Poultry Industry News

Producers and Restaurants Sue for a Moratorium on Massachusetts Law on Sow Housing

08/09/2022

The National Pork Producers Council and a consortium of restaurants have filed a motion for a preliminary injunction enjoining the Commonwealth of Massachusetts from enforcing housing requirements as specified in a law paralleling California Proposition #12.  The suit named Massachusetts Attorney General Maura Healey and John Lebeaux, Commissioner of the Massachusetts Department of Agriculture Resources as respondents.  The claimants maintain that the few relatively small pork producers in Massachusetts and in New England states are not compliant with the requirements for group housing of sows. The filing with the U.S. District Court request a stay in the implementation of the law until the Supreme Court has ruled on the California Proposition 12 appeal.  The filing implied that the Supreme Court will all probability reverse the decision of the Ninth Circuit regarding the constitutionality of Proposition #12 based on interference with interstate commerce.

 


 

USDA Evaluating COVID Response

08/09/2022

Following a directive by Congress, the Office of the Inspector General (OIG) of the UDSA undertook an evaluation of the response of the Food Safety and Inspection Service of the Agency to COVID. The OIG report has now been released.  The focus of the investigation was the response of the Agency following the Presidential Executive Order in April 2020 mandating that meat-packing and chicken plants should remain in operation.  It was determined that FSIS spent $22 million on funding under the CARES Act to pay for personal protective equipment for inspectors and staff.  It is noted that during the early period of the COVID outbreak, inspectors, along with the plant workers were infected with COVID and fatalities occurred among the FSIS workforce.  The report also determined that FSIS provided guidance to plants and tracked cases among workers.

 

The evaluation resulted in recommendations for tracking and reporting health outcomes in any future pandemic. The FSIS agreed to comply with suggestions including responsive action initiated by the Office of the USDA Chief Financial Officer.


 

USPOULTRY Live Production Program

08/08/2022

Biosecurity will be front and center at the 2022 Live Production, Welfare and Biosecurity Seminar to take place September 21st and 22nd at the DoubleTree Hilton Downtown in Nashville, TN.  The event organized by USPOULTRY is co-sponsored by the National Chicken Council, the National Turkey Federation and United Egg Producers.

 

Program topics include a Farm Bill update, biosecurity best practices, animal welfare, a cage free industry update, lighting intensity, animal activists’ update and food safety.

The full agenda and details on registration can be accessed at <www.uspoultry.org>.


 

Tyson Foods Inc. Reports on Q3 FY 2022

08/08/2022

In a press release dated August 8th Tyson Foods Inc. (TSN) announced results for Q3 of FY 2022 ending July 2nd 2022.

 

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS)

 

Third Quarter Ending

July 2nd 2022

July 3rd 2021

Difference (%)

Sales:

$13,495,000

$12,478,000

+8.7

Gross profit:

$1,611,000

$1,620,000

-0.6

Operating income:

$1,033,000

$1,062,000

-2.7

Pre-tax Income

Net Income

$986,000

$753,000

$966,000

$753,000

+2.1

0

Diluted earnings per share:

$2.07

$2.05

+1.0

Gross Margin (%)

11.9

14.3

-16.8

Operating Margin (%)

7.7

9.4

-18.1

Profit Margin (%)

5.6

6.7

-16.4

Long-term Debt and other liabilities:

$12,943,000

$14,606,000

-11.4

12 Months Trailing:

Return on Assets (%)

10.7

Return on Equity (%)

23.1

Operating Margin (%)

11.7

Profit Margin (%)

7.9

Total Assets

$36,245,000

$36,309,000

-0.2

Intraday Market Capitalization August 8th

$31,666,000

52-Week Range in Share Price of TSN: $69.83 to $100.72. 50-day Moving average, $91.39

 

Market Close: Friday May 6th $90.85. Open Monday May 9th post-release $94.37.

TSN beat on revenue against an estimate of $13,300 million but adjusted EPS of $1.94 was below expected $1.98.

Forward P/E 11.5 Beta 0.8

 

The Chicken Segment attained sales of $4,959 million ($4,954 million in Q3 FY 2021) representing 36.7 percent of Company revenue. Operating income was $277 million or 26.8 percent of the Company total (adjusted to $269 million). In Q3 of 2021 operating loss was $(279) million adjusted to $27 million.

 

For comparison among Tyson Foods’ business segments the adjusted operating incomes were respectively:- Pork, $25 million; Beef, $506 million; Prepared Foods $186 million.

 

In commenting on results Donnie King, president and CEO stated “We delivered solid results during the third quarter, focusing on operational excellence and aggressive cost management." He added, "The turnaround of our chicken business continues, and we continue to be the market share leader in many of our retail business lines, which include our Tyson, Jimmy Dean, Hillshire Farm and Ball Park iconic brands. We maintained double-digit sales and earnings growth year to date as well as progressing toward our goal of delivering more than $1 billion in recurring productivity savings by the end of fiscal 2024.

 

"King concluded "I'm optimistic about our ability to win with our team members, win with our customers and consumers and win with excellence in execution."

 

With regard to the Chicken Segment the company release included:- “Sales volume decreased in the third quarter of fiscal 2022 primarily due to a reduction in volumes related to a fire at a production facility in the fourth quarter of fiscal 2021 and a reduction in outside meat purchases. Average sales price increased in the third quarter of fiscal 2022 due to the effects of pricing initiatives in an inflationary cost environment. Operating income increased in the third quarter of fiscal 2022 primarily due to higher average sales prices, partially offset by the impacts of inflationary market conditions including increased supply chain and labor costs. In the third quarter of fiscal 2022, we experienced $145 million of higher feed ingredient costs and $23 million of net derivative losses as compared to $56 million of net derivative gains in the third quarter of fiscal 2021”.

 

Guidance for FY 2022 included Revenue between $52 and $54 billion; Operating margin of 5 to 7 percent unchanged from the Q2 report, Savings in cost of production of $400 million in FY 2022 relative to 2021and capital expenditure of $1.9 billion. The Company warned that supply chain issues would impact international operations.


 

Consumer Perceptions Concerning“Plant-Based”

08/08/2022

In a report produced by the Food Industry Association entitled The Power of Plant-Based Foods and Beverages, it is clear that consumers demonstrate diverse reactions to the term “plant-based”.  Those who are environmentally conscious associate the term with “nature” and “healthy”.  Other respondents considered the term analogous to “fake”, “tasteless” and are aware of a price differential between plant-based meat and the real product.

 

The Report was prepared with the assistance of Nielsen IQ and MotiveBase. Reaction to the term “plant-based” were gathered from consumers, retailers, and food professionals over a 52-week period ending June 11th.

 

The significant takeaway from the report is the lack of understanding of the term suggesting clarification and the need for standards.  Consumer education is required concerning the nutritional value of plant-based meat alternatives.  Most consumers are unaware of the inclusion of approved additives that detract from the “clean label” ethos but more importantly the high level of salt and the inferiority in amino acid content, despite claims for equivalence in crude protein content as supplied by animal-derived products.

 


 

Tyson Foods and Perdue Farms Donate for Flood Victims and the Needy

08/08/2022

Tyson Foods will partner with Walmart to distribute 500,000 pounds of protein to feed needy families in and around Hazard, KY.  John R. Tyson, Executive Vice-president and Chief Sustainability Officer for Tyson Foods, stated “We are deeply saddened by the damage and loss of life caused by the catastrophic flooding and we want to do our part to help.”  He added, “We are working with our local community partners to amplify their support and do our best to provide food and supplies to those who need it.” Tyson will deploy the Meals That Matter ® disaster-relief trailer in the Hazard, KY., Walmart parking lot.  Teams from Tyson Food facilities in Tennessee, Missouri, Arkansas, and Indiana will provide aid to victims of the disaster.

 

Perdue Farms has donated $30,000 in direct contributions and an additional 5 tons of chicken to the Second Harvest Food Bank of Middle Tennessee in Nashville. This will support a Back-Pack program and a mobile pantry in rural Putnam County. Perdue associates in the Monterey, TN., complex organized the donation and delivered the products.


 

Cargill Philanthropy

08/08/2022

Cargill Inc. recently announced donations totaling $4.9 million to the Feeding American Network of food banks.  Funding of $1.9 million will comprise protein products for local food banks specifically for vulnerable communities.  The bulk of the allocation will be to improve refrigeration infrastructure and equipment to repackage donated bulk proteins.

 

Over the past 35 years, Cargill has donated $28 million to Feeding America and member food banks.  Worldwide in 2020, Cargill contributed more than $30 million to reduce global hunger through support of CARE, Heifer International, the World Food Program and Save the Children.

 

Cargill supports Means Database, an online platform to gather excess food inventory from supermarkets and restaurants for those in need.


 

Tyson to Expand Prepared Foods Plant in Caseyville, IL.

08/08/2022

The Caseyville, IL., plant producing Hillshire Farm® and Jimmy Dean® products will undergo expansion at a capital cost of $180 million.  According to an August 4th news release, expansion will be conducted through 2023.  The current project follows a previous decision to add production lines to increase annual output to16 million lbs.  The announced expansion will extend over 170,000 square feet and provide employment for an additional 250 workers.

 


 

Wayne-Sanderson NC. Hatchery To Be Upgraded

08/06/2022

Following the acquisition of Sanderson Farms the combined company, Wayne-Sanderson Farms, is undertaking a program of rationalization and consolidation to achieve efficiencies and synergy from the transaction.  On August 4th, the company announced that the Dobson, NC. hatchery will undergo a $1.3 million expansion and reorganization to accommodate gender-sorting of chicks.  Pullet chicks will be delivered to an Alabama small-bird operation with the local complex placing males.  The current output of the Dobson hatchery is 650,000 chicks per week.  The project includes the erection of new offices, a breakroom and staff facilities with expansion of chick handling into existing space not used for incubation.


 

Tyson Foods Settles Non-Compete Claim

08/06/2022

Tyson Foods has settled litigation with Brian Baker, who left the company as Vice-president of Poultry Optimization to join Foster Farms.

 

Tyson was concerned over disclosure of confidential information relating to live bird production. Accordingly the company attempted to enforce a restraining order that was dismissed by a Washington County, AR. Circuit Court.

 

The case was settled with the issues resolved to the mutual satisfaction of the parties. Judge John Threet dismissed the case with prejudice with each party will be responsible for their own costs.

 

Previously, broiler integrators have sued senior managers who have resigned to obtain employment with competitors.  It is obviously common practice to require employees with specific technical or business knowledge to sign non-compete agreements, although their enforceability may be limited.


 

Beyond Meat Reports on Q2 2022

08/05/2022

In a press release dated August 4th Beyond Meat Inc. (BYND) announced results for the 2nd Quarter of FY 2022 ending July 2nd. The Company disappointed on the top line with sales of $147 million against a consensus of $149 million. The bottom line miss was a negative EPS of $1.53 against an expectation of a negative $1.18

 

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS)

 

2nd Quarter Ending

July 2nd 2022

July 3rd 2021

Difference (%)

Sales:

$147,040

$149,426

-1.6

Gross profit:

$(6,162)

$47,352

-113

Operating income:

$(89,681)

$(18,601)

-382

Pre-tax Income

Net Income / (loss)

$(95,691)

$(97,134)

$(19,443)

$(19,652)

-392

-394

Diluted earnings per share:

$(1.53)

$(0.31)

-394

Gross Margin (%)

(4.2)

31.6

-113

Operating Margin (%)

(60.9)

(12.2)

-399

Profit Margin (%)

(66.1)

(13.2)

-400

Long-term Debt and lease obligations:

$1,156,523

$1,152,715

+0.3

12 Months Trailing:

Return on Assets (%)

-14

Return on Equity (%)

-321

Operating Margin (%)

-65

Profit Margin (%)

-72

Total Assets July 2nd.

$1,218109

$1,379,399

-11.6

Market Capitalization August 5th

$2,160,000

 

Notes for the 2nd Quarter derived from data presented:

SGA ’22 $63 million comprising 42.8% of sales compared to ’21 $48.3 million or 32.3% of sales

R&D ’22 $16.2 million comprising 11.0% of sales compared to ’21 at $13.8 million or 9.2% of sales

Inventory: In Q2’22 represented 20.9% of sales compared to 17.5% in Q2 2021

In Q2 ’22 30.1 million lbs. sold compared to 26.3 million lbs. in Q2 ‘21

In Q2 ’22 Unit revenue attained $4.88/lb. compared to $5.69/lb. in Q2 2021

In Q2 ’22 each of claimed 183,000 outlets received an average of 165 lbs. product compared to 118,000 outlets receiving 222lbs. in Q2 ‘21

In Q2 2022 U.S sales represented 70 percent of revenue of which 77 percent was retail, the remainder, food service.

In Q2 2022 International sales represented 30 percent of revenue of which 53 percent was retail, the remainder, food service.

52-Week Range in Share Price: $20.50 to $134.99 50-day Moving average $28.42

Forward P/E 666

In commenting on Q2 2022 results , Ethan Brown Founder and CEO stated, “We recorded our second largest quarter ever in terms of net revenues even as consumers traded down among proteins in the context of inflationary pressures, and we made solid sequential progress on reducing operating and manufacturing conversion costs. Across the balance of the year, we are tightly focused on intensifying OpEx and manufacturing cost reductions, executing against a series of planned market activities for our global strategic partners, and strengthening our retail business through core support and the introduction of one of our best innovations to date. Through these and other measures, we are confident we will emerge from the current economic climate leaner and stronger, and well positioned for our next chapter of growth.”

 

The report included commentary on the second quarter that included:-

“The decrease in net revenue per pound was primarily attributable to changes in price, including the impact of sales to liquidation channels and list price reductions in the EU implemented in the first quarter of 2022, changes in foreign exchange rates, and increased trade discounts”.

 

The reality is that the Company record includes:-

  • An accumulated deficit of $574.6 million.
  • Trailing 12-month operating cash flow of -$416 million
  • Effective July 15th 41 percent of float was short
  • News reports of mismanagement and failure to execute and deliver on products offered to food service prospects
  • Share price off 43 percent year-to-date

 

Notwithstanding the Q2 report BYND opened August 15th post release at $31.33 and closed inexplicably up 18% at $38.26. Management may attribute this market affirmation to promises to cut expenses by laying off four percent of staff and other economies to reduce cash burn. A more sinister explanation is that some investors see the inevitability of an acquisition with a premium or alternatively a short squeeze in the near future. David Trainer speaking on CNBC correctly points to flagging sales and losses among the manufacturers of vegetable protein with extreme competition in the market. (see Report on Maple Leaf Foods Q2 in this edition). Analysts see Beyond Meat running out of cash with a share price below $5. This will create an opportunity for a Grey or even a Black knight (the White knights have passed it over) to acquire and dismember the Company. Tyson Foods correctly assessed the prospects for Beyond Meat when they disposed of their equity before the IPO.


 

Zoetis Posts Q2 Financial Results

08/05/2022

In an August 4th release, Zoetis Inc. (ZTS) posted financial results for the 2nd quarter of FY 2022. The Company can be regarded as an indicator of the status of enterprises manufacturing pharmaceuticals, biologics and nutritional additives for companion animals and livestock industries in the Americas, Asia and Europe. Along with competitors Elanco, Phibro, Merck, and Boehringer-Ingelheim, all are subject to the risks of currency fluctuation, disruption of supply-chains and increased costs for products, labor and transport in a competitive environment with livestock producers and consumers impacted by inflation.

 

For the 2nd Quarter of FY 2022 ending June 30th 2022, net income attained $529 million on revenue of $2,052 million representing a net margin of 25.8 percent.  Comparable figures for the 2nd quarter of fiscal 2021 ending June 30th were net income of $512 million on total revenue of $1,948 million. Diluted EPS attained $1.12 for the most recent quarter of fiscal 2022 compared to $1.07 for the 2nd Quarter of 2021.

 

In reviewing the components of revenue for the 2nd quarter of FY 2022 the Companion Animal Segment represented 66.6 percent of Company revenue with Livestock accounting for 32.5 percent. Within this segment, cattle comprised 49 percent; poultry, 18 percent; swine, 22 percent with aquaculture and other species contributing to the difference. Sales to the International segment of livestock amounted to 68 percent with the remainder derived from the U.S.

 

Zoetis expanded its poultry vaccine portfolio in the U.S. with the approval of Poulvac® Procerta® HVT-IBD-ND, a trivalent vector vaccine that protects against Marek’s disease, infectious bursal disease and Newcastle disease. This is the third recombinant vector vaccine from Zoetis, following the introduction of Poulvac® Procerta® HVT-ND in 2020 and Poulvac® Procerta® HVT-IBD in 2021.

 

In reviewing Q2 results Kristin Peck, CEO stated, “Zoetis delivered another strong quarter, with 8 percent operational revenue growth and 9 percent operational growth in adjusted net income, driven once again by the strength of our companion animal portfolio.” She added “Our diversity and strength across parasiticides, dermatology products, vaccines and monoclonal antibodies for pain continue to demonstrate people’s desire for innovative and effective care for their pets."

 

Ms. Peck concluded “Our business remains strong thanks to the durability of our global portfolio and a steady pipeline of new products. Even as we face uncertain macroeconomic conditions, continued supply constraints, generic competition and the war in Ukraine, we remain confident in the resilience of our business and colleagues. As we look at the rest of the year, we are updating and narrowing our guidance to reflect our positive outlook for the remainder of the year, as well as recent changes to foreign exchange rates."

 

Guidance for FY 2022 includes revenue in a range of  $8,225 to $8.325 million; net income of $2,350 to $2,390 million and a reported diluted EPS ranging from $4.05 to $4.75.

 

On June 30th 2021 Zoetis posted assets of $13,770 million of which $4,257 million comprised intangibles and goodwill against long-term debt of $5,221 million. The Company had an intraday market capitalization of $84,790 million on August 5th 2022. ZTS traded with a forward P/E of 35.7 and has ranged over the past 52-weeks from $154.18 to $249.27 with a 50-day moving average of $171.49. Q2 operating margin was 37.1 percent.  Return on assets was 3.8 percent. At close of trading on August 3rd pre-release ZTS was priced at $180.06 opening on August 4th post-release at $177.75.


 

Seaboard Q2 Reports Butterball Profit

08/04/2022

On August 2nd Seaboard Corporation (SEB) filed SEC Form 10-Q reporting results for Q2 of FY 2022 ending July 2nd.  The company is a conglomerate with segments dedicated to pork production, grain milling, commodity trading, marine transport and power generation. Seaboard owned 50 percent of the equity of Butterball LLC at the end of the first quarter with warrants to purchase an additional five percent of the shares, expiring in 2025.  On April 19th Seaboard exercised rights to purchase the additional equity thereby acquiring a controlling interest with 55 percent of the equity of Butterball LLC.

 

For Q2 FY 2022 SEB earned $108 million on revenue of $2,973 million with an EPS of $92.53. Comparable values for Q2 of FY 2021 ending July 3rd were net income of $176 million on revenue of $2,430 million with an EPS of $151.56

 

On July 2nd Seaboard posted total assets of $7,810 million with long-term debt and lease obligations of $1,399 million.  Seaboard has a market capitalization of $4,620 million with 79 percent of equity held internally. The 12-month trailing operating margin was 5.1 percent with a profit margin of 5.0 percent. Return on assets and equity were 4.3 and 11.6 percent respectively. During the past 52 weeks share price has ranged from $3,535 to $4,400 with a 50-day moving average of $3.930.

 

Effective April 2nd Seaboard owned half of Butterball LLC ranked as the second largest turkey producer in the U.S. The performance of this now-incorporated subsidiary, producing 850 million tons of RTC product in 2021, is reflected in the Seaboard Corp. SEC Q-10 submission. For Q2 FY 2022 Butterball posted sales of $417 million compared to $371 million in Q2 FY 2021. Net income attained $21 million generating a profit margin of 5.0 percent compared to a loss of $(7) million for the corresponding 2nd Quarter of 2021. As of July 2nd 2022 Butterball LLC posted assets of $1,100 million.

 

The SEC 10-K report includes the following statement:- “The Turkey Segment, accounted for using the equity method, represents Seaboard’s investment in Butterball, LLC. The increase in income from affiliates for the three and six month periods of 2022 compared to the same period in 2021 was primarily the result of higher selling prices, partially offset by lower volumes of turkey products sold and higher feed, plant production and transportation costs. Also, the income from affiliates for the first quarter of 2022 includes Seaboard’s portion of a gain on the sale of a business. Management is unable to predict market prices for turkey products or the cost of feed for future periods; however, management anticipates this segment will be profitable for the remainder of 2022”.


 

Maple Leaf Foods Reports on Q2 of FY 2022

08/04/2022

In a press release dated August 4th Maple Leaf Foods Inc. (MFI-TO) announced results for the second quarter of FY 2022 ended June 30th.

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS (conversion of CAN$1=US$0.78)

 

2nd Quarter Ending June 30th.

2022

2021

Difference (%)

Sales:

$933,203

$903,444

+3.3

Gross profit:

$68,046

$105,812

-35.07

Operating income:

$(20,567)

$19,291

-207

Pre-tax Income

Net Income1

$(45,743)

$(42,597)

$11,087

$6,844

-512

-722

Diluted earnings per share:

$(0.44)

$0.07

-729

Gross Margin (%)

7.3

11.7

-37.6

Operating Margin (%)

-2.2

2.1

-205

Profit Margin (%)

-4.6

0.8

-475

Long-term Debt and lease obligations2:

$1,293,098

$1,000,228

+29.3

12 Months Trailing:

Return on Assets (%)

2.0

Return on Equity (%)

3.3

Operating Margin (%)

3.0

Profit Margin (%)

1.5

Total Assets*

 Intangibles and goodwill as % of assets

$3,584,177

22.3

$3,280,430

24.4

+9.3

Market Capitalization

$2,558,000

  1. Restructuring charge of $14.9 million in Q2
  2. June 30th 2022/2021

 

Q2 2022 Meat Protein Segment:

Sales, $905 million, up 3.8% from Q2 2021.

