. is now free of avian influenza and foot and mouth disease and has never been exposed to African swine fever.  Introduction of any of these catastrophic diseases alone or in combination would stretch the resources of USDA-APHIS and result in considerable damage to hog, beef and poultry production and the U.S. economy.

 

The U.S. along with all industrialized nations has imposed barriers at airports to prevent international travelers introducing raw or potentially contaminated cooked meat products in their luggage.  CHICK-NEWS has frequently commented on the need for detection in arrival halls using the ‘Beagle Brigade’

 

A second route of entry is illegal importation of commercial quantities of prohibited pork, chicken, beef and duck products from China.  From April through early June of the current year, specialist assigned to the U.S. Customs and Border Protection Service intercepted close to 10 tons of prohibited meat items at the Long Beach Seaport.  Smuggling was deliberate with products intermingled among a wide range of manufactured goods.  Twelve shipments comprising 834 cartons were seized.  The larger concern is how many illegal consignments were missed given the volume of smuggling that occurs. During the first five months of fiscal 2020 interception of contraband meats increased by 70 percent compared with the corresponding period in fiscal 2019.

 

Demand for exotic products from China by U.S. residents is driving this trade. Legislation is needed to impose heavy penalties on importers.  Seizure and destruction at port of entry is an inadequate response. 

The potential damage caused by contaminated meat products is illustrated by the foot and mouth outbreak in Great Britain twenty years ago.  Illegally imported meat contaminated with virus was used to prepare dishes at an ethnic restaurant located in Newcastle on Tyne.  Swill from the restaurant was fed to backyard hogs resulting in an infection that took over a year to eradicate and even involved an extension to France.  Given that African swine fever is endemic in China, and that ASF virus has been isolated from pork products smuggled by travelers to Australia, Thailand and Taiwan, the likelihood of commercial shipments introducing disease is highly likely.

 

Following the adage that an ounce of prevention is worth a pound of cure, allocation of resources for detection and interdiction coupled with severe penalties for those illegally importing meat products should be intensified.


 

China Chicken Statistics

06/17/2020

According to USDA-FAS GAIN Report CH2020-0040, dated March 27th, production of chicken in China will attain 15.750 million metric tons (34,650 million pounds).  Total imports will attain 675,000 metric tons or four percent of total supply. The USDA estimates that for 2020 imports will increase by 16 percent over 2019.  Exports are relatively small representing 2.2 percent of total supply.  Accepting a population of 1.4 billion, per capita consumption in China is 11.5 kg (25.3 pounds).

 

Pork is the principal animal protein comprising 65 percent of the total consumed.  This is followed by poultry at 45 percent, beef, six percent and other species, four percent. The consumption of chicken is sub-divided among conventional white broilers at 45 percent, traditional “yellow birds” at 30 percent and a hybrid between conventional broilers and traditional birds termed “817” now comprising 15 percent.  Culled hens producing eggs represent ten percent of chicken consumption.  It must be remembered that in China ducks are consumed in both rural and urban areas. In addition to chicken 3 to 4 million metric tons of duck and other poultry is consumed annually.

 

 

The advent of African swine fever reduced the supply of pork possibly by as much as 25 percent although herds are being slowly rebuilt and processed pork from the EU and the U.S. is now supplementing domestic production.  The effect of African swine fever is noted by an estimated 35 percent decrease in domestic production from 2018 through 2020.

 

In November 2019 the embargo on U.S.-origin poultry products imposed during the HPAI outbreak in 2015 was lifted in accordance with the General Administration of Customs of China Announcement #177.  Although shipments to China were impacted by port congestion and transport disruption arising from COVID-19 during the first quarter, during the first four months of 2020 the U.S. exported poultry products amounting to 99,875 metric tons valued at $143.9 million.  This represented an 8.5 percent of volume and 11.8 percent of value exported but with a unit price of $1,440 per ton.  Although China ranked second among importers of broiler parts and feet combined over the first third of 2020, it is noted that the volume shipped to Hong Kong declined over the same period by almost half so the net export gain for the U.S. from China was effectively 57,309 metric tons of mixed parts and feet.  The U.S. was indirectly supplying China after the 2015 embargo through a grey market channel from Hong Kong to the mainland. 

 

Factors that will influence exports to China include government policy on tariffs, availability of pork and the ability of the U.S. to supply products consistent with consumer requirements.  As of March 2020, tariffs comprising 35 percent on average, plus a weight-based duty have priced muscle cuts out of the market.  Tariff exclusions have since been applied to U.S. products allowing some importers to be granted an exemption from Section 301 retaliatory tariffs.  According to the USDA, the most popular products include livers, feet and some frozen chicken cuts.  Traditional U.S. exports comprising leg quarters will not have a strong competitive advantage over domestic chicken and imports from Brazil and the E.U. Importers favor U.S. feet, in addition to wings and wing tips that are used in snack foods.

 

Currently Brazil is the dominant exporter to China with approximately 75 percent of the market in 2019 amounting to 450 tons.  Argentine and Thailand shipped approximately 60,000 and 50,000 tons respectively.

 

Before the U.S. industry regards China as an immediate and vast market the realities should be considered both with respect to product mix and potential export volumes.


 

Unions Press for More Aggressive Prevention of COVID-19

06/14/2020

Appearing before the House Oversight and Reform Committee, the president of the United Food and Commercial Workers Union (UFCW) drew comparisons between progressive meat-packing and supermarket stores and those that apparently have less regard for the health and well-being of their workers. 

 

The UFCW represents meat-packing, grocery, food-processing, healthcare, retail and senior care workers.  Two hundred and twenty-five members of the Union have died of COVID-19 with more than 28,000 testing positive for the infection. Anthony Perrone UFCW President, called for job protection, two weeks of paid sick leave and firm enforcement of COVID-19 precautions at all plants under the jurisdiction of the Occupational Safety and Health Administration. 

 

It is calculated that close to 25,000 employees of meat-packing and poultry-processing plants have tested positive and 86 fatalities have been attributed to the infection.  The UFCW was joined in the appearance before the House Committee by representatives of the American Federation of Government Employees, representing FSIS inspectors.  The failure of FSIS to provide their inspectorate with appropriate PPE in the early stages of the infection resulted in a number of cases of COVID-19 and two fatalities.  AFGE called for greater spacing on lines for inspectors and slower line speeds.

 


Testing Plant Employees

Pre-Covid times
In evidence presented before the committee Perrone specifically complemented Cargill and Safeway for their proactive approach to COVID-19 protection and compared the efforts of these companies to late responses, lack of transparency and deficiencies demonstrated by Amazon, JBS, Walmart and Kroger. From the perspective of news reports, Tyson Foods and Perdue led the industry in addressing the challenges of COVID-19 by providing workers with protection and releasing the results of testing for the presence of the infection.

 

 


 

EPA Administrator Faces Pressure from Competing Interests over Waivers

06/02/2020

At a recent Senate Environment and Public Works Committee, EPA Administrator Andrew Wheeler stated “We are looking to see what relief we can provide everyone.”  Both ethanol producers and petroleum refiners are under pressure given the profound drop in consumption of fuels as a result of COVID-19 restrictions.  During April, ethanol production fell to a volume in the low 20 million gallons per day range, although there was a rise through mid-May to 27 million gallons per day compared to a regular 40 gallons per day. 

 

Senators representing oil-producing states have petitioned the EPA for waivers covering the renewable fuel standard that can be allowed if severe economic conditions exist, such as at the present time. Naturally corn-state senators are opposed to waivers and in addition are considering legislation to support the ethanol industry that is operating at approximately 60 percent of capacity. 


 

Oil Refinery

The House passed a Coronavirus Bill in mid-May allowing payment to ethanol producers forced to shut plants for at least one month during the first quarter.  These plants would qualify for a payment of 45 cents per gallon based on half of the volume they produced during the corresponding month of 2019.  In terms of a bill filed jointly by Senators Chuck Grassley [R-IA.] and Amy Klobuchar [D-MN,], the USDA would reimburse biofuel producers for 70 percent of their outlay on feedstock with corn in the case of ethanol and soybean oil for biodiesel.
The sharp drop in demand for gasoline obviously impacts ethanol producers and indirectly corn growers.  The present situation obviously highlights the fact that biofuels are nonviable without mandates and federal support. It is instructive to remember that initiation of biofuels, almost two decades ago, was based on the need to be independent of foreign supplies of energy.  Since this time, the U.S. has achieved more than parity through additional domestic supplies of natural gas and oil. The biofuels program converting food to fuel is an anachronism and now serves as an indirect tax on all who eat and drive.
Ethanol Plant

 

 


 

Robots Are Immune to COVID-19

05/31/2020

A recent article in Wired by Eve Sneider documented the low prevalence rate of COVID-19 among workers at the Danish Crown hog plant in Horsens, Denmark.  Less than ten workers have tested positive for SARS-CoV-2 among 8,000 employees in all Danish Crown facilities.  There have been no interruptions in processing, and production rates were maintained throughout the first quarter.

 

Management attributes the low infection rate both in their plants and in the surrounding communities to early lockdown and to the extensive use of robotics and mechanization in processing.  The Horsens plant is the most modern in the world using infrared laser-guided robots to make cuts including the critical “tail cut” that extirpates the terminal intestinal tract to avoid fecal contamination. A series of laser and machine-vision guided robots continues dismemberment, completing the tasks that would otherwise be carried out by workers, allowing the plant to processes 18,000 hogs per eight-hour shift. 

 

It is inevitable that robotics will have to be incorporated into processing lines in U.S. plants placing less reliance on workers and allowing appropriate distancing.  Both in the red meat and chicken industries, considerable capital will be required to replace manual workers.  Events over the past three months have demonstrated the vulnerability of packing plants to reduced labor availability. Plants are the fragile link in the supply chain extending from farms to retail. 

 

COVID-19 spreads rapidly within plants given the proximity of workers in both first processing and deboning.  Modern EU chicken plants and those erected in Eastern Europe and the Middle East during the past decade incorporate mechanization, robotics and advanced processing technology compared to U.S. facilities located in southern states.  Design of U.S. plants and their equipment is predicated on the availability of relatively inexpensive labor.  European producers do not have the luxury of an infinite supply of workers even though temporary immigrant labor is used in some nations.

 

The capital investment required to mechanize processing will have to be passed on to consumers.  Given the disruptions in supply during March and April with depleted supermarket cases, consumers will have to accept increases in price to ensure a steady supply of wholesome meat products.

 

An added justification for mechanization and the installation of robots is the reality that packing plants are a source of infection for local communities.  This is clearly demonstrated by prevalence rates in rural counties where a large plant is located. Workers in plants equipped with advanced mechanical installations will have appropriate skills, commanding higher wage rates that will be reflected in more acceptable accommodation obviating domestic overcrowding.  This factor contributes to relatively high prevalence rates in communities attributed to infection acquired and spread among low-paid immigrant workers performing repetitive manual labor.

 

It is axiomatic that robots are refractory to disease, do not take holidays or sick leave, never participate in strikes or agitate to join unions and have immense physical strength and dexterity compared to human labor.  It is unfortunate that it has taken COVID-19 to force a re-evaluation of the human component and available alternatives in meat processing.  COVID-19 will not be the last viral pandemic and this reality should evoke changes taking us beyond The Jungle of Upton Sinclair.


 

Presidential Comment over Cattle Imports Generates Concern and Criticism

05/21/2020

In a White House ceremony announcing the Coronavirus Food Assistant Program (CFAP) the President questioned the desirability allowing importation of live cattle in the U.S. and instructed the Secretary of Agriculture, Dr. Sonny Perdue to terminate trade deals allowing live cattle to be imported into the U.S., presumably at the expense of domestic farmers.

 

Live cattle are only imported from Canada and Mexico and are allowed in terms of the USMCA only recently ratified. Imports of cattle on the hoof are necessary to stabilize supplies and markets and have functioned to the benefit of the U.S. and our neighbors for many decades.

 

Marty Smith, President of the U.S. National Cattlemen’s Beef Association commented, “this was something I wish the President had not said.”  Export of 1.2 million head from Mexico to the U.S. in 2019 was more than balanced by exports of processed beef back to Mexico.  Forcing Mexico to retain slaughter stock will lead to expansion of their domestic packing capability ultimately to the detriment of the U.S. and farmers over whom the President is apparently so concerned.

 

A number of economists at Land Grant universities have pointed to the benefits of integral and mutually beneficial trade agreements that are supported by the Canadian Cattlemen’s Association and the Mexican Cattle Confederation.

 

In the interest of regular trade and avoiding contentious and illegal bans, it is hoped that the presidential comment was off-the-cuff remark and is not indicative of a change in U.S. trade policy which would be a contravention of the USMCA.


 

Reopening U.S. Packing Plants: Political Expediency or Economic Necessity?

05/13/2020

Following the Presidential Executive Order on April 28th directing meat plants to continue operation during the COVID pandemic, Secretary of Agriculture Dr. Sonny Perdue predicted that 85 percent of capacity will be online during the second week of May.  Fourteen beef, pork and poultry plants have resumed operations after shutdowns to reconfigure lines, test workers and to carry out decontamination.

 

The prerequisite for reopening plants was that they should conform to the CDC standards indicating best production practices to prevent transmission of COVID-19 within facilities.  It must be noted that there is considerable interaction between plants and the community with respect to transmission.  Epidemiologic evidence demonstrates that there is a close correlation between the prevalence rate in a plant and in the surrounding community affecting the prevalence of COVID-19 in a specific rural county with a large facility.  Notwithstanding the CDC and OSHA regulations, it appears that considerable latitude has been extended to plants in imposition of protective measures. With the stated waiver of responsibility, uniform adoption of the CDC requirements and monitoring conformity by OSHA will be a difficult task. 

 

Although plants can be reopened, they still require personnel to operate equipment and maintain production.  It is estimated the beef and pork plants operated at 75 percent of capacity during the first week in May up from 65 percent the previous week.

 

The United Food and Commercial Workers Union (UFCW) representing 250,000 workers is demanding comprehensive testing for the presence of SARS-CoV-2, the virus responsible for COVID-19 among plant employees.

 

Mark Perrone, President of the UFCW stated, "the rush by the Trump Administration to reopen fourteen meat packing plants without the urgent safety improvements needed is a reckless move that will put American lives at risk and further endanger the long-term security of our Nation's food supply".  The UFCW is requiring frequent testing of workers, availability of protective equipment and distancing, even on lines. Perrone noted "the administration has failed to take urgent action needed to enact cleaning and enforceable safety standards at these meat packing plants".

 

Secretary Perdue expects that meat production will be back to normal during the third week of May.  It is apparent that the Administration regards restoration of meat supply both for the domestic market and for exports to be both a political and economic necessity.

 

Re-establishing production through meat packing plants should alleviate the need to euthanize hogs, relieving farmers of a considerable financial burden with losses for live hogs sold at $60 to $100 per head.  Cattle have accumulated in feedlots with a negative impact through the entire chain from cow-calf operations forwards.

 

From weekly broiler chick placement data released by the USDA and posted on CHICK-NEWS in the weekly Broiler Volume and Price Report, it would appear that production is trending back to normal levels. Some plants are operating at a lower capacity due to absenteeism associated with either COVID infection or fear of contracting the disease. Both turkey and broiler production were less impacted than in the red meat industry with fewer disruptions. Adequate supplies of both chicken and turkey appeared in supermarkets from mid-May onwards.

 

Poultry plants affected by COVID-19 included:-

  • Tyson Foods, Robards KY. Reopened after cleaning
  • Empire Kosher. Mifflintown, PA. Reopened late April after Passover break.
  • Sanderson Farms, Moultrie, GA. Reduced production through early May
  • Jennie-O Turkey Store, Wilmar, MN. One plant closed for cleaning. Benson Rd. Wilmar plant and Melrose, MN. plant now operational.
  • Miller Poultry, Orland, IN. Operational after cleaning and testing employees for COVID-19.
  • Tyson Foods, Shelbyville, TN. Reopened late April after cleaning
  • Mountaire Farms, Siler City, NC. No disruption in production following a few diagnoses of COVID-19.
  • Fieldale Farms, Cornelia, GA. Few cases identified among workers.
  • Butterball Inc. Winston-Salem, NC. Few case identified in late April.
  • West Liberty Foods, West Liberty, IA. Reopened mid-April after cleaning and testing workers.

 

COVID-19 Incidence Rates in Packing Plants an Opportunity for Epidemiologic Studies

05/10/2020

As with cruise ships, certain packing plants have recorded higher levels of COVID-19 infection among workers compared with other plants for reasons that are not clearly defined.  Certainly when we have reached "the other side" and stability in the meat and poultry industries has been restored, studies can be conducted that will define the relative role of processing plants, the community, worker housing, commuting and other risk factors contributing to infection. 

 

Clearly there should be a focus on the JBS plant in Greeley, CO.  This plant recorded 280 diagnosed infections with seven fatalities.  It is considered critical that extensive testing for the presence of SARS-CoV-2 virus responsible for COVID-19 should be carried out following re-opening of the facility.  This will enable plant management to identify both asymptomatic and symptomatic carriers so that they and their contacts can be quarantined.  Subsequently the presence of antibodies can be determined by serologic assays, providing valuable information on the temporal and spatial level of exposure of workers and their families. 

 

It is apparent that there were conflicts between JBS management and the Weld County and Colorado State health officials.  Colorado Governor Jared Polis stated that the management of the plant promised to test employees but failed to follow through.  A spokesperson for the Weld County Public Health Department stated "JBS officials backed away from an initial plan to test all employees and decided to close the plant after a warning was issued on April 10th, reopening at the end of April".

 

Governor Polis recently stated, "to be clear, if JBS is willing to test all employees we would be happy to work with them on making sure they have the supplies to do that".  He added "we can't just go on their premises and test people, that’s why we did it a mile away".

