Editorial

Prospects for Trade With China

Date released by the USDA-FAS indicated that China purchased chicken products attaining 99,875 metric tons during the first four months of 2020.  Product was valued at $143.9 million representing an average unit price of $694 per metric ton compared to an average unit value of $1,028 per metric ton for the total of 1,176,851 metric tons.  During the first quarter of 2020 exports to China were constrained by disruptions associated with COVID-19.  In April 2020, China imported 53,562 metric tons of chicken products valued at $73.3 million with a unit price of $1,368 per metric ton suggesting a change in composition of products, favoring feet.  In April, purchases by China represented 18.6 percent of volume and 25 percent of value.  Although second-ranked among importers in April 2020, exports to China exceeded the volume leader, Mexico by $25.6 million or 53.7 percent of the value shipped to Mexico during that month.

 

Given the potential importance of China to the U.S. chicken industry, it is important to understand their motivation to buy our products and to understand the broader issues that influence trade between China and the U.S.

 

China buys U.S. chicken mainly based on the criteria of need and price.  At the present time, China has yet to rebuild breeding and growing herds seriously depleted by African swine fever.  In the absence of an effective vaccine, China will not be able to restructure their industry to allowing for integration, efficiency and restoration of volume.  The production of white-feathered broilers required for the domestic quick-service industry as favored by younger consumers was seriously constrained by embargoes on grandparent stock imposed in 2015 due to internal strategic considerations.  The broiler industry in China has yet to achieve its potential, but domestic production is growing, with long-term implications for imports from the U.S. and Brazil. 

 

All decisions made by the central Government must be evaluated in the context of nationalism. The Communist party has consistently used pride and aspiration as a means to entrench support and to deflect criticism directed at corruption, mismanagement and degradation of the environment.  China is always ready to use coercive trade tactics to achieve commercial benefits.  Applying asymmetric pressure, China has at times banned importation of bananas from the Philippines, imposed restrictive duties on canola imports from Canada and cancelled beef imports from Australia all as leverage to achieve political and diplomatic objectives.

 

In terms of the Phase One Trade Agreement with the U.S., signed in mid-January, China agreed to purchase large quantities of U.S. agricultural commodities presumably including chicken.  The unjustified 2015 ban on U.S. poultry products extending from breeding stock through to chicken portions and feet was rescinded, potentially allowing imports from the U.S. that have materialized. When convenient to China, phyto-sanitary considerations will be implicated as a "justification" to disrupt trade and inflict pain on U.S. producers in order to protect their domestic industry or to create a bargaining position. 

 

During the late 1990's, the U.S. chicken industry rode a wave of export volume based on Bush Legs exported to Russia.  When it suited that nation, trade was constrained by artificial and frequently spurious embargoes implicating Salmonella contamination, drug residues and in one instance, alleged detection of radioactivity in product.  As with Russia, the leadership of China is willing to use trade as a political weapon and has no compunction in imposing restrictions on their domestic population to achieve leverage with trading partners. If we are to continue trading with China we should be aware of the aphorism that to sup with the Devil one should use a spoon with a long handle.

 

Poultry Industry News

Turkey Week

Weekly Turkey Production and Prices

Poult Production and Placement:

The June 16th edition of the USDA Turkey Hatchery Report, issued monthly, documented 26.8 million eggs in incubators on June 1st 2020 (27.2 million eggs on May 1st 2020) and down 4.0 percent (1.1 million eggs) from June 1st 2019.

A total of 21.4 million poults were hatched during May 2020 (23.5 million in April 2020), representing a decrease of 9.3 percent from May 2019.

A total of 19.3 million poults were placed on farms in the U.S. in May 2020, (22.1 million in April 2020), 1.8 percent less than in May 2019. This suggests disposal of 2.1 million poults during the month. Assuming all tom poults were placed, 19.6 percent of May-hatched hen poults or 9.8 percent of all May-hatched poults were not placed.

For the twelve-month period June 2019 through May 2020 inclusive, 279.7 million poults were hatched and 256.5 million were placed. This suggests disposal of 23.1 million poults. Assuming all tom poults were placed, 16.5 percent of hen poults or 8.3 percent of all poults hatched during the period were not placed.