Adjusted operating earnings $45.0 million down 33.8% from Q2 2021.

 

Q2 2022 Plant Protein Segment:

Sales, $31.8 million, down 15.2% from Q2 2021.

Adjusted operating loss $(26.5) million 16.7% deterioration from Q2 2021.

52-Week Range in Share Price: $17.17 to $25.43 50-day Moving average $20.58

Forward P/E 23.9 Beta 0.4

Market Close pre-release August 3rd $21.01

Market Open post-release August 4th $17.46

Insider shareholding 39.2%. Institutional shareholding 26.0%

 

In commenting on Q2 results Michael H. McCain, president and CEO of Maple Leaf Foods stated, “This chaotic and unpredictable operating environment is unprecedented in my 40-year career in the food industry," He continued “Driven by a post-pandemic economy and the tragic conflict in Eastern Europe, we have been unable to hire adequate people resources to operate our supply chains, experienced unnatural agricultural and trading markets, and realized hyper-inflation that has been challenging to keep up with pricing. While our Q2 results fell short of expectations with an Adjusted EBITDA margin of 9 percent in the Meat Protein Group, we see signs of these conditions abating. Our commitment to achieve 14-16 percent. Adjusted EBITDA was grounded in the assumption of normal, five-year average market conditions and we are confident we will deliver that once the environment stabilizes, although predicting this timeline at the moment is challenging. Our focus on executing our Blueprint to be the most sustainable protein company on earth is absolute.”

 

Addressing the Plant Protein segment McCain said "We are in full motion executing our transition to a different business model,” He added “At the end of Q2, we took steps to materially reduce the size of the organization. We expect to achieve our SG&A targets by the end of this year, and a right sizing of the manufacturing footprint in the first half of 2023, giving us the back half of 2023 as time to make final adjustments. Revenue management adjustments will also occur over the course of the next 12 months. This is a business model in transition back to one of profitable growth."

 

The Company provided the following comments on strategy and guidance:-

  • Meat Protein:Expect mid-to-high single digit sales growth with Adjusted EBITDA Margin expansion near the lower end of the 14% - 16% target by the end of 2022, once markets normalize, driven by mix-shift benefits in prepared meats resulting from growth in sustainable meats and brand renovation, as well as operational efficiencies”.
  • Plant Protein: “The Company is pivoting its strategy and investment thesis for the Plant Protein Group and has set a new goal to deliver neutral or better Adjusted EBITDA in the latter half of 2023. Work is ongoing to implement this pivot. Given the current size of the Plant Protein Group of approximately US$150 million of annual revenue in 2021, the expected resultant business model from this strategy would deliver a 30% gross margin, with less than US$50 million in SG&A, to achieve the stated Adjusted EBITDA target.

 

In late 2021, the Company announced that it was re-evaluating its outlook for the Plant Protein Group and launching a comprehensive review of the overall plant protein category. This decision was driven by a pronounced slowdown in growth rates in the category, particularly in the second half of the year, which fueled the Company’s imperative to identify and thoroughly assess the causes, near and long-term trends, and overall implications. While the Company’s analysis is ongoing, the results to date confirm that the very high category growth rates previously predicted by many industry experts are unlikely to be achieved given current customer feedback, experience, buy rates and household penetration. Based on this new information, the Company believes that the category will continue to grow at more modest, but still attractive rates. Current estimates suggest that the category will grow at an average annual rate of 10% to 15%, making it a $6 billion to $10 billion market by 2030.

 

The Company announced in May 2022 that it is moving forward with a planned leadership transition plan for the Board and Management. Michael McCain will serve as the Executive Chair of the Board and will continue as CEO for the next year as part of the management transition plan. Curtis Frank, currently the President and COO, will assume the role of CEO during Q2 of 2023.


 

Port Of New York and New Jersey Takes Preemptive Action On Containers

08/04/2022

Recognizing the increased level of traffic through Atlantic Coast ports as a result of congestion on the West Coast, the Port of New York and New Jersey has taken preemptive action to maintain regular inward and outward flow of containers during the fourth quarter.  Effective September 1st, the port will impose a container imbalance fee.  The outward movement of containers by ocean carriers should equal to or exceed 110 percent of their incoming volume during a given period.  Deviation from this standard will result in a $100 per container penalty for imbalance.  The Port will also impose a container fee on long-dwelling incoming and export containers.  This is intended to expedite movement and maintain space for outward collection.

 

The Port of New York and New Jersey has experienced a 34 percent increase in container volume compared to pre-pandemic operation with 12 percent higher container movement year-to-date.  During April through June, seven percent of volume handled represented cargo from vessels rerouted from the West Coast.


 

McDonald’s Terminates McPlant Offering

08/01/2022

After determining suboptimal consumer demand for the McPlant burger using a patty supplied by Beyond Meat, the QSR chain has withdrawn the product from the stores where it was under test.  It is understood that the product has gained acceptance in Europe. McDonald’s CEO Chris Kempczinski noted “after a successful pilot in the U.K. beginning in January, we made it available across all the restaurants in the U.K. and Ireland.”  He added, “When customers are ready for McPlant we will be ready for them.”

 

The announcement that McDonald’s sales in the U.S. have terminated resulted in an immediate six percent decline in the share price of Beyond Meat (BYND).  BYND is down 52 percent YTD declining to a market capitalization of slightly over $2,000 million.  Despite trials and the experience of McDonald’s, neither YUM! brands nor Pizza Hut have committed to national menu offerings.

BYND has traded over a range of $20.50 to $134.99 over the past 52 weeks with a 50-day moving average of $27.83.  The company has generated negative returns on assets of -10.5 percent and -167 percent on equity.  Over the trailing 12-month period the company has posted a negative operating margin of -50 percent and a profit margin of -55 percent. With a forward P/E exceeding 600, the share is over-priced given an apparent inability to gain traction in the U.S. among QSRs and with slow to declining retail sales. This is due in part to competition and higher price relative to real ground beef.

Analysts have expressed concern over the free cash flow ogenerated by BYND. The financials released yesterday confirm the precarious situation for the Company. Details will be evaluated and a report will be posted on CHICK-NEWS


 

U.S. Drought Leading to Herd Liquidation-Implications for 2024

08/01/2022

A report from Oklahoma State University documented a two-percent decline in cattle inventory on July 1, 2022, compared to the corresponding date in the preceding year.  Dr. Derrell Peel stated, "there are indications that drought impacts have accelerated sharply in the southern plains during July".  He added, "Cattle producers are destocking at a rapid rate as pasture conditions deteriorate". 

 

Dr. David Anderson of Texas A&M noted, "We haven’t had this kind of movement of cows to market in a decade since 2011 that was our really last big drought".  Regional cow slaughter plants have experienced high volume of sales in both Oklahoma and Texas.  This has implications for the availability of slaughter stock from pasture and feed lots in 2024 when additional packing capacity is projected to come on line together with the existing and expanded production from the four major packers.

Since the 2020 restrictions on output imposed by COVID that demonstrated vulnerability in the beef supply chain, a number of entrepreneurs and production groups have proposed establishing beef packing plants. Small regional establishments will receive funding from USDA and from state agencies.  Major plants processing up to 2,000 head per day and costing between $0.5 to $1.0 billion have been proposed.  Critics have noted that if these facilities are erected and commence production in 2024, they will have difficulty in sourcing live animals given the current depletion of the beef cow herd.  Industry insiders have also pointed to restrictions on availability of labor for large beef plants.  Promoters of new facilities may have underestimated the competitive aspects of the beef industry with domination by the four major packers with established markets and the possibility of predatory pricing to the detriment of industry newcomers.


 

Tyson to Petition SCOTUS Over COVID Claims

08/01/2022

Tyson Foods Inc will petition the Supreme Court of the U.S.  (SCOTUS) for a ruling as to whether the company was absolved of liability for cases of COVID in plants. Tyson operated under the terms of the Presidential Executive Order of April 28th 2020 invoking the Defense Procurement Act. This obliged packers and poultry processors to continue operation despite ongoing cases of COVID among workers. 

 

Four employees of Tyson Foods died from COVID in Iowa hog plants.  Subsequent lawsuits alleging negligence were filed in state courts and subsequently in Federal courts.  Lower courts ruled that Tyson Foods acted under the Federal Order, although the Eighth Circuit Court of Appeals referred cases back to state courts claiming lack of Federal jurisdiction.

 

There is no certainty that SCOTUS will grant certiorari and respond to the petition that will have implications for operators of beef and hog plants.  It is a matter of record that there were relatively few cases of COVID among workers at poultry processing plants compared to red meat facilities.


 

Chick-fil-A Recipient of the Chicken Marketer of the Year

08/01/2022

Chick-fil-A was awarded the Chicken Marketer of the Year at the 2022 Chicken Marketing Summit.

 

The Award was in recognition of the 2021 advertising campaign highlighting dedication to customers. The paid TV advertisements stimulated social media posts that were responsible for advancing the image of the brand and contributing to restaurant visits.

 

Finalist for the 2022 Chicken Marketer of the Year included Farmer Focus, Lee’s Famous Recipe Chicken and Wayne Farms.

 


 

Chipotle Announces Q2 FY 2022 Financial Results

07/31/2022

In a July 26th release, Chipotle Mexican Grill (CMG) posted financial results for the second quarter of fiscal 2022. This upscale food company competes at the intersection of QSRs and casual dining, offering a limited menu of Mexican-themed dishes assembled cafeteria style. The Company experiences the same pressures of increased cost of ingredients, labor and packaging as competitors in an environment still restrained by COVID and impacted by inflation.

 

Same-store sales increased by 10.1 percent for the most recent quarter compared to Q2 2021. In-restaurant sales were up 35.9 percent Digital orders comprised 39.0 percent of food and beverage sales.

 

For the 2nd Quarter of FY 2022 ending June 30th 2022, net income was $259.9 million on total revenue of $2,213 million.  Comparable figures for the 2nd quarter of fiscal 2022 ending June 30th 2021 were net income of $187.9 million on total revenue of $1,869 million. Diluted EPS increased 40.4 percent from $6.60 for the 2nd quarter of fiscal 2021 to $9.25 for the most recent quarter.

 

The Company provided guidance for Q3 comprising a mid to high single-digit increase in sales growth. Restaurant openings will attain a range of 235 to 250 units during FY 2022.

 

Chipotle operates approximately 2,000 stores in the U.S., Canada, U.K., France and Germany with all locations company-owned.

 

In commenting on the quarter, Brian Niccol Chairman and CEO stated We are pleased with our second quarter performance during a period of inflation and consumer uncertainty," He added,  "Pricing power and value proposition remain strong as our culinary and food with integrity commitment continues to be a key point of differentiation."

 

On June 30th, CMG posted assets of $6,545 million, against lease obligations of $3,393million but with no long-term debt. The Company had an intraday market capitalization of $43,430 million on July 29th. CMG trades with a forward P/E of 47.6 and has ranged over a 52-week period from $1,196 to $1,958 with a 50-day moving average of $1,328.  Twelve-month trailing operating margin was 11.1 percent and profit margin 9.3 percent.  Return on assets over the past twelve months was 8.8 percent with 34.9 percent on equity. At close of trading on July 26th pre-release, CMG was priced at $1,315. On July 27th CMG opened at $1,495.


 

Congress Pressing DOJ to Resolve Allegations Of Market Manipulation By Beef Packers

07/30/2022

A letter addressed to the Department of Justice (DOJ) requests information on the ongoing investigation of alleged market manipulation by the major beef packers.  Approximately two years ago, Tyson Foods, JBS USA, Cargill and National Beef Packing Company received demands for information as part of a comprehensive investigation.

 

The letter initiated by Rep. Cindy Axne (D-IA) noted, “The American public deserve to know of any wrongdoing at the meat packing industry.”  She added, “It is absolutely imperative that consumers and producers can have faith in the cattle industry.”

 

The beef packing industry has been under scrutiny since the 2019 fire in the Tyson Foods plant in Holcomb, KS. followed by the COVID outbreak that disrupted supply chains, and now high costs for beef in an inflationary environment.

At this time, the investigative activities of the DOJ appear to be centered on beef, although there may be extension to pork and even to chicken should unethical practices or manipulation be proven.


 

Pilgrims Pride Reports on Q2 2022

07/29/2022

In a press release dated July 27th Pilgrim’s Pride Corp. (PPC) announced results for the 2nd Quarter of FY 2022 ending June 26th. The report incorporates operations in the U.S. Mexico, the EU and the U.K.

 

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS)

 

2nd Quarter Ending

June 26th 2022

June 27th 2021

Difference (%)

Sales:

$4,631,648

$3,637,698

+27.3

Gross profit:

$676,771

$380,241

+77.9

Operating income:             

$512,904

$(123,131)

+517

Pre-tax Income

Net Income / (loss)

            $474,732

            $362,021

$(176,315)

$(165,503)

+369

+319

Diluted earnings per share:

$1.50

$(0.68)

+320

Gross Margin (%)

14.6

10.5

+39.1

Operating Margin (%)

11.1

(3.4)

+426

Profit Margin (%)

7.8

(4.5)

+273

Long-term Debt and lease obligations:

$3,371,373

        $3,191,161

         +5.6

12 Months Trailing:

 

 

 

           Return on Assets    (%)

11.9

 

 

           Return on Equity    (%)

27.0

 

 

           Operating Margin   (%)

9.7

 

 

           Profit Margin          (%)

4.2

 

 

Total Assets ’22 22.7% / ’21 25.8% intangibles

$9,322,932

        $8,913,205

          +4.6

Market Capitalization  July 29th

$7,610,000

                    

          

Notes for the 2nd Quarter:

 

SGA ’22 $164 million comprising 3.5% of sales compared to ’21 $503 million at 13.8% of sales

Foreign Currency loss $2.7 million ’22; $4.2 million ‘21

Tax payment $113 million ’21; $9.8 million benefit, ’22.

 

 

52-Week Range in Share Price:  $20.23 to $32.56     50-day Moving average  $31.17

Market Close July 26th pre-release  $32.92;  Market Close July 27th $32.31

Forward P/E  13.8             5-year Beta 0.9

 

 

In reviewing the relative revenue and contribution to operating profit, the following proportions of Company totals were derived from data presented:-

 

Geographic Segment     Proportion of Revenue    Contribution to Operating Profit

             U.S.                               62.6%                                      88.4%

             U.K. and  EU                26.9%                                        1.5%

             Mexico                          10.5%                                      10.1%

            

In commenting on Q3 results Fabio Sandri, CEO of Pilgrim's Pride Corp. stated, “Throughout the second quarter, we emphasized discipline and ownership throughout all aspects of our strategy and organization. As a result, second quarter sales grew over 27 percent and Adjusted EBITDA was up almost 68 percent from last year. I am continually impressed with our team’s determination to drive operational excellence to mitigate inflationary headwinds and work with Key Customers to profitably grow our business”.

 

“Our results continue to reflect the benefits of our diversified US portfolio. Investments in automation and in our hourly team members and their communities led to significant progress in net staffing levels, enabling our operations to realize the benefits of strong market fundamentals. Moreover, our overall demand in retail and foodservice remained robust given our emphasis on Key Customers and our diversified product portfolio. In addition, our retail branded business maintained its momentum, as Just Bare® and Pilgrim’s® continued their strong growth trajectory.

In commenting on U.K and EU. operations Sandri stated, “Our  business continued to recover through enhanced partnerships with Key Customers, improved cost recovery, and accelerated implementation of supply chain solutions. The team will continue to identify ways to leverage our diverse portfolio of offerings and further optimize our production capabilities to alleviate continual cost escalation and consistently innovate to drive profitable growth in a difficult economic environment.

 

With regard to Mexico Sandri opined “Our Mexican operations were impacted by seasonal diseases that reduced our efficiency of live production. Nonetheless, the team leveraged our diverse geographic footprint to ensure sufficient supply, driving superior service for Key Customers. Moving forward, the team will continue to monitor conditions and adjust accordingly to grow the business.

 

Perspectives for the future included “Given our market momentum and focus on profitable growth, we are announcing a number of new investments in the US. These investments include an expansion of our Athens, Georgia facility, which will enhance our service levels and support growth for a Key Customer. It also includes funding for operational excellence improvements via automation throughout our U.S. footprint and construction of a protein conversion plant for pet food ingredients in Georgia. Also, we are committing to the development of a Prepared Foods facility in the Southeast U.S. to cultivate our branded growth, further diversifying our portfolio”.


 

NCC Promoting Measures to Overcome Hunger

07/29/2022

The National Chicken Council has submitted suggestions to be considered at the September White House Conference on Hunger, Nutrition, and Health.

 

Mike Brown, President of the NCC, noted “Lean meats like chicken help close the protein gap among Americans who struggle with food and nutrient insecurity that particularly impacts women, children, and older adults who have greater need for nutrient-dense foods to support healthy diets.”

 

Suggestions submitted by the NCC include:

  • Renewing the Farmers to Families Foodbox Program
  • Expanding Section 32 purchases
  • Expanding cold storage capacity and upgrading the long-haul trucking fleet
  • Increase storage, packing and distribution infrastructure especially for food banks and charities

 


 

Promotion of Batista Family Member at JBS S.A.

07/29/2022

Wesley Batista Filho, son of Wesley Batista and grandson of Jose Batista Sabrinho, will assume the position of Global President of Operations for JBS S.A. on November 1st.  Wesley Batisto Filho is currently Global President of Operations covering Latin America and Oceania.  In his new position he will report to CEO Gilberto Tomazoni.  The CEOs of JBS USA, Australia, and Brazil will report to Battista Filho.

 

Andre Nogueira, President of Operations for North America, will retire at the beginning of November, but will remain with the company in an advisory capacity and will also serve on the board of Pilgrim’s Pride Corporation.

During the nine years as head of JBS operations in the U.S. the Company has doubled annual revenue through expansion in North America, the EU, and Australia.  The Batista family remains the controlling shareholder of JBS S.A.

 


 

Wingstop Posts Q2 FY 2022 Financial Results

07/29/2022

In a July 28th release, Wingstop Inc. (WING) posted financial results for the second quarter of fiscal 2022. This specialty QSR Company competes directly with privately held Buffalo Wild Wings and indirectly with national chains offering chicken. The Company experiences the same pressures of increased cost of ingredients, labor and transport as competitors in an environment still restrained by COVID and inflation. In addition, flavored wings are now readily available from supermarkets and in bulk from club stores for home meals and entertaining.

 

Domestic same-store sales decreased by 3.3 percent. System-wide sales were up by 7.5%. Digital orders comprised 60.5 percent of sales.

 

For the 2nd Quarter of FY 2022 ending June 25th 2022, net income was $13.3 million on total revenue of $83.8 million.  Comparable figures for the 2nd quarter of fiscal 2022 ending June 26th  2021 were net income of $11.3 million on total revenue of $74.0 million.  Diluted EPS increased from $0.38 for the 2nd quarter of fiscal 2021 to $0.44 for the most recent quarter.

 

The Company reiterated guidance for FY 2022 comprising a low single-digit increase in sales growth for FY 2022 with a diluted EPS range of $1.55 to $1.57. Systemwide restaurant openings will attain a range of 220 to 235 units

 

Wingstop operates 1,858 stores of which 39 U.S. locations are company-owned with 219 franchised operations in international markets.

 

In commenting on the quarter Michael Skipworth, president and CEO stated "Our second quarter results demonstrate the resiliency and underlying strength of the Wingstop brand as the unit economics have continued to strengthen throughout 2022, fueling another record number of net new openings this quarter." He added "We are in a unique position for the back half of 2022 where we are benefiting from meaningful deflation in bone-in wings, have a proven playbook, along with sales-driving levers that give us confidence in our ability to deliver on our outlook for 2022."

 

On June 25th, WING posted assets of $395.4 million, of which $99.2 million comprised goodwill and trademarks against long-term debt of $709.6 million. The Company had an intraday market capitalization of $3,120 million on July 29th. WING trades with a forward P/E of 69.9 and has ranged over a 52-week period from $67.67 to $187.35 with a 50-day moving average of $84.80.  Twelve-month trailing operating margin was 23.5 percent and profit margin 13.3 percent.  Return on assets over the past twelve months was 11.7 percent. At close of trading on July 27th pre-release, WING was priced at $100.31. At close of trading on July 28th WING priced at $119.74. On March 1st after announcing new financing, WING closed at $146.82.


 

Frivolous Lawsuit Claims Employee Status for Broiler Contractor

07/28/2022

A disaffected contract grower for Perdue Farms has brought suit in a federal court claiming that the company classified him as an independent contractor whereas he claims the status of an employee apparently with no justification.

 

The lawsuit appears to be a response to his termination following claims of inaccurate weighing of the flock owned by Perdue that he raised under contract.

The lawsuit claims compensation and punitive damages and class restitution.  A further claim is that contract growers should be reclassified as employees eligible for benefits and compensation despite the fact that they are obviously independent farmers presumably based on their annual tax returns.