 

Since the first diagnosed case in Colorado at the beginning of March, the state has recorded 17,800 diagnosed cases with 921 fatalities for a rate of 5.2 percent that is similar to the U.S. apparent fatality rate of 6 percent based on 73,000 deaths resulting from 1.2 million cases. The actual number of cases and actual fatalities since March are presumably far higher than those diagnosed given the dearth of antigen testing and deficiencies in determining the cause of death since the beginning of the outbreak.


 

Constraints limiting Hog Euthanasia and Plant Re-opening

05/04/2020

The JBS USA plant in Worthington, MN.,  currently inactive, will be opened this week to euthanize mature hogs according to House Agriculture Committee chairman Rep. Colin Peterson (D-MN).  The plant with a daily capacity of 20,000 hogs believes it can kill 13,000 daily with a crew of ten.  The backlog of hogs on all U.S. Farms is growing at a rate of 160,000 per day as a significant proportion of hog-packing capacity is closed.  Governor Kim Reynolds of Iowa has joined the National Pork Producers Council to request aid for hog farmers from Congress.  The $1.6 billion from the USDA coronavirus allocation is obviously inadequate given the magnitude of the problem caused by plant closings.

 

Despite the Presidential Executive Order to reopen plants, now regarded as “critical infrastructure,” workers will still have to be available and willing to report for duty.  The Executive Order requires that operators of plants adhere to CDC guidelines regarding COVID-19 protection.  Some workers have refused to return to plants based on perceptions of insecurity and susceptibility to infection.  The Executive Order indemnifies plant owners from any claim resulting from COVID-19, and apparently negates both state and local decisions to close plants, irrespective of risk to workers and the community at large.

 

The legality of the order issued in terms of the Defense Production Act has yet to be challenged in court.

 

Representative Cindy Axne (D-IA) stated, “Iowa’s agriculture economy including its packing plants is critical to the state and to feeding the country and the world.”  She added, “keeping them running during COVID-19 means we need to first and foremost keep our workers safe and healthy.  Any requirement from an employer or from federal authorities for employees to keep coming to work needs to be accompanied by iron-clad answers on what protections will be in place including PPE, social distancing with routine testing and inspection.”

 

Marc Perrone of the United Food and Commercial Workers representing 250,000 employees in the meat industry stated, “While we share the concern over the food supply, today’s Executive Order to force meat packing plants to stay open must put the safety of our country’s meat packing workers first.”  He added, “Simply put, we cannot have a secure food supply without the safety of these workers.” 

 

The extent of infection in plants is illustrated by the Smithfield Foods, Sioux Falls, SD pork plant with 853 confirmed infections out of 3,700 employees.  Due to the lack of additional antigen (virus) testing and the non-availability of serologic assays, the actual number of individuals infected and those that have recovered following asymptomatic infection is unknown.  Reliable data is considered critical to making rational decisions on when plants can reopen and the effectiveness of preventive measures.


 

Post COVID Investigations of “Big Four” Packers Inevitable

05/01/2020

COVID-19 has focused attention on the dominance of hog and beef packing represented by the “Big Four” comprising Tyson Foods, Smithfield Foods, JBS USA and Cargill.  Activist group  R-CALF USA has lobbied Congress and the President to investigate "whether physical and geographic restructuring of the meatpacking industry is required to disaggregate and decentralize beef processing capacity”.  Problems emerged follow a fire in a Tyson Foods Kansas packing plant that impacted farmers shipping cattle from grassland and feedlots in 2019.

 

The current disruption of both pork and beef production due to COVID-19 has generated concern among legislators representing cattle and hog-producing states.  This is reflected in the retail food sector facing shortages and interruptions in supply, extending to consumers. Rationing has commenced in military commissaries and will surely spread to the retail market.

 

There is probably no concerted plan among the four major packers to in any way collude to rig the market.  Unfortunately, in the pursuit of efficiency and economies of scale, large plants are increasingly responsible for packing a larger proportion of hogs and beef cattle raised.

 

COVID-19 emerged as a black swan and, in all probability, could not have been foreseen even in early 2020 following emergence in China.  Inputs into plants such as water, power and labor were taken for granted until the advent of COVID-19.  Unfortunately, in the absence of an effective vaccine there can be no assurance that labor will be available at a reasonable cost or that previously projected production levels will be maintained in the intermediate future irrespective of Executive Orders.

 

In contrasting the red meat and chicken industries it is evident that integration has facilitated both long term planning and the response to COVID-19 among as many as 20 top producers representing 90 percent of chicken production. Apart from the lower prevalence of the infection among workers in poultry plants compared to hog and beef plants (with the exception of one Georgia county) chicken integrators are able to adjust more rapidly to challenges represented by disease among workers and changes in the marketplace. It remains to be seen how the large hog integration in Oklahoma is impacted by COVID-19 compared to industry peers that are not integrated.

 

It is clear that when the immediate COVID-19 emergency is resolved, irrespective of what Administration is in control in 2021, there will be Congressional, USDA, DOJ and DOC investigations into the structure of the red meat industry and interactions among the major companies. This will re-visit the Town Hall style meetings arranged jointly by the USDA and DOJ under the Obama Administration leading to an order in terms of GIPSA.


 

Smithfield Foods Neglect Contributed to COVID-19 Plant Closures

04/29/2020

A lawsuit was filed in Missouri Federal Court claiming Smithfield Foods provided inadequate protective equipment to workers at their Milan, MO. facility.  Additional allegations include discouraging workers from taking sick leave and insufficient hand-washing facilities and personal protective gear. 

 

The Rural Community Workers Alliance a labor advocacy group noted "workers, their family members and many others who live in Milan and in the border community may die, - all because Smithfield refused to change its practices in the face of the pandemic". A separate lawsuit brought on behalf of an employee at the Milan plant seeks a court order enforcing Smithfield to comply with current CDC guidelines to prevent COVID-19. These cases may be moot given the Executive Order indemnifying packers against claims. The directive does however require plants to comply with CDC guidelines to protect workers from infection.

 

Last week CHICK-NEWS reported on the results of a CDC evaluation of the Sioux Falls, SD. plant recently closed as a result of more than two hundred diagnosed cases of COVID-19.  This facility is responsible for producing five percent of U.S. pork.  In a memorandum, Keira Lombardo, Executive Vice President, Cooperate Affairs and Compliance Smithfield replied to the issues raised by CDC.  Smithfield claim that COVID-19 is ubiquitous across the U.S. and that it is believed that community spread occurred in the area of operation of the Sioux Falls plant before the condition appeared among workers.  Unfortunately, there are insufficient results of antigen testing and serologic assays to support this contention.

 


Workers at a WH Group Plant in China

 

An important conclusion and consequential recommendation by CDC was that Smithfield should communicate with workers concerning precautions to be taken to prevent COVID-19 in the languages as understood by workers.  Smithfield maintains that it "regularly communicates in multiple languages, verbally in videos and in print including iconography, e-mails and on the company intranet. This is at variance with the CDC investigation.

 

The memorandum attempts to justify company policy with regard to personal protective equipment. The Company claimed it was following CDC guidelines.  Unfortunately, the CDC has "wobbled" over the need for masks and eye protection since April 3rd.  At this time the advice provided was that masks were unnecessary in "agriculture", presumably in fields and barns and not in packing plants where social distancing is difficult to achieve. The CDC later amended recommendations, acknowledging the need to protect workers.  When the April 3rd CDC recommendations were released there was an absolute shortage of masks, gowns, gloves, and other equipment and clearly the Agency had no idea of the close proximity of workers in meat packing and poultry processing plants. 

 

Common sense based on a knowledge of the transmissibility of the virus should have been recognized by management of Smithfield that employed 40,000 in forty facilities throughout the U.S.  When Smithfield was obliged to provide masks, the short supply situation became evident.  In her self-exculpatory statement Ms. Lombardo opined that "it is not standard practice in the industry for employees to wear masks let alone face shields".  She is referred to images of plants in China operated by the parent company of Smithfield Foods, the WH Group, depicting workers with smocks and head covering extended over the nose and mouth.  Apart from recognizing the need to supply protective equipment, and recognizing their non-availability in the U.S., the parent company in China should have recognized its obligation to workers and airfreighted masks and other protective equipment apparently available in China to the U.S.  After all the Patriots team located and transported masks in their own jet for first responders and hospital personnel in Boston and other Massachusetts cities in mid-March.  Smithfield should have been more worker-oriented and made use of their parent company in China to anticipate problems and respond proactively. Hand-wringing is no substitute for hand-washing!


 

COVID-19 May Slow Home Delivery of Groceries and Food

04/14/2020

With home confinement impacting 95 percent of the U.S. population, delivery services offered by Amazon Prime and Walmart among others and food delivery by gig workers have replaced frequent visits to supermarkets and restaurants.  To date the frequency of deliveries and reliability has softened the restrictions followed by compliant citizens.

 

As the U.S. apparently reaches a peak in incident cases through mid-April, reports of outbreaks of COVID in distribution and fulfillment centers and among delivery workers are surfacing. Wired recently reported on extremely variable compliance with widely publicized CDC guidance to limit infection in the workplace.  Recent articles in the media indicate neglect of separation, failure to screen workers for elevated temperature or signs of infection and failure to provide protective clothing, masks and facilities to decontaminate hands.

 

If COVID-19 spreads among workers in distribution and fulfillment centers and if food delivery workers become infected the Nation's supply of food will be affected. At present, red meat and poultry plants are functioning at less than capacity due to labor shortages. Some companies have closed plants with threats that supplies of meat might be imperiled.  Unfortunately, many workers in food production, processing and distribution have little in the way of financial reserves and feel obliged to clock-in even if they feel ill thereby compromising the health of coworkers.  In addition, it is now well established that individuals can be asymptomatic shedders of SARS-CoV-2 virus further contributing to infection in work situations where close contact is required.

 

Until a safe and effective vaccine is deployed, employers are obliged to implement as many of the CDC recommendations as are applicable to suppress infection. This applies to Mom and Pop stores as well as the World’s leading companies such as Walmart and Amazon.


 

Allen-Harim to Depopulate Growing Broilers

04/13/2020

According to news reports including Delmarva ABC-Affiliate Channel 47, Allen-Harim will depopulate approximately 1.5 million broilers in succeeding weeks.  This action results from a slow rate of processing due to a claimed 50 percent absenteeism at the major Allen-Harim 1st-processing plant.  The company contracts with 220 farmers who were informed of the intended action by letter on April 8th.  Allen-Harim has also reduced egg settings and chick placements although the result will only be evident in six and ten weeks time respectively.

 

Spokespersons for Perdue Farms, Mountaire Farms and Tyson Foods operating on the Eastern Shore have emphasized that they have no plans to depopulate in the immediate future.

 

Allen-Harim is ranked 19th among U.S. broiler integrators and processes approximately 1.6 million birds per week at an average live weight of 6.2lbs.

 

The announcement elicited the usual condemnation of intensive livestock production by organizations including the Socially Responsible Agricultural Project.  The spokesperson for the organization, Maria Payan noted  without substantiation "this vertical system does not have the ability to respond efficiently.  We are seeing problems from the growers; workers being protected and impacts on public health and the environment".  Ms. Payan fails to acknowledge that the integrator-contractor model has provided a secure livelihood to Delmarva growers over at least eight decades and they will not suffer during this transitory event.  

 

A constant critic of vertical integration, Craig Watts, an aggrieved ex-grower for Perdue noted "disposal of birds may present problem for growers. He commented "the highly consolidated meat supply chain is vulnerable to major disruptions". On balance it appears that inability to process broilers in barns is less an industry problem but results from circumstances inherent to Allan-Harim. A claimed 50 percent reduction of a workforce of approximately 1,000 plant workers due to COVID-19 implies 500 cases. This far exceeds published prevalence rates for any other U.S. red meat or poultry plant or even the Diamond Princess.  It is presumed that the inevitable emergence of COVID-19 has exacerbated underlying worker disaffection over protection, pay or communication.

 

Allen-Harim has indicated that it will compensate growers, but there is no indication of the method to be used for disposal of dead birds or which party will bear costs.

 

The National Chicken Council has urged the USDA to make available funds to compensate growers for COVID-19 associated losses. It is expected that integrators will stand by their contracts at considerable expense.


 

WTO Develops Alternative Arbitration Strategy

04/01/2020

The current U.S. Administration refuses to approve new candidates to be appointed to the World Trade Association (WTO), Appeals Arbitration Board, based on allegations of bias in past decisions. Accordingly the World Trade Organization has established a Multiparty Interim Appeal Arbitration Board.  Participants in the initiative comprise 45 nations including the EU as a group in addition to Australia, Brazil, Canada, China, New Zealand among others in Asia and Latin America.

 

The EU Commissioner for Trade stated "this is a stop-gap measure to reflect the temporary paralysis of the WTO appeal function for trade disputes.  This agreement bears testimony to the conviction held by the EU and many other member countries of the WTO that in times of crisis working together is a productive option.

 

The Multiparty Interim Appeal Arbitration Arrangement will become active within weeks following agreement on procedures.

This action by the WTO effectively sidesteps the U.S. and demonstrates the decline in power of the World's largest economy to influence international trade policy and represents both isolationism and a failure in diplomacy.


 

Commissioner Chopra of the FTC Comments on Proposed Packers and Stockyards Act Rule

03/22/2020

Rohit Chopra, Commissioner of the Federal Trade Commission addressed a comment to USDA Secretary of Agriculture Dr. Sonny Purdue regarding the proposed rules to amend the Packers and Stockyards Act.  Chopra stated the Act “was modeled after provisions in the Federal Trade Commission Act and other anti-trust laws to ensure that powerful meat packers and processors could not take advantage of family farmers through unfair trade practices.”  Chopra maintains that the rules do not support these objectives and will allow potential abuses to continue.

 

Whether justified or not Chopra stated “vertical integration and concentration has turned the animal supply chain into a series of choke points used by Big Meat to coerce farmers and ranchers into accepting terrible terms for the price of participation”

 

CHICK-NEWS takes exception to the statement by Commissioner Chopra that “growers take on all of the risks and have little to show for it.” 

 

In the U.S. broiler-production industry the relationship between contract growers and integrators has evolved over six decades and is mutually beneficial to both parties.  Effectively risk is born by the integrators who supply chicks and feed and carry the potential losses associated with disease, inclement weather and market fluctuations.  Contractors have no concerns over logistics or marketing and can integrate flock management with other employment or farm enterprises. 

 

The fact that there are more aspirant growers than can be accommodated by the chicken industry confirms that the grower-integrator system is equitable and mutually beneficial. Lincoln Premium Poultry was able to contract with growers for breeding and broiler production for their new complex in Nebraska indicating the acceptability of the system. 

 

There may be abuse or manipulation in beef or pork production but there is no recent evidence of exploitation in the chicken and turkey industries.


 

Minnesota Bill to Fund Regenerative Chicken Production Wasteful Expenditure

03/04/2020

A bill introduced into the Minnesota legislature would provide $250,000 in grants to the Regenerative Agricultural Alliance to conduct a feasibility study on production of poultry applying regenerative principles. The Alliance claims that 100 farmers are producing 250,000 chickens annually, feeding locally-grown grains under free-range conditions.

 

The proposal flies in the face of both biological reality and economics. The intent to produce 1.2 million chickens a year and to fund a processing plant would represent a waste of resources, starting with the allocation of funds for a feasibility study. The questionable viability of a free-range regenerative project could be calculated in an hour with a pencil and calculator given realistic production parameters including live weight, feed conversion, input costs and value of product. $250,000 sounds like pork!

 

Promoters of the scheme are reminded of the losses sustained by West Liberty Foods in funding a free-range broiler operation intended to satisfy an apparent demand for slow-growing, non-confined broilers.

 

Subsistence, regenerative agriculture, represents a fad appealing to a limited market and simply cannot compete  with commercial production based on inherent inefficiency.

 


 

Survey Reveals Attitudes Toward Plant-Based Meat Substitutes

03/03/2020

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

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

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

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

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

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

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


 

National Cattleman's Beef Association Concerned Over Importation of Beef from Brazil

02/28/2020

The USDA has reopened the market in the U.S. to Brazilian beef according to statements by the Secretary of Agriculture for Brazil, Tereza Cristina Dias. In 2017, importation of fresh beef from Brazil was terminated as health and safety defects were noted in product attributed to inadequate inspection and allegations of bribery of inspectors and irregular documentation.

Brazil has apparently satisfied requirements imposed by USDA and domestic suppliers will now face competition from imported Brazilian beef.

The National Cattleman's Beef Association (NCBA) released a statement on Monday February 24th noting that the organization supports "science-based trade".  The NCBA expressed concerns over importation of Brazilian beef based on past history including outbreaks of foot-and-mouth disease and defective inspection.

The statement issued by Kent Bacus, Senior Director, International Trade and Market Access noted "should Brazil continue to have food safety or animal health issues, we expect the U.S. Government including Capitol Hill to take all necessary and immediate action to protect U.S. consumers and U.S. beef producers. 

Not even a veiled threat.


 

China Bans Trade and Consumption of Non-Domestic Animals

02/28/2020

In late January, CHICK-NEWS published an editorial entitled "Bizarre Food Preferences in China Contribute to Emerging Disease."  The editorial referenced the preoccupation in China with exotic animals to produce traditional “medicines” and a desire to consume nontraditional food species especially among the affluent.

During the week of February 24th, the Central Government announced through the official news agency Xinhua, that legislation would be passed to ban the trade and consumption of wild animals following a temporary suspension imposed in January.

Zhang Tiewei a spokesperson for the Legislative Affairs Commission of China stated "there has been a growing concern among people over the consumption of wild animals and the hidden dangers it brings to public health security since the novel coronavirus disease (COVID-19) outbreak”.