 

Turkey Production:

The July 2nd 2020 edition of the USDA Turkey Market News Report (Vol. 67: No. 27) confirmed the following provisional data for turkeys slaughtered under Federal inspection:-

  • For the processing week ending June 27th 2020, 1.771 million young hens were slaughtered at a live weight of 16.9 lbs. (last week 1.819 million at 16.5 lbs.). During the corresponding processing week in 2019, 1.799 million hens were processed, 1.6 percent less than the current week. Ready-to-cook (RTC) hen weight for the week attained 24.0 million lbs. (10,925 metric tons), 3.4 percent less than the corresponding processing week of 2019. Dressing percentage was a nominal 80.5. For YTD 2020 RTC hen production attained 575.6 million lbs. (261,618 metric tons), 2.4 percent less than during YTD 2019.

 

Broiler Week

Weekly Broiler Production and Prices

Chick Placements.

The Broiler Hatchery Report released on July 1st 2020 confirmed that a total of 232.5 million eggs were set during the week ending June 27th 2020, up one percent from the corresponding week in 2019 but 0.7 percent (1.5 million eggs) less than the previous week. A total of 179.1 million day-old chicks were placed among the 19 major broiler-producing states during the week ending June 27th 2020. This was <0.1 percent less than during the corresponding week in 2019 and 0.4 percent more than the previous week. Total chick placements for the U.S. amounted to 188.9 million, <0.1 less than the corresponding week in 2019. Claimed average hatchability was 82.3 percent for eggs set three weeks earlier, (82.1 percent for the previous week). Cumulative placements for the period January 4th through June 27th 2002 amounted to 4.83 billion chicks, down one percent from the corresponding period in 2019.

 

Broiler Production

According to the July 2nd 2020 USDA Broiler Market News Report (Vol. 67: No. 27) for the processing week ending June 27th 2020, 164.8 million broilers were processed during the past processing week (last week 161.9 million) at an average live weight of 6.36 lbs. (6.41 lbs. last week) and a nominal yield of 76.0 percent. The number of broilers processed was 6.6 percent less than the corresponding processing week in 2019. Processed (RTC) broiler production for the week was 796.4 million lbs. (361,986 metric tons), (788.6 million lbs. last week) 4.1 percent less than the corresponding processing week in 2019. For YTD 2020 Processed (RTC) production attained 20,408 million lbs. (9,276,476 metric tons), 3.1 percent more than YTD 2019.

 

Broiler Prices

The USDA National Composite Weighted Wholesale price on July 2nd 2020 was up 0.7 cent per lb. from the previous week to 75.0 cents per lb. compared to 93.8 cents per lb. during the corresponding week of 2019; 75.0 cents per lb. for June 2020 and 105.0 cents per lb. for the three-year average. The USDA Composite price has stabilized after moving up 22 cents per lb. from a bottom of 52.7 cents per lb. during the last week of April. The decline during April and May was attributed to the collapse of the food service segment following imposition of COVID-19 restrictions.


 

COMMODITY REPORT: JULY 3rd 2020.

  • The financial and economic implications of the COVID-19 pandemic continue but will gradually ease as society returns to a “new normal” despite a recent upsurge in cases.
  • Corn and soybeans were markedly higher in price this past week following release of the USDA Planting and Stocks Report on June 30th. Corn futures for July delivery were higher by a noteworthy 8.2 percent compared with the quotation on June 27th. Soybeans were up 3.0 percent compared with last week, attributed to orders placed by China.
  • Prospects for commodity exports to China are apparently still restrained. China has reduced their domestic short-term demand for soybeans as a result of continuing losses from African swine fever but chicken production has now recovered. The U.S. anticipates shipping in quantity during late summer for the 2020/2021 market year, following established seasonal patterns.