 

Parties in Sanderson Farms Acquisition Accept DOJ Consent Decree

07/27/2022

In documents filed with the U.S. District Court of Maryland, Cargill Meat Solutions, Sanderson Farms and Wayne Farms agreed to pay $84.8 million in restitution to workers.  The case follows intensive investigations by the Department of Justice into allegations that the three companies cited allegedly suppressed wages for plant workers and colluded to restrict payments to contract growers over a minimum of ten years.  Cargill Meat Solutions will pay $15.0 million, Sanderson Farms $38.3 million and Wayne Farms $31.5 million.  The companies accepted the consent agreement without admitting any wrongdoing.  Meng, Sahl and Company, a compensation consultancy, was enjoined from providing services that could be used to restrict wages.  The DOJ settlement is separate from a class-action lawsuit naming Wayne Farms and Sanderson Farms as defendants.

 

In addition to restitution for plant workers, the integrators will abandon aspects of the tournament system and will not be allowed to penalize contractors for documented suboptimal grow-out performance.  The companies will function in accordance with a compliance monitor for a ten-year period to ensure adherence to rules imposed by the Department of Labor and under the USDA Packers and Stockyards Act.

 

The agreement will expedite approval of the $4.5 billion transaction by which Cargill, Inc. and Continental Grain Company will acquire Sanderson Farms to create a new entity, Wayne-Sanderson Farms that will comprise third largest U.S. broiler producer approaching the weekly volume of 2nd-ranked Pilgrim’s Pride Corporation.


 

Monthly Turkey Production and Prices, July 2022

07/25/2022

Poult Production and Placement:

The July 13th 2022 edition of the USDA Turkey Hatchery Report, issued monthly, documented 26.61 million eggs in incubators on July 1st 2022 compared to 26.87 million eggs on July 1st 2021* The July set was down 1.0 percent (0.26 million eggs) from July 2021 and 1.1 percent down from the previous month of June 2022.

 

A total of 22.70 million poults were hatched during June 2022 compared to 22.10 million in June 2021*. The June 2022 hatch was up 0.2 percent (51,000 poults) from the previous month of May 2022.

 

A total of 21.94 million poults were placed on farms in the U.S. in June 2022, compared to 21.161 million in June 2021*. The June placement was 3.7 percent, (0.8 million poults) more than the month of June 2021. This data suggests disposal of 0.72 million poults during the month, therefore approximately 3.1 percent of the June 2022 hatch was not placed.

 

For the twelve-month period July 2021 through June 2022 inclusive, 269.90 million poults were hatched and 251.13 million were placed. This suggests disposal of 18.77 million poults over the 12-month period, corresponding to 7.0 percent of all poults hatched.

* USDA revision from previous monthly report.


 

KFC Releases Fried Nuggets Under Test

07/24/2022

Kentucky Fried Chicken Corporation (KFC) is serving Kentucky Fried Chicken Nuggets at test locations in Charlotte, NC.  Nuggets comprise white meat and are breaded and seasoned with the proprietary KFC herb and spice mixture. Nuggets will be available in 8, 12 and 36-count packs.

 

Nick Chavec, Chief Marketing Officer for KFC, U.S., stated, “While nuggets often come in small packages, that doesn’t mean they should have small flavor.”  He added, “We wanted to introduce nuggets for the flavor and ingredients that live up to our legacy as the original fried chicken experts.”

 

It is interesting to observe that KFC is promoting all-white meat nuggets and apparently has not proceeded with a vegetable-based chicken alternative that lacked consumer acceptance on test in the U.S.


 

DOJ Agrees to Sanderson Farms Acquisition-With Conditions

07/24/2022

Despite the announcement that an agreement between the parties has been concluded to allow the acquisition of Sanderson Farms, the Department of Justice  intevened in the transaction. The consortium comprising Cargill Inc. and Continental Grain will become the owners of  Sanderson Farms in a $4.5 billion purchase of shares entered into in August 2021. The price of DOJ approval is a consent agreement modifying the tournament system and wage restitution  to plant workers amounting to $85 million

 

According to industry sources, the conditions imposed by the DOJ will be almost complete elimination of the tournament system regulating payment to contractors.  The Administration is attempting to scrap this proven and equitable method to determine remuneration through a rule to be issued under the Packers and Stockyards Act.  Generally, the DOJ Antitrust Division requires divestment of facilities to encourage competition and to reduce the possibility of an unfavorable effect on competitors or consumers.

 

It would appear that the DOJ does not regard the proposed merger as a competition issue but is using its leverage to achieve an objective that is outside their remit.  Although a delay in completion of the transaction would have represented uncertainty and anxiety for stakeholders, Sanderson Farms along with competitors has benefited from high prices as reflected in the report for the most recent quarter ended April 30th The posting on what will probably be the last quarter of SAFM before de-listing can be retrieved by entering "Sanderson" in the Search block.


 

Reduction In Future Beef Supply An Opportunity For Broilers

07/24/2022

Projections for future beef production suggest lower availability in 2023 as a result of a reduction in the beef-cow herd. This trend was evident in USDA statistics released on July 1st with inventory the lowest since 2015. Depopulation will be accelerated in the short and intermediate periods by drought in the Southwest and high-input costs.  Beef cow slaughter was up 15 percent year-over-year during the first half of 2022.  In 2021 the disposal of breeder cows increased by nine percent from the previous year.

 

Concurrently slaughter of feedlot and grass-fed cattle has increased with heifer slaughter up 3.8 percent for the first half of 2022.  Given the length of the beef cycle, the U.S. will be facing a deficit of product through 2024 and possibly beyond creating market opportunities for both pork and broiler producers.  Even if the U.S. economy does not decline into a recession, consumers will be frugal in their expenditure and will avoid high-priced beef, favoring both broilers and turkeys for their protein requirements.


 

USDA-AMS Purchases

07/23/2022

On July 18th, the USDA Agricultural Marketing Service announced purchase of 5.6 tons of boned chicken in pouches for child nutrition and related food assistance programs.  Product was purchased at $3.64 per pound with deliveries to be made during September 2022.

 

On July 20th, the USDA Agricultural Marketing Service announced purchase of 12,510 tons of large chilled chicken in bulk and 792 tons of chilled chicken legs for child nutrition and related food assistance programs.  Product was purchased for an average of $1.44 per pound for whole birds and $0.80 for legs with deliveries to be made during September 2022.

The two purchases amounted to $40.2 million.


 

Mexico Controls HPAI in Sinaloa State

07/21/2022

The Animal Health and Food Safety Agency (SENASICA) of Mexico has announced that the recent outbreak of HPAI is now under control with twenty affected units soon to be repopulated following decontamination.

 

It is unclear whether vaccines were used in conjunction with traditional depopulation, quarantine and surveillance as press reports indicated use of “advanced vaccines”.  Previously in the 1990s Mexico deployed homologous oil-emulsion vaccines extensively and over long duration as an adjunct to depopulation of affected broiler egg production and parent flocks.

 


 

Aviagen to Extend Collaboration with PAACO

07/21/2022

In a July 18th release, Aviagen announced collaboration with the Professional Animal Auditors Certification Organization (PAACO) to enhance educational activities.  The intention is to develop videos narrated by animal welfare experts affiliated with Aviagen for continuing education of PAACO-certified auditors.  Topics will include, “Stockmanship in Relation to Flock Welfare” and “Brooding for Optimal Performance” The intended presentation “Care of Hatching Eggs From Farm to Hatchery” has only indirect relevance to flock welfare but is important in the context of productivity.

Previously Aviagen collaborated with PAACO to host the first virtual in-house training program to certify Company personnel.

 


 

Presidential Action on Impending Railroad Strike Receives Support

07/21/2022

On July 15th, the President signed an Executive Order creating an Emergency Board to facilitate an agreement between rail companies and unions. This action has averted immediate action by the parties including lockouts or strikes. Establishing an Emergency Board will create an opportunity for the unions and management to negotiate a settlement during a mandated “cooling off” period. The three person panel will deliver a report to the White House within 30 days and if there is no resolution a second 30-day cooling off period will commenced preventing either a walkout or a lockout. Any overt labor action by either party would exacerbate the currently stressed supply chain, contributing further to inflation.

 

The Executive Order was supported by Ian Jeffries, president of the Association of American Railroads and was endorsed by Greg Regan president of the Transportation Trades Department of the AFL-CIO. Negotiations on a new labor agreement between Union Pacific and BNSF Railroads and their respective unions have been in progress for over 22 months.


 

DOJ Indicts Pilgrim's Pride Managers for Alleged Price Fixing

07/19/2022

Following a not-guilty verdict in the third trial of executives of Pilgrim's Pride and Claxton Poultry, the DOJ has served four ex-employees of Pilgrim's Pride with a superseding indictment alleging price-fixing and bid-rigging in a conspiracy extending over eight years.  Those accused comprise Jason McGuire, former Executive Vice president; Wesley Tucker, former National Accounts Sales Executive; Jusin Gay, former Director of Fresh Foods Service Sales and Timothy Stiller, former General Manager of Fresh Food Services.

 

In addition, Stiller faces charges of witness tampering and obstructing an official proceeding. The DOJ alleges that Stiller attempted to conceal evidence and records and coached a witness who was cooperating with the DOJ regarding the alleged conspiracy.

 

The accused face up to ten years in prison for conspiracy and Stiller, if found guilty of the other charges could face a prison sentence of up to 20 years.


 

U.S. Meat Exports

07/18/2022

U.S. Broiler and Turkey Exports in January-May 2022.

Total exports of bone-in broiler parts and feet for January-May 2022 attained 1,602,775 metric tons, 7.6 percent more than during the corresponding months in 2021 (1,489,660 metric tons). Total value of exports increased by 18.8 percent to $2,081 million ($1,752 million 2021).

 

Unit price is constrained by the fact that leg quarters comprise over 95 percent of broiler meat exports (excluding feet). From Q1-2021 to date unit value of leg quarters has risen consistent with international demand. Despite the recent welcome increase in unit price, leg quarters represent a relatively low-value commodity lacking in pricing power. Exporters of commodities are subjected to competition from domestic production in importing nations. Generic products such as leg quarters are vulnerable to trade disputes and embargos based on real or contrived disease restrictions.

 

During January-May 2022 the National Chicken Council (NCC), citing USDA-FAS data, documented exports of 1,620,489 metric tons of chicken parts and other forms (whole and prepared) valued at $2,122 million with a weighted average unit value of $1,310 per metric ton, 10.1 percent higher in unit value than for January-May 2021 ($1,189 per metric ton).

 

The NCC breakdown of chicken exports during January-May 2022 by proportion and unit price for each broiler category compared with the corresponding months in 2021 (with the unit price in parentheses) comprised:-

  • Chicken parts 7%; Unit value $1,260 per metric ton ($1,131)
  • Prepared chicken 1%; Unit value $3,643 per metric ton ($2,995)
  • Whole chicken 2%; Unit value $1,219 per metric ton ($1,224) 


 

Impossible Foods Gains Entry to School Feeding

07/18/2022

Following a 2021 approval by the USDA Food and Nutrition Service, vegetable protein products produced by Impossible Foods will be incorporated into school meals.  California is to be the leading state in adopting alternatives to real meat.  Chicken nuggets and patties will be supplied by Impossible Foods who claim that 500 institutions have tried or are using their products. Given the differential in wholesale cost between vegetable-derived products compared  to hamburger and chicken it would be difficult for school administrators to justify selection of  alternatives to real meat.


 

Poultry Meat Projection

07/18/2022

Updated USDA-ERS Poultry Meat Projection for July 2022.

On July 18th 2021 the USDA-Economic Research Service released updated production and consumption data with respect to broilers and turkeys, covering 2021 (actual), a projection for 2022 and a forecast for 2023.

 

Compared to 2021, broiler RTC production in 2022 was reduced 0.9 percent in the July report to 45,295 million lbs. RTC (20.589 million metric tons.). Per capita consumption in 2022 will be 0.2 percent higher compared to 2021 at 96.7 lbs. (44.0 kg.). Exports will represent 16.4 percent of RTC production in 2022 attaining 7,416 million lbs. (3.371 million metric tons) comprising both RTC leg quarters and feet. The forecast for 2023 is for 45,675 million lbs. (20.761 million metric tons) with a per capita consumption of 97.3 lbs. (44.2 kg.) and exports of 7,465 million lbs. (3.393 million metric tons).

 

Turkey production for 2022 compared to 2021 will be held at 5,359 million lbs. (2.436 million metric tons) RTC approximately 3.5 percent lower than in 2021. The July projection of per capita consumption in 2022 was 2.0 percent lower than in 2021 at 15.0 lbs. (6.8 kg.), despite extensive promotions and introduction of further-processed items. Export volume for 2022 was reduced 26.9 percent to 402 million lbs. (0.183 million metric tons). Values for production and consumption of RTC turkey in 2022 are considered to be realistic, given the prevailing economy, variable weekly poult placements, production levels, losses from HPAI and inventories.

 

The June USDA forecast for the turkey industry in 2023 comprised annual production of 5,650 million lbs. (2.565 million metric tons) with consumption of 15.8 lbs. (7.2 kg.) per capita.

 

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

 

Parameter

2020

(actual)

2021

(actual)

2022

(projection)

Difference %

2021 to 2022

Broilers

Production (million lbs.)

44,583

44,898

45,295

+0.9

Consumption (lbs. per capita)

95.8

96.5

96.7

+0.2

Exports (million lbs.)

7,637

7,367

7,416

+0.7

Proportion of production (%)

16.5

16.4

16.4

0

Turkeys

Production (million lbs.)

5,743

5,558

5,359

-3.5

Consumption (lbs. per capita)

15.8

15.3

15.0

-2.0

Exports (million lbs.)

571

550

402

-26.9

Proportion of production (%)

 9.9

9.9

7.5

-24.2

Source: Livestock, Dairy and Poultry Outlook released July 18th 2022

 

The projection takes into account declining exports to China, ranked second by volume in 2021 with imports of 460,159 metric tons valued at $864 million with a unit price of $1,875 per ton. Average unit price for U.S. broiler exports including parts and feet but excluding imports by China, attained $1,139 per metric ton during 2021. For the first five months of 2022 China imported 248,920 tons of broiler products valued at $469 million including at an average unit price of $1,811 per ton.

 

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


 

Unintended Consequences Of California Law AB5

07/15/2022

State law AB5 was enacted to classify drivers of ride-share and delivery vehicles as employees instead of independent contractors.  The law directed to specific group of workers, but the impact has extended to truckers. As an unintended consequence AB5 has affected owner-operators of trucks critical to the movement of containers from the ports of Los Angeles and Long Beach to their final destination.

 

To protest AB5, owner-operators carried out a work stoppage on Monday, July 11th, intensifying problems relating to port congestion.  The law has been contested at the state and federal levels.  At the end of June, the U.S. Supreme Court referred a petition from a California trucking association back to the U.S. Court of Appeals for the Ninth Circuit.  Strict implementation of AB5 has the potential to deprive as many as 50,000 independent owner-operators of their livelihood and could cripple port operations.

 

The labor action has now ended but the unintended consequences of the law have yet to be resolved


 

Tyson Foods To Overcome Restraints To Production Volume And Efficiency

07/12/2022

In an interview with The Wall Street Journal, Donnie King, CEO of Tyson Foods, recognized restraints to production in the chicken segment but indicated that corrective action is in progress.

 

Problems encountered included a drop in hatchability as a result of introducing a male breeder line in 2020 with the potential to increase yield at higher weights.  These traits were apparently negatively correlated with fertility and as a result, chick production was impacted by approximately two percent. Restoration in chick production was delayed until maturity of additional parent flock placements to compensate for lower hatchability.

 

Tyson Foods has also experienced problems in staffing in common with other integrators processing and packing red and white meat.  Tyson Foods has been in the forefront of mechanization and has introduced measures to improve efficiency in all areas of operation.

 

For the second quarter of Fiscal 2022 ending April 2nd, Tyson Foods posted net income of $829 million, a 75.8 percent increase over the second quarter of Fiscal 2021.  Results in the chicken segment were affected by increased feed costs, amounting to $100 million during the quarter and $285 million for the half year, partly offset by gains in derivatives.

 

The Wall Street Journal commented on the loss experienced in Fiscal 2021.  This was, in part, due to a nonrecurring $320 million legal settlement.

 

Fiscal 2022 guidance for the company includes revenue approaching $53 billion, an adjusted operating margin of 9 percent despite challenges represented by foreign currency exchange, supply chain disruption, labor shortages and higher ingredient costs.

 

Tyson Foods has committed to improving profitability and taking advantage of high prevailing prices in part due to reduced output relative to demand.  In the current inflationary environment, there has been a downward shift in consumer purchases of beef to pork and from pork to chicken based on value.


 

House of Raeford Farms Supports Childrens’ Camps

07/10/2022

FLOCK the nonprofit organization established by House of Raeford Farms, has supplemented the $28,000 raised by company employees and associates with a $10,000 donation to support Camp Corral.  The organization provides services for children of military veterans and wounded and fallen heroes

 

In responding to the donation, Phillip Kowalczyk, CEO of Camp Corral, stated, “We have transformed the lives of military children through the nurturing experiences at the camp.”

 

In 2022, camps will be held at 17 locations across the nation. Children will receive support from trained counselors who understand the challenges faced by military families.

 


 

Sysco Corporation Files Price-Fixing Suit

07/10/2022

Sysco Corporation has filed a lawsuit in the U.S. District Court for the southern district of Texas, against the ‘Big Four, alleging “an illegal conspiracy to increase the wholesale price for beef” from 2015 through to the present. According to the complaint, the Big Four (Cargill, Inc., JBS U.S., National Beef and Tyson Foods) represent an oligopoly controlling over 80 percent of cattle slaughtered

 

Sysco maintains that this concentration was conducive to a conspiracy to limit supply, and increase prices paid compared to wholesale prices that may have pertained in a competitive environment. To support their case, Sysco has compiled statistics relating to spreads between farm and wholesale prices and claims to have testimony from a witness who can attest to the existence of a conspiracy among packers.

 

Given the failure of the Department of Justice to convict five executives of two broiler companies of collusion in three consecutive trials, Sysco may have a difficult task in pursuing their claim.  The Department of Justice had statistics, documentation, e-mails, a witness and corporate settlements without prevailing in a criminal trial.  The Sysco lawsuit has the hallmark of a shakedown.


 

USDA-AMS Purchases

07/10/2022

On June 30th, the USDA Agricultural Marketing Service announced purchase of 78 tons of IQF boneless breasts for child nutrition and related food assistance programs.  Product was purchased at $5.29 per pound with deliveries to be made from July 1st through September 30th.

 

On July 8th, the USDA Agricultural Marketing Service announced purchase of 1,962 tons of oven-roasted chicken products for child nutrition and related food assistance programs.  Product was purchased over a range of $4.77 to $4.95 per pound with deliveries to be made from August 16th 2022 through April 15th 2023.

 

The two purchases amounted to $19.9 million. Bids were not submitted for 600 tons of cut-up frozen and 342 tons of frozen oven-roasted 8-pice chicken products


 

Promoter of Proposed South Dakota Beef Plant Responds to Questions

07/10/2022

Megan Kingsbury, CEO of Western Legacy Development Corporation, met with livestock industry leaders and stakeholders in early July to respond to questions concerning the enterprise.

 

Kingsbury informed those present that the plant would process eight thousand head daily and would market product to the food service segment and would not serve retail. Ms. Kingsbury claimed that the business has contracted with a major food service group for beef products.

 

The Company intends purchasing livestock over a six-state region through cash trades with the anticipation that some previously closed feed lots would be reactivated.

 

Kingsbury assured questioners that the company will have adequate working capital to function without federal support.


 

Advances in Epidemiology of Salmonella Contamination through the Broiler Production Chain

07/09/2022

A recent article* addressed the epidemiology of Salmonella contamination in breeder flocks and subsequent contamination of processed product.  Records maintained by the USDA-Food Safety and Inspection Service demonstrated a decrease in the recovery from carcass and parts from 9.0 percent in 2016 to 6.6 percent in 2020.  The most recent data revealled an 11.2 percent contamination rate on parts and 4.8 percent on carcasses, presumably detected using whole- carcass wash.

 

The study showed differences in serovars according to area of production with S. Infantis and S. Typhimurium among Mid- Atlantic processors and a high proportion of S. Schwarzengrund in the Southeast quadrant of the broiler industry.

 

There is a disconnect between Salmonella serovars isolated from breeder flocks and the isolates recovered at processing.  This is evidenced by two-thirds of isolates from breeders yielding S. Kentucky that was not evident during processing.

 

Applying CRISPR-SeroSeq on breeder samples collected between 2020 and 2021 demonstrated an evident inability to identify all serovars in a sample using conventional microbiology. This is regarded as a restraint to evaluating public health risk.

 

An understanding of the epidemiology of the various Salmonella serovars that occur at the breeder and grow-out levels and their eventual prevalence on processed product is important since USDA-APHIS is considering pre-harvest modalities for suppression of Salmonella contamination entering plants.

 

*Siceloff, A.T. et al. Regional Salmonella Differences in United States Broiler Production from 2016 to 2020 and the Contribution of Multiserovar Populations to Salmonella Surveillance. Applied and Environmental Microbiology. doi: 10.1128/aem.00204-22. April 6, 2022.


 

Tyson Acquires Equity in Tanmiah Food Company of Saudi Arabia

07/09/2022

On July 6th, Tyson Foods announced a strategic partnership with Tanmiah Food Company, a producer quoted on the Saudi Exchange.  Tyson Foods will acquire 15 percent equity of the Agriculture Development Company subsidiary, presumably responsible for live bird production and 60 percent of the equity of Supreme Foods Processing Company.