In traditional centrally-planned "officialspeak" illegal consumption and trade of wildlife will be severely punished as will be hunting, trading, maintaining or transporting wild animals for the purposes of food consumption.  The use of wild animals for non-edible purposes including scientific research, medical use and display will be subject to strict control, approval and quarantine inspection. 

This “medical use” proviso keeps the door open for trade in organs and extracts from wild animals used in traditional Chinese medicine.  At least the trade in donkey, dog, deer, crocodile and other exotic meats will be controlled.  Experience has shown that if demand persists, the price for these products will rise and an illegal and clandestine market will develop with or without acquiescence by corrupt officials.  We shall see how effective the Beijing imperative is obeyed in the far Provinces.


Brazil shipping soy to China

 

GM Cowpea Cultivar Approved in Nigeria

02/06/2020

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

 

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

 

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

 

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

 


 

U.S. Farmers Will Benefit From Phase-One Agreement Only if China Actually Imports Commodities In Compliance With Their Obligations

02/03/2020

In a Des Moines Register guest editorial Sen. Charles Grassley, (R-IA), opined that the Phase-One deal is "welcome news" for Iowa farmers who have been impacted by the trade war with China initiated in 2018. Whether farmers will be made whole over and above the $31 billion in Market Facilitation Program support disbursed through 2019 remains to be seen. Soybean futures certainly do not reflect the optimism of politicians and White House advisors. Actual shipments, not promises or orders will demonstrate the commitment of China to trade agreements that invariably “get lost in translation” We should not be surprised if any day now China will invoke the outbreak of coronavirus as a justification to delay imports of U.S. commodities while they continue to buy from Latin America. Trade wars are not easy to win nor are they short in duration.

Sen. Grassley correctly maintains that the recently signed USMCA "opens the barn for farmers and workers all along the food supply chain”. Essentially with respect to grains and soybeans there is no specific benefit from the USMCA over NAFTA.  Dairy farmers and other sectors of the economy may gain from the re-negotiated agreement but Canada is maintaining production-supply controls with respect to poultry excluding U.S. producers from free-market competition.


 

Memphis Meats Raises $160 Million to Commercialize Cell-Cultured Meat

01/22/2020

Memphis Meats successfully completed a Series B funding round raising $160 million.  Proceeds will be used to scale-up preliminary laboratory production of cell-cultured meat based on previous funding of $20 million.

 

According to the company release, investors include Richard Branson, Bill Gates, Threshold Ventures, Cargill, Tyson Foods and others led by the SoftBank Group and Temasek.  Dr. Uma Valeti, co-founder and CEO of Memphis Meats stated “we are excited to welcome these investors into our big tent.”  She added “Memphis Meats is revolutionizing how meat is brought to every table around the world.”

 

It is hoped that the investors have carefully evaluated the prospectus for financial and technical feasibility. Overhanging issues relate to regulatory approval, standards and labeling with U.S. jurisdiction split between the USDA and the FDA. 

 

The challenge facing Memphis Meats and other developers of cell-cultured products will be competition from vegetable alternatives that can be classified as vegan and presumably can be marketed at the same price as conventional meat, if not at a lower price.  There is no indication that magnitude of scale will reduce the cost from laboratory-cultured samples to anywhere near an acceptable market price.  The second unknown is how producers will be able to maintain quality and consistency when extending from laboratories to commercial-scale bioreactors.

 

Clearly this is a work in progress, but Memphis Meats appears to be a leader in the field, has excellent technology and apparently has the support of investors. The livestock industry looks forward to seeing what $160 million invested brings to the table within a three-year period.


 

CEO of Impossible Foods Criticizes Meat Industry

01/21/2020

Dr. Patrick O. Brown strongly criticized the conventional meat industry on the grounds of sustainability.  He described meat production as “the most destructive technology on earth by far.”  This is clear hyperbole since the used of coal to generate electrical power is far more injurious to the environment than beef production. According to the EPA all cattle including dairy animals are responsible for two percent of greenhouse gas emissions. Our transport infrastructure comprising aircraft, trains and road vehicles burn hydrocarbon fuels.  Even much vaunted electric autos derive their power in the U.S. in large measure from coal-fired power plants.

 

Brown who has earned both MD and PHD degrees and is a distinguished geneticist in his own right, should be more responsible and scientifically accurate in his public statements.  Although his products have been accepted as alternatives to beef over the short term, his strident condemnation suggests either a degree of concern for the future of his industry and company or an expression of his environmental zealotry.  Despite the inordinate and adulatory publicity extended to Impossible Foods and competitor Beyond Meat, their actual share of the protein market is small and the claimed double-digit growth rate is off a very small base.  Impossible Foods is currently privately held and Beyond Meat is enjoying a market honeymoon after a meteoric rise from the IPO price.  The Company trades at a nose-bleed P/E and neither Impossible Foods nor Beyond Meat have really experienced competition from multinationals such as Cargill and Nestle in addition to numerous me-too companies including Maple Leaf Foods.

 

Dr. Brown may be an extremely capable entrepreneur but he sounds eerily familiar to Josh Tetrick who promised to displace hens in producing eggs over ten years ago.  Since then (unfortunately for margins!) hen numbers have increased and consumers are enjoying nutritious eggs and egg products at exceptionally low prices.


 

Relationship of Live Weight and Value of Jumbo Boneless Breasts

01/20/2020

Dylan Hughes of Urner Barry recently published a review of the interrelationship of average live weight and jumbo boneless breast values from 2010 to 2020. Over the period 2010 to late 2016, live weight increased from 5.6 to 6.1 pounds. During these five years jumbo boneless breast values ranged from an initial $1.01 per pound to $1.25 per pound with brief peaks in mid-2013 and 2014 but tracked live weight.

 

In 2017, a deviation became apparent. As live weight increased from 6.1 pounds to 6.3 pounds, boneless breast values declined from $1.60 to $0.75. The difference in value is attributed to increased supply, but with a disproportionate reduction in demand based on the size of jumbo boneless breasts for food service, QSRs and domestic consumption.


 

Wild Boars Responsible for Dissemination of African Swine Fever

01/20/2020

Eastern European Nations including Romania, Bulgaria, Ukraine and Poland are at risk of more extensive dissemination of African swine fever (ASF) spread by large populations of wild boars.  The infection was recently diagnosed in non-commercial hogs in Serbia and this has created concern in Hungary that has a significant commercial hog industry. Germany recently increased security when ASF virus was isolated from wild boars within 20 miles of the eastern border with Poland.

CHICK-NEWS has frequently commented of the vulnerability of the U.S. in the event of introduction of ASF as a result of large populations of wild hogs in Gulf states.  In recognition of the danger represented by these destructive animals, state game departments and the USDA should intensify efforts to reduce populations concurrently with efforts to prevent introduction of virus carried on pork products from nations where the infection is endemic.


 

Pork Producers Experience Negative Publicity From CBS 60 Minutes Airing

01/09/2020

The pork industry was the recipient of negative publicity on the influential CBS 60 Minutes program that aired on Sunday, January 5th. The segment dealt with antibiotic-resistant pathogens associated with pork. Dr. Lance Price, a microbiologist afilliated to George Washington University, Department of Environmental and Occupational Health and who serves as the Director of the Antibiotic Resistance Action Center was a persuasive advocate for restricting administration of antibiotics to livestock. In his interview he was given the opportunity to expound at length on drug resistance and the role of antibiotics, with specific emphasis on pork production.

 

Dr. Liz Wagstrom, Chief Veterinarian for The National Pork Producers Council (NPPC), defended the position of her industry. It is apparent from a statement subsequently released by the NPPC that her contribution was heavily edited with a wide disparity in the length of her interview with Lesley Stahl and the duration and content of her contribution to the program aired. So why are they surprised?

 

Whether due to editing by CBS or the current philosophy prevailing in the hog industry, Dr. Wagstrom had a difficult time responding to questions justifying the use of antibiotics. What came across as a decidedly defensive approach centered on denying access to farms to health professionals. She “justified” the exclusion citing the consideration of biosecurity. This is a frequently raised defense of doubtful merit. If  biosecurity is an important practice in the industry, visitors should be able, subject to decontamination, to enter facilities housing growing hogs. Scientists not having had contact with any livestock or swine pathogens for at least five days are no danger to a herd if they pass through a biosecurity module to disrobe, shower and don farm-provided personal protective clothing. To deny access to responsible media and public health authorities on the grounds of “biosecurity” creates the impression of obstruction and lack of transparency, inviting suspicion and confirming the worst condemnation of “factory farming” depicted on social media.

 

Producers of the CBS program erred in not stating that since 2017, routine administration of antibiotics for the purposes of growth promotion ceased in accordance with FDA Industry Guidance. The 60 Minutes program created the perception that this practice continues.

 

The program represents a number of lessons for the broiler industry. Both with respect to welfare and food safety, it is more beneficial to be proactive than reactive. Although the NCC and USPOULTRY have produced positive videos depicting welfare on farms  and have promoted the image of the industry on social media, more can be done to establish rapport with mainstream news and entertainment outlets. Spokespersons for industry associations require training in presentation and should develop the ability to respond positively to questioning by professional interviewers.

 

The National Pork Producers Council has experienced a ten-year conflict in the media over gestation crates, that are still being defended as a rearguard action. This is despite replacement of confinemnent by the major hog integrators in response to customer and consumer demands. The sentiments expressed by Dr. Wagstrom towards antibiotics reflect an opinion which prevailed in the broiler industry over five years ago. The dependency on antibiotics has now been dispelled by science and practice.

 

We will continue to face criticism from “big media”. As far as they are concerned, programs that purport to expose a problem, real or spurious and that create anxiety among consumers, generate more eyeballs than topics which are bland and non-controversial. Remember “pink slime”?

 


 

Wayne Pacelle Actively Soliciting Funds for Animal Wellness Action

01/05/2020

Recently EGG-NEWS reported on the reemergence of Wayne Pacelle and his newfound affiliation with Animal Wellness Action (AWS).  The tone of initial web postings by this organization in soliciting funds suggests that the organization is focused on companion animals and opposed game fowl and dog fighting.

 

In his New Year’s Day request for AWS funding, Pacelle emphasizes “When it comes to life, as to experience, animals are not so different from us.”  This is classic anthropomorphism designed to pluck at the heart-strings of potential donors.  A later sentence in his appeal is however more sinister stating “that means sparing animals from human torments whether they are in the name of sport, science or food.”  The ‘food’ reference is of concern since Pacelle as president of the Humane Society of the United States (HSUS) moved the organization progressively in an avowedly pro-vegan direction. 

 

The obvious inference from a review of the Animal Welfare Action website and mission statement and the most recent appeals under the signature of Pacelle suggest that he may have influenced the West Coast founders of the organization to his philosophy and objectives. He has probably convinced them of the value of his political contacts in Washington and his proven fundraising ability. His purpose as it appears to this commentator will be to use the AWS as a vehicle to divert the mission of the organization to oppose intensive livestock production.

 

The apparent modus operandi of Pacelle completely parallels his tenure at HSUS.  He used sentiment derived from companion animals to raise funds be used for lobbying activities directed against meat and poultry production. He is reapplying the formula with the added fillip of animal-fighting to harvest donations.

 

Pacelle has a persuasive personality and through his fundraising activities will probably engender the respect and gratitude of the Board of Animal Wellness Action over the short term. It will probably take some time before the shift in objectives has taken place but by this time Pacelle would have entrenched himself into a position of strength using Animal Wellness Action as a vehicle to promote his image, lifestyle and vegan agenda.


 

Sen. Booker Introduces Farm System Reform Act

12/24/2019

Aspirant Democratic party nominee for President, Senator Cory Booker (D-NJ) has introduced the Farm System Reform Act into the Senate. This radical legislation is diametrically opposed to intensive livestock production and would place a moratorium on concentrated animal feeding operations (CAFOs) and phase out existing CAFOs over 20 years.

 

In terms of the proposed legislation CAFOs would be defined as units with more than 1,000 cattle, 2,500 hogs or 82,000 laying hens.

 

The legislation sponsored by Sen. Booker also revisits the attempts made during the Obama Administration to strengthen the Packers and Stockyards Act to address concerns over the claimed power of integrators. Regulations enacted during the last hours of the previous Administration were nullified by incoming Secretary, Dr. Sonny Perdue. The bill proposed by Senator Booker would eliminate the tournament system, require forward contracts and introduce competitive bidding.

 

The bill would place the onus on integrators and meat packers for any adverse environmental outcomes from intensive livestock production. The bill would reinstate country-of-origin labeling for chicken, beef, pork and dairy products.

Senator Booker has a long history of promoting legislation with the potential to disrupt U.S. agriculture. The Food and Agribusiness Merger Moratorium and Antitrust Review Act of 2019 would have placed an 18-month moratorium on mergers and acquisitions within the food production industry. The Opportunities for Fairness in Farming Act was intended to reform check- off programs. Fortunately neither bill has achieved any traction in the Senate.

 

The Presidential campaign mounted by Sen. Booker stresses “building wealth and opportunity in rural America” which includes a moratorium on mergers and acquisitions, phasing out CAFOs and other radical policies which would disrupt agriculture and reduce the potential of farmers to feed the nation and supply an export market.


 

Cell-Based Meat Company Raises Funds in the E.U.

12/23/2019

Meatable, a startup based in Holland secured $10 million for development of cell-based beef and pork. Part of the capital investment for the company was derived from the Eurostar program managed by the European Commission.

CEO of Meatable, Krijn de Nood anticipates producing a prototype product by mid-2020.

It is considered significant that public funding was extended to the company in a program supporting innovative product development. In commenting on the funding, de Nood stated “To me, this is convincing evidence that the European Union now sees cultivated meat as a credible aid to combatting climate change”. CHICK-NEWS considers this self-laudatory statement as  hyperbole given the technical and financial feasibility of vegetable-based meat substitutes. There is less optimism over the practicality of cell-culture to displace conventional meat despite extensive investment in research.


 

Marfrig Global Foods Acquires Control of National Beef Packing Company

12/17/2019

With the purchase of the 31 percent holding by Jefferies Financial Group in National Beef Packing Company, Marfrig Global Foods of Brazil will now own 82 percent of the equity. The shares were valued at $970 million in a cash transaction.

The control of National Beef Packing by a multinational company based in Brazil has raised opposition from the United States Cattlemen’s Association (USCA). The organization has requested an investigation of the transaction by the Committee on Foreign Investment in the United States. The president of USCA in a communication to Treasury Secretary Steven Mnuchin commented on sale of U.S. agricultural land and production facilities to foreign investors claiming that ownership is to the detriment of U.S. farmers and may prejudice “long-term sustainability of America’s farming and ranching families”.

It is inevitable that in a multinational environment, investors whether based in the U.S. or outside our borders will recognize value in production facilities. The U.S. offers availability of labor and other resources including a transport infrastructure, power and water facilitating formation of new enterprises or acquiring equity in ongoing operations. A proportion of the production of National Beef Packing Company is exported and without a functional processing plant and distribution network, ranchers would be unable to market their herds.

Political stability, a rational legal business environment and infrastructure attract foreign capital to the U.S. and directly contribute to the wellbeing of farmers that the USCA claims to represent. Leadership of the USCA fail to recognize the contribution of viable enterprises to service industries and workers in the communities where facilities are located.

That a packing plant is 80 percent owned by a foreign entity is not necessarily to the disadvantage of U.S. farmers given protection afforded by GIPSA. Unless the USCA can be specific as to how the interests of farmers will be adversely affected by the acquisition, opposition is based on xenophobia and mistrust. Simply preventing foreign ownership of agribusiness enterprises in the U.S. as a matter of principle is unjust. Smithfield Foods, owned by the WH Group of China and Pilgrim’s Pride controlled by JBS S.A. of Brazil are two prominent companies functioning to the benefit of U.S. farmers and other stakeholders. By the same token Tyson Foods and Cargill have extensive involvement in food production in Latin America and Asia contributing to food supply and the economies of their host nations


 

CoBank Evaluates Chicken Legs and Breasts

11/29/2019

Will Sawyer, Lead Economist for CoBank published the results of an economic evaluation of dark meat and breasts in an October newsletter.

 

The U.S. exports three billion metric tons of chicken meat annually mainly in the form of leg quarters. Successive monthly export reviews in CHICK-NEWS have pointed to the decline in unit value of leg quarters that averaged $1,020 per metric ton in September 2019.

 

Sawyer determined the relative contribution between drumsticks and boneless skinless thighs.  The differential has increased progressively from 7 cents per pound in 2012 to 13 cents per pound in 2018.  The increase in value of leg portions is attributed to domestic demand specifically by Latino and Asian consumers who favor dark meat.  Sawyer points to the increase in the proportion of these demographics in the U.S. population expected to increase from 10 percent in 1985 to a projected 25 percent in 2016.

 

 

The CoBank report estimates that the value of chicken breasts as a proportion of a processed broiler declined from 66 percent in 2000 to 45 percent in 2019.  Over the same period the value of dark meat increased from 12 percent to 30 percent.  It is currently more profitable to separate and to debone legs for the domestic market than to export leg quarters.  It is however recognized that there is a limit to domestic consumption and that export is still necessary to balance production with demand.

 

The study does not take into account the emerging problem of pectoral myodystrophy manifested in a range of degenerative changes recognized as white striping to the most extreme form, woody breast.  These conditions are encountered with high-yield broilers in excess of 7.5 pounds and are responsible for a financially significant loss in some complexes.  Selection for breast yield has created problems of skeletal integrity in addition to myodystrophy that represents an imbalance between accretion of muscle and vascular supply. 

 

Given that geneticists have pushed the envelope to the extreme, it is possible that enhanced return from parts and further-processed presentations will favor lower live weight and a reversal from high breast yield.  Certainly welfare considerations exemplified in the Global Animal Partnership standards progressively being adopted by QSRs and members of the Food Marketing Institute will affect the balance between white and dark meat over the intermediate term. 