 

Uncertainties still include:-

  • The extent and timing of soybean purchases by China in 2020 is in question. The U.S. - China Phase-One agreement signed in mid-January incorporated U.S. tariff rescissions, promised purchases of agricultural commodities (valued at $36.5 billion in 2020 and $43.5 billion in 2021), concessions on some structural issues by China and strengthened enforcement provisions. A virtual meeting between senior officials of the U.S. and China on Friday May 8th elicited a reassurance that China would fulfill its obligations with respect to imports of U.S agricultural products. Both sides accepted the need to improve relations damaged by recent injudicious rhetoric relating to the origin of COVID-19 and legislative pressure on Hong Kong. The Phase-One Trade Agreement still appears intact despite comments by White House advisor, Dr. Peter Navarro who issued a subsequent “correction”.
  • It is anticipated that China will take advantage of low world prices for commodities to import corn and soybeans to add to reserves. The U.S. expects to supply part of this requirement. A consignment of 390,000 metric tons (14.3 million bushels) of soybeans was ordered on Monday 22nd
  • Imports of soybeans by China from Brazil were delayed by inclement weather and COVID-19 port disruptions during the first quarter of 2020, resulting in soybean stocks falling to a multiple-year low. Imported consignments increased stocks to 4.26 million tons (157 million bushels), up 28.7 percent from March 2020.
  • The market is now more accepting of the reality that future shipments of soybeans to China will not attain the quantities promised by the Administration after signing the Phase-One agreement.
  • Total world soybean shipments from the U.S. during the 2019/2020 market year amounted to 36.61 million metric tons, (1.326 million bushels), with China representing 36 percent of this quantity.
  • Total world corn shipments from the U.S. during the 2019/2020 market year amounted to 31.13 million metric tons through May with China representing 83 percent of the quantity.
  • Domestic U.S. soybean and soybean meal demand is currently constrained by cutbacks in the intensive livestock and poultry sectors as impacted by COVID-19.
  • Justifiable uncertainty exists regarding the spread of African swine fever and COVID-19 to other Asian nations, Europe and North America with the potential to create a worldwide depression as economic activity is curtailed

 

Questions still exist:-

 

  • The eventual sizes of corn and soybean crops will influence price going forward. According to the June 30th USDA Planting and Stocks Report, corn acreage was down approximately five percent from the March estimate. Yields of both corn and soybeans are expected to be impacted by emerging drought and heat in the corn-belt. Projections will be updated in the July WASDE to be released mid-month.
  • A U.S. trade agreement with the U.K. should be concluded in 2020 but trade with the U.S. will be conditioned by commitments to the E.U. by the departing nation. Negotiations commenced in early January between Ambassador Robert Lighthizer and his U.K. counterpart, Minister Elizabeth Truss and are continuing at appropriate levels in working groups. A bilateral agreement will have to overcome U.S objections over the use of Huawei communications equipment by the U.K. and application of chlorine and alternative antibacterial solutions in processing U.S. chicken and feeding beta agonists to livestock.

 

Corn to be harvested in calendar 2020 is expected to attain 15,000 million bushels with ending stocks influenced by yield and exports. Compared with the June 26th 2020 close, the CME quotation for July corn on July 2nd was up by 26 cents per bushel to 342 cents. The social restrictions imposed in the U.S. as a result of COVID-19 will reduce ethanol demand by 1.5 billion gallons or 10 percent of projected 2020 addition to gasoline. Forty percent of U.S. ethanol fermentation capacity is off-line at present but the outlook for increased demand is improving. Ethanol was priced at $1.25 per gallon on July 2nd up 9 cents per gallon from the previous week and compared with a five-year low of $0.92 per gallon on March 26th. Currently gasoline at $1.24 per gallon (quoted New York Harbor) is 0.8 percent less expensive than ethanol but has a 63 percent higher BTU rating than ethanol.  

 

Soybeans, expected to be the beneficiary of the Phase-One agreement, were up 26 cents per bushel to 892 cents for July delivery.  The USDA anticipates a 2020 crop of 4.125 billion bushels up 16 percent from 2019 but subject to climatic conditions. Ending stocks are projected at 395 million bushels.

