Poultry Industry News

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.

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.

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.

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.

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.

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

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.

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.

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.

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.

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.

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.

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

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.

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.

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.

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 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). 

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

According to an SEC 8-K filing, Tyson Foods announced that Curt Calaway would be appointed as the Interim Chief Executive Officer.  Calaway is an 18-year veteran of the company and has served in numerous corporate positions involving finance.  He was the Senior Vice-president of Finance and Treasurer in 2021 and has participated in M&A, risk finance and related activities.

Previous to his tenure at Tyson Foods, Calaway served in various positions of responsibility with PricewaterhouseCoopers for eleven years.

A case was filed by United Food and Commercial Workers (UFCW) Local 401 concerning he death of three workers from COVID was arbitrated in favor of the employer Cargill Inc.  The Union alleged that Cargill failed to protect their workforce at the High River plant.  During April, Cargill closed the plant for a two-week period since there were insufficient employees to maintain operations.

The UFCW demanded that Cargill pay each employee CAN$10,000 and the Union CAN$100,000 amounting to approximately CAN$20 million The arbitrator, James Casey, noted the limited scientific information available as to the transmissibility and routes of infection of SARS-CoV-19 in April 2020.  Initial advice issued by medical authorities in the U.S. and Canada was based on the assumption that the disease was analogous to seasonal influenza requiring distancing and cleaning of surfaces.  It was not until a few months into the pandemic that scientists were able to demonstrate that the disease was transmitted by airborne droplets.  This route played a role in transmission among workers not only in plants but during commuting, social gatherings and in homes.  Epidemiologic investigations ultimately identified 1,500 cases linked to the outbreak in the plant with 951 employees seroconverting to SARS-CoV-19, representing half of the plant workforce.

James Casey noted, “It is not appropriate to second-guess Cargill’s decision based on current scientific knowledge about COVID-19 and current regulatory advice.”  Casey did criticize Cargill for failing to communicate with the Joint Health and Safety Committee in the plant to address hazards. Damages were not awarded for this failure characterized as a “narrow but important deficiency”. 

The decision by an arbitrator in Canada does not establish case law in either that nation or the U.S.  Courts will, however, follow the same logic in determining that packing plant operators cannot be held responsible for actions taken based on available scientific knowledge and the advice of health authorities.

Following the accidental exposure of two workers to ammonia, the Occupational Safety and Health Administration (OSHA) conducted an intensive evaluation of worker safety during January 2024.  The Agency identified 40 serious violations in addition to other minor problems.  Items noted by OSHA and are possibly common to other packing and processing facilities included: -

• Inadequate lock out/tag out procedures.
• Failure to implement a hazard communication plan.
• Unmarked exits.
• Unsafe electrical equipment and installations.
• Exposure to noise.
• Lack of PPE.
• Unsafe walking surfaces and lack of protection from falls.

HK Cooperative employs 370 workers in the J.H. Routh Packing Company plant in Sandusky, OH. OSHA assessed more than $500,000 in penalties for violations with the amount to be appealed.

Susann Johnsson was appointed to the position of Group Vice-president for Communications and Brand effective July 1st. She joined Munters in 2021serving as Vice-president for Communications. She has extensive experience in communications and marketing.

Kaspar Kirchmann was appointed to the position of Group Vice-president responsible for legal affairs and will also serve on the Executive Management Team. 

Klas Forsstrom, President and CEO of Munters welcomed both Vice-presidents to the Executive Management Team based on their experience and strong personal qualities.

Munters is a major manufacturer of ventilation equipment and installations for agricultural and industrial applications. Their range of products can be reviewed by accessing the company website by clicking on to the Munters logo on the right side of the Welcome page

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.

Randy Day Chairman of the National Chicken Council (NCC) has announced the retirement of Mike Brown as president.  Day thanked Brown for his work “In building a strong foundation at NCC and for his years of work to promote the chicken industry.”

Gary Jay Kushner has been appointed to serve as Interim president.  He recently retired from Hogan Lovells where he served as the Outside General Counsel for the NCC.  Day observed, “Gary knows the chicken industry inside and out and the issues that will shape our future.  He is a proven leader with a steady hand and the right person to guide NCC as we select our next president.”

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.

A recent press report noted the 23 percent drop in groundwater levels in areas contiguous with the Guymon, OK. pork-packing plant operated by Seaboard Foods.  Although a major local employer and contributor to the regional economy, the consumption of water by the pork plant will have a deleterious effect on the community.  Similar depletion of subterranean water has occurred in areas adjacent to ethanol plants that use a disproportionate quantity of water.  Agricultural enterprises in California including almond groves and even large egg production complexes and dairies compromise local water supplies by abstraction at rates that are not replenished by precipitation and inflow.

In the short term, packing plants and users of large volumes of water should evaluate reduction and reuse.  This will conserve water for future generations.

In 2022, irrigation of alfalfa fields became an issue in the gubernatorial campaign in Arizona.  A company owned by investors in Saudi Arabia was cultivating and packing alfalfa for export while operating under a “sweetheart” lease allowing ground water abstraction at a low price.

In evaluating local conflicts, especially in arid regions, militant activity is less a function of acreage than the availability of water vital to life.

A recent publication* provided evidence of multidrug-resistant Salmonella serotypes from both commercial broiler flocks and backyard farms.  The study was conducted on ten commercial broiler growing farms and an equal number of backyard flocks. Samples including fecal swabs, soil or litter, feeders and waterers were obtained on days 10, 31 and 52 on production units and similar intervals from backyard farms.