 

A further complication will be the possibility of importation of cooked white meat from China when that Nation resolves the domestic protein shortage caused by African swine fever.  In the short term China will represent a net importer of leg quarters, at least for the proximal five year period.

 

The move towards high yield broilers was motivated by the differential in margin from white meat supplied to the domestic market and leg quarters for exports.  With obvious changes in value, it is expected that primary breeders will adjust breeding programs to conform to market demand.  It must be remembered that selection at the great-grandparent level currently being conducted will contribute to broilers marketed in 2022.  Regrettably market forces move more rapidly than successive generations representing a challenge to primary breeders to recognize trends and to act accordingly.


 

Decontamination of ASF Virus

11/26/2019

Scientists at the USDA Plum Island Animal Disease Center will evaluate the effectiveness of common disinfectants and procedures to decontaminate surfaces present in hog barns against African swine fever virus. Research will be funded in part by the National Pork Board and the USDA through a cooperative research and development agreement.

Given that the most likely route of introduction of ASFv into the U.S. will be through importation of contaminated pork, it is considered essential to interdict consignments at seaports and to identify and destroy pork products in the luggage of air travelers. It is noted that within the past few months, Australia, Japan, Taiwan and South Korea have confiscated pork from the luggage of travelers originating in China and Vietnam where the disease is endemic. In a number of instances, confiscated pork has yielded ASF virus.

The U.S. cannot rely on declarations by passengers at point of entry. It is essential that the Beagle brigade be rapidly expanded to maintain a presence at all airports. During recent months, this commentator has entered the U.S. through Minneapolis St. Paul and Raleigh-Durham on international flights. Raleigh-Durham has no Beagle surveillance since it is regarded as a “low risk” point of entry. This is completely fallacious. The two daily flights from Europe originate at Heathrow London and Charles de Gaulle Paris. Both hub airports accommodate transiting passengers from all over the world including Asia for onward travel to the U.S.

It will be infinitely less expensive to intensify protection at airports than to eradicate an outbreak of African swine fever or foot and mouth disease. It is hoped that pork producers and swine veterinarians can generate sufficient concern among their Congressional representatives to divert funds to strengthening the first line of defense against introduction of two significant viral pathogens of livestock.


 

CDC Issues Antibiotic Resistance Report

11/21/2019

The release by the Centers for Disease Control and Prevention of Antibiotic Resistance Threats in the United States, 2019 documents 2.8 million antibiotic-resistant infections in the U.S. each year. Collectively, these cases resulted in 35,000 fatalities. Within this total were 223,000 cases of Clostridioides difficile (“CDiff”) in 2017 with 12,800 fatalities.

The report lists 18 antibiotic-resistant bacteria and fungi and includes a Watch List identifying three emerging pathogens that could result in serious outcomes.

  • Urgent threats are represented by carbapenem-resistant Acinetobacter, Clostridioides difficile, carbapenemm-resistant Enterobacteriaceae (CRE).
  • Serious threats are represented by drug-resistant Campylobacter, non-typhodial Salmonella, Shigella, methicillin-resistant Staphylococcus aureus (MRSA), multi drug-resistant Pseudomonas aeruginosa, extended-spectrum beta-lactamase-producing Enterobacteriaceae.

In a forward to the report, Dr. Robert R. Redfield, Director of the CDC noted that we should stop referring to a coming post-antibiotic era, since it’s already here. Redfield opines that we should stop playing the blame game and recognize the role that industry, farmers, healthcare providers are all involved in emerging drug resistance. He stressed that we should not rely on new antibiotics that inevitably will become ineffective. He urges aggressive strategies including biosecurity and care in preventing infection. He concluded his remarks by noting that antibiotic resistance is universal and occurs in every U.S. state and every country in the world. He predicts the problem will become worse unless sound antibiotic stewardship is exercised.


 

Criticism of Market Facilitation Program

11/17/2019

According to Farm Journal AgWeb, November 6th Edition, the Ranking Member of the House Agricultural Committee, Rep. Colin Peterson (D-MN) has addressed a letter to the Secretary of Agriculture criticizing implementation of the Market Facilitation Program. Peterson notes “The current program has created winners and losers among neighbors who find themselves facing the same market situations meaning that some producers may remain viable while others may be forced out of business”. The Peterson letter included a narrative describing specific problems with assessing eligibility for payment.

Senate Finance Committee Chairman, Sen. Chuck Grassley (R-IA), himself a farmer, stated that the USDA should discontinue the MFP if a trade agreement with China is achieved and if significant orders for agricultural commodities are received. In contrast, Representative Rep. Mike Conaway (R-TX) suggested that a third round of MFP payments may be required extending into 2020.

There would have been no reason to establish a Market Facilitation Program that has cost the U.S. economy $28 billion, had the U.S. not embarked on a program to force China into changing structural policies by the application of tariffs. It should have been obvious from the outset that attempting to change deep-seated and ingrained policies followed by China would have resulted in counter-measures detrimental to the interests of farmers, manufacturers and consumers. The U.S. has progressively imposed tariffs over an 18 month period without achieving any tangible benefits, belying the contention that “trade wars are easy to win and quick”.

Notwithstanding damage to the agricultural sector, the Administration enjoys support from the farming community that to date is apparently willing to sacrifice present income in the anticipation of resolving long-term inequities by our trading partner. The Market Facilitation Program is pivotal in maintaining support from the farming community.

The alternative to our current situation in which we do not seem to be able to even close on a Phase-1 agreement would be a series of carefully crafted negotiations with concessions where necessary. It would be preferable to achieve sequential limited and realistic objectives instead of attempting to extract from China a single all-embracing grand agreement as envisioned by a politically naive Administration in 2017.


 

Competition Among Vegetable-Derived Meat Substitute Manufacturers Intensifies

10/22/2019

Competition among the current producers of vegetable-based meat substitutes is intensifying as new production enters the marketplace. This past week, Dave and Buster’s Entertainment Inc. substituted Light Life Burgers to be served in their chain of 130 restaurants in the U.S. and Canada. The burgers supplied by Greenleaf Foods, owned by Maple Leaf Foods of Canada, will replace product from Impossible Foods.Light Life claim that their burgers are free of GMO ingredients, gluten, soy and artificial flavors.

Barclays, a U.K.-based bank estimates that the alternative meat market might attain $140 billion annually by 2030. Motivation to purchase vegetable-based alternatives include concern over the environment, welfare and health. Given the recent introduction of vegetable-based meat substitutes that mimic the flavor and texture of beef burgers, it is too early to predict whether price and product quality will influence long-term substitution or whether veggie burgers are a passing fad. Without a track record, and based on preliminary market research, projections of future growth extending over decades appear speculative.


 

CoBank Quarterly Economic Review

10/21/2019

The CoBank Knowledge Exchange, October 2019 Edition covering the third quarter encapsulates both World and U.S. economies with specific reference to agriculture.  The report was issued shortly before the October 11th negotiations with China but was prescient with regard to the outcome.

 

With regard to the world economy, CoBank cite the Organization for Economic Cooperation and Development (OECD) as projecting that the world economy will grow by 2.9 percent in 2019 compared to a growth rate of 3.6 percent in 2018.  The decline is attributed to trade tensions and the impact on China. The Co-Bank projects that the U.S. economy will grow by 2.0 percent in 2019 followed by a decline in rate to 1.5 percent in 2020.

 

The outcome of the trade talks with China have yet to be confirmed although it is understood that the U.S. will rescind threatened tariffs due to have been imposed on October 15th with a second tranche in December.  Had these tariffs been imposed, economists estimate that it would have depressed GDP by 0.5 percent representing the equivalent of $100 billion in economic activity.

 

Co-Bank expects the strength of the U.S. dollar to be maintained reflecting the strength of the U.S. economy in comparison to the EU and Asia.  This will mean that U.S. products including agricultural commodities will be relatively more expensive compared to competitors Brazil and Argentina.

 

Domestic prices for corn and soybeans will depend strongly on the volume of exports.  The October WASDE assumed levels that in turn influenced ending stocks regarded by the market as the driver of price.  If the projected export volume does not materialize commodity prices and hence feed costs will be lower benefiting the livestock production.

 

Co-Bank commented on the bilateral U.S.-Japan agreement that will effectively place U.S. agricultural products on a par with members of the Comprehensive and Progressive Agreement for Trans Pacific Partnership.  Effectively the agreement restores the U.S. to a status equivalent to what would have been achieved through the Trans Pacific Partnership from which the U.S. unilaterally withdrew in 2017.

 

Prospects for ratification of the USMCA are impeded by concerns in the House regarding labor provisions.  Co-Bank does not expect a vote until after the 2020 elections.

 

Trade with the EU is affected by the uncertainty over Brexit.  Concurrent issues include state support of the EU aircraft industry, appointments to the WTO dispute resolution panels and tariffs imposed by the U.S. on steel and aluminum.

 

The reality is that farmers are in the process of harvesting corn and soybeans with no firm prospects for exports to China and with high storage levels from the 2018 old crop.  Fluctuation in commodity prices can be expected based on rumors, conflicting statements from both Beijing and the White House and in the short term, weather conditions.  There may be more clarity after release of a communiqué from the October negotiations followed by specific action by China not only in placing orders but actual deliveries of soybeans and other agriculture commodities.


 

Antibiotic Free Poultry has Fewer Antibiotic Resistant Organisms

10/16/2019

A collaborative study conducted by the Pennsylvania Department of Health, Penn State College of Medicine and the U.S. Food and Drug Administration demonstrated that chicken raised according to an antibiotic-free program had fewer antibiotic-resistant organisms on skin samples.  The study was conducted on cultures from 3,500 samples of chicken purchased from representative stores in Pennsylvania from 2008 through 2017. 

 

In an initial study 3,481 chicken and turkey samples collected for the National Antibiotic Resistance Monitoring System (NARMS) Program were evaluated.  Salmonella was isolated from 10.2 percent (2,733) of poultry meat samples from conventionally-raised chickens. This compared to 5.3 percent of samples from 748 antibiotic-free chickens.  Whole-genome sequencing data from 320 Salmonella isolates determined that resistance to three or more antibiotic classes was present in 55 percent of isolates from conventionally-raised poultry compared to 28 percent of isolates from chicken produced antibiotic-free. In a previous study conducted in 2007, there was no difference in the pattern of antibiotic resistance among isolates derived from either conventional or antibiotic-free chicken.

 

A second study was conducted by the Pennsylvania Department of Health applying pulse-field gel electrophoresis to distinguish among Salmonella isolates.  The laboratory compared 96 Salmonella isolates obtained from 2,520 samples of poultry, ground beef or pork and 109 Salmonella isolates from patients with confirmed salmonellosis. Among the isolates, 29 percent of 96 Salmonella isolates from meat samples were resistant to three or more antibiotic classes and 17 percent of the 96 were resistant to five or more classes.  There was also data showing that resistance to ceftriaxone increased from 12 percent in the Salmonella isolates obtained from poultry meat in 2008 to 27 percent in 2016. Thereafter there was a decline to 15 percent in 2017.  It is questioned whether this reduction was associated with the marked decline in administration of ceftiofur in hatcheries. Among the clinical isolates 26 percent of 109 Salmonella were resistant to three or more antibiotic classes and 11 percent resistant to five or more antibiotic classes.

 

The presence of antibiotic resistant genes in livestock can be transmitted to other potential pathogens including E. coli. Dr. Federico Perez of Case Western Reserve University stated, “As  clinicians it is critical to know the prevalence of antibiotic resistance in Salmonella that affect our patients. He added “furthermore in the interests of the science of antibiotic resistance, characterization of determinants in Salmonella illustrates how antibiotic use in animals raised for human consumption affects humans, thus conforming to the One Health concept”.


 

Outcome of October Negotiations Will Determine Direction of Resolution of Trade Dispute with China

10/02/2019

A Ministerial-level delegation led by Vice-Premier Liu He will meet with Treasury Secretary Steven Mnuchin and their respective teams in Washington. The outcome of these talks will determine whether additional tariffs placed on hold until mid-October will be imposed. The October meeting follows the previous visit during late September of a lower-level delegation that met with counterparts in Washington. Although no specific details were released, it is noted that the delegation from China returned prematurely following cancellation of visits to farms in Montana apparently at the request of the U.S. Government to avoid publicity. The fact that the October meeting will take place suggests that progress was made in determining an agenda.

The President has indicated that he will not accept “a bad deal”. There has been equivocation over whether or not the U.S. and China will be able to negotiate a series of deals relating to structural and trade aspects but it is generally conceded that a “grand deal” is unattainable. A second comment by the President following discussions at the U.N. General Assembly suggested that the U.S. believes that China is desirous of a deal as a result of damage to their economy although there is little economic data to support this contention.

Irrespective of who may be hurting more it is in the best interests of both nations and the World economy to make progress in resolving outstanding issues. Like eating an elephant, one bite at a time the problems that have arisen should be resolved in sequential agreements focused on narrow issues that can be resolved.


 

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

10/01/2019

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

 

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

 

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


 

Popeye’s Chicken Sandwich Launch Beneficial to All QSRs

09/24/2019

According to a 13th September article in Food Business News, the Popeye’s late Summer promotion of their chicken sandwich was a rising tide that lifted all boats. The publicity generated in social media apparently boosted chicken sales at QSRs by 4.4 percent according to market research company NPD Group.

Daily traffic at Popeye’s peaked on August 23rd with traffic up over 200 percent compared to the previous month. Within four days of the launch, Popeye’s was out of stock, which raises questions over their logistics and planning. KFC and Chick-fil-A recorded a 29 percent rise in visits. Competitor Zaxby’s recorded a drop in traffic at the beginning of the Popeye’s campaign.

Generally visits to QSR chicken restaurants average 8.3 million over a late summer weekend. During the 2019 time period, the number grew to 10 million with a shift to KFC and Chick-fil-A following the stock-out at Popeye’s

David Portalatin, author of “Eating Patterns in America” stated “You add the excitement of a chicken sandwich battle and a social media feud and you’ve got an even greater gain in transactions--- although temporary”.

The Popeye’s launch and the resultant increase in demand for chicken sandwiches that benefitted a number of chains was fueled by social media. This represented extremely inexpensive advertising for Popeye’s and in many respects is worthy of repitition.


 

Canada in a Precarious Trade Situation

09/20/2019

Canada is linked to the U.S. as the largest trade partner in agricultural and industrial goods. The current trade dispute between the U.S. and China has influenced Canada. Issues include the adoption of Huawei 5G technology, which the U.S. disfavors and the detention of CFO Ming Wanzhou, daughter of the founder of Huawei at the request of the U.S. Robert Fay, Director of Global Economy at the Center for International Governance Innovation in Canada considers that the U.S.-China trade war “makes things more difficult for Canadian policy makers”.

A further issue which may become significant is the fact that Hong Kong self-determination and 18 consecutive weeks of protest may result in intervention by the government of China. This would affect 300,000 Canadian citizens currently resident in Hong Kong.

Paul Evans, a professor at the University of British Columbia is critical of current U.S. policy and considers that U.S. action on Ming and Huawei 5G is detrimental to Canadian interests.

The current political uncertainty in Canada should be resolved in the October 2019 election with the possibility of a change in government. The USMCA previously ratified by Mexico has yet to be addressed by the legislatures of Canada and the U.S. Canada will in all probability not move unless the U.S. Congress takes positive action. Threats to withdraw from the existing NAFTA which has functioned for over 25 years may emerge as a lever to induce the Parliament of Canada and the U.S. Congress to act in a politically-charged environment heading into the 2020 election.

Finalization of USMCA would obviously be beneficial to the agricultural sector in both nations and will provide greater stability necessary for continued capital investment.


 

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.


 

Wadiak to Produce Sustainable Chicken

09/08/2019

A recent meat industry periodical devoted inordinate significance to an interview with Matthew Wadiak and his venture to produce ‘sustainable’ chicken.  In 2012 Wadiak was a co-founder of Blue Apron.  This company has lost money every since its inception and was the subject of a recent report on quarterly performance that denoted an insecure future with either acquisition or liquidation as possible outcomes.  Wadiak is now building a new company committed to “regenerative agriculture”.  His approach is to enhance soil quality using “carefully bred and raised heirloom chickens” complying with Global Animal Partnerships Step-4 Certification.

 

Apparently Wadiak has acquired  $12 million in financing from Amera Capital Management to enable his company, Cooks Venture to establish broiler enterprise based on slow-growing birds.    The company has purchased a disused processing plant formerly operated by Simmons Foods in Jay, OK.  The plant is to be converted to air-chilling which is not a unique concept even in the U.S.  The intent is to attain a capacity of 700,000 birds per week, all grown on pasture.  Breeding facilities were acquired from Crystal Lake Farms previously the production facilities used to produce Peterson strain male broilers. 

 

Wadiak makes claims for his naked-neck birds which are probably neither valid nor commercially viable.  Target price for his product is $15 for a four-pound chicken suggesting that the market will be confined to affluent, environmentally conscious consumers.  Wadiak apparently does not consider competition from existing producers of premium and organic chickens including Bell and Evans, GNP and Fieldale Farms. Production parameters accepted for the naked-neck chicken reared on pasture suggest that unless a very high wholesale price can be obtained, with acceptable volume to offset fixed costs, enterprises based on philosophy and claims sustainability and in this case regenerative agriculture are doomed to either failure or are relegated to a small niche of the market. Wadiak’s venture may follow Blue Apron as an interesting concept but financially nonviable over the intermediate term.


 

China Retaliates Against the U.S. With Tariffs on U.S. Exports

08/27/2019

China announced on Friday, August 22nd that it will impose tariffs on $75 billion worth of U.S. exports. Predictably, the Administration announced that counter-retaliation would include raising tariffs on the $250 billion worth of Chinese goods from an existing 25 percent at present to 30 percent on October 1st. In addition, the proposed 10 percent rate due to go into effect on September 1st but deferred to mid-December would be raised to 15 percent. Observers have indicated that the constant escalation in the tariff war is counterproductive and will not achieve the aim of structural changes in China despite statements to the contrary by spokespersons for the Administration.