 

From May 12th to June 9th the Yuan remained constant at CNY 7.08 to US$1 except for a brief spike at the end of May. During this time the Brazilian Real strengthened against the US$ from BRL 5.9 to BRL 4.9 and the BRL strengthened against the CNY  from BRL 0.83 to BRL 0.69, effectively favoring purchases of soybeans by China from the U.S. The value of the BRL then declined with an increase in the incidence rate of COVID-19 in Brazil. On July 3rd the BRL exchange with the CNY was 0.75 compared to 0.78 the previous week.

 

The USDA reported the following sales this past week:-

  • 202,000 metric tons of corn (7.95 million bushels) for delivery to China during the 2020/2021 marketing year; and
  • 126,000 metric tons of soybeans (4.63 million bushels) for delivery to China during the 2020/2021 marketing year.

 

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

 

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

  • Corn stocks in all positions on June 1st 2020 totaled 5.22 billion bushels, up less than one percent from June 1st Of the total stocks, 3.03 billion bushels are stored on farms, up three percent from a year earlier. Off-farm stocks, at 2.20 billion bushels, are down two percent from a year ago. The March - May 2020 indicated disappearance is 2.73 billion bushels, compared with 3.41 billion bushels during the same period last year.

 

  • Soybeans stored in all positions on June 1st 2020 totaled 1.39 billion bushels, down 22 percent from June 1st On-farm stocks totaled 633 million bushels, down 13 percent from a year ago. Off-farm stocks, at 753 million bushels, are down 28 percent from a year ago. Indicated disappearance for the March - May 2020 quarter totaled 869 million bushels, down 8 percent from the same period a year earlier. The June 11th WASDE projected the 2020 harvest for corn from 89.6 million acres and from 82.8 million acres for soybeans. These values were lower than the projections developed before the advent of COVID-19.

 

The following quotations for July delivery were posted by the CME at close of trading on July 2nd (closed on July 3rd) compared with values posted on June 26th  (in parentheses) reflecting specified months for delivery.

 

COMMODITY

 

Corn (cents per bushel)

  July  342  (316)        

Sept.  343  (318)

Soybeans (cents per bushel)

  July  892  (866)

Sept.  891  (860)

Soybean meal ($ per ton)

  July  293  (282)

Sept.  298  (285)

 

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

 

COMMODITY            CHANGE FROM PAST WEEK

Corn:                  July quotation up 26 cents per bushel                  (+8.2 percent)               

Soybeans:         July quotation up 26 cents per bushel                  (+3.0 percent)

Soybean Meal: July quotation up $11 per ton                                 (+3.9 percent)

 

 

The shortage of meat and bone meal in May and June due to reduced processing of pork and beef has ended. Prices for this ingredient for Minneapolis delivery settled at $170 per ton on June 30th unchanged from June 23rd. On July 2nd 2019 Meat and bone meal was priced at $210 per ton. The production of meat and bone meal from euthanized whole hogs will require adjustment of ingredient matrices for meat and bone meal depending on source.

 

With more plants producing ethanol, DDGS is now more available at a lower price. Eastern Corn-belt product was priced at $142 per ton on June 30th, $7 per ton lower than on June 25th 2019.

 

  • For each 10 cent per bushel change in corn:-

 The cost of egg production would change by 0.45 cent per dozen

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

 

  • For each $10 per ton change in the price of soybean meal:-

 The cost of egg production would change by 0.44 cent per dozen

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

 

 COMMENTS

 Subscribers are referred to the June 11th WASDE #601 under the Statistics TAB.

 

Dr. Joe Glauber of the International Food Research Institute and formerly a USDA economist for 30 years, expressed the view that China would not be able to comply with obligations under the Phase One Agreement. Imports of U.S. commodities amounted to $5 billion in the first quarter of 2020, comprising pork, cotton, corn and wheat. The volume of commodities delivered would have to increase to $10 billion for each of the succeeding quarters to attain the promised $36.5 billion for the current year. Dr. Glauber anticipates that China will even fail to meet the 2017 baseline of $24 billion. Escalating tensions with China over COVID-19 and pressure on Hong Kong will not benefit exports to that Nation.