A total of 52 percent of commercial farm samples yielded Salmonella compared to 19 percent of samples from backyard flocks.  Salmonella Kentucky was the most common serotype found in samples from both backyard and commercial flocks.  A third of the Salmonella isolates were classified as multidrug-resistant with ciprofloxacin and nalidixic acid resistance. This was compared to backyard samples with one percent multidrug-resistance recorded. 

The conclusion of the investigators was that the role of production practices in driving multiple drug resistance should be investigated in order to to develop appropriate preventive measures

*Parzygnat, J and Crespo, R. (2023). Megaplasmid dissemination of multidrug-resistant Salmonella serotypes from backyard and commercial broiler production systems in the southeastern United States. Foodborne Pathogens and Disease. doi.org/10.1089/fpd.2023.0181.

Ancera, a Branford, CT.-based technology company has introduced the Allied Company Monitoring Program.  Applying advanced biostatistics supported by machine learning, the system will allow integrators and the manufacturers of feed additives and biologics to design and implement field trials that will quantify the production and financial benefits of dietary supplementation. The Ancera program will assist suppliers of biologics, feed additives, alternatives to antibiotics vaccines and other products to demonstrate product efficacy through third-party validation.

Ancera operates with a dedicated team of biostatistics and field personnel including board-certified poultry veterinarians with experience in management, disease prevention and pathology.

The Allied Company Monitoring Program will provide benefits to integrators who are faced with claims by allied manufacturers wishing to evaluate alternative additives, vaccines or anticoccidial programs.  Progressively, profitability is data driven and Ancera provides input on experimental design, collection of data and interpretation of results to make decisions that add to the bottom line.

For further information access the Ancera website by clicking onto the company logo on the right side of the Welcome page.

According to USDA-FAS GAIN Report TU2024-22, released on June 12th, the Government of Turkiye will impose restrictions on the export of poultry meat to reduce cost to domestic consumers.

 Due to high production costs and low margins, output of chicken will decline by 3.1 percent in 2023 to 2.33 million metric tons (RTC) compared to 2022 at 2.4 million metric tons.  Concurrently chicken meat consumption in 2023 increased to 1.86 million metric tons and is anticipated to be higher at 1.9 million metric tons in 2024.  Accordingly, meat exports will decline by at least half to 270,000 metric tons following the 2024 restriction that will extend from May 1st to December 31st, 2024. 

USDA-FAS recorded a 150 percent increase in retail chicken meat prices over the past six months.  Chicken is the leading animal protein consumed and high price and lower availability have become embarrassing the ruling party that was forced to form a coalition government after the most recent general election.

Reduction in exports by Turkiye, principally to central Asian nations creates opportunities for competitors including Russia, Brazil and the U.S.

Recent press reports indicate the difficulties encountered by alt meat startups in attempting to survive during the critical phase of transition from pilot plant to commercial operation.  As yet, no company has successfully negotiated the gulf between laboratory-scale production and marketing a consumer-acceptable product at scale.

Examples include Upside Foods and Eat Just that were following the Silicon Valley dictum of  Fake it ‘till you make it”.  Mycorena has announced that it will not proceed with a large plant intended to produce a fungal-based product to have been erected in Falkenberg in Sweden.

Preparation of alt-meat products using fermentation of fungi represents one of a number of alternatives to real meat.  Blending a fungal-derived product with ground beef does represent a commercial approach as applied by Mush Foods based in Israel.  Essentially, the fungal component serves as a “hamburger helper” with claims that the diluted product is indistinguishable from 100 percent meat.

The situation with cell-cultured meat producers is, however, dire.  Eat Just, an operation conceived and led by Josh Tetrick, has apparently suspended production in Singapore and is embroiled in litigation with ABEC, the supplier of bioreactors who are claiming over $62 million for equipment and services.

SCIFi Foods has ceased operation as venture capital funding has dried up.  Joshua March, CEO of the failed company, noted, “A tight funding and hostile political environment is preventing the company from raising funds to commercialize a cultivated meat burger.” March noted, “It became effectively impossible for us to raise the tens of millions SCIFi needed for a small commercial launch, much less the hundreds of millions needed for full commercialization.”  This comment encapsulates the stumbling advances demonstrated by the cell-cultured segment of alt meat.

Over-optimistic predictions of demand based on environmental and welfare considerations appear naïve in retrospect.  Technical problems in scaling up from pilot plant operation are currently insurmountable.  Legislators in beef-producing states have advanced legislation either banning or severely restricting the labeling of cell-cultured and plant-based alternatives to beef, pork and chicken.  Surveys, including those conducted by Purdue University, have indicated that demand for alt meat is limited as consumers are satisfied with current diets.  The predicted higher cost of alt meat, especially from cell-culture, will be a barrier to adoption.  The leading public quoted plant-based producer, Beyond Meat, has a questionable future based on a history of continued losses and heavy debt.

Venture capital companies have tightened their purse strings and are now questioning the future of alt meat.  They are looking beyond the hype and deception and embracing reality.

Has anyone out there a use for stainless steel containers, piping, pumps and other hardware?  Going for pennies on the dollar!

The National Cattlemen’s Beef Association has condemned a Department of Defense research grant to BioMADE, an aspirant producer of cell-cultivated meat. It is obviously within the remit of the DoD to fund research leading to enhanced nutrition of service members and for convenience in meal preparation and improved food safety.  It is difficult at face value to ascertain the objective or to justify the grant since venture capital funds have supported, albeit without success, the development of cell-cultured meat that has yet to achieve commercial viability.

The purpose of the grant was for BioMADE to address “conversion of waste streams into bio- products using fermentation and cultivation of protein”.  The position of the DoD would be more acceptable if the specific purpose of project were to be explained providing this does not conflict with the national interest.