The tariffs on imports from China are borne by consumers. The Federal Reserve Bank of New York calculates that tariffs at the present rate will increase expenditure by the average American household by more than $800 annually. This figure will increase proportionately depending on any subsequent escalation in tariffs.

Tariffs imposed on agricultural products even before the August 4th blanket ban by China are now seriously impacting this sector. The compensatory payments to farmers effectively increase the national debt and repayment will have to be made by succeeding generations. The situation from the perspective of September 1st 2019 is far cry from the claim that “trade wars are easy to win and are of short duration”. This statement may be based on experience but obviously depends on the strength and determination of the adversary.


 

UN-FAO Issuing Unrealistic Recommendations on ASF

08/16/2019

A recent release by the United Nations Food and Agricultural Organization estimates that “almost five million pigs in Asia” have died or have been depleted due to African Swine Fever (ASF). This assessment is a gross underestimate of the damage and suggests that the FAO is out of touch with reality or is institutionally gullible, accepting distorted reports from member nations. Rabobank has estimated that 30 percent of the herd in China has either died or been culled representing a loss of 100 million hogs, a figure subsequently confirmed by a representative of an agency monitoring use of soybean meal.  Vietnam has reported the loss of over 20 million hogs and it must be assumed that proportional losses reflect the ASF situation in North Korea, Laos, Myanmar and possibly other nations in Asia.

The FAO has urged “implementing effective biosecurity”. Given that the organization knows that in China there are at least 20 million small-scale hog producers and with their knowledge of production practices gained from their response teams, the Agency must appreciate that this is a meaningless and unproductive recommendation.

The FAO recommendation not to move hogs or pork products is based on a sound foundation but unfortunately is observed more in the breach than in reality. If a small-scale hog farmer suspects that a herd of 20 hogs is infected, animals are either moved to slaughter or are sold, contributing to dissemination of the virus. Given the extent of ASF involving all provinces in China, and the incidence rate, any attempt at quarantine has been a failure.

ASF will persist in Asian nations until there is full integration allowing effective structural and operational biosecurity including location of production units and processing plants. Effective control will only be achieved when an effective and durable vaccine is available given that ASF is now endemic in most Southeast Asian nations.


 

Sanderson Farms Wins “Natural” Lawsuit against Advocacy Groups

08/08/2019

After prolonged litigation, Sanderson Farms Inc. has prevailed against Friends of the Earth and the Center for Food Safety regarding an allegation of deceptive advertising.  The U.S. District Court for the Northern District of California dismissed the lawsuit on the grounds that the plaintiff’s lacked “organizational standing” to pursue the suit because they were unable to demonstrate that the allegations of deceptive advertising made them divert resources from their respective missions. 

 

At issue was the claim that Sanderson Farms chicken was “100 percent natural”. The plaintiffs maintained that failure to allow flocks outside access and administration of antibiotics constituted misrepresentation.

 

The lawsuit was filed in June 2017 and at the time Sanderson Farms vowed to defend the action.  Court documents indicated a number of assays demonstrating antibiotic residues.  At the time, plaintiffs maintained that residues of ketamine were present in chicken.  There is no valid reason why ketamine, which is an exceptionally expensive and highly controlled drug should have been administered to poultry and the finding is regarded as spurious since valid testing methods have not been developed for detection of residues of this drug in poultry meat.  Some of the assays that apparently detected specific antibiotics and pesticides were also invalid to assay poultry meat.  At the time the lawsuit was filed Sanderson noted that the company did not administer any of the antibiotics, chemicals or pesticides listed in the complaint. Sanderson Farms did however acknowledge that company veterinarians prescribe penicillin in accordance with FDA regulations and prudent use principles as therapy for specific flocks as required by clinical and laboratory indications.  The company claimed that appropriate withdrawal times exceeding FDA guidelines were followed.

 

The findings of the Northern District Court of California should serve as a warning to advocacy groups to more circumspect when initiating of litigation.  By their vigorous defense, Sanderson Farms has benefited the entire industry and placed potential plaintiffs on notice with respect to discrediting current production practices and advertising claims.


 

Hamlet Protein Evaluates AviStart®

07/28/2019

AviStart® is a proprietary enzyme-treated soy protein produced by Hamlet Protein A/S both in the EU and the U.S. The manufacturing process reduces trypsin inhibitor, oligosaccharides and antigens including beta-conglycinin compared to conventional solvent-extracted soybean meal. Assays for anti-nutritional factors in 180 samples of U.S. soybean meal showed a range of 1.4 to 5.5 mg/g dry matter for trypsin inhibitor, 4.3 to 8.3 percent stachyose and 0.6 to 1.9 percent raffinose with up to 8 percent oligosaccharides.

 

At the 2019 Poultry Science Association Meeting Hamlet Protein presented results of applied research demonstrating the value of including AviStart® in broiler diets*.  Assays showed that conventional soybean meal used in the study contained 2.2 mg/g of trypsin inhibitor and 9.3 percent oligosaccharides compared to AviStart® at 1.5 mg/g. Inclusion of 5 percent AviStart® in the basal diet reduced trypsin inhibitor by 7 percent and both beta-conglycin and oligosaccharides by 16 percent.

 

In the replicate pen trial, conducted by Southern Poultry Feed and Research, AviStart® was included in the starter diet for 14 days at a level of 5 percent.  The possible interaction of AviStart® with superimposition of Clostridium perfringens infection was evaluated together with including BMD in diets at 55 ppm throughout the growing period. The trial was designed to determine the effect of BMD alone and in combination with AviStart®.  The replicate pen trial comprised eight treatments each with eight pens of 25 male broilers vaccinated at day-old against coccidiosis.  For treatments challenged with C. perfringens, the pathogen was mixed in feed to attain a dose level of 1.0 x 108.5 CFU per chicken and fed during days 19 through 21.

 

At the termination of the 42-day trial, control broilers weighed 2.306 kg with a feed conversion of 1.790. Challenge with C. perfringens resulting in clinical necrotic enteritis (4.8 percent mortality) reduced body weight by 9.4 percent to 2.089 kg., significantly different from the control. Feed conversion was significantly elevated by 3.8 percent to 1.858 kg.  Inclusion of AviStart® at 5 percent in starter diets restored body weight numerically to 2.295 kg, with a feed conversion of 1.803, but these parameters were not statistically significantly different from respective controls.

 

Inclusion of BMD at 55 ppm did not significantly increase body weight over controls or the treatment receiving both BMD and AviStart® although feed conversion ratio was significantly lower compared to controls.  As expected, BMD was effective in reducing the impact of necrotic enteritis on weight gain and feed conversion.  With respect to the uninfected treatments, weight gain through 42 days was unaffected by inclusion of AviStart® or BMD or their combination.  In contrast AviStart® and BMD significantly decreased feed conversion ratio and their combination was significantly superior to treatments receiving either of the additives individually in diets. 

 

With respect to the treatment infected with Clostridium perfringens, AviStart® restored body weight to that of the uninfected controls as did BMD and the combination of BMD and AviStart®.  The major impact of including of AviStart® in diets through 14 days was to restore feed conversion ratio to that of the controls in the treatments challenged with Clostridium perfringens.

 

The trial demonstrated that AviStart® was equivalent to BMD both in addition cost and in improving weight gain and reducing the feed conversion ratio in broiler chicks through 42 days of growth.  AviStart® was equivalent to BMD in improving both commercial parameters of growth and feed conversion.

 

Based on the results of the trial, AviStart® would be expected to provide an approximately 7 to 1 benefit to cost ratio from flocks impacted by clinical necrotic enteritis, depending on cost of feed, severity of challenge and prevailing unit revenue. It is reasonable to anticipate a benefit to cost return ranging from 3 to 5 depending on financial and biological variables from inclusion of Avistart® in broiler feed for a post-placement of 14 days. Production benefits are attributed to removal of anti-nutritional factors inherent to enzymatic treatment during processing of soybean meal.

 

In commenting on the results of the sponsored trial Erik Visser CEO stated “Hamlet Protein has a long track record in manufacturing soy-based specialty proteins. Avistart® represents a new product for the poultry industry and is generating positive reports from field application”. Visser added “The introduction of Avistar® in Latin America, the E.U. and Asia is based on independent scientific research and is supported by specialized Hamlet Protein technical teams”

 

*Rasmussen, S. H. et al. Effect of an enzyme-treated soy protein on the performance of broiler chickens infected or uninfected with Clostridium perfringens. Proc. 2019 Poultry Science Association Meeting.


 

World Resources Institute Promotes GM to Feed a Burgeoning Population

07/19/2019

In a comprehensive report on a sustainable food future, the World Resources Institute emphasized the contribution of genetic modification (GM) for major crops to alleviate hunger in expanding populations.  The report also comments on the need to restore forests and wetlands, reduce greenhouse gas emissions from agriculture, and limit meat consumption.

 

There is a growing concern that benefits of the Green Revolution resulting from the technical contributions of Nobel recipient, Dr. Norman Borlaug cannot be replicated using conventional breeding before demand outstrips production capacity, especially in developing nations.

 

Dr. Sara Evanega, director of the Cornell Alliance for Science supported the major findings of the report noting “genetic engineering is not going to be the only tool but it’s a good one.  To not use it is like asking a plant breeder to use an abacus instead of a calculator.”

 

The application of genetic modification is criticized by individuals and organizations including the Center for Food Safety.  This organization is apparently content to cherry pick science, distort findings and generally oppose GM technology while its operatives function with full stomachs.


 

FAO Reviews Impact of African Swine Fever in Asia

07/16/2019

The UN Food and Agricultural Organization recently issued a report on the financial and social impact of African swine fever (ASF) on food security and livelihoods of households relying on hog production. The FAO quantified a rapid rise in the price of pork during the second quarter of 2019. Currently ASF occurs in China (32 out of 34 provinces), Vietnam, Cambodia, Mongolia, Democratic People’s Republic of Korea and Laos.

The report noted the geographic extent of ASF in eastern and southeastern Asia resulting in death and culling of a significant proportion of the hog population. It is evident that small-scale family units are disproportionately affected based on lack of biosecurity, reliance on food swill and the need for middlemen to transport hogs to processing. CHICK-NEWS has opined that ASF will not be controlled within years and certainly not eradicated given the presumption of an endemic status on the subcontinent. To maintain pork production, the structure of the industry will of necessity require vertical integration eliminating the income of family farms.


The purchase of Smithfield Foods by Shuanghui Group now the WH Group in 2013 for close to $5 billion predated the ASF outbreak but was in part motivated by the desire of the parent company to gain inside knowledge of how hog production can be vertically integrated and to assess the efficiencies of scale achieved in the U.S.


 

Prospects for Bilateral China-U.S. Talks to Resume

07/16/2019

In a CNBC interview on Friday July 12th White House advisor and avowed Sinophobe, Dr. Peter Navarro announced that face-to-face talks with China would soon resume.  Navarro indicated that Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer would travel to Beijing to resume trade talks that terminated in May.

 

According to a Presidential tweet following the summit at the G-20 meeting in Osaka, Japan, China agreed to “import substantial quantities of agricultural products”.  Subsequently China denied that this was their commitment arising from the meeting. The conflict in perceptions clearly indicates the need for professional diplomats and aides to attend summit meetings and prepare minutes reflecting decisions. The President most recently commented, “China is letting us down in that they are not buying the agriculture products from our great farmers that they said they would.  Hopefully they will start soon!”  White House Economic Advisory, Larry Kudlow commented on Thursday July 11th that the U.S. expects China to start purchasing soybeans and other agriculture products in the near future.

 

Conflicting messages from the White House have roiled markets for many months and until substantial orders are placed by China, resolution of the trade conflict remains speculative.

 

The dearth of agricultural exports to China is most certainly affecting the balance of trade.  In June, the negative differential between U.S. exports to China and imports from that country attained $29.9 billion, eleven percent higher than the $26.9 billion posted in May.  The impact of the higher tariff on $200 billion of Chinese goods is reflected in the decline in exports to the U.S. from China amounting to 7.8 percent in June compared to a 4.2 percent decline in May.

 

The decision to place a 25 percent tariff on an additional $300 billion in Chinese exports to the U.S. is currently on hold pending the outcome of negotiations.


 

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

07/09/2019

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

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

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


 

Antibiotic Use in the Netherlands

07/03/2019

Researchers at the State Institute for Public Health and the Environment (RIVM) recently published a report on antibiotic use in livestock in the Netherlands covering 2018*. The 248 page document entitled NethMap 2019 combined with MARAN 2019 quantifies antibiotic use and also the incidence of emerging antibiotic resistance.

The report noted the importance of drug resistant Klebsiella pneumoniae. This organism was responsible for a number of outbreaks of nosocomial infections including fatalities at an NIH referral hospital in Bethesda, MD in 2013.                           .

The report noted that antibiotics prescribed for livestock remained constant in 2018 compared to the previous year. There was a 63 percent reduction in the total quantity of antibiotics used compared to the reference year of 2009. Following the pattern of U.S. restrictions, antibiotics of human health significance are only sparingly used in livestock. In contrast, antibiotic use in hospitals in the Netherlands is increasing.

The Dutch has been active in establishing “regional care networks” which among other functions encourage cooperation between veterinarians and physicians to minimize the potential risk of transmission of drug-resistant organisms from farms to medical facilities.

We await with anticipation a similar comprehensive report within a year of the reporting period, quantifying antibiotic use in livestock, companion animals and the human population in relation to data on drug resistance following introduction on restrictions on antibiotic administration to poultry, swine and ruminants.

deGreef, et al NethMap 2019: Consumption of antimicrobial agents and antimicrobial resistance among medically important bacteria in the Netherlands/MARAN 2019: Monitoring of antimicrobial resistance and antibiotic usage in animals in the Netherlands in 2018 (2019) Rijksinstituut voor Volksgezondheid en Milieu.  


 

USDA to Assume Responsibility for NBAF

06/25/2019

The Nation Bio and Agro-Defense Facility (NBAF) has transitioned from the Department of Homeland Security Science and Technology Directorate to the U.S. Department of Agriculture.

The NBAF will incorporate biosafety Level-4 facilities to study diseases with catastrophic potential that threaten livestock and human health.  The facility involves an investment of $1.3 billion and will be commissioned in May 2021.

 

Secretary of Agriculture, Dr. Sonny Perdue stated, “It is a real honor for USDA to have the operational stewardship of NBAF.  We look forward to working with Congress, our private sector partners and our academic partners in this area as we take over operations.”

 

The NBAF was initially planned in 2006 as a replacement for the Plum Island facility in New York State.  Originally placed under the jurisdiction of the Department of Homeland Security, this agency worked closely with USDA which has the technology and capability to plan and implement what may be regarded as a high technology program.  The NBAF will be located in Manhattan, KS.  Although regarded as “strategically placed near the largest concentration of animal health companies in the world” the facility is also in reality, located amid a high concentration of livestock.  Any release of a pathogen with the potential to cause a severe disease would be difficult to contain.  Despite the use of BSL-4 laboratories, accidents do happen as noted previously with Pirbright Laboratory in the UK, Sverdlovsk in Communist Russia and the CDC in Atlanta.  Plum Island was situated in a favorable location since prevailing winds would have conveyed any accidental release of pathogens into the Atlantic.  While the need for a modern research facility is not questioned, the actual location of the NBAF may have been more influenced more by political and logistic considerations than the need for maximum security.


 

Risk of Introduction of ASF on Smuggled Meat Products

06/17/2019

Following outbreaks of African swine fever (ASF) in Eastern Europe, South Korea instituted a surveillance program for ASF virus on smuggled meat in 2015. Authorities in South Korea confiscate approximately 6,000 products per month from travelers at airports. Following the emergence of ASF in China, surveillance was intensified. During August 2018, 4,000 pork products mainly comprising sausages were seized indicating the extent of smuggling. A total of 52 samples were selected for real-time PCR assay for ASFv. Specimens were seized at Incheon and Jeju International Airports from passengers flying for Shenyang China.

Of these confiscated products sampled, two blood sausages, one dumpling and one commercial sausage yielded ASF. Conventional PCR assay was used to characterize the isolates that were identical to isolates from the Ukraine, Lithuania, Poland and Russia.

It was not possible to propagate virus from the specimens that yielded DNA of ASFv on PCR assay. The report of surveillance conducted by authorities in Korea confirms the danger of illegal introduction of processed pork products by travelers.

Returning to the U.S. from Japan through Minneapolis International Airport in late May it was a disappointment to note that USDA had not deployed beagles as at Kennedy and Atlanta Airports. It is understood that in view of the risk of introduction of ASF the Beagle Brigade has been reinforced. We hope to see a more extensive presence of these valuable and sensitive detectors of contraband meat at airports and other points of entry in the future

*Kim, H-J et al African Swine Fever Virus in Pork Brought into South Korea by Travelers from China, August 2018 Emerging Infectious Diseases. 25: 1231-1233 (2019)


 

Farmers Justifiably Concerned Over Threatened Tariff on Mexican Imports

06/10/2019

The announcement by the President that the U.S. would impose an initial and progressive five percent tariff on imports from Mexico effective Monday 10th June created concern on both sides of the border among producers, industrialists and in the legislatures of both nations.

Adoption of USMCA was imperiled by the action since it was evident that Mexico would have imposed retaliatory tariffs that would directly impact the agricultural sector.

At issue is the contention by the White House that Mexico has done too little to stem the migration of refugees from Central America to the U.S. border. In response, Mexico offered to intensify detentions and sent a high-level delegation to Washington on Thursday, June 6th. Congress has expressed little support for the action with solid opposition from Democrats and subdued calls for moderation from Republicans.