 

During 2018 and 2019 a total of $28 billion was disbursed to the agricultural sector in Market Facilitation Program (MFP) payments. Additional requests are being made by industry groups for 2020 MFP relief and these may be justified by delayed or anticipated lower imports by China. President Donald Trump stated in late February 2020 that the Federal Government would “provide additional aid to U.S. farmers as needed until recently negotiated trade deals with China, Mexico, Canada and other countries fully kick in”. At least one round of 2020 MFP payments was anticipated. Approximately $16 billion will be disbursed under the Coronavirus Food Assistance Program (CFAP). As of June 3rd, $540 million has been distributed. This effectively represents a transfer of funds from taxpayers and their grandchildren to the agricultural sector.


 

Status of 2019 Corn and Soybean Crops

The USDA Crop Progress Report released on July 6th documented soybean and corn emergence as complete but corn silking is behind the 5-year average. The condition of both corn and soybean crops are superior to 2019.

Subsoil and surface moisture levels were lower than the corresponding weeks in 2019 creating concern in some states over drought. Topsoil moisture was partly restored by rains this past week. CHICK-NEWS and EGG-NEWS will report on the progress of the two major crops as monitored by the USDA through the end of the 2020 harvest in October.

Reference is made to the June 11th WASDE Report #601 accessible under the STATISTICS tab for projected 2020 acreage and yields to be updated next week.

WEEK ENDING

Crop

June 28th

July 5th

5-Year Average

Corn Planted (%)

Corn Emerged (%)

Corn Silking (%)

100

100

4

100

100

10

100

100

16

Soybeans Planted (%)

Soybeans Emerged (%)

Soybeans Blooming (%)

Soybeans setting pods (%)

100

100

14

-

100

100

21

2

100

100

34

4

       

Crop Condition

V. Poor

 Poor

Fair

Good

Excellent

Corn 2020 (%)

Corn 2019 (%) *

* late planting

1

3

 

5

9

23

31

54

47

17

10

Soybeans 2020 (%)

Soybeans 2019 (%)*

 * late planting N/A

1

3

4

9

24

35

57

46

14

7

Parameter

V. Short

Short

Adequate

Surplus

Topsoil moisture: Past Week

10

26

57

7

Past Year

3

12

70

15

Subsoil moisture: Past Week

8

24

62

6

Past Year

3

10

70

17


 

China Extends Bans on Plants with COVID-19 Infection of Workers

The General Administration of Customs of the Government of China has banned import of meat from three plants in Brazil following reports of high levels of COVID-19 among workers.  Affected plants are apparently operated by Marfrig in Varzea Grande, a JBS chicken plant in Passo Fundo and Minuano in Lajeado.

 

The Agricultural Ministry of Brazil has initiated negotiations with counterparts in China to have the bans lifted.

 

The justification for banning meat products from plants where employees have been diagnosed with COVID-19 is questionable.  There is no evidence that SARS-CoV-2, the virus responsible for COVID-19 can be transmitted in raw meat or poultry and it would be most unlikely that the viability of the virus would be preserved on packaging.


 

Innovative Technology Produces Plant-Based Steak Substitute

To date, plant-based meat substitutes have competed with ground beef for burgers and sausages.  Redefine Meat of Israel has unveiled a faux steak product based on printed technology that is claimed to mimic the texture, flavor and appearance of high value beef cuts.

 

The CEO and co-Founder of Redefine Meat stated, "the importance of using Precision 3D printing technology to achieve texture, color and flavor and the combinations between them cannot be overstated".  He added "by using separate formulations for muscle, fat and blood we can focus on each individual aspect, creating the perfect alternative steak product".

 

The product will be tested in restaurants with the intention of initiating commercial production in 2021.


 

Integration of Jamesway and Chick Master

TBG, the holding company for Jamesway, Chick Master, Petersime and Moba has announced the integration of Jamesway and Chick Master.  The combined company will operate from the Jamesway headquarters in Cambridge, Ont., Canada.  An office will continue to operate in Medina, OH.  Procurement, quality control, human resources and IT will be concentrated in Cambridge.

