Updated USDA-ERS Poultry Meat Projection for July 2024. 

On July 18th 2024 the USDA-Economic Research Service released updated production and consumption data with respect to broilers and turkeys, covering 2023 a projection for 2024 and a forecast for 2025.

The 2024 projection for broiler production is 46,700 million lbs. (21.227 million metric tons) up 0.5 percent from 2023. USDA projected per capita consumption of 101.3 lbs. (46.1 kg.) for 2024, up 1.8 percent from 2023. Exports will attain 6,744 million lbs. (3.065 million metric tons), 5.2 percent below the previous year.

The 2025 USDA forecast for broiler production will be 47,550 million lbs. (21.614 million metric tons) up 1.8 percent from 2024 with per capita consumption up 0.7 lb. to 102.0 lbs. (46.3 kg). Exports will be 1.9 percent higher compared to 2024 at 6,744 million lbs. (3.065 million metric tons), equivalent to 14.5 percent of production.

Production values for the broiler and turkey segments of the U.S. poultry meat industry are tabulated below:-

Source: Livestock, Dairy and Poultry Outlook released July 18th 2024

The July USDA report updated projection for the turkey industry for 2024 including annual production of 5,214 million lbs. (2.330 million metric tons), down 4.4 percent from 2022. Consumption in 2024 is projected to be 14.2 lbs. (6.5 kg.) per capita, down 4.1 percent from the previous year. Export volume will increase by 4.1 percent in 2024 to 510 million lbs. (231,818 metric tons). Values for production and consumption of RTC turkey in 2024 are considered to be realistic, given year to date data, the prevailing economy, variable weekly poult placements, production levels, freedom from HPAI and inventories.

The 2025 forecast for turkey production is 5,280 million lbs. (2.400 million metric tons) up 1.3 percent from 2024 with per capita consumption down 0.7 percent to 14.1 lbs. (6.4 kg). Exports will be 3.9 percent higher than in 2024 to 530 million lbs. (240,910 metric tons) equivalent to 10.0 percent of production.

Export projections do not allow for a breakdown in trade relations with existing major partners including Mexico and Canada nor the impact of catastrophic diseases including HPAI and vvND in either the U.S. or importing nations

The USDA export projection takes into account declining broiler product exports to China. For 2022, China imported 622,099 tons of broiler products valued at $1,087 million including feet at an average unit price of $1,263 per ton. Exports to China during 2023 were 34 percent lower in volume to 405,343 metric tons and 34 percent lower in value to $711 million. For the first five months of 2024 broiler volume to 4th-ranked China by quantity was down 62 percent from the corresponding months in 2023 to 78,710 metric tons. Value was down 54 percent to $154 million

Subscribers are referred to the monthly export report in this edition and update of production data and cold storage inventories of broilers and turkeys respectively posted in each end-of- month edition of CHICK-NEWS with the previous monthly data under the STATISTICS tab.

U.S. Broiler and Turkey Exports, January-May 2024.

OVERVIEW

Total exports of bone-in broiler parts and feet during January-May 2024 attained 1,376,146 metric tons, 11.6 percent lower than in January-May 2023 (1,556,051 metric tons). Total value of broiler exports decreased by 5.6 percent to $1,862 million ($1,973 million).

Total export volume of turkey products during January-May 2024 attained 86,673 metric tons, 20.2 percent more than in January-May 2023 (72,137 metric tons). Total value of turkey exports increased by 10.1 percent to $252 million ($229 million).

Unit price for the broiler industry is constrained by the fact that leg quarters comprise over 96 percent of broiler meat exports by volume (excluding feet). From the first quarter of 2021 through 2022, unit value of leg quarters increased in unit value consistent with international demand followed by a decline in 2023. Leg quarters represent a relatively low-value undifferentiated 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. To increase sales volume and value the U.S. industry will have to become more customer-centric offering value-added presentations with attributes required by importers. Whether this will increase margins is questionable given the by-product origin of leg quarters. A more profitable strategy for the U.S. industry would be to develop products using dark meat to compete with and displace pork in the domestic market.

HPAI is now accepted to be a panornitic affecting the poultry meat industries of six continents with seasonal and sporadic outbreaks. The incidence rate and location of cases in the U.S. limits eligibility for export depending on restrictions imposed by importing nations

Ongoing outbreaks of African swine fever in China and Southeast Asia from early 2019 and Europe from 2010 onwards reduced the availability of pork. In addition, disruptions in chicken production and logistics due to COVID restrictions decreased availability of protein with international repercussions on trade in chicken and pork. The demand for pork imports to China has diminished with restoration of domestic hog production to the extent of overproduction. Mild oversupply is evident in the white-feathered broiler sector with implications for exports other than feet extending into 2024.

EXPORT VOLUMES AND PRICES FOR BROILER MEAT

During January-May 2024 the National Chicken Council (NCC), citing USDA-FAS data, documented exports of 1,393,414 metric tons of chicken parts and other forms (whole and prepared), down 10.9 percent from January-May 2023. Exports were valued at $1,920 million with a weighted average unit value of $1,378 per metric ton.

The NCC breakdown of chicken exports for January-May 2024 by proportion and unit price for each category compared with the corresponding months in 2023 (with the unit price in parentheses) comprised:-

• Chicken parts (excluding feet) 4%; Unit value $1,289 per metric ton ($1,218)
• Prepared chicken 0%; Unit value $4,176 per metric ton ($4,300)
• Whole chicken 6%; Unit value $1,627 per metric ton ($1,608)
• Composite Total 0%; Av. value $1,378 per metric ton ($1,280)

The following table prepared from USDA data circulated by the USAPEEC, compares values for poultry meat exports during January-May 2024 compared with the corresponding months of 2023:-

COMPARISON OF U.S. CHICKEN AND TURKEY EXPORTS

JANUARY-MAY 2024 COMPARED TO 2023

BROILER EXPORTS

Total broiler parts, predominantly leg quarters but including feet, exported during January-May 2024 compared with the corresponding months in 2023 declined by 11.6 percent in volume and 5.6 percent in value. Unit value was 6.7 percent higher to $1,353 per metric ton.