David Herring, president of the National Pork Producers Council stated “Producers are extremely concerned about another potential trade retaliation from Mexico”. He added “Mexico is considered one of the most lucrative markets for American agricultural products given easy access and close proximity to the U.S. by rail, ship or truck”.

Veronica Nigh, an economist with the American Farm Bureau Federation commented “When you look at all the different products that the U.S. exports to Mexico, all those folks are getting nervous that retaliatory tariffs could certainly find their way into their products”.

In 2018, the U.S. exported $19 billion in agricultural products representing the second-largest purchaser after Canada. Mexico is the top market for U.S. poultry, eggs, corn and rice in addition to beef, pork, soybeans and wheat.

It is hoped that the announcement of a bilateral agreement by the White House will resolve the immediate crisis. Unfortunately Mexico, in the words of their former Foreign Minister “always says yes but is vague on when”. In the event of non-compliance the Administration has threatened to impose punitive tariffs. In this event, farmers and manufacturers in the U.S. will suffer due to reduced trade and disruption of supply chains. Additional costs will ultimately be borne by consumers. 


 

Effects of the China Trade Conflict

05/29/2019

Despite the intention of the President to meet with his counterpart Xi Jinping, President of China at the G20 Summit in Japan in June, prospects for a settlement of the trade dispute are dimming.  Imposition of a 25 percent duty on approximately $200 million in imports from China and the virtual banning of Huawei as a supplier of equipment to the U.S. or purchase of components suggests a significant confrontation.

 

It is estimated that in 2018, U.S. exports to China amounted to $120 billion.  This figure was reduced by a sharp reduction in imports of soybeans and other agricultural commodities.  During 2018, exports from China to the U.S. attained $540 billion despite tariffs.  Contrary to assertions that tariffs are borne by exporters in China, the reality is that consumers are bearing the brunt of tariffs that are regarded by most economists as an indirect tax.  It is estimated that price hikes from 5 to 10 percent on most goods from China has resulted from the tariffs extending through the supply chain. 

 

Naturally, suppliers of substitutes of products previously imported from China have raised their prices in an opportunistic response, contributing to inflation that will become more apparent within months.  Despite White House statements, a survey conducted by Fox News, generally favorable to the Administration, revealed that 45 percent of those responding considered that tariffs will hurt U.S. consumers and the economy.  Analysts project that a prolonged trade war will reduce GDP by a range of 0.5 to 1 percent.  Jason Furman, former chairman of the Council of Economic Advisors under the Obama Administration considers that the advantages from any future trade agreement with China has justified the current strategy although he is optimistic that there will be no dramatic deterioration in the macroeconomic situation in the U.S.  If all exports from China were taxed at 25 percent, GDP in China could be reduced by 1.0 to 1.5 percent. It is accepted that China has sufficient reserves to implement stimulus programs to offset the decline in exports.

 

The Administration may have miscalculated the vulnerability of China both from an economic and political perspective in applying threats and brinkmanship. A senior official in China stated, “We do not want to fight but are not afraid of one to safeguard national dignity and our core interests.”

 

Point-man Robert Lighthizer, U.S. Trade Representative considers that the effect of intellectual property theft, subsidies to quasi-state enterprises and coercive trade practices collectively have a negative effect on the U.S. economy now and also in the future.  Attempts by China to dominate trade in Asia and potentially Europe as part of the China 2025 initiative must be resisted.

 

The Administration would serve our interest to a higher degree by communicating in greater detail with industry and consumers and laying out a clear plan to resolve the trade issue to the satisfaction of both Nations.  It is evident that concessions will have to be made on both sides.  The impasse continues with the May 19th edition of the Financial Times characterizing the current situation as “who will blink first?”


 

Cargill Invest in Cultured Meat Company

05/21/2019

According to a company press release, Cargill has invested in Aleph Farms, a company based in Israel working on cell-cultured meat.  The recipient of funding is a leader in cell-cultured meat technology and anticipates releasing a commercial product within 3 to 5 years.  Cargill has also invested in Memphis Meats of the U.S. and has purchased equity in a number of plant-based protein companies.

 

Sonya Roberts, Managing Director of Growth Ventures and Strategic Pricing for Cargill Protein North America stated, “Cargill is committed to innovation and we are delighted to be a part of Aleph’s accelerated growth.”  She added, “This partnership connects new frontiers in cell-based technology with insights into the global food system and supply chains to meet future customer and consumer needs”.

 

As noted previously in commentaries, CHICK-NEWS is of the opinion that cell-cultured meat substitutes will have to undergo profound advances in technology before they are remotely competitive with either conventional meat derived from cattle of plant-based substitutes.  Apart from the expense involved in production, the regulatory hurdles have yet to be addressed with the USDA and the FDA respectively sharing jurisdiction over aspects of production, safety and labeling.

 

The investment by Cargill should not be regarded as an endorsement of the technology but rather as an expensive learning experience to determine the obstacles in production, viability and long-term commercial prospects for cell-cultured meat.


 

Tyson Foods to Pursue Plant-Based Meat Alternatives Independently

05/12/2019

Following the sale of their approximately seven percent equity stake in Beyond Meat, Tyson has announced that it will introduce a range of plant-based meat substitutes as an independent initiative. It is evident that Tyson obtained considerable knowledge of both production technology and the market for products through their association with Beyond Meat. Tyson probably also determined reasons for the suboptimal financial performance of the company and consider that they may capitalize on the market without the disadvantages of functioning as a start-up with growing competition.

The intention of Tyson Foods to move into the market as an independent was revealed by CEO Noel White at a quarterly analyst conference on Monday 6th May. It is intended that the Tyson product will launch towards the end of summer with a more extensive distribution during the 4th quarter.

Analysts project the meat substitute market in the U.S. to be worth $1.5 billion with a target of $2.5 billion by 2024. Beyond Meat will have a strong competitor in Impossible Foods. In a recent personal sampling of the product at a restaurant chain serving the product at Seatac airport, the Impossible Burger with an added haeme pigment derived from plants to provide juiciness was clearly inferior to a conventional beef burger. The menu item was served at a premium of $1 over a conventional menu item, possibly reflecting cost to the restaurant or a “feel-good” tax.


 

Recalls Mounting in Volume and Cost.

05/08/2019

The Russellville AR. complex of Conagra Brands is recalling 1,000 tons of frozen entrees due to failure to include milk on the label contents. Since milk is an allergen, it is necessary for appropriate indications to appear on the label if dairy products are included.

Tyson Foods has voluntarily recalled 6,000 tons of frozen ready-to-eat chicken strips potentially contaminated with extraneous material. The product recall is an expansion of a March 21st response involving  30 tons of product from Plant 7221 shipped to retailers and Department of Defense locations. Six complaints were documented with three alleging injury.

Recalls associated with misbranding and foreign body contamination have been increasing over the past year and probably exceed recalls for pathogens, especially in the case of large processing facilities. The cost of recalling misbranded or damaged product is disproportionately high in addition to degradation of brand image and customer disaffection. Obviously plants must apply greater diligence to labeling, preventive maintenance and inspection.


 

China Punishing Canada Over Detention of Huawei Executive

05/01/2019

Meng Wanzhou, Deputy Chairwoman and CFO of multinational Huawei and daughter of the founder of the Company, was arrested by Canadian authorities on December 1st 2018 at the request of the U.S. In March, Canada announced that extradition proceedings to the U.S. would be initiated and Ms. Meng is currently under loose house arrest in Vancouver.

The fallout for Canadian agriculture has been heavy. Exports of canola seed amounting to $2.0 billion to China in 2018 have ceased. China alleged that consignments were contaminated by “a pest” apparently ants, although no evidence of any defect was noted by Canadian authorities inspecting product prior to shipment. In addition, inspections of soybeans imported from Canada have been subject to extended delays for inspection at port of entry.

These actions by agencies administered by the central government sent a message to trading companies many of which are quasi-government entities not to purchase Canadian soybeans. Exporting companies, Richardson International and Viterra have been forced to divert shipments of soybeans, canola seed and peas to India and Bangladesh at a deep discount. Despite the fact that prices of pork in China are rising sharply, obstacles including compliance with documentation have been raised as issues to impede imports from Canada.

It is evident that China fails to recognize that due process is inherent to the legal system of Canada and judicial proceedings are independent of dictates of the executive branch. In contrast in China an edict from President Xi or his principal subordinates would resolve any legal or administrative problem. China regards the detention and probably extradition of Ms. Meng to the U.S. as an affront to the sovereignty of China and is responding accordingly with all pressure that can be brought to bear.

It would not be a surprise if the U.S. Justice Department rescinded the extradition request to Canada concurrently with announcement of a bilateral trade agreement with China. Previously the White House hinted of involvement in the case that was prosecuted based on alleged contravention by Huawei of anti-Iran sanctions. If a low-level scapegoat in Huawei could be identified and indicted Ms. Meng would be off the hook, we would be closer to trade harmony with China and Canadian farmers and exporters would be relieved of uncertainty and financial distress.


 

E.U. Considering Restrictions on Labeling of Vegetable-Based Meat Substitutes

05/01/2019

Following a 2017 decision by the European Parliament concerning labeling of substitute milk and dairy products derived from other than cows, the E.U. Agriculture Committee proposed restrictions on labeling of vegetable-based protein. It is intended that any term which relates to meat derived from animals including “steak, sausage, burger et al” will be disallowed for plant-based substitutes. The ultimate decision will be the responsibility of the European Parliament and if passed as expected, a lengthy process of approval by each member state will be required before the policy decision is implemented.

According to the Mintel Group, barriers to adoption of plant-based meat substitutes include positioning in a store, concern by consumers over preparation and serving and unfamiliarity with a new product. In the U.S., lack of availability in many supermarkets and high price relative to meat substitutes disfavor market growth of this segment. Proponents of plant-based protein claim a high recent annual growth in sales value with an increase of 6 percent in 2017 to 24 percent in 2018. This should be compared to two percent for animal-derived meat in the most recent year. Obviously one must consider the base for the calculations of relative growth rates. “Real” meat sales in 2018 attained $90 billion compared to plant-based protein alternatives at $1 billion.

An editorial on the proposed IPO of Beyond Meat in EGG-NEWS (accessible under the SEARCH tab), highlighted the cost of production of meat substitutes and the need to sell at a discount to encourage trial purchases by consumers. Plant- based meat substitutes will not achieve significant market penetration in competition with “real” meat products simply on the basis of claimed sustainability and welfare considerations. The affluent demographic sensitive to these attributes is obviously limited and probably avoids meat in any event.


 

ADM Downsizing

04/23/2019

ADM has announced layoffs including offers of early retirement.  According to a company spokesperson the action is necessary “to strengthen the core of ADM’s business and establish the company as a global leader in nutrition.”  The spokesperson noted, “One of these actions will be the opening of a voluntary early retirement window for certain eligible U.S. and Canadian colleagues. Other options include capturing synergies from our recent acquisitions and realigning our organization worldwide as we further streamline and standardize processes and eliminate overlapping roles and responsibilities.” This is a great example of corporate gobbledygook and business-speak justifying termination of mature managers and traders over an admittedly disappointing quarter.

 

For the fourth quarter ending December 31, 2018, ADM earned $315 million on revenues of $15.95 billion.  This compares to a net earnings of $788 million on revenue of $16.07 billion for the corresponding fourth quarter of fiscal 2017.

 

Justification for the current round of intended layoffs is the impact of “extreme winter weather” on first quarter North American operations. The company predicts that disruptions attributed to weather will have a negative pre-tax operating impact of $55 million for the current quarter.

 

A decade ago ADM attempted to restructure the company from a focus on grain trading characterized by The Economist as “shoveling pennies” and oilseed crushing to ethanol production from corn. This initiative was based on government mandates and a presumed secure future in so-called renewable fuel.  Although contribution from animal nutrition has benefited earnings, ethanol production has been less profitable than anticipated.  Oilseed crushing and refining constitute the mainstay of the company.

 

A severe weather incident would appear to be an inadequate reason to layoff valuable employees with experience and skills required by the company as it adjust to a more competitive trading environment. ADM will have to navigate uncertainty regarding international commodity trading in a declining world economy.


 

Epidemiology of Campylobacter Infection in Broilers Revisited

04/23/2019

As an early investigator of the epidemiology of Campylobacter infection in broilers, a recent article describing a limited study in Spain illustrates how scientists manage to rediscover what is already known and documented without necessarily making a contribution to resolving a problem. The study in question1 evaluated three growing farms supplying a processing plant in Spain. Consistent with the all-or-none prevalence of Campylobacter infection in flocks, two of the three farms studied were Campylobacter positive only when sampled at 35 and 42 days respectively, consistent with experience. The third farm was negative until removal from the house, again a frequent observation.

This pattern stands in contrast to Salmonella infection in which the prevalence rate within a flock rises sharply from a low level at placement to a peak at 14 days followed by rapid reduction as a mature biome develops in the intestinal tract. Generally at the time of depletion, flocks that are infected with Salmonella show less than 10 percent prevalence as determined by cloacal swabs.

There is no surprise in the finding that carcasses from all three farms in addition to transport crates, scald water, defeathering equipment and the environment of the processing plant yielded Campylobacter. The limited study simply confirms what was known about Campylobacter infection in the early 90's A review of the then current literature covering 220 citations analyzed routes of transmission but also possible modalities to reduce the level of infection in both whole carcasses and portions2.

1. Perez-Arnedo, I. and Gonzalez-Fandous, E. Prevalence of Campylobacter spp. in Poultry in Three Spanish Farms, a Slaughterhouse and a Further Processing Plant. Foods, doi: 10.3390/foods803111 (2019)

2. Shane, S. The significance of Campylobacter jejuni Infection in Poultry: A review. Avian Pathology 21, 189-213 (1992)


 

Convenience Stores Rely Heavily on Gasoline Sales

04/12/2019

The National Association of Convenience Stores recently posted a report documenting the 16th consecutive year of record in-store sales for 2018. Although total sales increased by 8.9 percent to $654 billion, in-store sales advanced by 2.2 percent to $242 billion with 70 percent of sales represented by fuel which showed a 13.7 percent increase, partly due to escalation in unit price.

A significant problem faced by convenience stores, is that with improved fuel consumption, fewer stops are made to fill up, which impacts in-store sales. Food service sales represented 22 percent of in-store sales and included prepared foods and beverages that generate high margins. Increases in in-store sales and remodeling are reflected in an average convenience store area of 3,200 square feet. Some units located on interstates and in urban areas extend over an area of 5,000 square feet. It is estimated that the capital costs for a new store is now approaching $7 million.

The convenience store segment of retail is experiencing an escalation in direct operating expenses including wages, health-care insurance and credit card fees. Convenience stores are vulnerable to possible restrictive legislation on the sale of tobacco. Cigarettes and related products represent 37 percent of in-store sales.

Convenience stores represent an important potential outlet for egg-based snacks including one- and two-pack hard-cooked peeled eggs. Innovation in egg-based ‘finger food” and snacks could contribute to increased demand. The American Egg Board has achieved success in moving product through QSRs and the food service industry. It would appear that the convenience store sector represents a new opportunity.


 

Opacity in ASF Reports from China

04/02/2019

CHICK-NEWS and EGG-NEWS have forcefully questioned reports on the extent and severity of the ongoing outbreak of African swine fever (ASF) in China. Official reports suggest the loss of one million hogs out of a population of 300 million, which should be inconsequential in terms of output and market price. The reality is that prices of live hogs and pork have shown a steady increase since the first diagnoses during the 3rd quarter of 2018. High prices for pork are also reflected in increased demand for poultry meat as documented in a recent USDA-FAS GAIN Report. Conflicting data have been released by central and provincial authorities, although it is evident that at least 114 disclosed outbreaks have been confirmed in 28 provinces. This in itself is a red flag (irony intended), since multiple outbreaks of a highly contagious disease in diverse geographic areas over a short time period suggests a high incidence rate inconsistent with official reports.

The Ministry of Agriculture of China stated that the national pig herd in February fell by 16 percent year-on-year, representing 50 million hogs. More important, the sow herd has apparently fallen by 20 percent implying that forward production will be affected even in the unlikely event that the infection in grow-out farms can be controlled in the intermediate future. Authorities in Shandong Province, producing close to 50 million hogs in 2017, stated that the breeding sow herd had declined by 41 percent. The province produces seven percent of the national supply of close to 600 million hogs annually.

During the early months of the outbreak, official reports confirmed diagnoses, but most were described in small family-owned units with less than 200 hogs. To have attained the magnitude of losses as are now becoming apparent, the number of outbreaks and their extent over at least fifteen major provinces producing hogs must be far higher than has been admitted.

Since pork is a major protein source in diets in China, disruption of supply will have profound social and economic impacts, some of which are becoming apparent including the increased demand for broiler meat. Clearly China will have to import pork, presuming a relaxation of import duties on agricultural products imposed as retaliation for U.S. tariffs on manufactured goods. It is ironic that the WH Group, most vulnerable to the ASF outbreak is the owner of Smithfield Foods of the U.S. that indirectly will benefit from the outbreak.

The primary concern of veterinary authorities in the U.S. should be to prevent introduction of ASF. The most likely route would be illegal importation of pork from Asia in which the virus can remain viable for extended periods. CHICK-NEWS previously documented seizure of numerous containers of partly cured pork at the Port of Elizabeth in New Jersey. Taiwan and South Korea have also interdicted illegally imported pork contaminated with ASF Virus. The obvious questions are how much contraband material has been imported into the U.S. and Canada and whether existing illegal supply channels will continue to function undetected, risking our pork industry.


 

Midwest Row-crop Farmers Suffering Stress from Debt

03/31/2019

It is apparent that Midwest farmers are showing mental stress from current prevailing low ingredient prices and income.  Bloomberg reports that the ratio of debt to farm income has risen sharply since 2014 from a ratio of 3.0 to 6.5 in 2019.  This figure is the highest since 1985 during which a value of 7.2 was posted.