 

Paul Degraeve, CEO of the Hatchery Division of TBG stated, “As we move forward, we will remain strongly committed to continue offering our two distinct, successful brands.  He added, “Chick Master and Jamesway each have unique value propositions that our loyal customers have come to expect.”

 

Dennis Kan will serve as the leader of Jamesway Chick Master Incubator Company.


 

Cuba Embargos North Carolina over LPAI in March

In a belated and somewhat incomprehensible move the chief veterinary officer for Cuba has placed an embargo on all poultry products from North Carolina. This action results from the outbreak of low pathogenicity avian influenza diagnosed on eleven turkey farms.  The asymptomatic cases were diagnosed on routine surveillance and flocks were depopulated and disposed of within days of confirmation of the diagnosis.

 

It is understood that Cuba would only embargo a county and not a state in the event of low pathogenicity avian influenza.

 

In any event resumption of supply would occur in mid-July given the World Organization of Animal Health (OIE) period of 90 days from disposal of the last case.  Subsequent to the outbreak, North Carolina veterinary authorities in cooperation with USDA-APHIS conducted intensive surveillance for the presence of avian influenza in the affected counties in North Carolina and in an adjacent county in South Carolina. No additional cases were identified.


 

Simmons Foods Develops COVID Plan

Simmons Foods has developed a comprehensive program to prevent COVID-19 adapting standard procedures to specific challenges in plants.  The company operates care-clinics providing medical care, health screening and testing for members and families with no out-of-pocket cost.

 

  • Temperature screenings are required for all persons entering Simmon’s facilities if workers have been on leave of absence or have shown symptoms or subjected to potential exposure they are tested before returning to work.

 

  • Physical distancing has been introduced were possible in both plant and outdoor areas.

 

  • All team members are required to wear masks if a six foot distance is not possible.  The company provides masks and face shields as required.  Protective barriers are placed between workstations.

 

  • Intensive cleaning of plants is carried out on a routine basis.

 

Simmons provides workers with masks to be used in the community by themselves and family members.  Hand-gel is supplied and workers are continually updated with safety remainders.

Todd Simmons, CEO stated, “Simmons is grounded in the idea there is always a better way. During times like these, we are putting that concept to work in evolving health and safety measures. We are evaluating what we have learned over the last few months and making plans for the next phase of responding to COVID-19.”  Simmons complemented the Safety, Occupational Health Department and the Simmons Care Clinic teams for their service to the company and communities.


 

Growth in Restaurant Transactions Stalling

NPD Group reported that customer transactions at major U.S. restaurant chains was 13 percent lower during the week ending June 21st compared to the corresponding week in 2019.  There was a one percent decline in transactions from the previous week reversing the trend over the past month.  The small decline is attributed to a surge in COVID-19 diagnoses in several high-density states.  Arizona recorded a 5-point decline in year-over-year transactions for the week with single digit declines for Florida, Nevada and North Carolina.

On-premise dining has increased with 79 percent of restaurants open for the week ending June 21st versus 74 percent for the prior week.  Full-service restaurants are still impacted with a 24 percent decline for the week ending June 21stcompared to the corresponding week in 2019.

 


David Portalatin

In commenting on recent data, David Portalatin, advisor to NPD commented "the U.S. restaurant industry’s road to recovery is going to have some bumps along the way".  He added "the pandemic isn't over and as often mentioned it is unprecedented so there is no road map".  Restoration of restaurant traffic is critical to the recovery of the food service sector, responsible for a significant proportion of chicken and egg production.


 

COVID-19 Incidence Rates

The incidence rates (number of new cases over a defined period) is monitored by Johns Hopkins University. The data showing trends in various nations is reproduced for the benefit of subscribers.

 

 


 

August Safe + Sound Week Supported by Poultry Industry

August 10th-16th has been designated Safe + Sound Week. The objective is to create added concern for safety and health in the workplace. The National Chicken Council (NCC), the U.S. Poultry and Egg Association and the National Turkey Federation (NTF) will again partner with the U.S. Occupational Safety and Health Administration to mark the annual mid-August initiative. USPOULTRY, the NCC and NTF will share information, intensify training and re-educate workers to maintain practices that promote health and prevent accidents.