 

Chris Langholz, President of International for Tyson Foods, stated, “This investment will enable us to access poultry supplies in Saudi Arabia to meet the growing demand for protein in the Middle East and other markets.”  He added, “Expansion into international markets is a key part of our strategic growth plan and we are pleased to better serve customers in this region.”

 

Zulfiqar Hamadani, CEO of Tanmiah, stated, “We are delighted to be joining hands with a well-renowned global leader in food production to accelerate our growth and development agenda.”  He added, “This transaction will not only reinforce our position in the domestic market but will also enable us to expand our global footprint through leveraging Tyson Foods’ long-standing relationships with customers worldwide.”

 

It is anticipated that additional funding and technology, especially in the area of cooked and added-value products will lead to customer and geographic diversification and enhanced return on investment.


 

Smithfield Foods Settles With Restaurant Class Alleging Price Collusion

07/09/2022

According to press reports, Smithfield Foods has finalized a $42 million settlement with restaurants that alleged collusion to inflate prices charged for pork.

 

The company denied liability and the settlement was concluded “in the best interest in the company”.

 

Remaining defendants in the lawsuit include Tyson Foods, Seaboard Foods and Hormel, Inc.  AgriStats® that provided a cost benchmarking system used by the defendants is a co-defendant in this and related suits with Plaintiffs alleging indirect collusion from data made available to the subscribers.


 

Accumulation of Containers Still Problematic at West Coast Ports

07/07/2022

The threat of imposing a $100 per day demurrage fee on containers that remained in ports awaiting transport announced on October 24th 2021 reduced congestion during the first quarter of 2022 despite protest from shipping companies. According to recent data, on June 28th the Port of Long Beach counted 20,500 containers and the Port of Los Angeles had 70,290 containers. Although the combined quantity is lower than when the threat of a demurrage fee was mooted, there is clearly deterioration in the rate of removal from ports and especially by rail.

 

Gene Seroka, Executive Director of the Port of Los Angeles reported on June 14th that a number of containers awaiting rail transport have aged in excess of nine days.  He noted that if rail transport was restored to pre-COVID levels there would be no problem with aging containers and that cargoes would move "more fluidly through the port complex".

 

The question now is whether either threats or actual imposition of the demurrage fees as threatened would effect improvements to reduce congestion and expedite unloading and deliveries.


 

Persistence of viral contamination on frozen meat and packaging

07/06/2022

A recent study1 demonstrated persistence of two surrogates of SARS-CoV-2 (murine hepatitis virus and transmissible gastroenteritis virus) on beef, pork, chicken and salmon both refrigerated and frozen for over 30 days.

 

The report lends credence to the action by China in sampling outer and inner packaging and imported products for SARS-CoV-2 virus before release from warehouses to distribution. A report in the China CDC Weekly2 documented seven outbreaks resulting in 689 cases apparently caused by contact with contaminated outer packaging of frozen imported products. The article recorded 1,455 isolations of SARS-CoV-2 nucleic acid from 56 million samples, with all but 7 from imported products. Of the implicated consignments 11 were from the E.U., 6 from South America, 2 from North America, 9 from Asian nations and 2 from African nations.

 

Given the probability that COVID can be transmitted on food products and packaging, the research team stressed the need for "rigorous and sustained food sanitation and hygiene for the harvest, transport, processing and distribution of foods".  It is obvious that plants demonstrating deficiencies in controlling COVID and with an unacceptable prevalence among workers, there is a possibility of transmission through food products.  The results as published are contrary to previous assurances by the WHO that food does not serve as a vehicle of infection.

 

1 Bailey, E.S. et al. Persistence of Coronavirus Surrogates on Meat and Fish Product during Long-Term Storage. Applied and Environmental Microbiology. doi.org/10.1128/aem.00504-22. June 28, 2022.

 

2  Wang, J et al. Perspectives. Covid-19 Outbreaks Linked to Imported Frozen Foods in China. Status and Challenges. China CDC Weekly. 4:483-487 (2022)

 


 

China Reports Case of Avian Influenza in Customer of a Wet Market

07/06/2022

In a Monday, June 27th posting on ProMed authorities in China reported a case of avian influenza strain H5N6 in a patient who visited a wet market in Guangzhou, Jiangxi Province.  The patient was hospitalized approximately four days after onset of symptoms and is reported to be in critical condition.

 

The Center for Health Protection of the Department of Health in China has warned against visiting wet markets and the necessity of protective measures to prevent infection.  This is the 14th case of H5N6 infection among humans diagnosed during 2022.

 

It is enigmatic that China has a Draconian policy regarding COVID, yet tolerates wet markets and live bird sales with minimal restrictions in the face of ample evidence to demonstrate the role that the live bird marketing system and wet markets play in dissemination of avian influenza affecting flocks and consumers. It is also questioned why live bird marketing and wet markets are tolerated in the U.S.

 

 


 

Perdue Product a Winner in PEOPLE’s Food Awards

07/06/2022

Perdue CHICKEN PLUS ® Chicken Tots™ was selected as a winner of a Best Supermarket Product of the Year in the PEOPLE’s Food Awards 2022 competition.  Judges who sampled 1,300 new products awarded the top prize on the basis of taste.

 

The product combines white-meat chicken, cauliflower, chickpeas, cabbage, and potatoes with a Panko coating.  Perdue CHICKEN PLUS® Chicken Tots™ provide nine grams of protein per serving, are minimally processed and do not contain any artificial ingredients.

 


 

Subway Introduces Range of Sandwiches with Order Numbers

07/06/2022

Following the success of the Eat Fresh® Refresh Program introduced during the summer of 2021, Subway has now developed a series of twelve signature sandwiches.  Divided into four categories comprising Cheesesteaks; Italianos; Chicken and Clubs, each with three varieties that can be ordered by a number or name.  This departure from the more flexible construction of a sandwich should expedite serving and obviate waiting time during peak serving hours.

 

To promote the new Subway Series, the company gave away one million free six-inch subs on July 12th from across the U.S.

 

Trever Haynes, President of North America at Subway stated, "the Subway Series is the most ambitious undertaking in company history as we are changing the nearly sixty-year-old blueprint that help make Subway a global phenomenon".

 


 

U.S. Department Of Labor Monitoring Wages And Overtime Pay

07/04/2022

Chick-NewsIn a release by the U.S. Department of Labor, it was announced that penalties were imposed on two processors in Mississippi for deviations from legal payment of wages and overtime. Contravention of the Fair Labor Standards Act resulted in fines and compensation of workers for deficiencies.

 

Irregular practices revealed in audits and investigations included:

  • Failure to pay overtime beyond 40 hours in a work week
  • Illegal deductions, reducing average hourly pay
  • Failure to include bonuses in the pay rate when calculating overtime
  • Deficiencies in pay records

 

Audrey Hall, Director of the Wage and Hour Division of the department of Labor in Jackson, MS., stated, “Families across the country depend on food industry workers to put meals on their tables and these workers deserved to be paid all of their rightful wages.”

 

Chick-NewsIt is evident that the Department of Labor, Wage and Hour Division, will be more aggressive in ensuring compliance with the Fair Labor Standards Act.  This will require plant management to comply with wage rates, calculate overtime correctly and to maintain accurate records.

 

In the specific cases cited, the Department of Labor identified problems affecting 313 workers.  It is noted that major integrators operating primary processing plants employing many hundreds of workers have well-structured HR Departments with computerized records suitable for accurate payments that can be verified by audit.


 

National Chicken Council Requests Extension For Response To Proposed Rules

07/04/2022

Chick-NewsThe USDA has published proposed rules entitled, “Transparency and Poultry Grower Contracting and Tournaments” and “Poultry Grower Ranking Systems:  Fairness and Related Concerns”. The proposed rules have been published in the Federal Register with a statutory 60- day period for comments.

 

The National Chicken Council has requested a delay in responding, given the complexities of the issues and their potential to affect the broiler supply chain. At issue, it is the Administration intent to eliminate or profoundly modify the tournament system, which has served integrators and contractors for many decades.

 

In addition to the two rules, USDA has noted its intention to introduce rules in accordance with the Packers and Stockyards Act entitled, “Clarification of Scope of the Packers and Stockyards Act” and “Unfair Practices in Violation of the Packers and Stockyards Act”.  Deadlines for responding to the publication of the “Transparency and Poultry Grower Contracting and Tournaments” is August 8th.  Responses to the “Poultry Grower Ranking Systems:  Fairness and Related Concerns” is September 6th.

 

Chick-NewsIn their letter to USDA, the NCC noted, “This is not just one rule.  Rather, it is three rules and the possibility of more, all of which have been presented as intended to operate together to effect changes to the poultry supply chain.  As such, NCC respectfully requested USDA extend the comment period of the Proposed Rule and the advance notice of Proposed Rule Making until at least 180 days after the official publication in the Federal Register”.  The NCC letter concluded “Doing so would allow NCC and its members to fully study the impact the Department’s full competition agenda would have on industry efficiency, compliance costs, food availability and inflationary pressures.”


 

Emergence Of Antibiotic Resistant Staphylococcus aureus

07/04/2022

A recent publication by scientists at Cambridge University has documented the increase in infection among hog herds with a methicillin-resistant strain of Staphylococcus aureus (MRSA).  In 2008, less than five percent of Danish herds sampled carried the specific MRSA designated CC398.  In 2018, the infection rate had increased to 90 percent.

 

The CC398 MRSA strain is zoonotic and poses a risk to public health.  This specific strain is adapted to human hosts and has the ability to overcome an immune response.

 

An epidemiologic study in Denmark demonstrated that even following withdrawal of antibiotics, CC398 can persist in sequential placements of hogs, although other strains of potentially pathogenic bacteria have declined in prevalence and their spectrum of antibiotic resistance. This is attributed to strict control over administration of antibiotics of human health significance.


 

Consumer Reports Opined on Cost, Taste and Nutrient Content of Meat Substitutes

07/03/2022

Chick-NewsConsumer Reports in past years has developed a strong antipathy to intensive livestock production, favoring environmentally beneficial alternatives. Uncharacteristically the publication recently commented adversely on the cost and attributes of alternatives to meat. 

 

Thirty-two plant-based products were evaluated with Consumer Reports noting inferiority in organoleptic properties compared to real meat. Although some brands were almost similar in texture and taste there were perceptible differences among many of the alternatives that were markedly inferior inacceptable quality. 

 

Chick-NewsThe nutritional equivalence compared to real meat products was questioned. Although crude protein values are only slightly lower than real meat, amino acid composition especially with respect to lysine and essential sulfa-containing amino acids is inferior. Salt content of some products may be unacceptably high. Ingredient lists for vegetable-based alternatives include a number of additives, although approved for food, detract from acceptance by consumers demanding “clean labels”  


 

National Chicken Council Requesting FDA and USDA for Stricter Enforcement of Labels

07/02/2022

Chick-NewsThe National Chicken Council has requested both the Food and Drug Administration and the U.S. Department of Agriculture to strictly enforce regulations relating to potentially misleading labels.  At issue is the evidence from a recent survey of consumer attitudes relating to plant-based alternatives.  Tom Super, NCC Senior Vice President of Communications noted, “People should not have to waste time at the grocery store dissecting whether they are about to purchase real chicken or a imitation product, let alone discover they have wound up with the wrong product when they get home.”

 

The NCC claim that the study demonstrated support for descriptive packaging and separate shelf placement for real and imitation chicken.  As with many proposals on labeling the term chicken should be reserved for product with an origin in a flock. Approximately 20 percent of respondents reported accidental purchase of plant-based products while intending to purchase chicken. 

 

Approximately 70 percent of U.S. respondents considered that the term “meat” should be reserved for products derived from animals.

 

Chick-News

The NCC regard any product as misbranded if not of direct chicken origin but labeled as “chicken” either in text or by image. This follows from the definition of the Federal Food Drug and Cosmetic Act.  The Poultry Products Inspection Act prohibits false labeling of products.


 

National Safety Conference Scheduled for August 15th to 17th

06/30/2022

Chick-NewsIn a June 27th release, USPOULTRY announced that the National Safety Conference for the poultry industry will take place August 15th to 17th at the Hilton Sandestin Beach Golf Resort and Spa in Destin, FL.  Program Committee Chairperson, Adrienne Allison, Safety Director for Tyson Foods commented, “This year’s National Safety Conference will include key presentations on important industry topics and updates on government policy.”

 

Chick-NewsItems to be considered will include incident investigation training, response to highly pathogenic avian influenza; workplace violence and managing heat stress.  The program will also include a legal session and offers the opportunity for networking.  Winners of Safety and Innovation Awards will be announced at the meeting.

 

For further information and registration access www.uspoultry.org


 

Popeye’s Louisiana Kitchen Celebrates 50th Anniversary

06/28/2022

In a June 21st company release, Restaurant Brands International (QSR) noted that Popeye’s Louisiana Kitchen was founded by Al Copeland in New Orleans 50 years ago during 1972. The company was acquired by Restaurant Brands International in 2017.  During the past five years global systemwide, sales have increased from $3 billion to $5 billion.

 

For the first quarter of fiscal 2022, ending March 31st, the Popeye’s Division attained sales of $1.38 billion, representing 15.3 percent of total RBI revenue.  Of this amount, $1.18 billion, was recorded in the U.S. with $199 million from the International segment.  As of the end of the first quarter, Popeye’s operated 2,784 stores in the U.S. and 987 internationally.  Since acquisition by RBI, approximately 1,000 restaurants have been added globally, with two hundred in North America during 2022.  The brand has now extended to South Korea, France, India and Romania with prospects for the U.K., Spain, Brazil, Switzerland, Mexico and other nations.


 

Billy Hufford Honored by Poultry Federation

06/28/2022

Billy Hufford, Business Unit Manager for Aviagen, North America, was selected as the 2022 Industry Leader of the Year by the Poultry Federation.  The award recognized contributions to the poultry and egg industry and for over two decades of leadership and commitment.  Hufford received a commemorative gold lapel pin and crystal award from Marvin Childers, President of the Poultry Federation.

 

Before joining Aviagen in 2017, Billy was affiliated with Hubbard and Seaboard Foods.  He earned a Baccalaureate degree in Agricultural Education from Oklahoma State University.

 

In commenting on the award, Billy stated, “I am humbled and grateful to the Poultry Federation for this award and feel honored to be a part of an organization that shares the passion of myself and my company for feeding the world today and tomorrow.” 

 

Dr. Marc deBeer, President of Aviagen North America, noted “We are proud of Billy for achieving this honor and thank the Poultry Federation for recognizing him.  Aviagen values our longstanding collaboration with this noteworthy organization and the good work it does in promoting the interest of our industry.”


 

Singapore to Diversify Sources of Chicken Imports

06/28/2022

The vulnerability of Singapore with respect to chicken imports was demonstrated by the ban on exports imposed by Malaysia as a result of avian influenza.  Recently the Department of Veterinary Services of Malaysia announced that specialty chickens including free-range and further-processed products could be exported but the ban was still in place for conventional broilers.

 

The Singapore Food Agency will import broilers from Indonesia subject to documentary evaluation and on-site inspections of production facilities.  Singapore is currently importing both poultry meat and eggs from Spain, France, Canada and the U.K.


 

Greg Tyler Assumes Presidency of USAPEEC

06/28/2022

Effective July 1st, Greg Tyler will assume the positions of CEO and President of USAPEEC.  Greg succeeds long-time CEO and President Jim Sumner who is retiring after a 32-year tenure.

 

Tyler has a 25-year history with USAPEEC serving successively as Director of Foreign Market Development, Vice-president and Senior Vice-president for Marketing and since July 2020 Chief Operating Officer.  Tyler earned baccalaureate and master's degrees in agricultural economics from the University of Georgia and has worked with export-oriented commodity trade organizations and farmers’ cooperatives.

 

 In commenting on his appointment Tyler stated, "this is both a tremendous honor and a great responsibility as USAPEEC has played an invaluable role for decades in developing the international market for U.S. poultry and egg exports".


 

Expansion of Port of Houston Facilities

06/28/2022

According to a report in the June 27th edition of the USAPEEC MondayLine, facilities for handling chilled and frozen agricultural commodities will be expanded at the Port of Houston.

 

USDA will cooperate with the Port of Houston to obtain additional chassis to convey refrigerated containers and to store containers awaiting shipment.  The intended improvements will facilitate export of meat and poultry with the value of shipments exceeding $500 million in 2021.  Funds for the improvements were made available by the Agricultural Marketing Service using Commodity Credit Corporation resources.

Improvements will reduce the risk of delays and allow the port to use current capacity and provide expedited service to exporters.


 

Dr. Pat Brown Criticizes Cell-Cultured Meat

06/28/2022

In reports of an interview published in Plant Based News, Dr. Pat Brown, founder of Impossible Foods, Inc., pointed to the potential financial non-viability of cell-cultured meat, claiming high cost.  He also expressed the view, “That industry has been saying we are going to be on the grocery shelves next year for the past ten years and it is as far away as ever.”  He added, “It has zero percent chance of ever being competitive in the market.” 

 

Brown’s remarks belie the immense investment in cell-cultured meat with venture capital companies funding research, pilot plants and in some cases, production facilities.  Brown downplayed the recent investment of JBS SA in acquiring BioTech Foods, noting, “They don’t know the science and they don’t have any curiosity or imagination and they fall for the hype.”

 

In fairness, Dr. Brown has a dog-in-the-fight, since his company, Impossible Foods, is a leader in vegetable-based meat alternatives.  Impossible Foods is a privately held company that as yet has not released financial results. Postings by competitor, Beyond Meat and the plant-based subsidiary of Maple Leaf Foods, suggests declining sales and consistent losses for plant-based substitutes for meat.

 

Brown points to the negatives associated with extensive beef production, including deforestation and emission of greenhouse gases.  He neglects to condemn the petrochemical industry that is a major emitter of carbon dioxide from fossil fuels and more recently, disclosures of wide-scale methane release from wells and distribution installations. Attempting to justify vegetable-based meat alternative that are more expensive than the real product on sustainability appears to be a desperation response. His views on the future of cell-cultured meat have support from industry observers although this runs counter to the investments made by venture capital funds and public agencies. Time will tell for both producers of cell cultured meat and Impossible Foods and its competitors.

 


 

Missouri Files Amicus Brief Over California Proposition #12 Appeal

06/28/2022

Eric Schmitt, Attorney General of Missouri has filed an Amicus brief in the appeal brought by the National Pork Producers Council against the State of California with regard to the constitutionality of California Proposition #12.  The appeal follows an adverse ruling by the 9th Circuit Court of Appeals upholding the ballot-enacted law.

 

The Brief includes the statement, “California Proposition #12 is a paradigm of unconstitutional extra-territorial regulation: it requires hog, chicken and veal-calf farmers in every state to follow California’s animal-confinement rules on pain of exclusion from the market in California”. The brief continued, “Since most of California’s meat comes from out-of-state, Proposition #12 necessarily regulates not only California grocers but also the economic action and transactions of farmers, slaughters, meat packers, shippers and wholesalers in other states.”

 

The brief refutes the contention that Proposition #12 is based on promoting food safety.  There is no scientific evidence that confinement of either poultry or hogs has any effect on foodborne disease.

 

It is expected that the Supreme Court of the United States will rule on the constitutionality of Proposition #12 with narrow focus on the right of a specific state to impede interstate commerce.  There are precedents regarding restrictions on interstate movement that relate specifically to preventing spread of animal and plant diseases.  Proposition #12 is essentially a welfare issue with the implication that caged housing contributes to dissemination of salmonellosis as a spurious argument.  The pork industry is especially impacted since only 25 percent of sows are housed at 24 square feet with the remainder still in gestation stalls.

 

Attorney General Schmitt noted, “California is attempting to impose their will on Missouri farmers and ranchers by threating to deny entry into the California market if those farmers and ranchers don’t comply with their pointless regulations.”

 

Oral arguments will be heard on October 11th with a subsequent ruling at a future date.


 

Stability Predicted For Foster Farms Following Acquisition

06/26/2022

Following the acquisition of family-owned Foster Farms by conglomerate investor Atlas Holdings, the newly appointed CEO, Donnie Smith, confirmed that no radical changes are contemplated in structure or staffing.  In an interview conducted by the Modesto Bee, he stated, “Our intent is to grow the business.”  Foster Farms operates broiler complexes in Livingston, Fresno and Porterville, CA. and facilities in Oregon, Washington, Louisiana, Colorado and Alabama.  Turkeys are processed in Turlock, CA.

 

Foster Farms is believed to have annual sales approaching $3 billion and is the leading chicken and turkey producer on the West Coast, as well as a major employer in the counties where it operates.

 

Donnie Smith is a 35-year veteran of the poultry and meat industry, having served as CEO of Tyson Foods before early retirement in 2016.

 

Smith noted in the interview that, “ I have admired the Foster product mix and don’t see any reason to change it.”


 

COVID Vaccination Claims Against Tyson Foods Dismissed

06/23/2022

Chick-NewsA lawsuit involving twelve claims by employees of Tyson Foods alleging discrimination against workers not receiving COVID vaccination was recently heard by the U.S. District Court in the District of Western Tennessee.  Nine claims relating to alleged violation of the First and Fourth Amendments to the U.S. constitution, the Religious Freedom Restoration Act and the Americans with Disabilities Act. were dismissed  Chief U.S. District Judge Thomas Anderson noted the failure of plaintiffs to file charges with the Equal Employment Opportunity Commission.  Three claims will be referred to the Attorney General of Tennessee alleging that Tyson Foods did not follow the Tennessee Human Rights Act with regard to granting religious or health accommodations.