 

The plight of farmers was highlighted by the action of Senators Joni Ernst (R-IA) and Tammy Baldwin (D-WI) who included $50 million over five years in the 2018 Farm Bill to cover emotional and mental counseling in rural areas.  Wisconsin has lost 1,200 dairy farms in the past three years with small family-operated units impacted the most.  Calls to Farm Aid are evenly distributed among livestock, grain, dairy and vegetable producers with 1,034 calls in 2018, double the number in 2017.

 

A temporary beneficial effect resulted from the $8 billion distributed to farmers by USDA as a result of lost exports and consequential lowered domestic prices following the initiation of the trade war with China.  Prospects for a second round of ex gratia payments are remote.

Commenting on the current debt situation, Scott Marlow, senior policy specialist at the Rural Advancement Foundation International stated, “Farmers have a fierce independence and deep connection with the land that can become an economic disadvantage.”  He added, “Farmers can be driven far further than most of us would be before they would call it quits, to the point of getting off-farm jobs to be able to continue farming and subsidizing the farming operation with off-farm income.”

 

The plight of small-scale row-crop farmers contrasts with the security enjoyed by independent contractors to broiler integrators. These farmers receive a check after every 8 to 9 week cycle. They have no working capital invested in the flocks placed and the risks of disease and market fluctuations are borne by the integrator owning the birds. The contract system has worked for over seven decades and functions to the mutual benefit of both Farmer and integrator. Given the prevailing situation in corn, soybean and wheat cultivation broiler and turkey farmers are in a more favorable place. A very good justification not to attempt to fix a situation that is not broken as proposed by the previous Administration


 

Conflict Over EPA Small-Refinery Exemptions to RFS

03/25/2019

Despite pre-election rhetoric that the Renewable Fuel Standard (RFS) would be supported to the benefit of Midwest corn growers, the EPA under the current Administration has continued to grant small-refinery exemptions to the RFS. Under previous administrator Scott Pruitt, the EPA granted 48 Small Refinery Exemptions (SREs) in 2016 and 2017 totaling 2.3 billion gallons of biofuels not blended. Subsequently five additional waivers were granted in 2017 and the FDA rejected one request. It is estimated that the 53 waivers represented the equivalent of 930 million bushels of corn that would produce 2.6 billion gallons of ethanol.

The exemptions by the EPA have aroused the ire of advocates of corn-based ethanol. Geoff Cooper, president and CEO of the Renewable Fuels Association stated “It is extremely disappointing and outrageous to see EPA once again allowing oil refiners to undermine the RFS and hurt family farms, ethanol producers and our environment by exploiting and abusing our statutory provision that exempts them from their obligation to blend renewable fuels.”

Brian Jennings, CEO of the American Coalition for Ethanol stated “The EPA has further depressed demand for ethanol by rubber-stamping five more refinery exemptions for 2017 and done so without reallocating the blending obligations to other refiners.” He added “Any benefit of selling E-15 year-round will be wiped out until and unless EPA gets back to the rule of law when it comes to these refinery waivers under the RFS.”

Scott Segal, an attorney representing refiners stated “Attempts to set artificial barriers against granting SREs has been rejected both in court three times and by the direction of Congress in EPA appropriation bills.”

The EPA maintains that it is following law in granting SREs.


 

S. A. Poultry Association Campaigning Against Imports

03/11/2019

The South African Poultry Association (SAPA) is campaigning strenuously against imports from Brazil, the U.S. and other nations that collectively contributed to a volume of 570,000 tons in 2018, representing 25 percent of total consumption (assuming 50 million population and an average 41 kg. per capita).

SAPA bases its current request for import bans on job preservation, quality and safety. According to Izaak Breitenbach, General Manager of the broiler branch of SAPA, all three major broiler producers in the RSA laid off workers in 2017 when faced with high production costs due to the drought which impacted the availability and cost of ingredients.

Breitenbach as quoted in the RSA Sunday Tribune on March 3rd distorted reality in his promotion of a proposed ban on importation of chicken. The action he suggests would be illegal in terms of WTO rules and would contravene the African Growth Opportunities Act (AGOA) under which the RSA is granted favorable trading rights with the U.S. Breitenbach incorrectly claims that the chicken industry in the U.S. is “subsidized by the government” stating further “they receive subsidies for corn and soy feed”. SAPA is also agitating against Brazil by questioning the quality and safety of imports amounting to 348,000 tons in 2018.

Marthinus Stander, Chairperson of Country Bird a major producer noted “We’re not scared of whole chicken carcasses coming to the country but we cannot compete with the prices that leg quarters are being dumped in South Africa.” There is however no evidence that producers in the U.S. are “dumping” leg quarters. The issue has been resolved by independent evaluation to conform compliance with WTO rules.

Paul Apostolides, a relatively small family-owned producer operating on the East Coast of Kwa Zulu-Natal Province quotes a local producer-cost of $0.72 per pound which is realistic given feed, labor and energy costs in South Africa. In contrast he grossly understates the CIF price of frozen imported product at $0.20 per pound. At an average price of $900 per metric ton as per USDA FAS Export data for 2018, the 97,000 metric tons of U.S. leg quarters were shipped at $0.41 per pound FOB to which must be added freight, insurance, duties and related costs.

In his concluding remarks, Breitenbach noted “Government needs to step in and protect the local industry and the thousands of jobs at stake.” With an imminent national election, it is in the interest of the ruling African National Congress party to ensure that there is “a chicken in every pot” or at least a U.S. leg quarter as favored in the Nation. The Government of the RSA can accept an imperceptible increase in the unemployment rate given the documented 30 percent unemployment figure and possibly 50 percent underemployment.

The reality is that production of broilers in the Republic of South Africa has become non-competitive relative to Brazil, Argentina and the U.S. This is due to high labor costs and inefficiency, an exorbitant feed price, climatic extremes, deficiencies in power supply and a deteriorating infrastructure. Obviously companies with a product range comprising chilled whole birds and tray portions are in a relatively favorable position as they do not compete directly with frozen imports and market to a higher income demographic.

It is evident from the Sunday Tribune article, that the journalist Mervyn Naidoo failed to check facts and figures with special regard to the costs of domestic production and imports and simply quoted his obviously biased sources.

If imports were banned, the price of chicken would soar in consistency with the laws of supply and demand. As an example the price of domestic U.S. steel and aluminum rose following the injudicious imposition of a 25 percent tariff on imports in 2017. It is in the interest of the ruling African National Congress party to make available a relatively inexpensive source of protein for lower-income consumers who will effectively be supporters in the coming election. The ANC appears cynically willing to sell the RSA chicken industry down the river as a matter of political expediency.


 

Putting a Muzzle on Social Media Activists.

02/23/2019

During the past week Pinterest and Facebook clamped down on non-scientific and biased postings to extend their control over dissemination of misinformation. At issue is the misdirected opposition to childhood vaccination. Any person is entitled to their opinions but not their facts. The growing number of posts unjustifiably promoting the ideas of cranks and individuals with hidden agendas has caused an upsurge in cases of measles and whooping cough that can no longer be tolerated.

 

The outlandish views based on junk science and deliberate falsification of results cost Dr. Andrew Wakefield his medical license but he is supported by a host of like-minded charlatans including microbiologists, homeopaths, and fringe scientists. They are opposed by organized medical associations, the CDC and similar agencies together with primary care physicians who deal with the consequences of deliberate neglect of vaccination.

 

Social media has provided any crank with a large megaphone to spread fear and blatant prevarication. The effort involved in disproving any link between early vaccination and the autism spectrum diverted medical researchers and epidemiologists from other activities over years in the U.S. and Scandinavia. Their efforts were necessary given the gravity of rejection of vaccines in North America, the EU and Japan. Herein lies the problem of countering false claims in the social media. The time, creativity and professional reputation expended in rebuttal is disproportionate to unsubstantiated claims by quacks intent on scaring intellectually impressionable and vulnerable parents.

 

The vaccine issue as amplified by social media has highlighted the problem of asymmetrical opposition to science. For three decades, opponents of GMO technology have generated social and political restraints to adoption of cultivars offering increased yields and reduced pesticide and herbicide use. There is no evidence that GM crops have any adverse health effect despite unsupported claims to the contrary.

 

Animal rights groups and pro-vegan organizations such as HSUS and its clones have been able to harvest multiple millions in income by manipulating social media to the detriment of the intensive livestock sector of agriculture.

 

Perhaps the vaccination issue and false political postings have awakened providers, legislators and users of social media to the dangers of misinformation. Although censorship is undesirable we must advance somewhat from not shouting fire in a theatre as the standard for free speech. The social media collectively represents a two-edged sword. Making available knowledge, advancing fellowship and positive causes is beneficial. The darker side involves falsehoods, coercion and an appeal to baser instincts and fears that tear at the fabric of our society. Technology created this force now we have to learn to manage it for more positive outcomes.


 

India Moves the Goal Posts on E-commerce

02/06/2019

When confronted with any form of foreign investment or innovation India can be relied on to revert to protectionism that is the inherent default mode for the highly socialist regulated economy. In recent years, Amazon has entered the market in India through local partners closely followed by the 2017 investment of $16 billion by Walmart in domestic company Flipkart. It is estimated that during 2017 the sales of these companies amounted to $3.2 billion and $3.8 billion respectively.

 

Noting that the projected E-commerce market in India will rise rapidly from the 2018 sales value of $33 billion in 2018 the Government of India has imposed restrictions on foreign investors. This is in an attempt to protect the millions of mom-and-pop retail stores in the Nation.  

 

The regulations effectively prevent E-retailers such as Amazon and Walmart/Flipkart from selling products through subsidiaries.  This was a tactic forced on the foreign E-commerce companies following a previous restriction.  Companies can now only sell their own brands on their websites, severely restricting sales.

 

It is no coincidence that restrictions were imposed in advance of national elections.  Prime Minister Narendra Modi is vying for a second term and is pushing a “national champion” program which appeals to the middle class in addition to domestic backers of his Administration with their own E-commerce aspirations.

 

India has always been and will continue to be an unreliable investment opportunity given the socialistic inclination of the bureaucracy and the Byzantine administration overlapping state and national jurisdictions. The inefficient and possibly corrupt legal system is no help to foreign investors.  The market in India is potentially huge but artificial barriers and erratic policy decisions disfavor sinking capital into projects and apparent opportunities.


 

ASF Will Restructure Pork Production in China

02/05/2019

It is estimated that 40 percent of output amounting to around 700 million hogs annually are derived from small farms with less than 400 animals. With primitive facilities and deficient biosecurity, small-scale farmers are disproportionately impacted by African Swine Fever (ASF) compared to large integrations. Quarantine of variable intensity has prevented farmers from shipping hogs to distant abattoirs for slaughter. The cost of holding hogs for extended periods has wiped out profit even in farms unaffected by the disease.

African Swine Fever is especially hard on farmers who rely on the seasonal demand over the lunar new-year holiday that began on January 5th and is characterized by high domestic consumption. It is ironic that the current lunar year is termed “the year of the pig” given the advent of the infection.

It is obvious that as small growers exit production, the small but rising number of integrated producers will be able to expand to satisfy demand.

Perhaps in anticipation of ASF and also declining foreign trade, the centrally planned government of China in 2018 initiated a campaign to reduce excessive consumption of protein and especially pork, both on economic and health grounds.

Given the structure of the hog industry in China, and the history of control and eradication of ASF in the EU, producers can anticipate an endemic status for the disease in the foreseeable future even if an effective vaccine is introduced. Integration is inevitable resulting in a decline in the support structure for small-scale farmers concentrated in areas of high density of hogs. This includes many feed mills and will extend further back through the production chain to companies crushing imported soybeans from the U.S. and Brazil.


 

Angola Market in Question

02/04/2019

The Government of Angola has issued a document outlining economic and development strategy over the proximal four years to replace oil as the principal driver of the economy.  The Plano Nacional de Desenvolvimento considers promotion of domestic agricultural products including poultry, beef, pork, rice, cornmeal and flour.  Import restrictions will be imposed on wholesalers and domestic producers authorized to import goods.

 

It is anticipated that restrictions will be placed on imported chicken by 2022.  Angola was the second largest importer of U.S. broiler parts with a volume of 188,006 metric tons shipped from January through October 2018 with a value of $167.4 million at an average unit price of $890 per metric ton.

If the intended situation in Angola follows the pattern in Mozambique, the import permit system will become a cash-cow for officials in the Government who impose restrictions and then illegally profit directly or indirectly from issuing permits.  Domestic production of poultry will require foreign capital and it is questioned whether EU, North American or even Asian nations have the intestinal fortitude to deal with an acknowledged corrupt regime, temperature extremes and endemic diseases in addition to defects in the transport infrastructure and the absence of a cold chain for distribution. Angola was ranked by Transparency International in 2016 as the 164th most corrupt nation out of 176 countries bordering on the status of a “failed state”  Mozambique was ranked 161 out of 183 nations in 2018 by the same international agency.

 

The prospects of Angola becoming self-sustaining in broiler and egg production are considered doubtful given the record of implementation and performance of projects in other sub-Saharan nations.


 

China Approves GMO Cultivars

01/28/2019

According to a commentary in the Wall Street Journal, James C. Collins, Jr., CEO of Corteva Agriscience, a division of Dow DuPont, China has approved the importation of five genetically modified crops including soybeans, corn and canola. China will benefit from a continuing supply of ingredients that can be grown in the U.S. and other nations.

China has been slow to approve GM ingredients and the change in policy, although based on scientific evaluation, is an indication of their need to import ingredients at competitive world prices to support both livestock feed and for human food. The major beneficiaries of the decision by China will naturally be the developers and distributors of GM seeds of which DowDuPont represents a major supplier.


 

USDA to Recall 10,000 Employees

01/19/2019

USDA Secretary Dr. Sonny Perdue has ordered 10,000 furloughed employees to return to work without pay to staff FHA and related service agencies.

The partial Federal shutdown now entering the second month without an indication of resolution of the impasse over border security has generated resentment among farmers planning for the 2019 crop.

 

The recalled USDA employees together with about 800,000 others in the TSA, the U.S. Coast Guard and other affected agencies will eventually be paid for their time. It is however both coercive and exploitative to expect any employee to work without pay. Many of the lower-paid personnel live from paycheck to paycheck and after missing two pay periods have accumulated debt.

 

The Government needs to reopen and the fiscal and policy issues concerned should be resolved by good-faith negotiation.


 

E.U. to Face Food Shortage With Current “All Natural” Policy

01/07/2019

Remi Dumery, a farmer in France, has castigated current E.U. policies on GMO and pesticides. Dumery maintains that the 28-nation union is “sleepwalking into a food crisis and politicians are doing nothing to stop it.” Dumery claims that elected representatives are pandering to scientific illiteracy in an attempt to establish their environmental credentials.

At issue is the herbicide glyphosate, which has become a political football. Dumery maintains that President Emmanuel Macron has sufficient technical evidence to exonerate the compound from allegations that it is potentially carcinogenic. Unless a suitable and equally efficient herbicide is developed within the next three years, crop yields will deteriorate and environmentally deleterious alternatives will replace glyphosate.

The E.U. has adopted a decidedly anti-GMO stance despite three decades of experience that has demonstrated that GMO crops are innocuous with respect to health of humans and livestock. Anti-science and unfounded opposition to innovation will seriously restrict advances in agriculture which will be necessary to feed the world’s population by mid-century.

Dumery refers to the “Nespresso effect” in which a highly urbanized population takes for granted the availability of prepackaged food without any consideration how it is grown or processed. Unscrupulous politicians have applied fear and uncertainty and in many cases, sophistry to oppose GMO technology and environmentally acceptable herbicides and pesticides.

In a recent decision, the European Court of Justice determined that gene editing involving deletion and suppression of genes was to be covered by the same rules as insertion of genes. This is an example of unfounded restriction which obstruct technical and commercial progress in developing new cultivars offering resistance to pathogens and drought and offering increased yields.


 

Senator Debbie Stabenow Promotes Benefits of the 2018 Farm Bill

12/27/2018

In a press conference relating to the passage of the 2018 Farm Bill, Senator Debbie Stabenow   (D-MI), the ranking member of the Senate Agricultural Committee outlined benefits from the Farm Bill to the U.S. farming community but specifically to her Michigan constituency.

It is evident that dairy farmers will benefit both from the support extended in the Bill but also indirectly from the USMCA Trade Agreement, yet to be ratified. An aspect of the Farm Bill that was a specific area of concentration for Stabenow included establishing an Office of Urban Agriculture. During the Obama Administration, the USDA actively supported farmers’ markets and sustained programs to establish cultivation of vegetables in urban areas on vacant land. Various reports have indicated the non-viability of these projects, many of which rely on volunteer labor. The U.S. has never been able to establish the model of allotments popular in the U.K. and E.U.  The allotment system contributes to supply of vegetables by families and is also a recreational endeavor. The system is dependent on an enthusiastic group of participants and a public transport system, both of which appear to be lacking in our inner cities.

Senator Stabenow also pointed to the exclusion of restrictions for recipients of the Supplemental Nutritional Assurance Program (SNAP). Despite specific success stories such as Oakland Avenue Urban Farm in Detroit, the sustainability and financial viability of urban farming is highly questionable.


 

Bayer CEO under Pressure

12/07/2018

Werner Baumann the CEO of Bayer AG advanced to CEO in 2016 on a platform of acquisition with Monsanto as the principal prize representing a $63 billion commitment. The transaction was supposed to turn Bayer into the World’s major producer of seeds and agricultural chemicals critical to feeding and expanding a population expected to reach over 9 billion by mid-century. 