 

In a joint statement, John Starkey of USPOULTRY, Mike Brown of the NCC and Joel Brandenberger of the NTF commented "our organizations are pleased to continue to serve as Safe + Sound partners and to collaborate with OSHA and the other sponsors on programs and initiatives to help preserve the safety of the U.S. poultry work force”.

 

The Safe + Sound week in 2020 plays out against the challenge of COVID-19 that has required the introduction of appropriate preventive measures.  These include testing with quarantine of infected workers, social distancing, barriers between workstations, enhanced hygiene and cleaning of plants and providing PPE to workers.


 

McDonald's Reverses on Dine-In Service

The recent upsurge in incident cases of COVID-19 has resulted in McDonald's Corp. pausing in its initiative to reopen in-store dining.  As of the end of May a slow transition to in-store serving was initiated with approximately 2,000 out of 14,000 restaurants operating with restricted dining by early June. The decision to rescind in-store dining was reluctantly accepted as a necessary precaution by the National Franchise Leadership Alliance Owner's Association.  Fortunately, McDonald's franchisees have regained considerable sales through their drive-through lanes. 

 

A number of states have re-imposed bans on restaurants including nineteen populous counties in California and also in New York among other high-density locations. Even in jurisdictions where COVID-19 restrictions have been lifted, customers are reluctant to patronize dine-in having adapted to take-out and home preparation of food. 

 

During a business trip last week to Western mainline Philadelphia I was the only diner in a Panera store.  Over the duration of my meal, the takeout counter continued to serve customers who had pre-ordered.  Despite precautions including rearranging tables to ensure six-foot distancing, it is evident that the increasing incidence rate of COVID-19 has resulted in a disinclination to unmask to enjoy a cup of chicken soup.


 

CoBank to Present Webinar on COVID-19

On July 9th, CoBank Knowledge Exchange Division will present a seminar on the near-term outlook for Global and U.S. economies during the COVID-19 crisis.  Speakers will include Dan Kowalski, VP Knowledge Exchange, Tanner Ehmke, Manage Knowledge Exchange and Will Sawyer, lead economist for Animal Protein also affiliated with the Knowledge Exchange Division.

 

The seminar will be presented on Thursday, July 9th at 09h00 MDT.
 

Registration information is available at <kedresearch@cobank.com>.

 

Dan Kowalski

Vice President,

Knowledge Exchange

Tanner Ehmke

Manager,

Knowledge Exchange

Will Sawyer

Lead Economist, Animal Protein

Knowledge Exchange


 

FMI Announces Appointment of SQFI Director

The Food Marketing Institute  (FMI) has announced that Gigi Vita will replace Bob Garfield as the director of the Safe Quality Food Institute (SQFI).  Garfield established the program over ten years ago and has built SQFI into a reputable and a prestigious credential.  He will retire from his current position but will hand over the reins to Gigi who has served as his assistant for a number of years and will have the title of Chief Food Safety Assessment Officer and SVP.


Gigi Vita (left) with retiring SQFI Director Bob Garfield.

 

Oklahoma Legislators and Cattlemen Pushing Back Against Big-Four Packers

Oklahoma Representative Justin Humphrey is a driving force in developing a group tasked with  addressing the financial problems of cattlemen in his state.  The Oklahoma Independent Stock Growers Association is pressing for changes in the beef supply chain and is opposing the control exercised over prices for cattle and indirectly the wholesale price for meat, associated with the Big-Four packers.

 

The disparity between purchase price of cattle and retail prices paid by consumers was highlighted as a result of disruptions in the supply chain caused by COVID-19 infection of workers in packing plants.  Humphrey, joined by State Senator David Bullard, point to a rising level of Chapter-12 bankruptcies filed by farmers from late 2019 through 2020.  The Oklahoma Independent Stock Growers Association resents the control over collectively 90 percent of beef packing byTyson Foods, Cargill, JBS, and National Beef.  Concurrently the Department of Justice has initiated an antitrust investigation involving the structure and operation of the beef industry.