 

Chick-NewsAlthough the issue of COVID vaccination is in all probability moot, the outcome of the case will influence future policy by packers and processors. Case law concerning the rights of employers is evolving with regard to requiring vaccination against emerging or prevailing infections that impact health and may consequently result in disruption of production.


 

Foster Farms Experiencing Disruption in Corn Transport

06/23/2022

Chick-NewsAccording to news reports, Union Pacific Railroad has failed to consistently supply Foster Farms with adequate quantities of corn resulting in disruption in feed production.

 

As with many rail companies, Union Pacific has experienced problems in maintaining schedules, a fact acknowledged by the CEO of the company who has pledged to supply Foster Farms.

 

Chick-NewsWith the risk of having to depopulate farms early in the event of shortages of feed, Foster Farms has requested  and received an emergency order from the Surface Transportation Board  impelling the rail company to supply corn comdignments. These are normally delivered in 100-car train loads that realistically require small crews but considerable support staff.

 

The vulnerability of all livestock producers in the three West coast states is evidenced by the ingredient supply problems experienced by Foster Farms.


 

U.S. Faces Diminishing Exports To South Africa

06/21/2022

According to USDA-FAS GAIN report SF2022-0015 dated June 16th, the imposition of unjustified anti-dumping duties on chicken imports from the U.S. will reduce volume shipped.             

 

The GAIN report compared imports for consecutive 12-month periods April 2020 March 2021 with the most recent completed 2021/2022 year. U.S. imports decreased by 8.7 percent to 59,800 metric tons, representing 84 percent of the previously negotiated quota of 71,290 metric tons.  Comparing origin of imports over the consecutive 12-month periods, Brazil increased exports to the Republic of South Africa by 31.3 percent in 2021/2022.

 

Chick-NewsDecreased imports from the U.S. were due, in part, to riots and destruction of cold-storage and port facilities in mid-2021 and the additional anti-dumping duties introduced in April 2022.  In all probability, these duties will be extended beyond the November 2023 expiry date, given that their purpose is to protect the domestic broiler industry.

 

Impediments facing the U.S. also include the adverse currency exchange between the SA Rand and the U.S. Dollar, competitive prices from Brazil and the difference in product range with the U.S. offering mainly leg quarters and Brazil, can supply wider selection, including mechanically deboned meat.


 

Eight Proposed Beef Packing Plants Would Add 18,000 Head per Day Daily Capacity

06/21/2022

Chick-NewsIn response to the disruption in the supply chain caused by COVID, various investment and producer groups have proposed eight new packing plants with a total capacity of 18,700 head per day.  Of this quantity, Western Legacy Developments to be established in Rapid City, SD. would represent 43 percent of the total with 8,000 head per day.  Other plants range in size from 500 to 3,000 head per day.  In an incisive commentary by Greg Henderson, posted on Farm Journal AG-WEB  he questions the feasibility of establishing new plants given the delays in construction, high capital cost and concerns over the availability of labor.

 

His article noted that the cattle industry needs a number of strategically placed niche plants to serve specific markets.  Henderson noted that for the first week of June, 523,698 head were packed representing a utilization factor of 91 percent.  It is questioned whether an increase in capacity of five percent would lead to higher cattle prices.  If plants break ground in 2022, they will only be functional in 2024 and 2025 coinciding with low availability of steers and heifers given current high cow slaughter.

 

Chick-NewsBeef producers forming associations to establish new packing plants will have to find customers.  This will involve competition with the existing output from the four large packers that collectively supply 85 percent of the market.


 

Republican House Initiative To Reverse Administration’s Burdensome Rules

06/21/2022

Chick-NewsRepresentative Glenn Thompson (R-PA) introduced a bill into the House intended to preemptively negate many of the burdensome requirements that the Administration intends to impose.  The bill addresses proposed rules under the Packers and Stockyards Act and will require the USDA to conduct cost-benefit analyses for intended rules. These include alleged unfair practices and undue preferences and to enhance transparency in contract growing.  The bill also will require the USDA to allow broiler plants to operate at line speeds in excess of current limitations.

 

Representative Thompson stated, “This bill will reverse many of the more harmful regulatory burdens spearheaded by this Administration, address escalating input costs and provide certainty to farmers, ranchers, agribusinesses and other entities across our food and agriculture supply chains.”


 

By-Product Plant for Proposed Rapid City, SD. Beef Facility

06/17/2022

Kingsbury and Associates have announced that Farmers Union Industries plan to establish a by-product processing facility linked to the proposed Rapid City, SD plant currently in the feasibility stage of development. According to Dale Bednarek, the CEO of Farmers Union Industries, the proposed plant would produce meat and bone meal and tallow as feed ingredients.

 

Chick-NewsThe proposed Kingsbury plant would cost $1.1 billion and could process up to eight thousand head per day, employing 2,500.

 

The South Dakota Stock Growers Association is supporting the proposed plant based on the perception that the “Big Four” represent an oligopoly and that additional competition among meat packers is required.

 

At this time, there is insufficient information concerning the project to assess feasibility and obvious concerns including available supply of cattle, odor and waste disposal and availability of labor.


 

Smithfield Foods To Close Farmer John Plant

06/13/2022

Chick-NewsSmithfield Foods will close the Farmer John plant in Vernon, CA. during early 2023.  Concurrently, the company will end ownership of hog farms in Arizona and California.

 

After onset of COVID, the Farmer John plant experienced a series of outbreaks among workers that resulted in fines by OSHA and by the California Occupational Safety and Health Administration.  Farmer John lost their contract to supply hot dogs to the Los Angeles Dodgers‘s stadium, possibly as a result of negative publicity.Chick-News

 

United Food and Commercial workers, Local 770, was apparently ready to initiate negotiations for a new contract before the announcement that will remove 1,800 jobs from an economically depressed area.


 

Tyson Foods Litigates Against Former Executive

06/13/2022

Chick-NewsTyson Foods filed an injunction on Wednesday, June 8th, in Washington County Circuit Court in Fayetteville, AR.  The intent of the filing was to prevent Brian Baker, previously V.P. of Poultry Optimization, from providing his new employer, Foster Farms, with proprietary information.  Foster Farms has been named as a co-defendant.

 

Tyson claims that Baker violated the Arkansas Trade Secrets Act and also violated a known-compete agreement entered into in May 2019 that imposes a one-year hiatus after leaving Tyson Foods to a competitor.

 

Chick-NewsIn commenting on the action, Tyson Foods issued a statement stating, “We are obligated to enforce non-compete contracts to protect our business and ensure fair competition.” It is evident that Brian Baker had access to confidential company information and as a senior executive, possessed knowledge of the business in any position with a competitor.

 

Tyson Foods has a policy of enforcing non-compete agreements as evidenced by previous litigation.


 

President Jawbones Ocean Carriers Over Rates

06/13/2022

Chick-NewsOn Friday, June 10th, the White House released extracts from a speech delivered by President Biden on oligopolistic practices by ocean carriers.  Apparently, only nine major shipping companies are responsible for freight between Asia and West Coast ports.  These operators have progressively raised freight rates, adding to inflation.

 

During the past year, efforts have been made to improve efficiency of West Coast ports with 24/7 operations and incentives to move containers. The Administration has assisted Chick-Newsports, including Savannah, GA, with improved facilities, including a “pop-up” container storage area remotely from the port.  The Administration has also provided grants to the port of Long Beach and has increased funding from the Port Infrastructure Development Program, amounting to $685 million.  The Administration has also implemented a Trucking Action Plan and has directed the Federal Motor Carrier Safety Administration to develop a truck leasing taskforce to expedite transport to and from ports.


 

Foster Farms Acquired By Atlas Holdings

06/10/2022

Chick-NewsFoster Farms, the major West Coast broiler producer with complexes in California, Washington state, Oregon and additional farms in Louisiana, Alabama and Colorado, has been acquired by Atlas Holdings, an investment conglomerate.  Foster Farms, ranked 10th among U.S. broiler producers, has annual revenue of $2 billion, employs over 12,000 and has been under family ownership for over 80 years. 

 

Atlas has appointed Donnie Smith, former CEO of Tyson Foods, as Chairman and CEO of the company.  In commenting on the acquisition and appointment, Smith stated, “I have long been an admirer of the Foster family and the business they built over the past eight decades.”  He added, “In this new era we will maintain and further that legacy, rooted in animal welfare, superior product quality, customer service and community engagement.”

 

Chick-NewsPreviously Tyson Foods considered acquisition of Foster Farms but the transaction did not progress beyond initial due diligence. Given the present antagonism towards agribusiness it is doubtful whether the Administration would bless a takeover by a top 10 broiler integration.

 

Atlas Holdings is based in Greenwich, CT and owns 25 enterprises in diverse industries including building materials, food manufacturing and distribution, power generation and wood products.  According to the Wall Street Journal, the holding company generates $15 billion in annual revenue.  Details of the transaction were not announced.


 

North Carolina Cooperative Extension Considering Mobile Poultry Processing

06/10/2022

Chick-NewsThe last plant not affiliated with a major U.S. poultry integrator in North Carolina closed in 2017.  This indicates the non-viability of small processing plants operating as independent entities or as cooperatives.

 

In an attempt to support and encourage independent broiler growers, the North Carolina Cooperative Extension Service is constructing a mobile poultry processing plant.  The project is awaiting an allocation of funds in the 2023 budget for completion.

 

Chick-News

The project is considered to be financially infeasible but will make for good politics and appropriate photo-ops.  North Carolina was the largest broiler producer in the nation during 2021 and any number of mobile processing plants will have an imperceptible impact on supply. The project may indirectly contribute to foodborne infection, given the absence of equipment, control and inspection that is associated with small un-inspected plants compared to a conventional high-capacity facility.


 

Outbreak of Campylobacteriosis In Japan Attributed To Consuming Raw Chicken

06/09/2022

Chick-NewsAccording to ProMED mail on June 6th a localized outbreak of campylobacteriosis occurred in the city of Kyotanabe associated with a specific restaurant.  The vehicle of infection was chicken thigh sashimi, consumed virtually uncooked, having been briefly seared.  This specialty is only offered at a few restaurants in the U.S. but is common in major metropolitan areas in Japan.  Given the high prevalence of Campylobacter jejuni contamination of chicken, cooking to 165F for at least 30 seconds down to the bone is necessary to ensure freedom from this and other non-spore forming pathogenic bacteria.

 

Chick-NewsDuring the mid-1980s, an extensive outbreak of campylobacteriosis was diagnosed among fraternity members at the University of Georgia.  An investigation showed a temporary fad of consuming raw chicken, resulting in outbreaks.


 

USDA Chicken Purchases

06/04/2022

Chick-NewsOn May 20th USDA-AMS purchased 332 tons of split breasts at an average price of $3.48 per lb. and 1,287 tons of whole bagged frozen chicken at a price range of $1.44 to $1.62 per lb.

 

On May 23rd, the USDA-AMS purchased 605 tons of frozen chicken fillets and 1,326 tons of frozen chicken strips with both products at $5.00 per lb.

 

The total value of the purchases amounted to $28.4 million, with product to be Chick-Newsdelivered during the third quarter for child nutrition and food assistance programs.

 


 

Rabobank Forecasts High Demand For Chicken

06/04/2022

Chick-NewsThe Rabobank quarterly industry report is optimistic with respect to demand and trade volume for chicken.  The outstanding problem relates to increased cost of production, due in part to the invasion of Ukraine by the Russian Federation and drought in Brazil and neighboring nations, impacting availability of ingredients.  Demand will be strengthened as nations relax COVID restrictions, leading to higher restaurant and QSR servings, providing customers have available disposable income.

 

Chick-NewsAvian influenza remains an ongoing threat with the 2021-2022 panornitic continuing in many nations.  The large number of wild birds species affected, suggests that H5N1 infection may become endemic and lead to additional cases in both commercial and backyard flocks.  Outbreaks of HPAI in the E.U. and the U.S. have disrupted shipments of hatching eggs and breeding stock. This will be of significance to nations depending on regular supplies from the E.U.

 

CHICK-NEWS will quantify World production and export figures when released by USDA.


 

J-S Ranch Receives Approval for Broiler Project in Oregon

06/03/2022
Chick-News

The Oregon Department of Agriculture has approved an application by J-S Ranch to develop a broiler grow-out facility near Scio, OR. to supply Foster Farms

 

The plan calls for eleven houses with a capacity of approximately 48,000 birds to produce 3.4 million broilers annually. J-S Ranch is yet to receive a permit for handling storm-water. 

 

The application was approved despite objections from landowners in the area based on the usual concerns of odor, traffic and environmental pollution.

Chick-News

Chick-News

 

Hormel Posts Q2 Results for FY 2022

06/02/2022

Chick-NewsIn a release dated June 2nd Hormel Foods (HRL) reported on the second quarter of fiscal 2022 ending May 1st 2022.  For the quarter the company earned $261.7 million on revenue of $3,097 million with a diluted EPS of $0.48.  Comparable values for Q2 of fiscal 2021 ending April 25th were net income of $227.9 million on revenue of $2,607 million with a diluted EPS of $0.42. Profit margin fell from 8.7 percent in Q2 FY2021 to 8.4 percent for the most recent quarter.

 

For Q2 FY 2022 the Jennie-O Turkey Store Segment generated sales of $407.3 million with an operating profit of $61.8 million reflecting an operating margin of 15.2 percent.  For the second quarter of fiscal 2021, revenue and operating profit were $351.2 million and $12.7 million respectively yielding an operating margin of 3.6 percent.  Volume in the Jennie-O segment was up 29.7 percent to 261.6 million lbs. Sales value was higher by 16.0 percent. Unit revenue declined from $1.74 per lb. in Q2 2021 to $1.56 per lb. for the most recent quarter. Segment contribution was however up 387 percent. Growth was derived from a return in food service, demand for whole birds and branded products. As in Q1 2022 increases in feed and logistic costs detracted from earnings.

 

In commenting on Corporate results Jim Snee, Chairman and CEO stated “We delivered strong top- and bottom-line growth during the quarter, leveraging our balanced business model, leading brands and experienced management team," He added "The second quarter marked our sixth consecutive quarter of record sales, and we achieved earnings growth for the third consecutive quarter. Operating margin increased compared to the first quarter, an indication that our efforts to mitigate inflationary pressures are working. We also made meaningful progress across our supply chain, where our investments in capacity and a recovery in staffing levels contributed to improved fill rates, inventories and production volumes”.

 

Chick-NewsIn relation to the turkey Segment, Snee observed "Our Jennie-O Turkey Store segment had an outstanding quarter, as its ability to adjust to current market conditions and meet strong foodservice demand drove higher results” He sounded a note of caution for the subsequent quarter stating, "After an excellent first quarter and significant profit growth in the second quarter, our Jennie-O Turkey Store team is facing an uncertain period ahead. We are actively managing the impacts from highly pathogenic avian influenza (HPAI) on turkey supply and will take the appropriate actions to protect the health of the turkeys across our supply chain. Similar to what we experienced in 2015, HPAI is expected to have a meaningful impact on industry poultry supplies over the coming months. Beginning in the third quarter, we anticipate large supply gaps in the Jennie-O Turkey Store vertically integrated supply chain, caused by flock losses to date. Our dedicated and experienced team is managing through operational challenges caused by the outbreaks and adapting to changing business conditions. The team has shown unwavering commitment and resolve in the face of a very difficult situation." 

 

Hormel Foods posted total assets of 13,122 million on May 1st of which $6,750 comprised goodwill and intangibles. Long-term debt was $3,454 against an intraday market capitalization of $26,290 million. HRL has traded over the past 52 weeks in a range of $40.48 to $55.11 with a 50-day moving average of $51.60.  HRL trades with a forward P/E of 24.8 and a beta of 0.1.  For the trailing 12-month period, operating margin attained 10.0 percent and profit margin 7.7 percent.  The company has generated returns on assets of 6.6 percent and on equity 13.6 percent. HRL closed at $48.08 on June 1st but fell sharply at the open following the release to $45.75On June 2nd.

 

Subscribers can review the financial performance of competitor Butterball by entering “Seaboard” into the SEARCH tab.


 

Beyond Meat Appoints Kim Kardashian as a Spokesperson

05/31/2022

Chick-NewsIn a May 24th announcement Beyond Meat Inc. announced that Kim Kardashian will be featured in a campaign as a "professional tastemaker" to promote the claimed sustainability of the Beyond Meat brand.  Despite her statements regarding support of plant-based meat substitutes, she has little creditability as an environmentalist, health advocate or commentator on food.

 

The value of the Kardashian endorsement was tarnished by a flood of critical comments following airing of her commercial. A review of the spot clearly shows that she failed to actually taste the Beyond Meat burger she was holding.

 

Chick-NewsGiven the abysmal financial performance of Beyond Meat, the Company needs to define their market and adopt appropriate promotional activities. Vulnerabilities that need to be countered include a product that is inferior in nutritional quality to real ground beef, a label indicating numerous additives and above all an uncompetitive price compared to the real product. 

 

The choice of "ambassadors" including Snoop Dogg and Ms. Kardashian suggests a lack of focus and inappropriate selection of spokespersons relative to the potential market comprising affluent, health and environmentally conscious consumers.  The expense involved in enlisting the assistance of Ms. Kardashian will obviously reflect in the ever-declining operating margin of the company coupled with a less than stellar growth rate in the U.S. market.


 

Seaboard Foods Settles with OSHA

05/30/2022

Chick-NewsSeaboard Foods has agreed to pay $6,800 to resolve citations issued by the Occupational Safety and Health Administration alleging negligence in preventing and documenting repetitive motion injuries acquired by workers at the Guymon, OK. plant.  The settlement agreement did not constitute an admission by Seaboard of violating OSHA standards.  The company has until August 31st to Chick-Newsestablish interim and long-term procedures to prevent ergonomic injuries through retraining and reconfiguring workstations to eliminate lifting and bending and musculoskeletal stress.


 

USDA Attempting To Duplicate Existing Training Programs

05/29/2022

Chick-NewsIn recent months, CHICK-NEWS and EGG-NEWS have reported on programs established by major broiler integrators to provide educational and training opportunities for their employees.  These include in-company training and grants to community colleges to establish specific programs for workers to develop digital and managerial skills that would allow them to advance in their companies and become more productive.

 

The Extension Risk Management Education and Sustainable Agriculture Research Education Program will dispense $5 million to develop meat and poultry processing training and educational materials. Again as is the policy of the USDA, funds will be directed to small-sized operations.  Training workers to operate mobile processing units, on-farm processing and farm-to-fork enterprises will make no material difference to the national food supply chain.

 

 This program represents an additional example of the USDA pursuing altruistic endeavors using public funds to satisfy the collective desire of political appointees to move U.S. agriculture back to the 19th century by training butchers in a digital age.


 

Chipotle to Establish Venture Fund

05/28/2022

According to an April 20th release, Chipotle Mexican Grill Inc. has established Cultivate Next, a venture fund intended to support Series B Enterprises. As expected the $50 million fund will target innovations for fast casual restaurant chains that are compatible with the corporate strategy of Chipotle.

 

Egg-NewsCurt Garner, Chief Technology Officer at Chipotle stated, "we are exploring investments in  emerging innovation that will enhance our employee and guest experiences and possibly revolutionize the restaurant industry".

 

Chipotle has previously invested in robotic technology, radio-frequency identification for tracking ingredients and in autonomous delivery.


 

Sanderson Farms Inc. Reports on Q2 FY 2022

05/27/2022

Chick-NewsIn an SEC Form Q-10 filing on May 27th Sanderson Farms Inc. documented results for Q2 of FY 2022 ending April 30th 2022.

 

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS)

 

Second Quarter Ending

April 30th 2022

April 30th 2021

Difference (%)

Sales:

$1,539,714

$1,133,880

+35.8

Gross profit:

$487,787

$191,944

+154.1

Operating income:

$421,487

$127,699

+230.1

Pre-tax Income

Net Income

$420,190

$321,190

$122,015

$96,911

+240.9

+231.4

Diluted earnings per share:

$14.39

$4.34

+231.6

Gross Margin (%)

31.6

16.9

+87.0

Operating Margin (%)

27.4

11.3

+142.5

Profit Margin (%)

20.9

8.5

+145.8

Long-term lease liabilities:

$11,570

$16,122

-28.2

12 Months Trailing:

 

 

 

Return on Assets (%)

24.5

 

 

Return on Equity (%)

36.9

 

 

Operating Margin (%)

16.9

 

 

Profit Margin (%)

12.2

 

 

Total Assets

$2,826,514

$2,345,033

 

Intraday Market Capitalization

$4,133,000

 

 

 

Chick-NewsPoultry products represented 95 percent of sales. The product mix during the 2nd Quarter expressed as a percentage of sales value comprised:-

Fresh Vacuum-sealed 37.9%

Fresh chill-pack 30.9%

Fresh ice-pack 20.7%

Frozen presentations 5.1%

Prepared chicken 4.9%

Other 0.5%

 

Comparing Q2 2022 with Q2 2021 net unit revenue increased by 33.6% or $0.31 /lb.

 

Concurrently feed costs increased by 14.1% or $0.05/lb.

 

During Q2 Sanderson Farms consumed 32.1 million bushels of corn and 297,000 tons of soybean meal. Feed represented 44.4% of RTC in Q2 2022 (42.1% in Q2 2021)

 

52-Week Range in Share Price: $155.34 to $201.50. 50-day Moving average, $187.34

Market Close: Thursday May 26th $194.76. Open Friday May 27th post-release $201.12.