During 2023 exports attained 3,635,178 metric tons valued at $4,739 million, down 4.2 percent in volume and down 9.2 percent in value compared to 2022. Unit value was down 9.5 percent to $1,284 per metric ton

Broiler imports in 2023 were projected to attain 72,000 metric tons (158 million lbs.)

The top five importers of broiler meat represented 46.1 percent of shipments during January-May 2024. The top ten importers comprised 64.4 percent of the total volume reflecting concentration among the significant importing nations but with a decline in the importance of China.

During January-May 2024 Mexico was the first-ranked importer by volume and value with 305,255 metric tons representing 22.2 percent of export volume up 3.2 percent from January-May 2023. Value at $382 million was 20.5 percent of the total for exported broiler products during January-May 2024 and up 18.3 percent from 2023, but with a 14.5 percent increase in unit price to $1,252 per metric ton. During May 2024 volume was up 11.5 percent to 65,295 metric tons and value was higher by 23.8 percent from May 2023 to $86.9 million.

Cuba was the 2nd-ranked importer based on volume during January-May 2024 with 105,941 metric tons valued at $124.7 million. Exports were down 4.0 percent in volume but up 16.7 percent in value compared to January-May 2023. Unit price was $1,177 per metric ton. During May 2024 exports were down 27.7 percent in volume to 17,784 metric tons but up 7.7 percent in value to $23.7 compared to May 2023.

Taiwan was 3rd ranked as an importer during January-May 2024 with 86,051 metric tons valued at $105.0 million down 36.9 percent and 41.1 percent in volume and value respectively, compared to the previous year. Unit price was $1,220 per metric ton. During May exports were down 60.2 percent in volume to 13,156 metric tons and down 65.4 percent in value to $15.5 compared to May 2023.

During January-May 2024 exports to China, 4th-ranked by volume and 2nd ranked by value represented 5.7 percent by volume and 8.2 percent by value of shipments. Exports were down 62.3 percent in volume to 78,710 metric tons and down 54.3 percent in value to $154.3 million compared to January-May 2023. Unit price was $1,960 per metric ton up 19.6 percent. During May 2024 China ranked 5th among importers based on volume receiving 12,374 metric tons down 70.9 percent from May 2023. Exports in May 2024 were valued at $25.0 million down 62.8 percent with a unit price of $2,020 per metric ton confirming the predominance of feet in relation to other products.

During 2023, 405,313 metric tons of U.S. broiler products were shipped to China, valued at $711,172 with an average unit value of $1,755 per metric ton. A breakdown of product categories and prices was provided by USAPEEC. Paws and feet represented 68.5 percent of volume and 73.1 percent of value with a unit price of $1,871 per metric ton. Legs and leg quarters comprising 22.6 percent of volume and 12.8 percent of value were priced at $990 per metric ton below the $1,302 average for all U.S. exports excluding China. Wings comprised 4.6 percent of volume and 5.7 percent of value with a unit price of $2,190 per metric ton. All other poultry products (including 4 tons of duck meat) amounting to 4.2 percent of volume and 8.4 percent of value attained an average unit price of $3,485 per metric ton

During January-May 2023 exports to Hong Kong, 11th ranked by volume, but 7th by value, increased by 166 percent in volume to 38,964 metric tons and 143 percent in value to $59.4 million with a unit price of $1,525 per metric ton. In 2022 and 2023 unit prices were $1,834 and $1,671 per metric ton respectively. Accordingly consignments are presumed to comprise a high proportion of feet with assumed transshipment to the Mainland as in past years.

During January-May 2024 nations gaining in volume compared to the corresponding period in 2023 (with the percentage change indicated) in descending order of volume with ranking indicated by numeral were:-

1. Mexico, (+3%); 5. Guatemala, (+2%); 6. Philippines, (+2%); 8. Viet Nam, (+23%) 9. UAE, (+50%) and 11. Hong-Kong, (+171%); 12. Georgia, (+9%) and 13. Iraq, (+21%)

Losses during January-May 2024 offset the gains in exports with declines for:-

1. Cuba, (-4%); 3. Taiwan, (-37); 4. China, (-62%); 7. Canada, (-2%); 10.Angola, (-5%); 14. Haiti, (-30%); 15. Dominican Republic, (-6%) and 16. Congo –Braz., (-31%).

TURKEY EXPORTS

The volume of turkey meat exported during January-May 2024 increased by 20.2 percent to 86,673 metric tons from January-May 2023 and value was 10.1 percent higher to $251.9 million compared to January-May 2023. Average unit value was 8.3 percent lower to $2,906 per metric ton.

Imports of turkey products attained 38,640 metric tons in 2023.

For the entire year of 2023 export volume increased by 20.2 percent to 221,098 metric tons compared to 2022 and value fell by 2.0 percent to $620 million reflecting an 18.5 percent decrease in unit value to $2,829 per metric ton.

Mexico was the dominant importer of turkey products during January-May 2024 with 66,223 metric tons representing 76.4 percent of total volume of 86,673 metric tons. Value at $187.3 million was 74.3 percent of the total. Volume was 34.1 percent higher and value was 14.0 percent higher than for January-May 2023. Unit value was down 14.9 percent to $2,828 per metric ton. During May Mexico imported 14,405 metric tons valued at $42.2 million, up 18.9 percent in volume and 22.3 percent in value.

Imports by the nations of the Caribbean (6,554 metric tons); Canada (2,465); Central America, (3,402), sub-Saharan Africa (2,624) and East Asia (2,094) collectively comprised 17,139 metric tons of turkey products in January-May 2024 representing 19.7 percent of volume and 21.6 percent of total export value amounting to $51.5 million. Unit price was $3,004 per metric ton. Regional unit prices per metric ton ranged from $1,562 for sub-Saharan Africa to $3,772 for Canada.