 

Marijn Dekkers, predecessor of Baumann had concerns over the acquisition. Apart from increasing debt load, he possibly foresaw the public relations problems associated with a company in the crosshairs of environmentalists and Green parties in the E.U. and worldwide.  The doubts expressed by Dekkers have now become a reality with Bayer facing up to 10,000 lawsuits over the potential cost of defending lawsuits alleging the carcinogenicity of glyphosate, the active ingredient of Roundup®™.

 

Faced with the current situation, Bayer will cut ten percent of its workforce representing 12,000 positions, spin-off the Animal Health business and sell prime brands, Coppertone and Dr. Scholl’s, acquired from the Merck consumer portfolio.

 

Investors, especially banks and institutions abhor uncertainty. Since the August 10th adverse jury verdict against Monsanto, Bayer shares have fallen by 35 percent possibly making the holding company vulnerable to hostile takeover and subsequent dismemberment.

 

In retrospect, the injudicious purchase of Monsanto was in part stimulated by the failure of Monsanto to acquire Syngenta AG in August 2017.  Subsequently, Syngenta AG. was acquired by ChemChina, a government-controlled enterprise.  This made Monsanto receptive to an acquisition which appealed to Baumann who courted Monsanto from May 2017 through to the announcement of the deal in September 2018.  The Monsanto honeymoon with Bayer lasted only three months until the San Francisco jury verdict.

 

The weight of scientific evidence suggests that glyphosate is not carcinogenic irrespective of the WHO-IRAC Report, which designated glyphosate as a potential carcinogen in March 2015.  This declaration was subsequently retracted based on opposition by independent scientists affiliated to academia and regulatory agencies.  It was also disclosed that a co-author of the Report had a conflict of interest that he was serving as an expert for litigants suing Monsanto.

 

The bottom line for farmers is that their major supplier of genetically modified seeds and herbicides is under financial pressure and will obviously attempt to increase prices.  The livestock industry will lose Bayer Animal Health as an independent supplier of anti-parasiticals since after the subsidiary is acquired the market will be less competitive.


 

Demise of Cellulosic Ethanol?

12/03/2018

The 2007 Energy Independence and Security Act introduced a mandate for cellulosic ethanol. It was projected that 100 million gallons of non-corn ethanol would be produced in 2010 rising sharply to 5.5 billion gallons in 2017. As a result of heavy subsidies and a market mandated by the Renewable Fuels Standard, four capital-intensive plants were erected to convert plant waste into ethanol.

In 2014, 725,000 gallons of cellulosic ethanol were produced with the bulk derived from processing landfill waste. Production of cellulosic ethanol expanded in 2016 to 3.8 million gallons and then to 10 million gallons in 2017. Production was however approximately one-eighth of the 90 million stated capacity of the four plants.

Fast forward to November 2018. DuPont, an early entrant into the field, has sold the Nevada, IA plant erected at a cost of $200 million to Verbio of Germany. The purchaser will spend $35 million to convert the plant to produce methane as a fuel for vehicles or for the natural gas grid by 2020. This plant has the capacity to process 300,000 metric tons of corn stover annually, and was originally intended to produce 30 million gallons of ethanol.

The Abengoa plant in Hugoton, KS is now mothballed following a filing for bankruptcy. The Beta renewables plant has also been shuttered. Only the joint venture Poet-DSM plant is in operation in Emmetsburg, IA., although the financial viability of this facility is in question given the demise of the three other facilities.


 

African Swine Fever Situation Deteriorates in China

11/30/2018

Two reports during the week ending Friday November 16th and subsequent items indicated  deterioration in the African swine fever (ASF) situation in China.  To date 60 outbreaks have been documented in 18 provinces since the index case in early August.

 

Until this past week, Sichuan Province was unaffected.  African swine fever was diagnosed on a smallholding with 40 hogs in Yibin City in the Southeast of the Province.  Sichuan produces 66 million hogs out of the total output in China of 700 million in 2017.The Province has an 80 lb. per capita consumption of pork.

 

Despite bans on importation of live hogs and hogs products, ASF obviously crossed over into Sichuan from adjoining Juizhou Province where cases were recently diagnosed. On November 16th, Thomson Reuters reported isolation of ASF virus from a dead wild boar in Bastian City in Jilting Province in Northeastern China.  Emergence of ASF among feral swine represents a serious change in the epidemiology of infection and will complicate control and almost certainly prevent eradication in the intermediate term.  Endemic infection in a mild clinical form among wild hogs will constitute regional reservoirs.  The U.N. Food and Agriculture Organization estimates that there are more than 40 million wild hogs in China.

 

Authorities in China have imposed quarantines over affected small farms. Feeding swill containing potentially infective material has been banned.  Unfortunately authorities do not have the resources to effectively implement control measures on other than large production units.

 

The fact that the price of pork is rising in Provinces characterized by high consumption suggests that the public is not concerned over acquiring the infection.  This is not the case with avian influenza affecting broiler flocks since sharp drops in consumption follow announcements of infection.  The rise in prices for live hogs and pork will only complicate control since there will be a greater incentive to smuggle products and to defy quarantines and restrictions on movement.

 

Based on persistence of African swine fever following introduction into the Iberian Peninsula in the early 1960’s and the most recent outbreaks in Russia and Eastern Europe it is inevitable that ASF will become endemic in China and possibly spread to other Asian nations.  The only effective control measure will be the development and introduction of an effective vaccine.  Given homogeneity of ASF virus isolated from early cases in China with ASF virus from outbreaks in Eastern Europe, a vaccine which is effective against sero-group A should provide protection. In the interim since the virus appears to be transmitted in feed, as with the coronavirus causing porcine epidemic diarrhea, inclusion of dietary organic acid supplements to inactive ASF virus would be a worthwhile precaution.

 

 

It is inevitable that introduction of ASF into China will profoundly impact the structure of the industry, disfavoring small family farms in favor of large self-contained units capable of implementing effective biosecurity, vaccination and the efficiencies associated with economies of scale.


 

Seizure of Potentially Contaminated Products by FDA

11/20/2018

On November 7th inspectors from the Food and Drug Administration assisted by the Marshal’s Service raided J and L Grocery LLC in Alma, AR. The company receives salvaged products including over-the-counter drugs, cosmetics and human and animal food products for re-distribution.

The action taken by the FDA is justified and is intended to protect consumers. What is of concern is that the enterprise was previously inspected in September and October 2018 revealing insanitary conditions. According to the November 9th 2018 FDA release, conditions included multiple live nesting and dead rodents, live raccoons and cats, animal feces and urine-stained products scattered among seven warehouses and sheds. Accordingly, Administrative Detention Orders were issued dated October 9th and 19th.

Why was there a delay between the first visit in September and the November action? It is possible that products were not released after the October 19th Detention Order, but in view of the unsanitary conditions observed, all products should have been seized and the company ordered to cease operation. If the FDA does not have the legal authority to act promptly when confronted with an obvious deviation from accepted practices, then it should seek legal authority to truly function as an agency protecting the public.


 

Produce Demonstrated as Reservoir of Pathogens with Transferable Antibiotic Resistance Gene

11/20/2018

Scientist at the Julius Kuhn-Institut, Federal Research Centre for Cultivated Plants, Braunschweig, Germany recently conducted an analysis of potentially pathogenic E. coli isolated on produce offered for sale at supermarkets.  Advanced microbiological techniques were used to detect resistance genes, Class 1 integrons and plasmids.

 

The study showed a wide array of transmissible multiple resistant plasmids in bacteria isolated from produce. Since salads are consumed raw, it is highly probable that bacteria carrying multiple resistance genes could be transferred to the microbiome of consumers.

 

The source of potentially pathogenic and drug resistant bacteria was not identified.  Given the Yuma Valley outbreak of STEC associated with romaine lettuce, it’s more than probable that animal waste enters water courses and is used for irrigation for produce.

 

Fecal contamination of water with subsequent deposition on leafy vegetables represent a link between an animal system and consumers.  With respect to drug-resistant bacteria on meat, the risk of transferring genes to the human biome is limited since these products are cooked before consumption.  Salads represent a logical link between livestock and consumers with respect to transmissible antibiotic resistance.

 

*Blau, K. et al. 2018, doi. Org/10. 1128/nbIO.01300-18. The Transferable Resistome of Produce


 

Sanderson Farms Bryan, TX. Complex a Subject of Protest

10/16/2018

It is evident that activist groups promoting unions and labor rights have targeted Sanderson Farms as the Nation’s 3rd-largest broiler integrator. On Monday October 8th a protest was staged by a coalition including members of Interfaith Worker Justice, Brazos Interfaith Immigration Network and the Council for Minority Student Affairs.  Allegations which have been strongly denied by Sanderson Farms include restrictions on bathroom breaks, discrimination and sexual harassment by supervisors.

 

Sanderson Farms CFO Mike Cockrell emphatically stated, “The same labor group has made these allegations before in Mississippi.”  He added, “We denied they were accurate then and we deny they're accurate now.”  Cockrell opined “The idea that anyone would treat another human being like that is difficult to imagine and if that happened in our plant those supervisors will be terminated immediately.”  Sanderson Farms has a zero tolerance policy on any kind of discrimination or harassment.

 

The representative of the protestors Plankey Videla of the Centro de Derechos Laborales stated, “We have witnesses and people who have told us that they have begged to go to the bathroom while working on the production line.”  She also alleged, “Quite a few women have also come and told us about harassment on the part of supervisors.”

 

Given that the organizations promoting union representation and improved working conditions have gone on record with their protest, covered by mainstream and social media and that Sanderson Farms has denied allegations at the corporate level, it will be appropriate to investigate the situation at the Bryan, TX. A disinterested review team could establish whether there is any substance to the allegations.

 

Surely responsibility is vested in OSHA and other agencies within the Department of Labor to determine whether abuse of workers has or has not occurred.  If in fact there is any substance to the complaint, appropriate authorities including the Department of Justice should intervene. If the allegations are proven to be without substance, Sanderson Farms would be vindicated and the duplicity of the accusers exposed. 

 

Both for the image of the industry and also the management and shareholders of Sanderson Farms the accusations should be promptly investigated and if deficiencies exist either at the local or company-wide level, appropriate remedial action is indicated. Given that accusations have been proven to be without substance with respect to other producers and in areas of the U.S. the matter should be laid to rest as quickly as possible before it becomes a consumer or social media issue.


 

NCBA Oppose Motor Carrier Safety Administration Hours of Service Rule

10/09/2018

The Federal Motor Carrier Safety Administration has issued regulations requiring a driver of a heavy vehicle to rest 10 hours after 11 hours of continuous driving. The National Cattleman’s Beef Association are requesting blanket exemptions from the regulation.

NCBA president Kevin Kessner stated “The current Hours of Service framework is incompatible with the realities of livestock hauling.” He added “Drivers of our livestock need to be alert and safe while also cognizant of the welfare of the animals they are hauling. We want them to rest as needed instead of racing against the clock.”

The regulation as framed has a sound basis in both statistics relating to accidents involving heavy vehicles and on the effects of fatigue on driver performance. It is recognized that after an 11-hour stretch, a driver cannot leave a vehicle loaded with hogs or cattle for 10 hours during a rest period.

Surely the solution would be on those occasions when it is contemplated that a driver will undertake a journey longer than 11 hours to provide two drivers who can relieve each other at five-hour intervals. Admittedly this will increase cost but should contribute to a lower accident rate. Serious accidents involving livestock trailers generate opposition to intensive animal production and place a burden on first-responders who are ill-equipped by training and inclination to euthanize large numbers of animals under stressful weather conditions and frequently at night.

The NCBA should not ask for blanket exemptions or as they term their request “flexibility”. Appropriate planning and expenditure on manpower would contribute to a higher level of safety and remain within the intent of the Hours of Service Rule.

Fortunately, the broiler and turkey industries do not require drivers to be in service for extended periods. Delivery of started pullets and day-old chicks may involve extended distances, but again appropriate planning with either two drivers or staging substitute drivers along a route could be arranged.

There are good reasons for the Federal Motor Carrier Safety Administration to introduce limits on duration of service. Flight crews are rigorously supervised and more recently, length of continuous service periods for hospital interns and residents have been reduced to avoid fatigue and errors. These are valuable precedents which should be adopted by all users of our highways.


 

American Humane Promotion of Farm Program

10/05/2018

Marty Frankhouser, newly appointed National Director of the AHA Farm Program, recently circulated a letter to producers notifying them of an upcoming advertisement to appear in Supermarket News. Basically the full-page spread portrays the logos of participating egg and poultry meat producers.

The value of a welfare certification program is based on consumer acceptance and confidence in the validity of the program. A secondary consideration is the perception by retailers, QSR operators and food service companies that a given welfare certification program is valued by consumers.

It is difficult to discern the potential value of displaying 50 or more logos in an advertisement in a trade magazine other to attempt to bolster the image of the AHA Farm Program among retail buyers or for the gratification of AHA management. The assurance that AHA is “constantly working through national television campaigns, print advertising and social media to promote the American Humane Seal is intended to reassure producers who pay a royalty for the endorsement.

A more persuasive approach would be to present market research data demonstrating a statistically significant motivation to purchase products by consumers based on the AHA Seal. It would be further beneficial to retailers for AHA to quantify the willingness-to-pay a premium for products bearing the Seal. This would allow producers to calculate the benefit to cost of participation in the program and for retailers to ascertain whether there is a potential to improve margins on products carrying the AHA Seal.


 

American Farm Bureau Federation Urges Negotiations in Place of Tariffs

09/30/2018

With the advent of the ten percent tariff imposed on $200 billion of goods imported into the U.S. from China effective September 24th, the American Farm Bureau is counseling prudence and negotiation. In a statement before the Senate Agriculture Committee the Farm Bureau urged “our trade officials to engage in discussions with our trade partners to resolve trade concerns before resorting to tariffs”. Actions targeting our largest agricultural export markets have resulted in retaliation against U.S. farmers, ranchers and agricultural and food businesses across the country.

To be cynical, there is an end in sight. Unfortunately, this will involve further tariffs on the remaining $267 billion of Chinese imports. Retaliating, China has virtually run out of U.S. imports on which tariffs can be placed. Up to ten percent has been placed on $60 billion of over 5,000 U.S. categories coinciding with the U.S. tariffs of September 24th. As of this date, China has placed tariffs on a total of $113 billion U.S. goods including virtually all agricultural products.

U.S. cable channels with international connections covering the trade war between the U.S. and China evidenced strong support for the retaliation by the government of China by its citizens. They regard the U.S. action as bullying and coercive. Obviously the average citizen of China is unaware of past business and trade practices and have benefitted from misappropriation of intellectual property, coercive tactics in acquisitions and state subsidies for quasi-independent companies.

The Government of China cannot simply accede to U.S. demands, irrespective of their justification. This would be losing face. Although past U.S. Administrations have not made much progress in resolving outstanding trade and commercial activities with China, the present approach appears to be equally unproductive but with the potential of raising prices to consumers and weakening the position of U.S. as a major leader in World trade and international relations.


 

Canadian Dairy Policy Pivotal to NAFTA Renegotiation

09/16/2018

Dow Jones reports that U.S. Agriculture Secretary Dr. Sonny Perdue has emphasized that any renegotiation of the NAFTA agreement will be dependent on radical changes to the Canadian controlled marketing program for their dairy industry. At the present time, there is overproduction in Canada with export of milk and dairy products to the U.S. Concurrently U.S. farmers are afforded only a limited TRQ quantity with a 300 percent duty over the assigned quantity. Last year, Canada established Class 7, a new category covering protein concentrates, skim milk and whole milk powder effectively representing a subsidy to allow exports of these products in competition with the U.S.

According to White House Economic Advisor, Larry Kudlow, the milk issue is the remaining major point of contention delaying finalization of a NAFTA deal. The U.S. position is that Class 7 must be repealed.

Foreign minister Chrystia Freeland stated that NAFTA negotiations were making “very good progress” but also added “it’s going to take flexibility on all sides”. Given the support of Wisconsin for the current Administration and considering the imminence of midterms, it is doubtful that a compromise will be reached over the dairy issue although there are indications that Canada may “throw the dairy farmers under the bus” in the face of threatened tariffs on automobiles and components. If in fact the U.S. can effect changes in the controlled dairy production involving 10,000 farmers, the 1,000 Canadian egg farmers will be vulnerable to similar revocation of their monopoly.

In late September he U.S achieved understanding in principle over outstanding issues with Mexico and has threatened to proceed without Canada effectively invalidating NAFTA with potential repercussions for both parties.


 

African Swine Fever outbreak in China Has Implications for the U.S.

09/11/2018

Based on previous experience with African swine fever in the Iberian Peninsula and more recently in Russia and Eastern Europe, China will have great difficulty in containing the emerging epidemic of African swine fever.

 

Authorities in China have now admitted to eight distinct outbreaks in areas geographically separated by over 500 miles.  There is a presumption that transport of live hogs is involved in transmission.  The relatively primitive systems of hog production involving many thousands of relatively small-scale farms will contribute to outbreaks since there is no potential for effective biosecurity.

 

China imposed tariffs on U.S. pork in retaliation to U.S. tariffs on manufactured goods.  Given the demand for pork and obvious disruption of domestic production the Government of China may have to reevaluate their position on pork imports as domestic prices soar and public disaffection emerges.  Although the Administration of President Xi has promoted lower pork production in the interest of sustainability, health and conservation of foreign exchange, changes in dietary habits among the emerging middle class China predicates greater consumption of pork and chicken and beef for the affluent. 

 

If U.S. pork exports to China resume on a tariff-free basis, pressure will taken off the broiler and turkey industries. These segments of the domestic poultry industry would naturally benefit from removal of extra protein from the U.S. market.

 

It is ironic that a considerable portion of the pork produced in the U.S. and especially for export is derived from Smithfield Foods and affiliates which are subsidiaries of the WH Group of China.  Embargos, tariffs and now African swine fever have weighed heavily on the share price of the company since mid-year.


 

Traceback Complicated by Diverse Origin of Protein Products