Ethan Lane, Vice-president of Government Affairs for the National Cattlemen’s Beef Association noted, “This misguided research project is a giant slap in the face to everyone that has served our country.  Our veteran’s and active-duty troop deserve so much better than this.”  It is presumed that Ethan Lane has at his disposal the terms of reference and conditions of the grant and has confirmed that the BioMADE project either does or does not contribute to military readiness or the national interest.

On May 30th ABEC Inc. filed a motion to compel Good Meat operated by entrepreneur Josh Tetrick.  This action follows the failure of Good Meat to respond to requests for admission and accusing the debtor of “choosing gamesmanship over compliance”.  The submission to the Court stated, “Since this litigation began, Defendants have engaged in dilatory tactics related to discovery-responses are evasive, propound bad faith objections and represent the worst aspects of litigation practice.”

According to the Plaintiff, Good Meat owes $62.6 million for work completed against orders for a series of bioreactors to produce cell-cultured meat.  The original order placed in August 2021 would have required ABEC to install numerous 250,000 liter bioreactors over a seven-year period.  Given problems of cash flow in November 2022, Good Meats reduced the order to five 125,000 liter bioreactors.  Payment was not forthcoming and in March 2023, ABEC initiated legal action resulting in a series of claims and counter-claims by the parties.

In March, Tetrick stated  “he is not intending to raise money for a large-scale cultivated meat facility right now”.  The production facility operated by his subsidiary in Singapore is shuttered.

Over the past two decades, Josh Tetrick has raised hundreds of millions for egg replacement products and more recently, cell-cultured meat without establishing significant cash flow.  It is apparent that his sources of venture capital funding in the U.S. and the Middle East have dried up, corroborating the Lincoln adage about not being able to BS all of the people all of the time.

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 recent World Pork Expo in Des Monies provided allied industry suppliers with an opportunity to interact with clients and colleagues. Hamlet Protein a manufacturer of a soybean meal-derived ingredient for piglets, chicks and poults arranged a breakfast meeting for producers during the event.  Dr. Steve Mayer an agricultural economist, discussed the business environment for livestock producers with future projections.

Pork and poultry meat are competitors in the domestic and export markets but face common challenges including fluctuation in consumer demand, ongoing escalation in production costs from feed and labor and growing pressure on welfare and management of herds and flocks.

Hamlet Protein included in diets for piglets, poults and broiler chicks provide beneficial growth and feed conversion efficiency by compensating for the inadequacies of the developing neonatal digestive system and anti-nutritional compounds in conventional plant protein ingredients.

For additional information click on to the Hamlet logo on the right side of the Welcome page

The Purdue University, Center for Food Demand Analysis and Sustainability recently released results of surveys with diets currently consumed. Combining the two categories, 55 percent were very satisfied with their current diets with 30 percent “rather satisfied” and 15 percent “non very satisfied”. There was little difference between urban and rural residents.

The report noted that given acceptance of the range of foods consumed, introduction of an innovative source of protein including vegetable based or cell-cultured meat would have to offer distinct advantages for adoption even at price parity.

Advocates of cell cultured meat have posted results of surveys showing that consumers would potentially “try” cell cultured meat if it were commercially available.  Even if large-scale production in bioreactors were to become a reality, product would have to correspond to the current prices for ground beef and be equivalent in texture and taste. 

Despite considerable investment estimated in the low billions in cell-cultured meat over a decade, no recipient of funding has been able to consistently market a product in commercial quantity through supermarket or food service channels.  Venture capital investors are questioning the optimistic projections for the technology and are tightening their purse strings.  This is evident in the failure of start-ups. Companies with high cash burn rates that have been in existence for a number of years and have claimed successful production in pilot-scale production are now laying off staff.  No company has yet transcended the barrier between laboratory scale and commercial production despite unsubstantiated claims intended to generate funding.  Passage of restrictive legislation either as outright bans on sale of cell-cultured meat or onerous labeling requirements have inhibited ongoing investment in the sector.

The Purdue University Center for Food Demand Analysis and Sustainability characterize their consumer research confirming satisfaction with the present range of foods as “if it ain’t broke don’t try and fix it.”

In accordance with a recently enacted Oklahoma law, farmers in the state are protected from civil liability with respect to environmental claims providing they function in accordance with a nutrient management plan.  This includes application of poultry waste on agricultural acreage.  The law was enacted following a ruling of a federal court that the state poultry industry was responsible for pollution of groundwater from run-off from land on which poultry litter was spread as fertilizer. 

The law was actively opposed by the Cherokee Nation. The official statement included “When corporate polluters find safe harbor in this new law, we will all suffer including those who supported this industry-written legislation.  Generations unborn will pay the price”.

In a release dated May 30th Hormel Foods (HRL) reported on Q2 FY 2024 ending April 28th, disappointing on the top line but exceeded consensus on adjusted EPS.  For the quarter the company earned a reported (GAAP) $189.2 million on revenue of $2,887 million (Zack’s consensus of $2,987 million) with a diluted EPS of $0.34.  Comparable values for Q2 FY 2023 ending April 30th were net income of $217.2 million on revenue of $2,978 million with a diluted EPS of $0.40.

Compared to Q2 of FY 2023 sales declined by 3.0 percent, gross margin increased from 16.5 percent to 17.5 percent; operating margin was down from 9.9 percent to 8.7 percent. Profit margin fell from 7.3 percent to 6.5 percent for the most recent quarter.