During January-May 2024 nations increasing volumes of purchases, albeit over a small base, compared to the corresponding months in 2023 with ranking comprised:-

1. Mexico, (+34%); 4. Leeward-Windward Islands, (+35%); 5. South Africa, (1,013%) and 6. Dominican Republic, (+156%)

Nations reducing the volume of imports over January-May included:-

1. Canada, (-17%) and 5. Jamaica, (-32%)

PROJECTION FOR 2024 and 2025

The July 18th 2024 Livestock, Dairy and Poultry Outlook Report, lowered 2024 exports of broiler products to 3.068 million metric tons (6,744 million lbs.). This value represents 14.4 percent of the projected production of 21.227 million metric tons (46,700 million lb.) of broiler RTC by the U.S. industry.

For 2025 exports of broiler products were forecast at 3.084 million metric tons (6,784 million lbs.), equivalent to 14.6 percent of forecast annual production of 21.614 million metric tons (47,550 million lbs.)

Projected export of turkey products in 2024 will be 240,910 metric tons, (530 million lbs.) or 10.0 percent of annual production of 2.400 million metric tons (5,234 million lbs.).

For 2025 export of turkey products in 2025 is forecast at 237,901 metric tons (515 million lbs.) equivalent to 9.7 percent of forecast annual production of 2.418 million metric tons (5,320 million lbs.)

It is important to recognize that exports of chicken and turkey meat products to our USMCA partners amounted to $1,264 million in 2021, $1,647 million during 2022 and $1,696 in 2023. It will be necessary for all three parties to the USMCA to respect the terms of the agreement since punitive action against Mexico or Canada on issues unrelated to poultry products will result in reciprocal action by our trading partners to the possible detriment of U.S. agro-industries. This is especially important as Mexico has elected a new Presidenta and a change in the Government of Canada is predicted.

The emergence of H5N1strain avian influenza virus with a Eurasian genome in migratory waterfowl in all four Flyways during 2022 was responsible for sporadic outbreaks of avian influenza in backyard flocks and serious commercial losses in egg-producing complexes and turkey flocks but to a lesser extent in broilers. The probability of additional extensive outbreaks of HPAI over succeeding weeks appears less likely as spring migration of waterfowl has concluded. Incident cases in 2024 comprised 1.3 million commercial-level meat turkeys and 70,000 breeders through July 12th. Additional outbreaks affecting egg-production and turkeys will be a function of shedding by migratory and domestic birds and possibly mammals. The extent of protection of commercial flocks at present relies on the intensity and efficiency of biosecurity including wild-bird laser repellant installations, representing investment in structural improvements and operational procedures. These measures are apparently inadequate to provide absolute protection, suggesting the need for preventive vaccination in high-risk areas for egg-producing, breeder and turkey flocks.

The application of restricted county-wide embargos following the limited and regional cases of HPAI in broilers with restoration of eligibility 28 days after decontamination has supported export volume for the U.S. broiler industry. Exports of turkey products were more constrained with plants processing turkeys in Minnesota, the Dakotas, Wisconsin and Iowa impacted. Most nations have now lifted embargos that were previously placed on entire states or counties following outbreaks in the 4th quarter of 2024 as the WOAH mandated post-decontamination period has expired. The challenge will be to gain acceptance for vaccination based on intensive surveillance. It is now accepted that H5N1 HPAI is panornitic in distribution among commercial and migratory birds across six continents. The infection is now seasonally or regionally endemic in many nations with intensive poultry production, suggesting that vaccination will have to be accepted among trading partners as an adjunct to control measures in accordance with WOAH policy.

The live-bird market system supplying metropolitan areas, the presence of numerous backyard flocks, fighting cocks and commercial laying hens allowed outside access, potentially in contact with migratory and now some resident bird species, all represent an ongoing danger to the entire U.S. commercial industry. The live-bird segments of U.S. poultry production represent a risk to the export eligibility of the broiler and turkey industries notwithstanding compartmentalization for breeders and regionalization to counties or states for commercial production.

Following acquisition of Sanderson Farms by a consortium comprising Cargill Inc. and Continental Grain as Wayne-Sanderson Farms, inevitable downsizing is taking place.  Press reports note that as many as forty administrative workers at the previous Sanderson Farms headquarters in Laurel, MS. will become redundant.

The benefits of mergers and acquisitions are achieved through combining and consolidating services and administrative functions, thereby reducing costs, necessary in a competitive industry.

Faced with declining liquidity and high debt, Beyond Meat (BYND) negotiated a convertible bond offering in 2021 to survive.  Since then, the company has failed to increase revenue, develop new markets or stem extensive and regular quarterly losses.  The Company is now in discussion with bondholders concerning a restructuring of the balance sheet. Despite tweaking products, packaging and promotion, the reality is that the company is heavily in debt, facing deadlines on $1.1 billion in convertible bonds. Management has lost the confidence of analysts, shareholders, customers, consumers and the financial community. 

Basically, the demand for non-competitively priced plant-based substitutes for meat evaporated after the 2019 IPO with a downhill progression in share price from a July 28 2020 high of $244.  Currently, Beyond Meat convertible notes trade at an 80 percent discount and market capitalization of $397 million on July 22nd is 110 percent lower than the equivalent month in 2023.Twelve month trailing operating and profit margins are respectively -70.7 and -102 percent. The 52-week range in share price is a decline from $17.24 to %5.58 with a 50-day moving average of $7.04. Effective March 30th at the end of Q1 2024 BYND had an accumulated deficit of $1,135 million. 

Basically, Beyond Meat is a company with a great future behind it.

The National Chicken Council (NCC) supported by poultry associations in fourteen states has requested a six-month extension of the period to respond to proposed rules relating to contracts.  The Fair and Competitive Livestock and Poultry Markets Rule and the Poultry Grower Payment Systems and Capital Improvement Systems Rule have profound implications on the relationship between integrators and growers.  Accordingly additional time is required for producers to evaluate the implications of the rules and to respond accordingly.