Forward P/E 7.4 Beta 0.6

 

The Q-10 Filing contained the following commentary by management on financial performance.

 

“Net sales for the second quarter ended April 30, 2022 were $1,539.7 million as compared to $1,133.9 million for the second quarter ended April 30, 2021, an increase of $405.8 million, or 35.8%. Net sales of poultry products for the second quarter ended April 30, 2022 and 2021, were $1,464.0 million and $1,087.2 million, respectively, an increase of $376.8 million, or 34.7%. The increase in net sales of poultry products resulted from a 32.9% increase in the average sales price of poultry products sold and a 1.4% increase in the pounds of poultry products sold, each of which is primarily the result of improved demand from food service customers and supply constraints. During the second quarter of fiscal 2022, the Company sold 1.22 billion pounds of poultry products, up from 1.20 billion pounds during the second quarter of fiscal 2021.

 

Overall, quoted market prices for poultry products increased during the second quarter of fiscal 2022 as compared to the same quarter of fiscal 2021. When compared to the second quarter of fiscal 2021, Urner Barry average market prices for boneless breast meat, boneless thigh meat and tenders increased by 85.2%, 58.6% and 47.5%, respectively, while Urner Barry average market prices for leg quarters and jumbo wings decreased by 0.6% and 19.8%, respectively. Average realized prices for chicken products sold to retail grocery store customers increased by 13.1% during the second quarter of fiscal 2022 as compared to the same period of fiscal 2021, and retail grocery store demand remains strong.

 

Net sales of prepared chicken products for the quarters ended April 30, 2022 and 2021 were $75.7 million and $46.6 million, respectively, an increase of 62.3%. This increase is primarily attributable to a 39.9% increase in the average sales price of prepared chicken products sold and a 16.1% increase in the pounds of prepared chicken products sold. The increase in pounds and sales price of prepared chicken products was primarily the result of improved demand from our food service customers. During the second quarter of fiscal 2022, the Company sold 28.4 million pounds of prepared chicken products, up from 24.5 million pounds during the second quarter of fiscal 2021”.

 

Management of Sanderson Farms anticipates completion of the acquisition by the consortium including Continental Grain and Cargill to be completed during the current quarter.


 

Welcome to Jamesway Chick Master Incubator as a Sponsor

05/26/2022
Jamesway and Chick-Master have joined to form a single company, Jamesway Chick Master Incubator Inc., providing a comprehensive range of equipment and services to the International and North American poultry industry. With 230 years of combined experience in operation, the Company serves 2,500 customers in 150 nations with two leading incubator brands.

 

Chick-News

Jamesway Chick Master continues to supply equipment, parts and support for both the Jamesway single-stage Platinum™ and multi-stage setters and hatchers as well as the Chick Master Avida™ single-stage and Classic™ multi-stage machines.

 

Jamesway Chick Master equipment is used by the top poultry producing companies Internationally which includes broiler, turkey and egg producers and primary breeders.

Chick-News

The Company provides planning and design including Airway – Complete Climate Control ventilation for “worry-free” hatcheries, and maintains experienced installation teams, technical specialists as well as their PRT 24/7 support service.

 

Headquartered in Cambridge ONT Canada, Jamesway Chick Master maintains offices in the U.S., U.K., China and Malaysia. For additional information, access the Company website by clicking on to the Jamesway Chick Master logo on the right side of the Welcome Page.


 

Tekni-Plex Consumer Products Launches PET Trays

05/26/2022

Tekni-Plex Consumer Products has launched a new range of PET trays containing 50 percent post-industrial, recycled content.  Trays are recyclable and are shatter resistant, even at low temperature.  Transparent packaging allows optimal product display especially for premium items.

 

In commenting on the launch, Jay Arnold, VP and General Manager of Tekni-Plex Consumer Products stated, “We are continuing to expand our material and product offerings to include more eco-minded solutions as our customers and their commitment to sustainability continues to drive industry-wide changes.”  He added, “PET is the most widely recycled and favorably- viewed plastic in the eyes of the public, making it a great option to help our customers meet their goals.”

 

Tekni-Plex processor trays incorporate Hidden Rim Technology™ a proprietary technique preventing the overwrap film from tearing.  Trays can be packed and transported at high density, increasing volume shipped per vehicle.

 

PET processor trays are available as a transparent presentation in addition to translucent and opaque colors.  All trays irrespective of tint can be delivered to a recycling stream.  For additional information, access www.Tekni-Plex.com/consumer.

 


 

Mar-Jac Poultry Settles With Washington State A/G

05/24/2022

Following a lawsuit filed in October 2021 against twenty leading broiler integrators by Bob Ferguson, Attorney General of Washington State, Mar-Jac Poultry has settled and agreed to cooperate.  The company will pay $725,00 in terms of a consent agreement alleging anticompetitive action.  Mar-Jac Poultry will produce information and documentation implicating other companies as co-conspirators.

 

Litigation initiated in Washington State is separate from federal action and ongoing civil cases. The claim of collusion is based in part on using data provided by Agri-Stats, a co-defendant in ongoing civil cases against major broiler integrators. Many of the Defendants have settled with classes comprising direct and indirect Plaintiffs.


 

Brazil to Expand Chicken Production in 2022

05/24/2022

According to USDA-FAS Report BR2022-0032, released on May 10th, producers in Brazil will increase output by 3.5 percent compared to 2021 to 14.85 million metric tons (32,670 million lbs).  Expansion is driven by both domestic demand and exports that will represent 30.9 percent of production attaining 4.6 million metric tons (10,120 million lbs).

 

Assuming a population of 215 million, per capita consumption will be 47.7 kg (105 lbs).  Chicken is now the principal protein consumed in the nation representing 50 percent of all meat followed by beef at 35 percent and pork at 15.

 

The volume of production and profitability of chicken sector in Brazil is influenced by the state of the economy. Inflation will persist at over eight percent during 2022, but with an 11 percent unemployment rate.

 

Producers in Brazil offer a wide portfolio of products to suit the markets that they supply.  For 2021, China represented 14.8 percent of exports totalling 4.06 million metric tons.  China has approved 47 plants in Brazil with 80 percent of these concentrated in the top five producing states including Parana, Santa Catarina, and Rio Grande do Sul.  Current export data suggests that China will continue purchasing specific chicken products from Brazil comprising 145,000 metric tons during the first quarter of 2022. 

 

Japan is the second largest market for Brazil with 10 percent of export volume.  The United Arab Emirates is third at nine percent, followed by Saudi Arabia at eight percent.  Saudi Arabia has imposed strict Halal requirements that impacted exports in 2021.  The Middle East market demands local production resulting in the major producers in Brazil establishing joint ventures with domestic companies to produce and process chicken locally.  Brazil supplies a wide range of importers including South Africa, the Philippines, South Korea, and the Russian Federation.  It is significant that Mexico received 2.4 percent of exports from Brazil in 2021 with every prospect of expansion as import duties from non-USMCA nations have been waived for a year effective June 2022.  Producers in Brazil are experiencing the same inflationary pressures as in the U.S. and in 2022 will be impacted by drought increasing the cost of both corn and soybeans.  Feed represented 76 percent of live bird cost during March 2022 followed by day old chicks at 13 percent, labor at 3 percent, and the remainder comprising various fixed and variable costs.

 

Brazil will continue as the world’s leading exporter of chicken and will be able to leverage its advantages in the form of a diverse product range, relatively low cost of production, freedom from avian influenza, and active promotion with well established distribution through joint ventures and agents.

 


 

BinTrac Issues Installation Update

05/24/2022

BinTrac has prepared an installation guide to ensure correct operation of weighing systems.  The report highlights the following areas of concern

 

  • A-frame orientation
  • Installation clearances in accordance with specified tolerances
  • Compliance with recommendations for the auger transporting feed from the bin to the feeding system within the building
  • Adequate support of the feed line

 

The installation guide is available at <www.bintrac.com> under Technical Support.

 

Click here for the PDF download

 

 

 


 

Astral Foods Releases Half-Year 2022 Financial Results

05/22/2022

Chick-NewsIn a May 16th 2022 release, Astral Foods Ltd. released financial results for the first six months of Fiscal 2022 ending March 31st. The Company is among the leading broiler integrators in the Republic of South Africa in addition to producing and distributing breeding stock (National Chicks) and the manufacture and sale of a range of animal feeds.

 

For the first half of 2022, net income was $35.6* million on total revenue of $597.4 million with a diluted EPS of $0.89.  Comparable figures for the corresponding six months of 2021 ending March 31st 2020 were net income of $14.6 million on total revenue of $472.3 million with an EPS of $0.36. Gross margin increased from 18.2 percent for the first half of 2021 to 22.1 percent for the most recent period, denoting higher unit revenue on expanded volumes despite escalation in costs of feed, energy and power due to inflation. Operating margin increased from 4.5 percent to 8.3 percent and profit margin from 3.1 percent to 6.0 percent from the first half of 2021 to 2022 respectively

 

The release included comments on the two operating Divisions

 

Poultry

“Revenue for the Poultry Division increased by 28.6% to $497.8 million (March 2021: $378 million), driven by higher broiler sales volumes and selling prices.

 

Broiler sales volumes increased by 15.7% (36,067 tons), assisted by an additional 400,000 birds being processed per week under the expanded capacity as well as sales out of stock. Broiler volumes processed for the period under review equate to 5.9 million birds per week. The product mix was positively impacted by an increase in sales to the QSR sector and an increase in chill chicken sales relative to the comparable period.

 

Chick-NewsPoultry selling prices improved on the partial recovery of higher input costs linked to an increase in feed prices and energy costs, with feed making up 70% of the cost of producing a live broiler. The broiler net margin rose to 4.7% from a negative margin reported for this segment in the comparable period (March 2021: -0.2%).

 

A change in the broiler feed program to a lower nutrient density (and hence lower feed cost) in February 2021, has partially offset a significant increase in feed ingredient costs for the period under review.

 

Operating profit for the Poultry Division increased by 627.2% to $28.2 million (March 2021: $3.8 million), and the operating profit margin increased to 5.7%, compared to a profit margin of 1.0% achieved in the comparable period.

 

Total poultry imports remained high, with the average monthly total poultry imports for the period under review equaling approximately 24% of local consumption, at an average of 37,348 tons per month”.

 

Chick-NewsFeed Division

“Revenue increased by 13.8% to $283.6 million (March 2021: $252 million) as a direct result of higher selling prices on the back of increases in raw material costs. SAFEX yellow corn prices increased to an average of $238 per ton for the period under review (March 2021: $214 per ton).

 

Feed sales volumes in the division increased by 7.6% supported by both an increase in internal and external sales growth. Internal sales volumes increased by 10.8% largely on higher broiler feed sales due to an increase in broiler slaughter numbers. External sales volumes increased by 2.5% on higher sales into the pig and poultry sectors.

 

The operating profit for this division increased by 2.9% to $17.1 million (March 2021: $16.7 million), with a decrease in the operating profit margin to 6.0% as a result of the increase in the revenue line on higher raw material costs and resultant increase in feed selling prices (March 2021: 6.7%). The Division benefited from well-controlled expenses and effective raw material cost recovery”.

 

Astral Foods listed assets of $512.9 million, including $11.5 million as goodwill and intangibles, against long-term debt and other obligations of $6.6 million. Market capitalization on the JSE attained $472.7 million on May 20th. Astral Foods share price increased from $11.6 on May 16th pre-release to $11.96 on May 20th. For the six-month period the Company attained a 19.4  percent return on assets and 24.9 percent on equity.  

* Conversion ZAR15.87 = USD1


 

USDA Chicken Purchases

05/21/2022

On May 20th USDA-AMS announced purchase of chicken products for the school lunch program and other domestic food assistance initiatives for fiscal 2022.  Products to be acquired include:

  • 3,564 tons of large chilled chicken, bulk-packed at $1.16 to $1.43 per lb.

 

  • 936 tons of chilled legs, bulk-packed at $0.69 to $0.80 per lb.

 

Total purchase quantity will be 4,500 tons.


 

ADM Enters into Joint Venture with Eat Just

05/20/2022

Chick-NewsADM will assist Eat Just with development of cell-cultured meat including Good Meat™ cultivated chicken.

 

Leticia Gonzalves, President of Global Foods for ADM noted, "cultivated meat solutions have an exciting role to play in this space and we are eager to work together with Good Meat to bring innovative cultivated meat products to the Singapore market and beyond".

 

Previously Eat Just has claimed that it is serving cell-cultured meat in restaurants raising questions as to why technical support from ADM is required.

 

Previous unfounded claims and questionable business ethics on the part of the founder of Eat Just and its predecessors, presumes that ADM has performed appropriate due diligence.  The joint venture will enhance the image of the companies established by the founder and CEO.


 

Mexico Rescinds Imports Duties

05/20/2022

Mexico will rescind duties on chicken meat and table egg imports from all nations for a one year period commencing May 17th.  According to a release by USAPEEC on May 16th, the action was taken by the Government in terms of anti-inflation and food supply programs.  Removing the duty on chicken will benefit Brazil and other countries supplying Mexico, placing them on a par with the U.S.  The removal of duty applies to whole chickens, parts both frozen and refrigerated.


 

Wingstop to Offer Chicken Sandwiches

05/20/2022

Chick-NewsWingstop is currently testing a variety of chicken sandwich combos at sixty restaurants in Florida, Ohio, California and Nevada.  The combination comprising a sandwich, fries and drink will cost $7.99.  The introduction will be coupled with a one-time promotion of a free sandwich during the first week of the test.  This strategy would appear to confound the results of the market evaluation since a test of a product should not be biased by promotions or special offers.


 

Oklahoma to Regulate Chicken Waste

05/20/2022

Chick-NewsAccording to Oklahoma House Bill HB2983, standard management practices to handle poultry waste will be placed under the direction of the Oklahoma Department of Agriculture, Food and Forestry in place of the USDA - Natural Resources Conservation Service.

 

Chick-NewsThe bill sponsored by State Rep. David Hardin was signed into law by Governor Kevin Stitt.  In approving the bill, the Governor stated, "this was truly a collaborative effort to address the needs of Oklahoma poultry farmers and HB2983 helps provide stability and relief for them.


 

Salmonella Contamination Impacts U.K. Chicken Supply

05/17/2022

Chick-NewsUK broiler producer Cranswick County Foods plc. has initiated a recall and closed a plant in Hull to be decontaminated following an investigation of the source of Salmonella identified on a wide range of further-processed chicken products including salads, deli fillers and wraps to be supplied to supermarkets and restaurants. The problem was identified on routine quality control.

 

A spokesperson for the company noted, "as a precautionary measure we have asked our customers to remove any of their products containing our ready-to-eat chicken produced during the affected period and we are working closely with the Food Standards Agency to resolve the matter".

 

Chick-NewsThe recall has had a profound impact on the retail market since Cranswick supplies raw material incorporated into salads, sandwiches and meal kits.  Virtually all U.K. supermarkets including Marks and Spencer, Tesco, Waitrose, Aldi and Sainsbury's have removed product from shelves.  Coffee shops Costa, Starbucks and sandwich store Pret a Manger have also recalled product.


 

USAPEEC Intensifying Promotional Efforts Through Trade Diplomacy

05/16/2022

Chick-NewsAccording to a report in the May 16th MondayLine, Jim Sumner and Greg Tyler recently met with staff of the Embassy of China in Washington, D.C. to discuss concerns relating to exports, with specific reference to HPAI. Topics discussed included recognition and adoption of the World Organization for Animal Health Guidelines to allow Chick-Newsfor restoration of eligibility to ship product from affected farms and control zones 28 days after decontamination replacing the previous 90-day requirement.  The second issue was establishing export restrictions based on shipping date rather than production date.

 

Egg-NewsIn a second meeting to facilitate chicken exports, Jim Sumner and Greg Tyler met with officials at the Embassy of Iraq to discuss import bans and the approval of U.S. plants.  Audits are scheduled for October 2022 allowing for an extension during which the U.S. can continue exports.  USAPEEC has proposed that Iraq officials should audit a sample of poultry plants in place of each individual facility.  It was also requested that Iraq extend the shelf life of frozen chicken from 12 months to 18 months. The commercial attache for Iraq noted that importers were desirous of establishing closer contact with U.S. suppliers to raise awareness of U.S. products.


 

Beyond Meat Reports on Q1 FY 2022

05/12/2022

In a press release dated May 11th 2022, Beyond Meat Inc. (BYND) announced results for the 1st quarter of FY 22 ending April 2nd.

 

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS)


All downhill from the IPO

1st Quarter Ending.

April 2nd 2022

April 3rd 2021

Difference (%)

Sales:

$109,455

$108,164

+1.2

Gross profit:

$190

$32,706

negative

Operating income:

$(97,628)

$(24,625)

-296.1

Pre-tax Income

Net Income

$(99,777)

$(100,458)

($26,844)

($27,266)

-271.7

-268.4

Diluted earnings per share:

$(1.58)

$(0.43)

-267.4

Gross Margin (%)

0.2

30.2

negative

Operating Margin (%)

(89.2)

(22.7)

-292.0

Profit Margin (%)

(91.8)

(25.3)

-262.8

Long-term Debt:

$1,152,538

$1,152,715

<0.1

12 Months Trailing:

Return on Assets (%)

(10.8)

Return on Equity (%)

(72.9)

Operating Margin (%)

(34.2)

Profit Margin (%)

(39.2)

Total Assets

$1,294,510

$1,333,399

+870.4

Intraday Market Capitalization

$1,666,000

 

52-Week Range in Share Price: $20.50 to $160.28 50-day Moving average $42.65

Market Close Wed. May 11th $25.97. Open Thur. 12th post release $22.17.

BYND opened at $66 at the IPO on April 5th 2019 climbing to a peak of $234 within three months on July 20th 2019

Forward P/E 666

 

Chick-NewsA total of 63.7 percent of BYND equity is held by institutions, 8.7 percent by insiders (18% in mid- 2019) with 36.4 percent of the float short.

 

In Q1 FY 22, 77 percent of revenue was derived from retail sales, 22.9 percent from food service. The U.S. represented 76.5 percent of sales up 4 percent from Q1 FY 21. International contributed 23.5 percent to revenue, down 6.9 percent from Q1 FY 21.

 

In commenting on results, Ethan Brown, president and CEO stated "In the first quarter, we made good progress against our goal of building tomorrow’s global protein company. Whether furthering strategic partnerships in the restaurant industry, the market success of our first product collaboration with PepsiCo, or the continued acclaim awarded to our products here in the U.S. and EU, we continue to lay a robust foundation for our long-term growth.”

 

Brown added, “Though we recognize that the decisions we are making today in support of our long-run ambition have contributed to challenging near-term results, including a sizable though temporary reduction in gross margin as we took cost-intensive measures to support important strategic launches, we are confident in the future we are building while advancing our mission to bring plant-based meats and their attendant health, climate, natural resource, and animal welfare benefits to consumers around the world.”

 

These comments are pure hype. Brown should be addressing realities of his enterprise:-

 

  • R&D expenditure during Q1 corresponded to 17.9 percent of revenue, up from 14.7 percent during the 1st quarter of FY 21. By comparison Pfizer a leading biopharmaceutical multinational assigned the equivalent of 8 percent of revenue on R&D.
  • SG&A attained 68.6 percent of revenue in the most recent quarter up from 36 percent in Q1 FY 21.
  • Inventory at $283,754 as reflected under assets, represents a stock of raw material or finished product equivalent to 2.6 times Q1 sales implying a stock rotation of over 7 months.
  • Failure to achieve economies of scale with a sharp decline in gross margin from 30.2 percent in Q1 FY 21 to essentially zero during the most recent quarter.

 

China Slashes Pork Imports

05/10/2022

Chick-NewsWith more rapid recovery from African swine fever than expected, China has drastically reduced importation of pork.  According to the USDA-FAS, pork exports for the first quarter of 2022 amounted to 39,000 metric tons representing a 75 percent decline from the corresponding quarter in 2021.  U.S. pork exports were also impacted by reductions of 15 percent for Japan, 17 percent for Canada and 7 percent for South Korea, contributing to an overall 21 percent decline to 522,000 metric tons.  Mexico did, however, increase imports by 40 percent during the first quarter.

 

Chick-NewsThe U.S. is in a noncompetitive situation in China compared to the E.U. since a tariff of 25 percent is applied to U.S. imports.


 

Tyson Foods Inc. Reports on Q2 FY 2022

05/10/2022

In a press release dated May 9th Tyson Foods Inc. (TSN) announced results for Q2 for FY 2022 ending April 2nd 2022.     

 

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS)

 

Second Quarter Ending

April 2nd 2022

April 3rd 2021

Difference (%)

Sales:

$13,117,000

$11,300,000

+16.1

Gross profit:

$1,735,000

$1,253,000

+38.5

Operating income:             

$1,156,000

$720,000

+60.6

Pre-tax Income

Net Income

         $1,087,000

         $829,000

$624,000

$476,400

+74.2

+75.8

Diluted earnings per share:

$2.28

$1.30

+18.9

Gross Margin (%)

13.2

11.1

+37.5

Operating Margin (%)

8.8

6.4

+68.7

Profit Margin (%)

6.3

4.2

+50.0

Long-term Debt and liabilities:

$9,788,000

        $9,935,000

          +1.5  

12 Months Trailing:

 

 

 

           Return on Assets    (%)

9.5

 

 

           Return on Equity    (%)

21.6

 

 

           Operating Margin   (%)

11.1

 

 

           Profit Margin          (%)

7.5

 

 

Total Assets

$35,898,000

      $36,309,000

          -1.1

Intraday Market Capitalization

$33,650,000

                    

          

 

52-Week Range in Share Price:  $69.83 to $100.72.  50-day Moving average,  $91.39

Market Close: Friday May 6th $90.85. Close Monday May 9th post-release $94.37.