Effective October 2022, Hormel reorganized their operating divisions into Retail, Food Service and International segments.  The Jennie-O Turkey Store Division was integrated among the three operating divisions.  Accordingly, releases for Fiscal 2023 and thereafter do not disclose either volume or cost data for this subsidiary as in previous years.  In reviewing the release, there was only indirect comment on the turkey business noting lower volume with a reference to the risk of HPAI that has impacted turkey flocks in Minnesota in recent weeks despite implementation of biosecurity. In previous analysts’ calls CEO Jim Snee has expressed ongoing concern over losses during November and December 2023 and more recently for 2024.

Segment performance in both sales and operating profit for the most recent quarter was compared with Q2 FY 2023:-

• Retail Segment volume -5.4%:  sales -6.7%: segment profit -13.6%.
• Food Service Segment volume -2.9%: sales +5.7%: segment profit +2.7%.
• International Segment volume -7.2%: sales -7.3%: segment profit +70.7%

In commenting on Hormel results Jim Snee, Chairman, president and CEO stated "We delivered a strong first half, with consecutive quarters of better-than-expected earnings, a significant improvement in operating cash flows, continued Foodservice strength, recovery in our International business and stable volumes across our business. "He added, "Importantly, we made further progress on our strategic initiatives, and we remain on track to deliver on our commitments to improve our business and drive long-term shareholder returns and growth."

For FY 2024 the company projected a one to three percent increase in net sales growth compared to FY 2023 and an upgraded full year diluted net earnings per share of $1.55 to $1.65.  

Hormel Foods posted total assets of $14,135 million on April 28th 2024 of which $6,677 comprised goodwill and intangibles. Long-term debt was $3,073 against an intraday market capitalization of $16,780 million on June 6th. HRL has traded over the past 52 weeks in a range of $28.81 (an 8-year low) to $41.74 with a 50-day moving average of $34.68.  HRL trades with a forward P/E of 19.1. HRL closed at $34.10 on May 29th pre-release. The share price closed down 9.7 to $30.79 on May 30th post release

The 12-month trailing operating margin is 9.0 percent with a profit margin of 6.4 percent. The Company has returned 4.8 percent on assets and 9.6 percent on equity.

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

The 2024 SIAL Exhibition was held at the Shanghai New International Expo Center over May 28 to 30.  The show attracted more than 5,000 exhibitors and more than 180,000 professionals from 75 countries and regions around the world and extended over two million square feet.

USAPEEC members Globex International, Intervision Foods, Metafoods, and Global Food Solutions USA participated at the USAPEEC booth. Both the USAPEEC China team and participating member companies met with Chinese customers during the three-day event.

U.S. heat-processed poultry products are becoming more popular in China despite weaker demand resulting from the economic situation in the nation. After 18 months of product development and quality improvement, some importers in southwest China are becoming familiar with the product-range while others are learning about it at events such as the SIAL Show.

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>

A study conducted by Dr. Brian G. Fairchild at the University of Georgia challenges the presumption that 23-hour continuous light is required during the first week of brooding broiler chicks.  The investigation was carried out with funding from the USPOULTRY Foundation as Project 732. 

The trial compared four-and six-hour dark periods during brooding.  First week weight was significantly reduced although there was no difference in body weight compared to continuous lighting at the time of harvest denoting compensatory growth.  It is generally accepted that during early brooding, a dark period ranging from 30 minutes to an hour should be allowed each day to prevent piling in the event of power failure.  The results of the trial including data on feed conversion, mortality and the response of flocks with respect to corticosterone, melatonin levels and tibial breaking strength will be published in a peer-reviewed journal. 

The initial conclusion from the evaluation of light duration during brooding was that there was no negative effect on performance at the time of harvest with the potential for improved skeletal development and lower locomotory defects and reduced cost of energy.

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.

Judge John R. Tunheim, U.S. District Judge for the District of Minnesota, denied an AgriStats Inc. motion to dismiss a September 2023 lawsuit filed by the U.S. Department of Justice and six states.  The May 28th ruling denied a motion to transfer the litigation to the home state of Indiana.

The Department of Justice and the states claim that AgriStats fostered anticompetitive activity in the meat and poultry sectors.  The benchmark costing system was established in 1985 for broilers and was extended in 2001 for turkeys and during 2007 for pork. Following filing of antitrust litigation, pork and turkey producers withdrew from the AgriStats program in 2019.

AgriStats was established by agricultural economists to provide historical cost data to producers of laying hens as an outgrowth of a Purina division and was then extended to broilers.  The company was purchased by Elanco Animal Health but was subsequently divested to a private investor group.

AgriStats was named as a codefendant in a series of civil actions alleging collusion among pork and broiler producers as a vehicle to either manipulate prices of products to diverse customer segments and also in relation to remuneration of contract growers and wage rates for workers.

America First Legal that includes prominent members of the previous Administration have filed complaints alleging that Tyson Foods has violated Title VII of the Civil Rights Act of 1964 among other transgressions.  The America First Legal Group noted, “There is ample reason to suspect that Tyson prefers hiring aliens and as a “joint employer” alien minors over American citizens through out labor supply chain.”  The allegations probably arise following a policy statement by Tyson Foods that they were willing to employ a limited number of legally admitted refugees from Central America entering the U.S. under existing legislation and rules.  This apparently angered advocates for stricter limits on immigration and rejection of claims for refugee status.

In response to the allegations and legal complaints, a spokesman for Tyson Foods stated, “Any insinuation that we would discriminate against U.S. citizens to hire immigrant workers is completely false.  To date Tyson foods employs 120,000 team members in the U.S. all of whom are required to legally authorized to work in this country.”  Tyson Foods opposes illegal immigration and the employment of minors in all facilities as corporate policy.