Tom Vilsack the Secretary of USDA  introduced similar far-reaching changes under the Packers and Stockyards Act during his previous term of office in the Obama Administration.  Through his current tenure, Secretary Vilsack has advanced changes to the structure of U.S. meat and poultry production to the detriment of large packers and integrators. He has expended vast sums of taxpayer money on promoting alternatives including small local processing facilities, favoring tribes and minorities in so-called underserved communities.  It is doubtful whether the request for an extension will be granted since the end of the requested response period will extend to February 2025 at which time it is highly likely that the Secretary will no longer be in office and rules that are implemented may well be rescinded by his successor as occurred in 2017.

According to an FDA release, FGF Brands Inc. has recalled 12,000 cases of chocolate chip muffins supplied to Aldi.  The muffins were distributed nationwide and were packed in four-count containers. The recall was issued following disclosure that walnuts were incorporated in the product without appropriate label disclosure.

In reviewing the causes of recalls, more than half were attributed to mislabeling usually relating to designated allergens.  Collectively these recalls represent a considerable wastage of food and a substantial risk of adverse reaction among those sensitive to allergens including milk, nuts and soybean proteins.  Recalls due to mislabeling and are caused by failures in quality control procedures in food packing plants. Fortunately many recalls are initiated by manufacturers following in-plant recognition of errors. This expedites recall and avoided possible adverse health events.

Failure to regulate and document batch sizes may result in extensive recalls.  This especially the situation with ground meat products including turkey with a failure to identify and isolate production lots.  This is illustrated by the demise of Hudson Foods in 1997 following a ground beef recall of 25 million lbs. and the 2011 recall of 36 million lbs. of ground turkey processed by Cargill.

Concurrent with the Food Taipei Mega Show attended by more than 47,000 visitors, USAPEEC arranged a Gratitude Dinner for members of the Poultry Association of the Republic of China.  The Association, founded in 1993, has more than 200 members throughout Taiwan and is involved in the trade of both domestic and imported chicken.

Taiwan has experienced shortages of chicken due to outbreaks of HPAI in previous years including 2023.  Currently with restocking, there is a temporary over-supply with a sharp decline in wholesale prices expected to persist for many months.

USAPEEC maintains a close relationship with the Poultry Association and the Poultry Sales and Development Association of Taiwan given their respective roles in both production and importation.

During 2023, 3rd-ranked Taiwan imported 272,289 metric tons of U.S. chicken products valued at $352 million, and respectively 16 and 24 percent higher in volume and value compared to 2022.

Using funding provided by the Indiana Soybean Alliance, USAPEEC recently conducted a combination in-person and zoom program to promote products using U.S. turkey meat.  This was the fourth in a series of eight workshops and was led by Ruben Mora, Chef Consultant to USAPEEC.  Under his guidance, workshop attendees prepared a turkey sriracha crispy bowl with ingredients provided by Dos Familias.

In 2023, Mexico imported 150,510 metric tons of turkey meat valued at $426 million, up 16 percent in volume from 2022.  For the first four months of 2024, Mexico imported 51,818 metric tons of turkey meat valued at $145 million, with a unit price of $2,798 per metric ton.  Mexico is consistently the leading importer of turkey meat, far exceeding any other nation or region

Following a “selective role elimination”  (read layoffs) in February, Upside Foods has now terminated an unspecified number of employees at their sole Emeryville, CA. facility.  Since 2015 the company has raised $608 million from venture capital investors.  To date Upside Foods along with competitors has been unable to transition from pilot level cell culture in roller bottles to commercial production in bioreactors.

In a recent presentation, Dr. Uma Valeti trotted out the usual homilies regarding enhanced sustainability and limiting greenhouse gas emissions that are in any event widely disputed, as justification for the future of cell-cultured meat.  Valeti appears to ascribe lack of progress in consumer interest and commercialization to legislative action either as outright banning on sale of cell cultured meat in specific states or onerous labeling requirements.  The problem facing the aspirant manufacturers of cell-cultured meat relate to their collective inability to produce at scale. Projections of cost, failed promises following unsubstantiated hype over availability and questions concerning quality have created skepticism among potential consumers.  Recent studies conducted by Purdue University suggest that consumers are satisfied with their present diets and although there is some curiosity, wide-scale replacement of beef, pork and chicken with cell-cultured alternatives is unlikely even if price and availability were not negative attributes.

Despite previous hype and subsequently proven misinformation, Upside Foods acknowledges that it is not ready for “prime time” and is considering a hybrid product combining some cell cultured meat with plant-based protein.  Dr. Valeti claims that the Company will be adding additional cultivators at the Emeryville plant “for larger and more efficient scale by maintaining the taste, quality and safety that we’ve been able to consistently achieve at the 2,000-liter scale.”  This claim is contradicted by ex-employees who maintain that the company has never achieved consistent production using bioreactors.  Valeti confirmed that Upside Foods is still using 2-liter plastic flasks and has failed to market other than hand-processed product in limited quantities for a gourmet restaurant.

Good Meat, an iteration of entrepreneur Josh Tetrick, is facing large claims for non-payment of debt associated with orders for bioreactors. Companies operated by Tetrick are “developing new cell lines to enable more efficient large-scale production.” This statement suggests that the Company has drawn in its horns and is apparently not contemplating large-scale cultivated meat production, presumably based on an inability to raise funds.

It remains to be seen whether Believer Meats, a company that originated in Israel and is building a production facility in North Carolina will achieve commercial production following anticipated regulatory approval. 

After committing as much as $3 billion to developing cell-cultured meat technology neither venture capitalists nor aspirant producers have anything remotely commercial to show for their investment.  Cell-cultured meat has a great future behind it.

Home Market Foods will convert the former Carla’s Pasta production plant in South Windsor, CT., to produce hot dogs and sausages for convenience stores across North America.  The investment of $70 million in the project will allow production to begin during mid-2025 to expand the capacity of the Company.  Installations will incorporate energy efficiency and sustainability. Conversion of the plant to meat items will create 210 new positions with recruitment underway for engineers, technicians and supervisors.