Forward P/E 11.5                  Beta 0.8

 

The Chicken Segment attained sales of $4,086 million ($3,553 million in Q2 FY 2021) representing 31.2 percent of Company revenue. Operating income was $198 million adjusted to $203 million. In Q2 of 2021 operating income was $6 million.

 

For comparison among Tyson Foods’ business segments the adjusted operating incomes were respectively:- Pork, $59 million; Beef, $638 million; Prepared Foods $263 million.

 

In commenting on results Donnie King, president and CEO stated “Our performance in the first half of the year reflects our improving operational execution and strong customer and consumer demand for our brands and products,” He added “We continue to prioritize investment in our team members and business in a number of ways, including increasing pay, expanding pilots of health and child care services, and providing skills and life services, such as free college education and legal services for immigration. Although we continue to see inflationary pressures across the supply chain, we are working to drive costs down by continuing to increase our efficiency, productivity, and bringing more capacity on line. This is all part of our strategy to win with customers and consumers, win with team members and win with excellence in execution.”


Chick-NewsWith regard to the Chicken Segment the company release included:- 
Sales volume increased in the second quarter and first six months of fiscal 2022 primarily due to a strong demand environment partially offset by continued supply chain constraints. Average sales price increased in the second quarter and first six months of fiscal 2022 due to the effects of pricing initiatives in an inflationary cost environment. Operating income increased in the second quarter and first six months of fiscal 2022 due to increased sales volume and higher average sales prices, partially offset by the impacts of inflationary market conditions including increased supply chain costs and a challenging labor environment. In the second quarter of fiscal 2022, we experienced $100 million of higher feed ingredient costs and $101 million of net derivative gains as compared to $10 million of net derivative gains in the second quarter of fiscal 2021. In the first six months of fiscal 2022, we experienced $285 million of higher feed ingredient costs and $159 million of net derivative gains as compared to $83 million of net derivative gains in the first six months of fiscal 2021. Additionally, operating income in the first six months of fiscal 2022 was impacted by $18 million of insurance proceeds, net of costs incurred related to a fire at a production facility and was impacted in the first quarter of fiscal 2021 by a $320 million loss from the recognition of a legal contingency accrual.

 

Chick-NewsThe report concluded with a forward projection relevant to the Industry:-

USDA projects chicken production will increase approximately 1% in fiscal 2022 as compared to fiscal 2021. We anticipate an adjusted operating margin of 5% to 7% for fiscal 2022 as we continue to expect stronger performance in the second half of the fiscal year.

 

Guidance for FY 2022 included Revenue between $52 and $54 billion; Adjusted operating margin of 8 to 10 percent and Capex of $2 billion. The Company warned that supply chain issues would impact international operations.

 


 

Kentucky HPAI Farms to be Repopulated

05/10/2022

Chick-NewsBroiler grow-out farms in western Kentucky that were depopulated due to HPAI have been cleared by APHIS to resume production.  In accordance with the World Organization for Animal Health (OIE) regulations, county or statewide restrictions imposed by importers should be lifted 28-days after completion of decontamination with demonstration of freedom from infection.

 

Chick-NewsThe broiler segment of the poultry industry was largely spared from infection during the 2022 epornitic but lifting of restrictions imposed on the more than 125 affected turkey farms will expedite restoration of production and will ease restrictions on export of all poultry products from counties and states impacted by HPAI.


 

JBS Invests in Middle East

05/09/2022

Chick-NewsJBS S.A. has announced the purchase of meat processing plants in Saudi Arabia and the United Arab Emirates.  The company intends rebranding products and strengthening distribution in the region focusing on local demand and halal products as the primary focus.

 

Chick-News

JBS obviously recognizes difficulties in production and shipping from Brazil in the face of growing demand for domestic production.  Outright ownership of production and processing facilities in the Middle East together with joint ventures denotes a more aggressive commitment and marketing strategy that will ultimately be to the disadvantage of the U.S. that is relying on leg quarters to maintain export volume.


 

Minnesota Funds Mobile Meat Processing

05/09/2022

Funds from the American Rescue Plan will be used to develop and install mobile meat processing and to train butchers. A total of $2.9 million will be assigned to the Farmers Union Foundation to create 150 new jobs, retain 200 jobs and generate private investment.

 

Chick-NewsIt is difficult to see how this small drop in the bucket can do more than benefit small and local communities.  It will not in any way address disparities between processing capacity and demand under unusual circumstances such as the 2020 COVID pandemic that shuttered or constrained output of both hog and beef plants.  Expenditure on small, and by definition inefficient, meat processing is a diversion from the problem of inadequate capacity in large plants.  In recognition of the situation in 2020 and the consequences of the Tyson Foods fire in the Holcomb, KS. plant, private enterprise will invest close to a $1 billion in extensions and improvements. This expenditure along with the establishment of a few new large plants and installation of mechanization should provide spare capacity to account for unusual situations.

 

Chick-News

The comment by the Secretary of Commerce, Gina M. Raimondo, that the proposed investment in Central Minnesota “will help address supply chain issues and increase U.S. competitiveness in the global market” is unrealistic political puffery.


 

Concentration of Broiler Production by State for 2021

05/09/2022

The USDA National Agricultural Statistical Service recently issued the publication Poultry-Production and Value: Summary for 2021. The live production of the top five states amounted to 39,197 million pounds representing 66.2 percent of the U.S. total of 59,248 million pounds.  The top six states In descending rank were:-

 

  • North Carolina 8,061 million lbs. up 2.3 percent from 2020
  • Georgia 7,923 million lbs. down 2.0 percent and falling from first rank
  • Arkansas 7,464 million lbs. up 1.6 percent
  • Alabama 6,561 million lbs. down 0.7 percent but unchanged in rank
  • Texas 4,734 million lbs. up 2.1 percent
  • Mississippi 4,454 million lbs. down 3.4 percent but unchanged in rank

 

Pennsylvania ranked fourteenth with 1,387 million lbs. was up 10.1 percent followed by 15th ranked Tennessee with 1,133 million lbs. up 9.9 percent.

 

The three Delmarva states collectively produced 5,224 million lbs. collectively down 4.3 percent from 2020 and representing 8.9 percent of national production equivalent to the  “5th-rank” if regarded as a single state.

 

To avoid disclosure of specific companies, data for ten states was combined into the "other" category comprising 3,725 million lbs. down by 0.8 percent.  The production from Nebraska would have been an instructive figure reflecting the output of the Costco/Lincoln Premium Poultry complex.


 

BRF S.A. Posts Q1 Loss

05/08/2022

Chick-NewsOn May 4th, BRF S.A. posted results for the first quarter of Fiscal 2022, ending March 31st. For the period the Company lost $309 million on revenue of $2,408 million.  Comparative values for Q1 of FY 2021 were net income of $4.4 million on revenue of $2,118 million.

 

In commenting on results, Lorival Nogueira Luz, Jr., Global CEO, attributed the loss to events in Eastern Europe and disruption of exports due to lockdowns in China.

 

Chick-News

BRF posted assets of $11,122 million with long-term debt of $3,942 million against a market capitalization of $3,000 million. BRF has traded in a 52-week range of $2.39 to $6.08 with a 50-day moving average of $3.31. On May 4th, pre-release BRF closed at $2.79 falling to $2.57 at close of trading on May 5th.

 

On a trailing 12-month basis, operating margin attained 6.5 percent and profit margin 0.9 percent.  The company generated a return on assets of 3.7 percent with 5.9 percent on equity.


 

Lightlife™ Plant-Based Chicken Breasts Developed

05/08/2022

Chick-NewsGreenleaf Foods, a subsidiary of Maple Leaf Foods based in Canada, has developed a range of plant-based chicken breasts and strips.  According to Jitendra Sagili, Chief Research and Development Officer for Greenleaf Foods, “These products reflect our vision of relentlessly evolving the product designs, utilizing ingredient technologies delivering on consumers expectations for taste, color and texture.” Chick-NewsField Roast, a sister company, will launch Chao Creamery Cantina-Style queso containing fermented tofu, bell peppers and spices.

 

Financial results for the first quarter of 2022 for Maple Leaf Foods, parent company of Lightlife and Greenleaf Food are in this edition of CHICK-NEWS.

 


 

Future Of Vegetable-Based Meat Alternatives

05/08/2022

Chick-NewsNegative comments from Maple Leaf Foods regarding slow growth in sales, evidence that the McPlant™ Burger is failing to gain traction in test markets and data from IRI all suggest a pause in the upward sales trajectory of alternatives to meat. Following the release of various ground beef substitutes for both consumer and institutional markets, CHICK-NEWS suggested that initial growth was associated with a “curiosity factor” and that future sales would depend on equivalence in organoleptic qualities and cost in comparison with real products. 

 

Chick-News

A recent survey conducted by Ingredion, Inc. showed that consumers of alternatives to meat concurrently purchase beef, pork and chicken. Given that 65 percent of the respondents to the survey rated taste as their top requirement followed by 48 percent motivated by label additives it may be assumed that plant-based meat alternatives are failing on both counts.  In surveys, “taste” may also include texture and odor in addition to appearance when cooked.  Clearly, there are differences disfavoring substitutes.  To attempt to reproduce the organoleptic qualities of real meat, manufacturers of plant substitutes include a number of additives that obviously concern many consumers.

 

Among those surveyed by Ingredion, three quarters noted that they would be prepared to pay more for plant-based substitutes, provided they were equivalent or superior to real products as served in restaurants.  At this time, all of the red meat substitutes are priced higher than quality ground beef displayed in supermarket coolers without offering equivalence in properties as perceived by the consumer.

 

CEOs of companies producing alternatives to meat should follow the lead of Maple Leaf Foods and re-evaluate product quality, pricing and volumes or just simply heed the advice of Fagin in the musical Oliver, “I think I better think it out again!”


 

Analysts Downgrade Beyond Meat, Inc.

05/05/2022

Piper Sandler recently downgraded Beyond Meat, Inc. (BYND) to neutral from underweight.  Other analysts ranged in their estimates from hold to sell.  The 12-month consensus target price for BYND is $48.13 with a May 2nd close at $38.33.

 

The YTD share price is 44 percent down from a high of $63.33 on January 12th. BYND peaked at $196.51 on July 1st, 2019, amid the unjustified exuberance over plant-based alternatives to meat.

 

Currently, BYND has a market capitalization of $2,436 million and has traded over the past 52 weeks from $160.28 down to $35.21.  The forward P/E is an eye-watering 666. On a trailing 12-month basis, the company has an operating margin of -34.2 percent and a profit margin of -39.2 percent.  The return on assets is -10.8 percent and on equity -72.9 percent. Of the equity, 8.7 percent is held by insiders and 63.7 percent by institutions.  On April 14th, 41 percent of the float was short.

 

Chick-News

Much of the recent pessimism is associated with reports that test marketing of the McDonald’s McPlant™ has received minimal acceptance.  In an inflationary environment, only a dedicated few consumers concerned over welfare and sustainability are willing to pay more for a product with lower nutritional value and with organoleptic qualities considered inferior to real beef.


 

Wayne Farms Recalls 15 Tons Of RTE Chicken Breast Product

05/05/2022

According to a USDA-FSIS announcement on May 2nd, Wayne Farms, LLC is recalling approximately 15 tons of Ready-To-Eat chicken breast fillets produced at a Decatur, AL plant between March 1st and 21st.

 

The problem was recognized following customer complaints that the RTE product appeared undercooked.  Follow-up evaluation confirmed that the implicated batches may not have reached appropriate cooking temperature.

 

The need to thoroughly cook chicken portions is self-evident, given the prevalence of Salmonella  and Campylobacter contamination on raw parts.  Cooking is an absolute kill step in processing. Plants functioning with mandatory HACCP programs must monitor the adequacy of the temperature and time of exposure during processing. This is not the responsibility of consumers.


 

Maple Leaf Foods Reports on Q1 of FY 2021

05/05/2022

Chick-NewsIn a press release dated March 4th Maple Leaf Foods Inc. (MFI-TO) announced results for the 1st Quarter of FY 2022 ended March 31st.

 

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS (conversion of CAN$1=US$0.78)

 

1st Quarter Ending March 31st.

2022

2021

Difference (%)

Sales:

$878,711

$821,405

+7.0

Gross profit:

$120,013

$150,504

-20.3

Operating income:

$26,837

$60,118

-55.4

Pre-tax Income

Net Income1

$16,417

$10,676

$51,399

$37,200

-68.1

-71.3

Diluted earnings per share:

$0.09

$0.30

-70.0

Gross Margin (%)

13.7

18.3

-25.1

Operating Margin (%)

3.1

7.3

-57.5

Profit Margin (%)

1.2

4.5

-73.3

Long-term Debt and lease obligations*:

$1,169,676

$876,359

+33.5

12 Months Trailing:

     

Return on Assets (%)

2.7

   

Return on Equity (%)

5.2

   

Operating Margin (%)

3.9

   

Profit Margin (%)

2.3

   

Total Assets*

 Intangibles and goodwill % of assets

$3,551,940

22.3

$3,246,692

22.9

+13.6

Market Capitalization

$2,730,000

   

* March 31st 2022/2021

 

Chick-NewsQ1 2022 Meat Protein Segment:

Sales, $849 million, up 7.5% from Q1 2021.

Adjusted operating earnings $39.8 million down 35.9% from Q1 2021.

 

Q1 2022 Plant Protein Segment:

Sales, $35.0 million, up 5.3% from Q1 2021.

Adjusted operating loss $(27.2) million 36% improvement from Q1 2021.

 

52-Week Range in Share Price: $18.95 to $25.43 50-day Moving average $22.53

Forward P/E 20.3 Beta 0.4

Market Close pre-release May 3rd $21.36

Market Close post-release May 4th $21.76

 

Insider shareholding 39.2%. Institutional shareholding 25.3%

 

Chick-NewsIn commenting on Q3 results Michael H. McCain, president and CEO of Maple Leaf Foods stated, “Our team’s perseverance and resiliency during the past two years has been nothing short of remarkable,” He added “As fully expected, intense Omicron impacts, including high levels of absenteeism, inflation and supply chain disruptions, challenged us operationally, yet we achieved exceptional business performance in these extreme conditions. Revenue grew 7% and we remain on target to achieve our goal of 14 to 16 percent adjusted EBITDA margin in Meat Protein this year.”

 

With respect to the Plant Protein Segment McCain commented, “ We showed a modest 5 percent growth rate and are continuing our methodical work to adjust the business investment model to match our new outlook for long-term category growth. We will rightsize our manufacturing footprint and SG&A structure to deliver our goal of breakeven adjusted EBITDA or better in the latter half of 2023,” said Mr. McCain.

 

The Company provided the following guidance:-

 

“Meat Protein: Expect mid-to-high single digit sales growth with Adjusted EBITDA Margin expansion near the lower end of the 14% to 16% target by the end of 2022”.

“Plant Protein: Targeting to deliver neutral or better Adjusted EBITDA in the latter half of 2023”.

The Company announced that it is moving forward with a planned leadership transition plan for the Board and Management. Michael McCain will serve as the Executive Chair of the Board and will continue as CEO for the next year as part of the management transition plan. Curtis Frank, currently the President and COO, will assume the role of CEO during Q2 of 2023.


 

McDonald’s McPlant™ Disappointing in Tests

05/05/2022

Chick-NewsA March 24th report in Restaurant Dive cites BTIG Market Research, showing low consumer demand for the McPlant™ burger.  Despite initial acceptance in an early test, market evaluation in California and Texas is disappointing.  Sales are in the region of one third of the anticipated 60 per day in each of the stores offering the product.  Accordingly, operators are extending waiting times for counter delivery and delaying drive-thru turnover. 

 

BTIG consider that price is also a consideration and that McDonald’s, if it wishes to persist with the McPlant will have to alter price, upgrade product, and develop a more appropriate promotional strategy before contemplating a national launch.  In a conference organized by Fast Company, Morgan Flatley, Global CMO of McDonald’s doubled down on the company intention to continue with plant based items characterizing the McPlant as “a product that is here to stay”.  The company continues to work with Beyond Meat, the supplier of the plant-based patty, as a component of a corporate initiative to achieve increased sustainability for proteins served.

 

Chick-News

McDonald’s contemplates an expansion of menu items including plant-based chicken substitutes. Are they trying to push a piece of string?


 

Equine Influenza Responsible for Mortality in Mustangs

05/05/2022

According to a ProMED report on April 28th, equine influenza subtype H3N8 is responsible for ongoing mortality in mustangs corralled in Colorado. More tham 100 horses died in April according to the Bureau of Land Management.  Horses were transferred from Rio Blanco County in Colorado near the Utah state line in late fall 2021 following wildfires and were part of a population of 2,500 wild mustangs rounded up from rangelands. 

 

Equine influenza caused by H3N8 is a common cause of respiratory disease in equines and is endemic to the continents of Europe, Asia and the Americas.  Stressed horses are obviously more susceptible to infection with both viral and secondary bacterial pathogens and this would be especially the case with wild horses confined in pens in close proximity, facilitating infection by inhalation of aerosol droplets and fighting..


 

Wingstop Posts Q1 FY 2022 Financial Results

05/04/2022

In a May 4th release, Wingstop Inc. (WING) posted financial results for the 1st quarter of fiscal 2022. This specialty QSR Company competes directly with privately held Buffalo Wild Wings and indirectly with national chains offering chicken. The Company experiences the same pressures of increased cost of ingredients, labor and transport as competitors in an environment still restrained by COVID and inflation. In addition, flavored wings are more readily available from supermarkets and in bulk from club stores for home meals and entertaining.

 

Domestic same-store sales increased by1.2 percent. System-wide sales were up by 12.7% Digital sales remained at 62.3 percent compared to Q1, 2021.

 

For the 1st Quarter of FY 2021 ending March 26th 2022, net income was $8.68 million on total revenue of $76.2 million.  Comparable figures for the 1st quarter of fiscal 2021 ending March 27th 2021 were net income of $13.2 million on total revenue of $70.7 million.  EPS fell from $0.44 for the 1st quarter of fiscal 2021 to $0.29 for the most recent quarter.

 

The Company provided guidance of a low single-digit increase in sales growth for FY 2022 with a diluted EPS of $1.55 to $1.57.

 

Wingstop operates 1,791 stores of which 37 U.S. locations are company-owned with 203 franchised operations in international markets.

 

In commenting on the quarter Michael Skipworth, president and CEO stated "Our first quarter 2022 results reflect the strength and momentum in our global development with a record 60 net new restaurant openings," He added "We delivered domestic same-store sales growth of 31.8% on a three-year basis. This coupled with the meaningful deflation we are experiencing in bone-in wings gives us confidence to raise our net new unit guidance for our full year to 220+. Our strategic growth levers and proactive investments in technology have positioned our brand for continued long-term growth as we continue executing against our vision to become a Top-10 Global Restaurant Brand." 

 

On February 28th the management of Wingstop announced a restructuring of debt. Securitized notes to the value of $250 million were issued with the proceeds used to strengthen liquidity and for “corporate purposes” Wingstop has also renegotiated the $50 million variable funding note to allow for borrowing of up to $200 million subject to predetermined conditions

 

On March 26th, WING posted assets of $507.3 million, of which $99.6 million comprised goodwill and trademarks against long-term debt of $710.9 million. The Company had an intraday market capitalization of $2,742 million on May 4th ($4,180 million on March 1st.) WING traded with a forward P/E of 62.9 and has ranged over a 52-week period from $82.80 to $187.35 with a 50-day moving average of $116.68.  Twelve-month trailing operating margin was 24.9 percent and profit margin 15.1 percent.  Return on assets over the past twelve months was 19.1 percent. At close of trading on March 3rd pre-release, WING was priced at $89.18. At noon post-release on May 4th WING traded at at $90.16. On March 1st after announcing new financing,  WING was priced at $146.82.


 

NCC Posts Infographic Relating to Contract Growers

05/02/2022

Egg-NewsRecently Dr. Thomas Elam published a scholarly review on the financial security ad earnings for contract growers, providing details of low turnover rates, long tenure with integrators and other benefits.  A summary of the findings was posted on CHICK-NEWS. This week the NCC unveiled an infographic on their website summarizing the findings in a form that consumers can review and digest.

 

Among the facts presented were high income for contract broiler growing compared to other farming enterprises, the demand for contracts and the mutual dependence of integrators and contractors to produce wholesome chicken at the lowest possible cost.

 

Egg-News

Dr. Elam concluded, "raising chickens under contract is one of the best and most reliable sources of cash flow that helps keep families on the farm.  The real winner is the American consumer who benefits from the healthiest and most affordable protein in the meat case".

 


 

Foster Farms Cited by California Labor Commissioner

05/01/2022

Egg-NewsAccording to press reports, Lilia Garcia Brower, California Labor Commissioner, has cited Foster Farms and staffing companies for alleged illegal practices during the COVID outbreak. Following complaints, a detailed audit was initiated in 2020, centered on the Livingston, CA plant. It was claimed that temporary workers provided by staffing agencies were not informed of sick leave policies including the availability of supplemental paid absence.  According to the Department of Labor, close to 3,500 workers were affected.