During the previous Administration, Tyson Foods was instrumental through its Chairman in motivating the April 29th 2020 Presidential Executive Order relating to ongoing operation of meat packing plants during the pre-vaccination phase of the COVID pandemic and also indemnifying employers from responsibility in the event of infection among workers.

According to press reports, the assets of bankrupt Cooks Venture, comprising a processing plant, feed mill and hatchery were purchased by a subsidiary of Pitman Family Farms for $7.1 million.  The transaction was approved by the U.S. Bankruptcy Court in the district of Delaware.

The enterprise was established in 2019 to produce slow-growing broilers marketed directly to consumers through delivery services. Information on the Company can be retrieved by entering ‘Cooks Venture’ in the SEARCH tab.

Pitman Family Farms has extended its geographic reach from California to incorporate Norbest, a producer of turkeys in Utah, and now will operate on the border between northeast Oklahoma and northwest Arkansas.  Pitman Family Farms is anticipated to apply accepted methods of production using contractors and will market through conventional channels.

Hopefully, creditors will be made whole and contract growers will once more be restored to production but supporting a more substantial business model.

Representative Greg Casar (D-TX) introduced an amendment to the delayed 2023 Farm Bill relating to use of child labor.  The amendment would have banned the USDA from contracting with “meat packing operations found to have serious, repeated or pervasive violations of child labor regulations or other labor law in their facilities or by subcontractors within their plants”.  The measure was defeated in Committee on a party-line vote. 

A vote against this amendment effectively implies support of “serious repeated or pervasive violations of child labor regulations”.  The fact that the vote was along party lines exemplifies the philosophical divisions between the parties and suggests a lack of concern for the welfare of children. Many of those identified as employed underage are immigrants or refugees without documentation who are subject to exploitation.  The proposed amendment would have served as an additional incentive to comply with labor regulations and immigration requirements defining eligibility for employment.

The House Agricultural Committee Chair, Representative Glenn Thompson (R-PA) indicated that a hearing on child labor issues in the meat processing sector would be arranged at a subseqent time. The Committee in its indifference to a pervasive problem failed to put teeth into compliance with current laws that relate to child labor in dangerous situations. Why should members of a party promoting family values be so reluctant to adopt a simple remedy to help eliminate exploitation?

Approximately 1,000 workers have commenced a strike at the Dunlop, Guelph, Ont. beef packing plant.  Workers represented by the United Food and Commercial Workers Union rejected a negotiated settlement by an 82 percent margin resulting in a strike commencing May 27th.

Kelly Tosato president of UFCW Local 175 stated, “The decision to go on strike is never easy, but members are not satisfied with what the Company has brough to the table.”  The Union has called for an increase in wage rates because of higher costs of living and a decrease in income following termination of supplements provided during and after the COVID pandemic.

Cargill noted, “Our proposed agreement which the Union Bargaining Committee unanimously recommended as a comprehensive proposal, honors the tremendous skill and dedication of our Guelph workforce.”  The Company added, “We are concerned about the hardships a labor disruption will pose to our employees and our customers.  We will be working with the Union on next steps once we hear more from them.”  The Company offer, accepted by the Negotiating Committee included a 9.3 percent wage increase and backpay dating to January 1, 2024, together with enhancements of benefits and a signing bonus.

The Guelph workers are supported by UFCW Local 401 in Alberta. It is possible that a strike could also be called in this case-ready plant and in a third location in Calgary.

House of Raeford Farms has awarded 32 college scholarships in their 11th annual program.  This year eligibility was extended to dependent children and grandchildren of company employees and the families of contractors.

Robert Johnson, CEO of House of Raeford noted, “Our company recognizes the importance of providing career development opportunities for our youth, so they become responsible citizens in the community.”  He added, “This educational assistance program for children of our hard-working and dedicated employees and farmers is an investment in their future success.”  Scholarships are valued at $2,500 and are awarded based on academic excellence, leadership qualities and involvement in school and community activities. 

Over the past eleven years, House of Raeford has provided $455,000 to 182 recipients in six states where the company operates.

The U.S. Equal Employment Opportunity Commission (EEOC) has filed a lawsuit alleging that Smithfield Foods illegally fired an employee over the age of 55.  The EEOC alleges that five of six employees older than 55 were terminated. In contrast 14 of 18 salespersons under the age of 55 were retained in a restructuring involving a mandatory relocation to the company headquarters in Smithfield, VA.

The lawsuit was filed following a failure to reach a settlement through structured negotiation.

The 2024 USPOULTRY Financial Management Seminar will take place June 26-28 at the J.W. Marriott, Marco Island Beach Resort, in Florida.  The program will include a Washington Review, tax update, protection from cyber-intrusion, hedging strategies and updates on technology.  Joint sessions will address compliance with Packers and Stockyards Act reporting and tax accrual.

Continuing educational credits will be accepted by some professional associations for attendance at the Seminar. Additional information is available on the USPOULTRY website <www.poultryegg.org>

A study conducted by the USDA Agricultural Research Service has determined that cooking ground beef to a temperature of 145 F is adequate to eliminate the viability of H5N1 influenza virus in patties.

Beef patties of 300 g were spiked with an H5N1 surrogate influenza virus and then were cooked. The study compared temperatures of 120 F, 145 F and 160 F. The lowest temperature of 120 F “substantially inactivated” the virus.  No viable virus was detectable in patties cooked at either145 F or 160 F.  Standard recommendations are to cook patties and chicken products to  165 F to destroy non-spore forming bacterial pathogens including Salmonella. 