The current fragmented approach to establishing the epidemiology of bovine influenza-H5N1 is clearly inhibiting progress in gaining an understanding of the disease in order to implement preventive action.  Federal regulators, state departments of agriculture, public health agencies and the dairy industry evidently have divergent objectives. There is clearly no central authority to coordinate surveillance and allocate resources to develop and implement a common response plan. 

Surveillance of herds and workers should be intensified, to determine the extent of infection that may be far broader than currently recognized.  Whole genome sequencing of isolates should be implemented in cooperation with international WHO reference laboratories to monitor for changes that may predict the emergence of a zoonotic strain.  Parallels between the USDA response to bovine influenza-H5N1 is eerily reminiscent of the situation in China regarding COVID in 2019 or the emergence of SARS two decades earlier.  Time is critical in developing a response to an emerging livestock and potentially zoonotic infection.

 Appropriate action taken now will potentially save herds, flocks and lives and the cost of a response should there be changes in the virus that enhance the capacity for human infection and contagion.  Wishful thinking expressed as “If we can stop the movement of cattle and improve biosecurity we can eliminate the virus” appears to characterize the current USDA position. This represents an attitude of institutional self-denial that could have dire consequences for the U.S. milk industry, public health and the economy of the U.S.

In their quarterly Global Poultry Review, Rabobank anticipates a 1.5 to 2.0 percent year-over-year expansion in global broiler production.

Consumption will be driven by increased spending power with demand for value-added products.  A decline in feed cost representing more than 65 percent of live bird expenditure is  currently beneficial, but ingredient prices may rise as a result of climatic extremes and freight-related cost influenced by geopolitical events.  Avian influenza is now endemic in many areas of the world and will be an important consideration during the winter seasons in both the northern and southern hemispheres respectively.

Overproduction in China will continue and will constrain imports.  This will result in the U.S., Brazil and possibly Russia searching for other markets for low-priced commodity products including leg quarters and even feet.

According to the Industry Meat Export Association, ABPA of Brazil, chicken exports during June were 0.8 percent higher than the 2023 monthly average, attaining 431,400 metric tons.  Increased exports are apparently at the expense of the U.S. according to Luisor Rua, Market Director for ABPA.

Brazil has achieved market penetration in Latin America including Mexico and Chile offsetting the loss to China, with a 29 percent reduction based on domestic oversupply in that nation.

Increased exports have come at a cost with value declining by 10.3 percent over the first half of 2024 compared to the corresponding months in 2023 at $4.64 billion.

Maple Leaf Foods has announced that the pork business will be spun off, creating two separate public-traded companies. It is presumed that Maple Leaf will continue to operate the chicken business and the previous plant-based segment. Maple Leaf Foods will retain 20 percent of the pork business and will continue to incorporate pork into the company supply chain in accordance with a long-term contract to support the range of value-added, branded products sold in North America.

Curtis Frank, President and CEO of Maple Leaf, noted, “This transaction is the start of a new era to unlock the full potential of two outstanding businesses each with a distinct value proposition and growth opportunities.” The proposed pork company will be led by Dennis Organ as CEO.  He previously served as the President of the company pork operations.

Michael H. McCain, Executive Chair of Maple Leaf Foods, stated, “This is the right transaction at the right time as we move forward with our sustainability vision seeking to create value for all stakeholders.”

The most recent quarterly report for Maple Leaf Foods can be accessed by entering “Maple Leaf” in the SEARCH block.

Smithfield Foods, a wholly owned subsidiary of WH Group, a public traded company in China is considering an initial public offering.  The Company acquired in 2013, has engaged Goldman Sachs, Morgan Stanley and Bank of America to facilitate the IPO that would raise up to $1 billion.

WH Group led by Chairman Wang Long with 17 percent of the equity, is the largest Pork producer in the World. Smithfield Foods is the leader in volume in the U.S. The Company has responded to declining margins and adverse market conditions by consolidation, closing unprofitable plants and mothballing breeder farms with layoffs of workers and other personnel. 

For Fiscal 2023 the WH Group earned $629 million on revenue of $26,236 million representing a decline in income of 54 percent from FY 2022.

Effective July 1st, Chad Groves has been appointed president and CEO of Seaboard Foods.  Groves joined the Company three years ago as Senior Vice-president of Global Sales, Marketing and Innovation.  He was previously affiliated with Trilliant Food and Nutrition LLC and served as a Board member and Treasurer of the National Pork Board.

In accepting the position, Groves stated, “ I’m excited to lead Seaboard Foods and my focus will remain committed to bringing excellence to the table and finding innovative ways to add value to our connected food system”.

Seaboard is the majority owner of Butterball LLC. a major U.S. turkey integrator

In 2001, Mountaire Farms settled a lawsuit with 800 members of a class alleging contamination of subterranean water as a result of inadequate effluent treatment. As a condition of the settlement, Mountaire upgraded water treatment at their Millsboro, DE. plant involving the expenditure of $120 million.  The settlement settled a dispute over a 2017 wastewater permit issued by the Delaware Department of Natural Resources and Environmental Control.

More recently, a family with a child born with developmental defects has claimed that they were improperly advised at the time of the settlement that provided inadequate compensation for the costs that will be incurred.  A Delaware Superior Court judge has ruled that the family was adequately advised concerning their rights to opt out of the settlement and that there is insufficient evidence to implicate the disabilities with alleged contamination by Mountaire Farms.  The case is now being appealed to the Delaware Supreme Court with the family represented by a prominent legal firm with expertise in claiming compensation for environmental contamination.

Should the family be successful in their appeal, and prevail in a subsequent action, the precedent that will be established will have implications for the livestock industry both at the CAFO and processing plant levels.

Alco, a leading Mexican processor featuring high-quality U.S. chicken meat, launched its new line of value-added chicken products at Soriana, a popular retail chain in Mexico City recently, with USAPEEC Mexico hosting a workshop with participation to celebrate the launch.