 

Adriaan Weststrate of Rabobank Honored by IPC

On his retirement from Rabobank, after 27 years of service, Adriaan Weststrate was honored in a virtual ceremony and presented with a commemorative plaque by Robin Horel, the president of the International Poultry Council.  Weststrate was honored for “enthusiastic support which has led to the development of the International Poultry Council as a representative organization of the Global Poultry Industry.” 

 

In accepting the plaque, Weststrate stated “When I look back on all those years at IPC not only has the organization put itself on the map globally as a representative organization for the poultry industry, but we’ve created a group of people who have so much fun seeing each other at our meetings.” 

 

 

Jim Sumner, president of the USAPEEC and previously president of the IPC, commented on the contribution made by Weststrate stating “We just wanted you to know how much we appreciate your efforts.  You have been there with us since the very beginning and were always there to help us in every way.  You were our go-to-guy and an inspiration to us all.  The IPC would not be where it is today without you.”


 

EPA Delays Decision on Retroactive Refinery Waivers

According to a statement by EPA Director Andrew Wheeler, the 52 requests for retroactive waivers to absolve refiners of the need to dilute gasoline with ethanol have been referred to the Department of Energy for review.

Wheeler noted that petitions date back to 2012 and accordingly some applications may be rejected as refiners will not be able to demonstrate “economic harm” based on the fact that the applicable RINS may not be active in 2020. 

 

The issue of waivers has resulted in considerable lobbying activity by both proponents and opponents of the renewable fuel standard.  The issue has degenerated into a confrontation between the oil refining industry on the one hand and corn growers and ethanol producers on the other.  Waivers detract from the renewable fuel standard and during a period when demand for gasoline has fallen sharply and between 30 to 40 percent of ethanol production has been shuttered, the Administration is torn between opposing interests with dire political implications.

 

Projection of fuel requirement is optimistic; Cellulosic ethanol is a myth.


 

U.S. Chicken Industry Seeking Federal Assistance

Senators Chris Coons (D-DE) and Roger Wicker (R-MS) organized a letter signed by seventeen other Senators requesting Federal assistance for chicken farmers affected by COVID-19.  The decline in food service demand has reduced chick placements and accordingly contract growers have experienced smaller flocks and extended inter-flock intervals reducing their income.

The Senators’ letter to the Department of Agriculture noted “while we appreciate that the recently passed Coronavirus Aid, Relief and Economy Securities Act providing direct payment to agricultural producers through the USDA Coronavirus Food Assistance Program, there is no direct assistance for chicken farmers.”  The letter requested that Congress incorporate direct payments for chicken farmers experiencing at least a five percent loss in revenue as a result of COVID-19 to be incorporated in any future relief bill.

 

 

Sen Lowell Wicker (R-MS)

Sen. Chris Coons (D-DE)

 

Mike Brown, President of the National Chicken Council stated, “America’s chicken producers are extremely grateful to Senators Coons and Wicker in their leadership on this effort” he added, “we reiterate that the farmers who have been working to provide chicken on our tables, have been affected by COVID-19 should be provided financial assistance in the next Congressional aid package.


 

Resurgence of COVID-19 in Southern and Western States Intensifies Losses for Hog Producers

The resurgence in COVID-19 in Arizona, Florida, Texas and California will delay restoration of normal traffic in restaurants and create more misery for the pork industry.  Universities and institutional dining will remain closed reducing the demand for pork.  As a result of reduced production year-to-date annual pork consumption is now estimated at 50 pounds per capita compared to 52 pounds in 2019. Although packing capacity has apparently been restored to within 90 percent of pre-COVID levels, there is a backlog of hogs on farms.  The Wall Street Journal reported that wholesale hog carcasses averaged $28 per hundredweight down from $60 in April.

 

Lean hog futures traded seven percent down on the CME after release of the quarterly USDA Hogs and Pigs Report.


 

Shane Commentary

Illegal Importation of Meat Products

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.

 

Visit our Companion Website
http://egg-news.com/
Dr. Simon M. Shane
Simon M. Shane
Contact     C. V.
 
Copyright © 2020 Simon M. Shane Managed by Goosedown