The study conducted by USDA-ARS confirmed that existing recommendations should inactivate H5N1 and presumably other influenza A viruses.  The USDA Food Safety and Inspection Service is currently collecting beef muscle from culled dairy cows condemned at ante mortem inspection at plants to determine the prevalence of H5N1 virus. To date one isolate of H5N1 has been obtained. It is noted that culled dairy animals represent approximately six percent of the U.S. beef supply and are mostly processed into ground beef.

According to MUSH Foods, an Israeli food tech company, their 50 CUT™ burger comprises equal proportions of ground beef and mushroom mycelium.  A life cycle assessment analysis conducted by consulting company, Boundless Impact Research and Analytics, demonstrated that the mushroom component generated less than 20g. carbon equivalent per patty, effectively reducing the impact of a conventional burger patty by half.

Mush Foods claim that their hybrid burger is similar in organoleptic properties to a conventional ground beef patty but with environmental benefits.  The 50 CUT product is formulated to achieve a “clean label” as the mushroom derived component is devoid of binding agents, seasonings or preservatives.

There is no indication of price for 50 CUT. Plant-based patties have the disadvantages of higher cost, inferior taste and texture and labels denoting additives, compared to all-beef patties. These are reasons why plant-based meat substitutes have failed to gain market share in the food service and QSR sectors resulting in losses for producers.

Interpreted as a desperation move, Good Meat, an entity controlled by Josh Tetrick has launched a hybrid pseudo-meat product in Singapore.  The ersatz chicken carries a claim of three percent chicken cells and is marketed through a local butchery and priced at over $5 per lb.

The origin of the chicken cells apparently included in the Good Meat product is unknown since news reports confirmed that Tetrick closed his Singapore plant.  The Company is embroiled in litigation with suppliers claiming nonpayment of invoices and breach of contract.

The inclusion of a token three percent of animal-origin cells in a plant-based food product will certainly not move the needle on sustainability nor will it contribute to environmental mediation.

The news report on the product launch suggests yet another publicity initiative by Tetrick in his attempts to raise venture capital funding. He appears to have exhausted sources in the U.S. and from sovereign funds in the Middle East.

An Australian chain of burger restaurants, Grill’d, has limited sales of their Gamechanger burgers. It was claimed that the product was derived from herds fed seaweed pellets to reduce methane emission. Gamechanger burgers were promoted as “the world’s first all-natural sustainable beef burger”.

The burgers carried a premium for claimed sustainability that apparently was an inadequate attribute to justify a differential in price from conventional burgers.

The Grill’d chain with 60 stores has previously played the sustainability card with plant-based meat substitutes and other pseudo-beneficial climate-related claims.

In an anticipated ruling, 2,400 broiler contractors have been granted certification as a class in their lawsuit against Pilgrim’s Pride Corporation.  The specific case is part of a series alleging collusion by integrators to reduce grower remuneration.  The Plaintiffs allege that integrators functioned in accordance with no-poach agreements and shared information informally and also indirectly through a benchmark cost reporting system in wide use. 

During January 2023 Sanderson Farms reached an agreement with eight defendants. Tyson Foods, Perdue Farms and Koch Foods have settled with defendants for a total of $50 million to date.

Mosa Meat of Holland has raised $43 million in a funding round led by LowerCarbon Ventures among others.

Maarten Bosch, CEO of Mosa Meats, stated, “The overall macroeconomic landscape has been rough in the last two years, that has culled the herd of companies and forced us to be even more strategic and focused on achieving our mission.”

Previously, the Company raised $55 million to expand pilot production.  The current expenditure will be to scale up to commercial production.  This step appears to be a major restraint to marketing cell-cultured meat since no company appears to have broken the barrier of consistently achieving commercial scale production in bioreactors.

At this stage, cell-cultured meat appears to be a giant black hole for venture capital funding with some estimates placing investment north of $2 billion since inception of the concept with little to show for the expenditure. Apart from the problem of production at a competitive cost, parliaments in France and Italy and state legislatures in the U.S. have imposed either outright bans as in Florida and Alabama or are to require onerous labeling requirements that are essentially discriminatory and to protect conventional livestock production. 

As with plant-based meat substitutes, affluent consumers may be willing to sample the product but long-term growth through universal acceptance will only be achieved at a comparable cost to conventional meat and with similar organoleptic properties and flexibility in preparation of a range of meat dishes.  Non-quantifiable attributes including environmental benefits will not be sufficient to justify a price differential or contribute to preferential purchase if texture or taste is inferior to protein from animals and poultry.

There appears to be more support for cell-cultured meat in the E.U. compared to the U.S. but production and economic restraints will determine the future of cell-cultured meat. Production at this time has not progressed beyond limited pilot scale.  The image of the embryonic industry has not been helped by unsubstantiated hype and in some cases, deliberate deception by unethical companies desperately seeking venture capital funding to survive until the next round.

The Pan-American Health Organization and the World Health Organization have become involved in an investigation of an extensive outbreak of Guillain-Barre Syndrome (GBS) in Guatemala.  A total of 87 cases have been documented with five fatalities localized in two regions in the nation.  The first cases were detected in November 2023 ceasing in early March.

GBS is an infrequent sequel of campylobacteriosis affecting approximately one in 1,000 cases.  The condition is characterized by muscular weakness extending to paralysis and is attributed to an autoimmune response against nerve tissue stimulated by antigens produced by a specific strain of Campylobacter jejuni.  GBS usually occurs within weeks of an acute gastroenteritis characterized by bloody diarrhea.  An initial investigation of the Guatemala cases disclosed deficiencies in food preparation and in personal hygiene leading to campylobacteriosis.

Health officials in Guatemala are continuing their epidemiologic investigations and motivating acceptable practices in food preparation.