The workshop attracted 87 attendees, 80 of whom received ingredients kits featuring chicken fillets donated by Alco. USAPEEC Marketing Consultant Carlos Garcia hosted the workshop, which included a live demonstration by chef Ruben Mora who showcased product versatility and taste by preparing chicken fillets stuffed with poblano chili and cheese.

The one-hour workshop was live-streamed on Zoom, allowing viewers to participate in the culinary experience. This workshop was the third of six events planned by USAPEEC Mexico.

For additional details contact Liliana Solis USAPEEC Marketing Manager at <lsolis@usapeec.org.mx>

Welfare activists have promoted the Better Chicken Commitment in Europe through exerting pressure on retail chains, food service companies and restaurants. The Better Chicken Commitment requires the use of slow-growing strains, low stocking density and enrichments in growing houses.

At the outset there is no evidence that the requirements imposed under the Better Chicken Commitment standards actually improve welfare over and above the standards adopted by the Association of Poultry Processors and Poultry Trade in the E.U. (AVEC) that approximate NCC standards in the U.S. 

A recent study commissioned by AVEC conducted by RSK ADAS Ltd. an agribusiness consultancy has quantified the impact of the Better Chicken Commitment standards.  This study Cost and Implications of the European Chicken Commitment in the E.U. determined:

• An additional production cost of 37.5 percent per unit of RTC

• A 35.4 percent increase in water consumption

• A 35.5 percent increase in feed consumption requiring an additional 7.3 million tons of feed for E.U. nations.

• A 24.4 rise in greenhouse gas emissions per unit of RTC weight produced.

• A reduction in 44 percent in the total meat produced compared to existing standard production parameters (6.2 lbs./ft2 stocking density).  If the Better Chicken Commitment stocking density were to be applied, to maintain current production, close to 10,000 new broiler houses would be required with an investment of $9 billion.

Dr. Birthe Steenberg, Secretary General of AVEC stated, “The unique aspect of this study lies in the emphasis placed on calculating costs per unit weight of RTC unlike previous research that focus solely on consequences for live birds or live weight that does not acutely reflect market realities since we sell meat not live animals”.

Dr, Jason Gittins, Technical Direct for ADAS stated, “Due to differences in meat yields between current standards and the Better Chicken Commitment earlier studies underestimated the true impact of the requirements of the Better Chicken Commitment.

Gert-Jan Opelaat, president of  AVEC noted, “While the Better Chicken Commitment aims to improve animal welfare it is crucial to recognize that these improvements come with significant economic and environmental implications.”  He added, “Consumers should have the choice to select higher welfare products if they wish but it is crucial that standard, affordable options remain available.

It is axiomatic that opponents of intensive livestock production attempt to impose anthropomorphic parameters on producers that result in increases in cost.  Essentially advocates of systems such as the Better Chicken Commitment gain a sense of self-satisfaction from reducing the potential demand for chicken based on elevated price.  These promoters of “welfare” are not content to suggest adoption of enhanced welfare standards on a voluntary basis but are coercing retailers and the food service and restaurants segments of the distribution industry into adopting standards without considering the cost implications for consumers.  Advocates for systems such as the Better Chicken Commitment ignore the reality that they are spending other people’s money. This is evident in the “Pacelle Tax” paid by California egg consumers following introduction of Proposition #2.

The 91st General Session of the World Organization for Animal Health (WOAH) adopted the Revised International Standards on Animal Welfare During Slaughter.  The standard will be incorporated in Chapter 7.5 of the Terrestrial Code.  The standard allows for animal-based measures to assess the level of welfare and stipulates the need for remedial and corrective action as required.  Aspects of the standard include structure and surfaces of abattoirs, installation of equipment to prevent injury, adequate lighting and appropriate stunning. 

Establishing a uniform standard will be important with respect to international trade and should raise the level of welfare associated with meat and poultry production.

Faced with a domestic oversupply of pork, officials in China are evaluating whether to impose anti-dumping duties on pork from the E.U.  China has conducted an “investigation” into costs pertaining in Europe. The real issue is the imposition of anti-dumping duties on Chinese electric vehicles (EVs) manufactured with presumed subsidy support from the Government of China. Canada has joined the E.U and the U.S. in excluding EVs from China in their respective markets.

China is extremely sensitive to imposition of duties on their products and invariably retaliates with reciprocal action. Two successive U.S. Administrations have imposed and maintained duties on a range of subsidised imports from China. With the possibility of an intensification of a trade war, producers of soybeans, corn and wheat should prepare for a decline in export volume and value.  Entreaties by the American Soybean Association to keep food out of trade wars will be unlikely to sway China.  This nation is committed to self-benefit and will import U.S. agricultural commodities as and when required. Imports by China take into account prevailing landed prices and there is no sentiment in international trade in commodities. This reality should be factored into consideration with respect to 2025 planting intentions.

Following acquisition of Sanderson Farms by a consortium comprising Cargill Inc and Continental Grain operating as Wayne Farms, inevitable consolidation and downsizing is taking place.  Press reports note that as many as forty administrative workers at the previous Sanderson Farms headquarters in Laurel, MS will become redundant.

The benefits of mergers and acquisitions are associated with combining service and administrative functions thereby reducing overhead costs. This is necessary ­­­in a competitive industry.

In comments delivered at the Wall Street Journal Global Food Forum, Joe Erlinger, President of McDonald’s U.S., confirmed that his company had no interest in serving plant-based burgers for the U.S. market. He stated, “U.S. consumers aren’t coming to McDonald’s looking for the McPlant or other plant-based proteins.”  This conclusion was based on a one-year test conducted between 2021 and 2022 in both San Francisco and Dallas. In contrast, plant-based meat alternatives are acceptable in the E.U. and U.K.

It is understood that other QSR chains have trialed plant-based burgers without success.  It remains to be seen whether plant-based ersatz chicken nuggets will be more successful.  Given current prices of real and alternative meat products, it is doubtful whether plant-based products will gain traction in mainstream chains.