 

In announcing the action and imposition of $3.8 million in penalties, the Commissioner stated, “Employers are obligated to ensure that employees are made aware of sick leave benefits intended to protect workers, their families Egg-Newsand the public from the spread of COVID.”

 

In response, a company spokesperson noted, “Foster Farms is reviewing the recent action by the California Labor Commissioner.  We abide by all federal and state employment laws.  An extensive audit of Foster Farms’ full-time employees failed to find any violations.”

 


 

USAPEEC Responding To Challenges of HPAI

05/01/2022

Egg-NewsChick-NewsOver the past eight weeks, the USA Poultry and Egg Export Council (USAPEEC)  has performed tirelessly to communicate with importing nations to convince them of the eligibility of the U.S. to supply eggs, broiler and turkey meat free of avian influenza virus.  Following the 2015 highly pathogenic avian influenza (HPAI) epornitic, USAPEEC recognized the vulnerability of the U.S. if importing nations imposed national or statewide bans following an isolated case of Avian Influenza, irrespective of pathogenicity.  The benefits of the diplomacy and negotiations are now evident as the U.S. has apparently maintained export volume during March and April, albeit with some selection of plants of origin routes of transport and ports of loading.

 

Acceptance of regionalization as accepted by the World Organization of Animal Health has been the key to the ability of the U.S. to continue shipping products.  Convincing potential customers of the validity of regionalization and assuring them of the ability of the U.S. to diagnose and contain outbreaks and maintain an effective program of surveillance has been the responsibility of the USAPEEC. Dr. John Clifford, in his previous Egg-Newsrole as Chief Veterinary Officer represented the USDA-APHIS in international venues and gained the confidence of his then counterparts in importing nations.  It is fortuitous that his experience and credibility are now applied as Veterinary Trade Policy Advisor to the USPEEC to assist CEO Jim Sumner and his team to maintain export volume.

 

USAPEEC has served as an important link among USDA-APHIS, producers and shippers.  The Council has responded with effective communication as the HPAI situation has developed.

 

Recent achievements include:-

  •  Cuba has reduced restrictions to county-wide bans and will lift restrictions 28 days after completion of cleaning and disinfection, bringing this important importing nation into conformity with OIE recommendations
  • Taiwan has now placed bans on the basis of production dates in place of shipping dates.  This will allow product harvested more than 14 days before the detection of HPAI to be eligible for export. 
  • USAPEEC has been instrumental in translating and interpreting requirements imposed by importers, especially with regard to dates relating to bans and transshipment of sealed containers from the plant of origin to the port of loading.
  • China has now agreed that shipments from states in which HPAI has occurred will be allowed entry if an issued health certificate predates the confirmation of HPAI.  This requirement will allow product loaded into containers to be consigned without logistic delays.
  • USAPEEC has coordinated proposed audits of processing plants authorized for export.  Currently, the Council is advocating audits of systems to obviate individual plant visits and audits conducted by representatives of importing nations. These are both expensive for both parties and disruptive to plants without serving a practical purpose.

 

During the recent months of turbulence associated with outbreaks of HPAI, the USAPEEC has facilitated movement of product through preemptive planning, application of scientific principles and demonstrating compliance with OIE policies. The industry owes the Council and its dedicated staff a debt of gratitude.


 

Tyson Foods To Expand Educational Opportunities for Employees

04/27/2022

Egg-NewsOn April 25th, Tyson Foods, Inc. announced an extension of the company-sponsored educational assistance program.  Commencing mid-2022, all U.S. employees will have the option to obtain associate, undergraduate or master’s degrees with full reimbursement by the company.

 

The program will be administered by Guild as part of the initiative incorporating 175 options offered by 35 universities.  It is anticipated that Tyson will commit $60 million to cover all fees, tuition and educational material. Areas of study will include agriculture, supply chain and operations, manufacturing and automation, and sustainability.

 

In commenting on the program, John R. Tyson, Executive Vice President and Chief Sustainability Officer, stated, “This commitment to our team members reinforces our belief that they are the lifeblood of our current and future success.”  He added, “Providing educational benefits will continue to lay a foundation for personal and career growth for our team members.”

 

Egg-News

For employees intending to obtain certificates and associate qualifications, programs will include English comprehension, career readiness and applied line management techniques.  The company will also reimburse attendance at executive programs leading to certification in leadership, business management and applied aspects of technology.


 

Tyson Achieves Zero Waste Landfill at Six Plants

04/27/2022

Chick-NewsGold-Level validation has been granted to Tyson Foods with respect to six broiler plants in Tennessee, Arkansas, Kentucky, and Georgia that have achieved Zero Waste to Landfill status.  All of the plants recycle animal waste to byproducts and have eliminated delivery of other materials include packaging, compost, liquids, and food to landfills.

 

Chick-News

Tyson Foods has designed integrated waste management systems that will reduce greenhouse gas emissions with all facilities subject to third-party validation.  To achieve the Zero Waste to Landfill Gold-Level certification, each plant was required to document methods for handling waste and avoid disposal to landfills.

 

Additional information on Tyson sustainability programs can be accessed at <www.tysonfoods.com/sustainability>.


 

Settlement of Civil Case Alleging Anti Competitive Action

04/26/2022

A number of broiler integrators defending a civil lawsuit alleging collusion and price fixing by customers have settled for $104 million.  Defendants include Pilgrim’s Pride Corporation, Tyson Foods, Fieldale Farms, George’s Inc. and Amick Farms among others.  The current settlement approved by the presiding judge follows other settlements in past months.  Plaintiffs in the current lawsuit include restaurant chains and chicken processors.

 

Approximately $30 million will be assigned to plaintiff’s attorneys with $10 million to cover expenses.


 

Dr. Douglas P. Gladue Co-recipient of Arthur S. Fleming Award

04/26/2022

Egg-NewsThe USDA Agricultural Research Service has announced that Dr. Douglas P. Gladue will receive the 2021 Arthur S. Fleming Award.  Dr. Gladue was the lead researcher responsible for the development of an African Swine Fever vaccine at the USDA Agricultural Research Service (ARS) Plum Island Animal Disease Research Center, located at Orient Point, NY. 

 

Egg-News

The award recognizes outstanding achievements by federal employees.  Administrator of the ARS, Dr. Chavonda Jacobs-Young, stated “The ability of the ARS to deliver scientific solutions to animal disease and African Swine Fever is strengthened by Dr. Gladue’s brilliant mind and research.”  She added, “We appreciate his commitment to innovation and collaboration and are proud to see his achievements receive the recognition it deserves.”

 

There are currently no approved commercial vaccines for African Swine Fever, accordingly the candidate product developed by the ARS will be commercialized and made available worldwide.

 

Egg-NewsAfrican Swine Fever has never been diagnosed in the U.S. but projections suggest if it is introduced to the domestic hog industry from Asia or the Caribbean, control will cost over $14 billion for the first two years and $50 billion over 10 years.

 

The pork industry in China is only now recovering from the introduction of African Swine Fever in 2019, that esulted in the loss of almost half of the nation’s sow herd within a year. Restoration of domestic supply will reduce imports by China from both Brazil and the U.S.


 

Impossible Foods Sued Over Leghemoglobin Patent

04/26/2022
Chick-News

Motive Foodworks has petitioned the U.S. Patent and Trademark Office to revoke a patent awarded to Impossible Foods covering soy leghemoglobin, an ingredient used in vegetable-based meat substitute products.  Motive Foodworks claims that the patent was awarded improperly based on the fact that the process to develop the additive was in the public domain. Motive uses a proprietary ingredient derived from fermented yeast that has properties similar to bovine myoglobin to impart beef-like flavor and taste to their alternative - meat products.

 

Chick-NewsImpossible Foods rejects the contentions advanced by Motive and will respond to the petition within the three month statutory period. A spokesperson for Motive stated, “Our industry should work together to grow the plant-based category for the greater good.  Competition is healthy and it should play out in the marketplace, not the courts.”


 

CHICK-NEWS Welcomes Anpario As A Sponsor

04/25/2022

Anpario now on Chick-NewsAnpario plc. is a publicly quoted company located in Nottinghamshire in the U.K. producing and distributing feed additives world-wide.

 

The Health and Performance portfolio includes Orego-Stim™.  The product available in the U.S. is formulated to enhance productivity of monogastric species.  Orego-Stim™ is a phytogenic product with oregano essential oil as the active component.  Within the intestinal tract, oregano oil suppresses pathogenic bacteria, is anti-inflammatory and serves as an immunomodulator.

 

The Feed Quality category produced by Anpario include antioxidants, pellet binders, mold inhibitors all formulated to enhance production through the manufacture of high-quality feeds.

 

Anpario now on Chick-NewsThe Toxin Management portfolio in the E.U. includes mycotoxin binders specifically formulated to inhibit absorbtion of DON and ZEA, both for monogastric species and for dairy cows.

 

Anpario has gained over 30-years of experience in intensive livestock production and branded GRAS products supported by research and development scientists and field technical representatives.

 

For further information, click on to the Anpario logo on the right side of the Welcome page or access, www.Anpario.com.


 

OSHA Tours Triumph Foods

04/25/2022

Representatives of the United Food and Commercial Workers Union Local 2 and officials of the Occupational Health and Safety Administration (OSHA) recently toured the St. Joseph, MO plant.  The facility with 2,500 workers has generated a solid record of worker safety including protection during the COVID pandemic.  The purpose of the visit was for OSHA to examine at first hand measures adopted by Triumph Foods.  The plant was recentlyChick-News awarded the North American Meat Institute Worker Safety Recognition.  Triumph Foods has a long history of promoting worker safety in cooperation with the Cleveland Clinic.


 

USDA to Disclose Slaughter Records

04/25/2022

Chick-NewsFollowing lawsuits filed jointly by the Animal Welfare Institute and Farm Sanctuary, the USDA is now obliged to publicly post records indicating enforcement action in terms of the Humane Methods of Slaughter Act and the Poultry Products Inspection Act.

 

The agreement following a lawsuit  will result in the posting of data back to January 2017. These animal activist groups and others now have access to processing and packing plant records that may impact the image of broiler integrators and meat packers when publicized.

 

Chick-NewsA Federal Magistrate Judge for the U.S. District Court for the Western District of New York approved the settlement.  The USDA will be responsible for paying the Plaintiffs' attorney fees arising from a 2018 trial in the amount of $300,000.

 

A representative of the Animal Welfare Institute noted, "thousands of slaughterhouse records are now readily available to concerned citizens and animal advocacy groups who wish to monitor USDA enforcement without waiting months or even years for the department to respond to a Freedom of Information Act request.

 

Implications for poultry slaughter  and brand image are self-evident.


 

Tyson Foods To Rebuild Alabama Rendering Plant

04/24/2022

Chick-NewsTyson Foods has announced that it will invest $200 million to rebuild a rendering plant in Hanceville, AL. that was destroyed by fire in 2021.  The projected date of completion of the proposed 120,000 square feet plant will be mid-2023.

 

Chick-NewsCullman County, the location of the plant, is a major chicken producing area. Prior to destruction the plant produced 750,000 tons of poultry by-product meal annually used for petfood and animal diets. The plant was the largest poultry rendering facility in the U.S. and probably the World.


 

Rabobank Quarterly Review of Livestock Production in China

04/21/2022

RabobankAccording to the Rabobank China Food and Agribusiness Quarterly covering the second quarter released April 19th, the economy of China is expected to slow due to COVID restrictions.  The official National Bureau of Statistics forecast a 7.5 percent year-over-year growth for industrial production through February 2022.  Rabobank supports a consensus view of a growth rate of 4.3 percent.  The People’s Bank of China has documented a sharp decline in both orders and profitability arising from disruption of supply chains.  Accordingly, the Government-controlled bank is supporting financial institutions to boost capital, increase Yuan flexibility and to increase liquidity.

 

At issue are regional shutdowns in major centers including Shanghai, together with rising input costs due to the world escalation in the price of grains, fertilizers, and energy. A sharp decline in foreign trade is stimulating the State Council to establish domestic markets, moving away from globalization that previously drove the economy of China.

Chick-News

With respect to animal protein in China, domestic pork prices are low attributable to declining demand.  This is a direct result of restrictions imposed as the incidence rate of the Omicron strain of COVID soars.  With falling prices for pork, producers are liquidating herds, intensifying downward pressure on price. Imports will obviously be restricted other than to build a national stockpile as a central government policy. 

 

Broiler producers benefitted from increased prices during April due to disruption of supply chains, but the situation will return to normal if and when China manages to control the Omicron strain of COVID or alternatively adopt a different policy to widespread home confinement.  Sales of all animal protein will be limited by a ten percent decline in the food service sector.  Supermarket sales have increased in the short term due to panic buying resulting in shortages on shelves and in coolers, contributing to food inflation.

 

Chenjum Pan, Senior Analyst for Animal Protein at Rabobank noted a six percent decline in imports of poultry products over the first two months of 2020 to a quantity of 218,000 metric tons. Rabobank reported that Brazil gained in share of imports at the expense of the U.S. based on price and availability.

 

Questions remain as to the supply of grandparent broiler stock sourced from the U.S. Our supply hatcheries have attained OIE Compartment Status and China should not legally ban imports on the basis of sporadic outbreaks of HPAI in states other than Arkansas and Alabama.  In any event, following the 2015 HPAI epornitic, the world’s major, primary broiler breeders established facilities in other nations that could supply China.


 

Smithfield Foods Settles Civil Claim Alleging Price Fixing

04/21/2022

JudgementFollowing approval by Judge John R. Tunheim, Chief District Judge for the U.S. District Court for the District of Minnesota, Smithfield Foods, Inc. will settle a civil claim for $42 million.  The commercial and institutional indirect purchasing plaintiffs alleged that Smithfield Foods, Inc. conspired to fix prices for pork over an extended period commencing 2009.

 

Smithfield

Smithfield Foods denied liability but negotiated the settlement “in the best interests of the company”.  Previously, Smithfield Foods, Inc. paid $83 million to settle a parallel suit initiated by direct pork purchasers including distributors and supermarket chains.

 

The settlement agreements followed similar agreements by JBS USA with this Company along with competitors named as co-defendants.


 

USPOULTRY To Present Financial Management Program

04/21/2022

Chick-NewsThe 2022 USPOULTRY Financial Management Program will be held June 27th through 29th at the Hilton Clearwater Beach Resort and Spa.  The major topics will include changes in tax and labor law, consumer behavior, proposed legislation and cybersecurity.

US Poultry

In addition to the formal presentations, sessions will be offered on topics including recruiting and retaining accounting professionals, planning cash-flow, lease accounting, automation and investment analysis.

 

For registration and additional information access <www.uspoultry.org/programs/education>


 

Tyson Foods Assists in Immigration Applications

04/20/2022

TysonIn an April 12th release, Tyson Foods announced that $1 million will be assigned to support employees to obtain U.S. citizenship.  The Tyson Immigration Partnership provides legal services in cooperation with two non-profit advocacy organizations, Immigrant Connection and Arkansas Immigration Defense.  Tyson also reimburses team members for INS application fees.  The program will be extended from the current seven complexes to 40 facilities in 14 states.

 

John R. Tyson, Executive Vice-president and Chief Sustainability Officer stated, “We care about our team members and want to help them achieve their goals including those who have dreams of becoming U.S. citizens and having greater access to opportunities our country has to offer.”  He added, “We are working hard to help team members who want and need assistance with their lawful immigration status or the complex and expensive process of becoming a citizen.

 

Chick-News

Immigrant Connection is hosting informational meetings at 27 company locations and Arkansas Immigration Defense is carrying out the same function in 13 locations in the Tyson home state.


 

Technomic Survey Confirms Increase in Chicken Served by Restaurants

04/20/2022

Technomic has released the Top 500 Chain Restaurant Report.  The comprehensive report documents the performance of U.S. chain restaurants during 2021.  Principal conclusions include:

 

  • Collective revenue of $360 billion in 2021, approximately 18 percent higher than the previous year impacted by COVID.

 

  • Collectively the top five 500 restaurants encompass 26,000 locations with expansion in 2021.

 

  • Menu items featuring chicken increased by 10 percent in 2021 reflecting versatility, cost, consumer preference and suitability for small growing restaurant chains.
Technomic

Chick-News

 

Third Trial of Broiler Company Executives to Proceed

04/18/2022

Chick-NewsJonathan Kanter, Head of the Antitrust Division of the Department of Justice appeared before U.S. District Judge Phillip Brimmer to explain why the interest of the State justified a third trial following two previous trials ending in hung juries. Charges involved collusion to fix prices and rig bids for broiler products extending from 2012 to 2017.

 

The Department of Justice has cancelled charges against five of the ten who were indicted claiming that the case against the remaining defendants will be easier to prove.

 

Jason PennJudge Brimmer who is skeptical of the DOJ case does not have the power to refuse a third trial.  The accused now comprise the two previous CEOs of Pilgrim's Pride, their subordinates and their counterparts at Claxton Foods.

 

It would be in the interests of the industry for this case to be resolved so that image and confidence can be restored.


 

Philippines Accepts County-Related Restrictions Following U.S. HPAI Outbreaks

04/18/2022

Chick-NewsUSDA-FAS Gain report RB 2022-0020 released on April 1st updated official policy of the Department of Agriculture of the Philippines concerning issue of Sanitary Import Clearances.

 

Following discussions between USDA-APHIS and their counterpart, the Department of Agriculture Bureau of Animal Industry of the Philippines, the Nation would now impose only county-wide restrictions on importation of poultry products following outbreaks of HPAI.  In accordance with the 2016 agreement, Chick-Newsstate-level restrictions will be imposed when three or more counties in a single state are affected.  Accordingly, some states have been declared ineligible to export live birds and poultry meat other than heat-treated product.

 

Concern over the risk of importing HPAI through inspected products from the U.S. would seem to be an overreach given extensive outbreaks of HPAI in the Nation.


 

2020 U.S. Broiler Chicken Industry Sustainability Report Receives National Recognition

04/18/2022

Chick-NewsThe National Agri-Marketing Association awarded first place to the U.S. Broiler Industry Sustainability Report. The Report advanced to the national level and competed against submissions from six other regions. The report features a Life Cycle Assessment commissioned by the National Chicken Council.

 

Chick-NewsMike Brown, President of the NCC stated, "This award is a collective effort on behalf of the entire U.S. chicken industry because we could not have made such significant environmental progress without the steadfast commitment of each farmer and processing company".

 

Essentially the advances in sustainability achieved in broiler production can be attributed to genetic progress with concurrent improvements in nutrition, promotion of flock health, housing and management in a coordinated approach to narrowing the spread between genotype and phenotype.


 

Beef Packer CEOs To Testify

04/14/2022

Chick-NewsRepresentative David Scott, Chairman of the House of Representatives Agriculture Committee has announced that the CEOs of the “Big Four” will testify at a hearing on April 27th.  Rep. Scott stated, “I am pleased to announce that the Chief Executive Officers of each of the four largest meat packers in the United States have agreed to testify at our upcoming Congressional hearing discussing cattle markets and price increases for consumers.”

 

Topics to be considered include alleged anti-competitive behavior in the meat industry.  The hearing will serve as a bookend for a panel of ranchers who will comment on consolidation and its effect on operations and profit ability. 

 

Chick-News

It is suggested that the CEOs of Cargill, Inc., Tyson Foods, Inc., JBS and National Beef Packing Company wear insulated trousers as they will surely be on the hot seat.


 

Hamlet Protein Quantifies Action of Antinutritional Soybean Meal Components

04/14/2022

Hamlet ProteinResearch conducted at the University of Arkansas, funded by Hamlet Protein, evaluated the deleterious effect of stachyose and raffinose in soybean meal on the performance and intestinal function of broiler chicks. 

 

Chick-NewsDr. Alfred Blanch, Category Manager for Poultry at Hamlet Protein, noted “The studies showed a linear effect on the conversion rate of chicks.”  Above a level of 1.2 percent for stachyose and raffinose combined, feed conversion efficiency was reduced mainly due to a lower growth rate compared to controls”.

 

Dr. Guillermo Tellez of the University of Arkansas noted that high levels of the two antinutritional factors in soybean meal affect intestinal permeability, increase fecal moisture, and stimulate an immune response.  Chicks receiving levels of the antinutritional compounds at a level exceeding 1.2 percent showed higher heterophil to lymphocyte ratios in blood indicating an immunologic response correlated with stress. 

 

Hamlet Protein will continue to sponsor research on intestinal function in monogastric species with an emphasis on the intestinal microbiome as it is influenced by antinutritional compounds in diets.

 

Hamlet Protein processes soybean meal using a patented enzymatic and heat process to enhance digestibility and to inactivate antinutritional compounds resulting in enhanced growth rate and feed conversion in starter chicks and poults.


 

Aviagen Contributes to Mississippi State University Feed Mill

04/14/2022

AviagenDr. Marc de Beer, President of Aviagen North America, has announced that his Company will contribute to the cost of theplanned feed mill at the Mississippi State University, Poultry Science Department, H.H. Leveck Animal Research Center. The facility will serve as a model for students and will supply feed for research herds and flocks.

 

Chick-NewsDr. Kelley Wamsley, Associate Professor of Nutrition and Feed Manufacture for the MSU Poultry Science Department, stated, “We pride ourselves on providing our students with practical, hands-on learning experiences to complement classroom teaching.  The investment in the feed mill allows us to increase student preparedness for employment on graduation and also allowing us to better serve the poultry industry to enhance research and feed milling workshops.”


 

 
Copyright © 2022 Simon M. Shane