There is low prevalence of GBS among those recovering from campylobacteriosis estimated at 1 in 1,000 cases. Unfortunately the consequences of the condition justify suppression of Campylobacter jejuni through the entire production chain of poultry meat considered to be a major vehicle of infection. At this time there is no effective pre-harvest method to prevent intestinal colonization of flocks.  Fortunately, post-harvest measures including chlorination and other approved additives to spin chiller water and carcass washes lowering levels of Salmonella will also reduce the extent of surface contamination with Campylobacter.  Thorough cooking destroys foodborne non-spore forming bacterial pathogens. 

Following revelations of illegal employment of minors to clean packing and processing plants, USPOULTRY in association with the National Chicken Council and the National Turkey Federation has established a task force to share industry best practices relating to prevention of child labor. The group will include company representatives with expertise in HR, communications and employment law.

This action is paralleled by the Meat Institute whose members have come under criticism for employing, directly or indirectly, children as young as 14 on nightshifts to clean equipment and facilities in contravention of both state and federal laws.  The most recent case involves a chain of plants in California used minors in deboning and further processing operations.  The owners and company were collectively fined and will have to repay $4.8 million in back wages and damages to close to 500 workers in addition to penalties. 

Fayette, Inc., based in Tennessee, was subject to a $650,000 fine as a result of employing 24 children in plants owned by Seaboard Triumph Foods, LLC in Sioux City, IA. and Perdue Farms in Accomac, VA.  The case involving Packers Sanitation Services, Inc. that provided labor for meat plants in the Midwest through 2023 was the most publicized case of egregious and widespread employment of minors.

Underage workers are usually recruited from the local community to join cleaning teams.  In the course of investigations, the Department of Labor referred possible trafficking allegations to the Department of Justice for additional action.  A large number of unaccompanied minors have entered the U.S. across the southern border, and are exploited by recruiters who in turn provide services to established U.S. companies processing livestock and poultry. 

The Meat Institute has developed a Best Practices document to enable plant management to verify age and employment eligibility.  Both fines and negative publicity should deter packers and processors from simply handing off responsibility to labor contractors given the consequences of unfavorable media attention and inevitable lawsuits.

The action by USPOULTRY and two of the associations representing major segments of the poultry industry is commendable.   Children have no place in processing and packing plants where they are exposed to corrosive chemicals and hazardous equipment as evidenced by injuries and deaths reported during the past two years.

In a press release dated May 8th Beyond Meat Inc. (BYND) announced results for the 1st Quarter ending March 30th 2023. The Company beat a consensus revenue projection of $75.2 million but loss exceeded the anticipated $(43.1) million. BYND fell 13.5 percent in after-hours trading following the release attributed to the wider loss and a weak forecast.    

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)

* ‘+’ denotes improvement (or ‘less bad’)

NOTES:

R&D expenditure declined 67 percent from Q1 2023 to $9.9 million or 13 percent of revenue

S&G expenditure declined 9.7 percent from Q1 2023 to $47.3 million or 65 percent of revenue  

For Q1 FY 2024:-

52-Week Range in Share Price:  $19.25  to  $5.58    50-day Moving average  $7.54

Forward P/E: Neg.                  Beta 2.4

Insiders hold 9.2 percent of equity, Institutions 37.3 percent.

Comments:-

For Q1 2024:

     U.S. sales represented 65.3 percent and International 34.7 percent

          Of U.S sales 75.1 percent were through retail channels, unchanged from Q1 2023

            Of International sales 48.0 percent were through retail channels, up from 42.8 percent in Q1 2023

Average unit revenue in Q1 2024 for all sales attained $4.56/lb. compared to $4.67/lb.

          during the corresponding quarter of 2023.

Guidance for FY 2023 included:

      Net revenue of between $315 and $345 million.

      Gross margin of mid- to high ‘teens.

      Operating expenses $170 to $190 million

      Capital expenditure $15 to $20 million

      Continued negative cash flow

In commenting on results Ethan Brown president and CEO stated:-  “In Q1, we made solid progress against our 2024 priorities, including: hitting our first quarter revenue objective; reducing operating expenses and cash consumption year-over-year; bringing production in-house to reduce costs and improve quality; and commencing shipments of Beyond IV, the fourth generation of Beyond Burger and Beyond Beef, to our customers, to the praise of nutritionists and consumers alike.”

Brown concluded “Together with measures we are exploring to bolster our balance sheet, we continue to work to position 2024 as a pivotal year as we strive to achieve sustainable and profitable operations.”

Despite this optimistic commentary the reality includes:-

• An accumulated deficit of $1,135,614 million.
• Trailing 12-month negative operating cash flow of $97.5 million
• Inventory of $122,538 represents 1.6 times Q1 FY 2024 sales
• Effective October 30th 45.1 percent of float was short
• Share price of $7.15 on May 8th off 62.8 percent over past 12-month high of $19.25
• Institutional holdings declined from 63 percent to 37 percent over past year.

On April 17th, USPOULTRY arranged a workshop developed by the Food Safety Advisory Committee to consider aspects of the Public Health Information System.  Attendees representing the poultry meat industry were provided with instruction on accessing and navigating the system including downloading of data and aspects of addressing non-compliance records.

USPOULTRY will continue to provide additional information through workshops, seminars and reports posted on the Association website.

With the initiation of operations by Nest One a combination of HeadStart Hatching and Next Nest Hatching, Jennie-O Turkey Store will close hatcheries in Barron, WI in June and subsequently their facilities in Henning and Foley, MN.