Authorities in Canada have reported a series of outbreaks of metapneumovirus (AMPV)in turkeys and chickens to the World Organization for Animal Health.  The 10 cases in Ontario involved four commercial chicken farms and the remainder turkeys.  Manitoba has reported one incident case in turkeys.  Isolates from Ontario yielded MPV-B variant from nine farms and one case of MPV-A with this same variant from Manitoba.

In turkeys AMPV is referred to as turkey rhinotracheitis presenting clinically as an upper respiratory infection with swollen heads.  Egg production in mature turkey flocks drops sharply with a deterioration in shell quality.  Broiler chickens demonstrate a similar syndrome to turkeys with pronounced swelling of the subcutaneous tissues of the head.  Laying hens are either asymptomatic or show mild respiratory signs with depressed egg production.

Popeyes Louisiana Kitchen has introduced boneless wings as a permanent menu item nationwide.  The product will be available in a range of flavors and prepared from all-white chicken meat coated with a batter.

It is questioned why boneless wings are prepared using white meat. Cost would be reduced and texture improved with incorporation of a high proportion of dark meat

Popeyes has engaged the services of Jimmie O Yang to promote the product.

Following the June 25th announcement of the “Fair and Competitive Livestock and Poultry Markets Rule”, the National Chicken Council and the Meat Institute issued strong objections to what is regarded as a heavy-handed solution to a nonexistent problem.

The interim president of the National Chicken Council, Gary Kushner, himself a veteran member of the bar stated, “Eight different Federal Circuit Courts of Appeal have addressed the key issues under pending the proposed Rule, entitled “The need to establish injury to competition to demonstrate a violation.”  The statement continued, “Rather than accept the Courts’ decisions Secretary Vilsack and this Administration are trying to circumvent Congress, has misused the lawmaking process to achieve what they have not won in court and what Congress has never authorized.”

The NCC correctly maintains that the proposed rule will lead to frivolous lawsuits and expensive litigation.  This consequence is apparently encouraged by Assistant Attorney General Jonathan Kanter who has openly expressed a hope that plaintiffs will file a Packers’ and Stockyards Act claim against broiler integrators.

The NCC characterized the Rule as “ill-advised” and would have unintended consequences including increased costs for consumers.

According to the Kazakhstan Investment Agency, a complex planned to produce 240,000 tons of RTC annually will be established near Almaty in Kazakhstan.  The project has a projected price tag of $600 million and will be the largest in the Commonwealth of Independence States comprising eight nations formally part of the Soviet Union.

Given the projected volume corresponding to 2.5 million broilers of 4lb RTC the capital cost is unrealistically low for the stated level. Assuming the need for breeder farms, hatchery, growing houses, feed mill and processing plant following the Eurasian model, either the volume is overstated or the cost as reported is incorrect, even without a provision for land.

According to recent comments by Hormel CEO, James P. Snee, the Company will expand product scope to capture new distribution channels. Hormel will promote products including snacks comprising their Planter’s Nut brand and a range of pork and turkey products through convenience stores that offer potential for increased sales.  Hormel is also promoting Jennie-O ground turkey through retail channels despite indications of oversupply.  Hormel is also accessing the market for pizza toppings and sliced meats.

Initiatives to reduce costs have been implemented through streamlining the supply channel and application of technology. The implied benefits of improved planning and execution will be evident in subsequent quarterly reports according to Snee.

Before the Dunlop, ONT strike was settled, The Canadian Cattle Association, the National Cattle Feeders Association and Beef Farmers of Ontario issued a statement urging UFCW and Cargill to resolve issues.  Workers closed the plant on May 27th over  wages, benefits and security.  The plant was responsible for processing over 70 percent of cattle in Ontario and the eastern region of Canada.  The situation was exacerbated by the strike vote taken by workers in Cargill plants in Alberta who have threatened labor action in support of the Ontario UFCW Local 175.

The joint statement issued by the producers’ organizations included “Canadian beef producers rely on a strong and stable supply chain to get beef to Canadian and our global customers as efficiently as possible.”  The statement added, “While we fully respect and support the collective bargaining process we cannot turn a blind eye to the effect this stalemate is having on our beef industry.   Accordingly the UFCW Locals involved reached a tentative agreement  with Cargill that was approved by rank and file over the July 6th weekend.

USAPEEC participated in the 12th edition of the Alimentec Trade Show, held recently in Bogotá, Colombia. This nation is the third-largest economy in Latin America, with a population of 50 million and a growing middle class, representing a large potential market.

Alimentec is the premier platform for the food, beverage, and hospitality industries in the Andean region, the Caribbean, and Latin America and offers an ideal opportunity to showcase food products and services for the HRI, retail, and supermarket sectors of Latin America.

More than 30,000 attended the Show, allowing USAPEEC to expand its network of contacts. From visitors to the USAPEEC booth, 158 contacts were made with companies in the region allowing USAPEEC to provide information about members and their products. Francisco Palmieri the U.S. Embassy Charge D’Affaires to Colombia visited the USAPEEC booth.

In 2023 Central and South America combined with the Caribbean imported 851,326 metric tons of broiler products representing 23.4 percent of exports. Value attained $1,093 million, equivalent to 23.1 percent of the total and with a unit price of $1,284 per metric ton.

Aviagen North America completed the 61st Annual Production Management School on June 27th in Huntsville, AL.  The event was attended by 35 students from 20 nations and extended over a month. The Production Management School included both classroom instruction and practical farm experience. Students visited the Production Development Center in Albertville, AL, the Egg Distribution Center and Veterinary Laboratory in Elkmont, AL and the Pikeville, TN. Feed Mill and the National Poultry Technology Center at Auburn University.

The Aviagen approach is to “train the trainer” providing knowledge and experience that can be shared with colleagues in their home operations Course topics included welfare, biosecurity, compartmentalization, promoting food safety, vaccination and disease management and operation of hatcheries among 35 items covered. The four-week program allowed students to interact and exchange ideas and to establish team-building activities.

Dr. Marc DeBeer president of Aviagen North America stated, “Our goal with the North American School is to give our customers valuable perspectives on effective management techniques that are proven to enhance both broiler and breeder welfare, sustainability and productivity in poultry operations.”

For additional information on the Aviagen Production Management School, access the Aviagen website by clicking onto the Company logo on the right side of the Welcome page.

In a July 1st release, USPOULTRY announced the 2024 National Safety Conference for the Poultry Industry to take place August 19th-21st at the Hilton Sandestin Beach Golf Resort and Spa in Destin, FL.

Topics to be considered include a Washington update; Establishing a culture of safety and health; Onboarding and safety training best-practices; Sanitation safety best practices; Processing hazard analyses; Handling inspections and the new walk-around rule.

The meeting will allow an opportunity for networking and the exchange of knowledge.

The agenda and registration details are available on www.USPOULTRY.org.

In 2018, the previous Administration imposed Section 301 tariffs on imports from China.  This resulted in retaliatory tariffs, placing U.S. pork in a non-competitive situation relative to the E.U.  Pork imported from the U.S. carries a 25 percent tariff over and above the most-favored-nation rate of eight percent.

Section 301 tariffs were retained by the current Administration and are regarded by agricultural exporters as onerous.  Despite the Phase One Agreement, China, predictably dragged its feet on establishing an approved establishment list and effectively failed to comply with the Agreement.  China also requires certification that pork is derived from herds fed either ractopamine (justified) or Codex-approved beta agonists (unjustified). 

With the 12th state reporting bovine influenza-H5N1, and with over 120 confirmed herds as of June 10th, USDA is faced with a problem of transparency.  Daily updates of websites should be achievable.  Release of isolates for genome sequencing is essential with participation by WHO influenza reference laboratories in the U.S. and in Europe. Simply beating the drum of improving biosecurity pays lip service to the emerging problem.

It is fortunate that heat treatment inactivates the virus in fluid milk so pasteurized milk and dairy products should be safe to consume.  The question of transmissibility to human contacts appears to be extremely limited at present but it will be critical to continually monitor for mutations that may facilitate infection of human respiratory tissue.  At the present time all three identified patients who contracted H5N1 infection demonstrated conjunctivitis (with only one displaying mild upper respiratory signs).  This is due to the fact that conjunctival tissue along with bovine mammary glands contains sialic receptors to both avian and mammalian strains of H5N1.

In a ProMED posting moderator JH questions whether the USDA will initiate surveillance of beef cattle in feed-lots to establish whether infection has entered these herds.  JH opined “Given the geographic coverage of the USDA map, odds are not in our favor that beef cattle haven’t been infected.  Until a few months ago spill-over of H5N1 into bovines was reviewed as unlikely even though infection with several influenza A variants have occurred on a limited basis previously in cattle.  Even cow-calf operations may be at risk, given that their water may be contaminated by free-living birds excreting H5N1 virus, known to survive for prolonged periods in water containing organic matter. 

Is the reluctance to establish a limited testing problem based on the presumption that it is best  not to turn over rocks unless one knows what might be under them?  Assay of muscle tissue from culled dairy cows subjected to antemortem condemnation has yielded H5N1 virus.  The implications for asymptomatic infection of beef cattle are self-evident.  Fortunately it has been shown that heat treatment adequate to kill foodborne bacteria infection inactivates H5N1 virus.

At the present time the CDC is calling for all milk from herds with cases of bovine influenza-H5N1 to be withheld from market. This recommendation is based on prudence, notwithstanding the effectiveness of pasteurization. If this policy were to be implemented there would be absolutely no voluntary reporting of cases and a call for federal indemnification. Steve Naig, the Iowa Commissioner of Agriculture has called for Federal compensation for herd operators to cover losses. A proportion of affected dairy cows have either died from H5N2 infection or have been culled as a result of chronic low lactation with unsalable milk.

The USDA-FSIS has proposed an effective zero tolerance for any Salmonella contamination in raw, stuffed chicken products.  Opposition to the proposal is probably unjustified although is based less on risks associated with the specific product than the fear of extension to a wider range of chicken preparations.  It is a matter of record that Attorney Robert Marler has submitted a petition to FSIS to designate numerous known pathogenic Salmonella as adulterants in all chicken whether whole birds, portions or further processed items.

The situation with regard to raw, stuffed chicken products does not represent a major food safety concern. Over the past 25 years there have been 14 outbreaks and 200 illnesses

attributed to raw breaded products. These represent less than 0.1 percent of total consumption of chicken by volume but five percent of all chicken associated outbreaks.

The industry has justifiably contended that labeling should be adequate to inform consumers of the need to thoroughly cook raw breaded or stuffed chicken products. Unfortunately microwave reheating allows Salmonella and other potential pathogens to survive.  The National Chicken Council noted, “There is no silver bullet nor a one-size-fits-all approach to food safety which is why we employ a multi-level strategy.”  The NCC invokes science-based procedures and recommends handling and cooking properly in home and institutional kitchens. 

From the perspective of an academic and a past researcher on Campylobacter infection, it is questioned why breaded and stuffed products are sold as raw rather than cooked presentations.  If Salmonella is regarded as a risk, cooking during production would eliminate the problem. Since stuffed chicken products are marketed as lightly browned they create the deceptive perception of having been cooked. Labeling cannot overcome stupidity or negligence.  If there are organoleptic reasons to continue marketing a raw, stuffed chicken product, irradiation using electron beam treatment could be applied as an effective kill step.  By the same token, IQF products could also be free of non-spore forming bacterial pathogens including Salmonella, Campylobacter and Listeria.

It is highly likely that the FSIS will enforce the status of Salmonella as an adulterant for raw products irrespective of the opposition by the NCC. The possibility of FSIS extending restrictions beyond stuffed products to a wider range of chicken presentations is a consideration of concern.