Head Start Hatching and Next Nest Hatching were formed under Life-Sciences Innovations.  The joint-operation will be managed by Jonathan Huisinga, a fourth-generation participant of the turkey industry.  The Nest One Hatchery will be equipped with HatchTech incubation installations including a patented hatcher that allows poults to feed and drink after they hatch and dry, contributing to increased viability and livability.  The Nest One facility was planned over an extensive period with construction commencing in the fall of 2022 and completion in January 2024.  With incremental production, the facility has now attained projected capacity allowing Jennie-O to terminate existing activities and consolidate hatching in one modern unit.

In the most recent quarterly investors’ call Hormel CEO Jim Snee noted, “The modernization and investments have set up our plant, people and brand for growth by enabling us to more efficiently achieve our mission of meeting the needs of our customers and consumers with innovative products and services.”

The Barron, WI complex will cease operations during the current quarter and the plant will be repurposed for value-add further processing.

Aviagen has announced Ms. Yingxin Zhao as the 2023 recipient of the Poultry Science Scholarship.  Ms. Zhao is a graduate of the University of Alberta and will undertake doctoral studies relating to meat quality, working with a major producer in the Province.

Ms. Zhao commented, “This scholarship not only supports my academic pursuits, but also affirms the value of my research in the broiler meat industry.”  She added, “Thank you Aviagen and the Canadian Poultry Research Council for the scholarship award”.

Matt Klassen, Account Manager in Canada for Aviagen stated, “Ms. Zhao embodies the future of the Canadian poultry industry and Aviagen is proud to support her journey.” Aviagen is a longstanding supporter of the Canadian Poultry Research Council and will continue to invest in initiatives that promote a sustainable future for the poultry sector.

According to USDA-FAS GAIN Report SF2024-009 released on May 3rd, the Government of the Republic of South Africa has extended anti-dumping duties on U.S. origin, bone-in frozen chicken.  Currently U.S. poultry is imported into South Africa under a tariff rate quota that rebates anti-dumping duties provided that volume is lower than the TRQ limit of 71,632 metric tons specified for 2022-2023. 

U.S. chicken is still non-competitive with poultry from other nations eligible for a tariff rebate.  The South African International Trade Commission ruled that anti-dumping duty rebates and poultry tariff rebates are not “mutually exclusive”.

The Foreign Agricultural Service is making appropriate representations to the International Trade Commission and the South African Revenue Service to reconsider what must be regarded as a discriminatory ruling. Despite the TRQ only half the U.S. quota was imported in 2022-2023 due to competition from other exporters and domestic supply.

For the record exports to the RSA have declined successively since 2020:-

Year    Importer rank  Metric Tons

2020             11th         88,798

2021             14th         79,450

2022             14th         55,449

2023             18th         44,324

During February 2023, Micro-Tracers, Inc. in collaboration with University of Arkansas, was awarded a USDA National Institute of Food and Agriculture (NIFA), Small Business Innovation Research (SBIR) grant as part of the Meat and Poultry Processing Research and Innovation (MPPRI) program. This program aims to improve the supply chain resilience of small and mid-size meat and poultry processors through emerging technologies, sustainability and food safety.

The collaborative project focuses on a chlorine-free method that safely and cost- effectively inactivates pathogens in poultry wastewater. Generating these disinfectants on-site, in wastewater reduces hazards associated with handling of chemicals and contributes to worker safety. This application also reconditions wastewater without toxic residues, making it environmentally friendly and ideal for water reuse applications while providing real-time process monitoring to ensure the safety of poultry products. 

In 2023, pilot-scale equipment was designed and built and utility was validated. Both E.coli and Salmonella were inactivated in treated wastewater through the in-situ generation of oxidants. These included hydrogen peroxide, hydroxyl radicals and singlet oxygen. Quantitative analyses of bacterial survival showed decreases in colony forming units by two to four orders of magnitude.

The principle of the application is the generation of reactive oxygen species (ROS) that induce oxidative stress leading to bacterial death.When molecular oxygen undergoes electrochemical reduction, the resulting molecules and metallic ions further reduce pro-oxidants to form highly-reactive hydroxyl radicals through the Fenton reaction. Simultaneous photodynamic reactions generate another ROS, singlet oxygen contributing to bacteriolysis.

Continuation of Phase III research in 2024 will focus on commercialization and integration of pilot equipment into existing poultry processing, sanitation and cleaning systems. Remote trials are in progress at the Agricultural Research and Extension Pilot Processing Plant of the University of Arkansas, Poultry Science Department in addition to the Natural State Processing Facility in Clinton, AR. 

Micro-Tracers, Inc. established in 1961 has acquired extensive experience collaborating with senior technical staff at poultry integrations in the U.S. and abroad. By adopting improved water reuse applications, small to mid-sized poultry producers can improve sustainability, supply chain resiliency and generate enhanced profitability.

Nan-Dirk Mulder, Senior Analyst at Rabobank anticipates a four to five percent annual growth rate in poultry production in South Asia and Southeast Asia through 2030.  Growth is anticipated due to an increase in population and a growing preference for poultry meat.  His projection suggests that supply will come from domestic production with only Thailand expanding their export market.  Mulder envisages restructuring of poultry production with greater integration and modernization.  Expansion will also involve marketing of poultry meat through a cold chain, disfavoring live-bird markets.

Rabobank recognizes investment opportunities in Southeast and South Asia both in poultry production and the cultivation and processing of oilseeds.

Seaboard Corporation is the majority shareholder in Butterball LLC with 52.5 percent of equity The subsidiary is ranked as the second largest turkey producer in the U.S.

The Seaboard Corporation SEC 10-Q filing recorded net income from Butterball of $7 million  corresponding to a Q1 net income for Butterball of $13.5 million based on shareholding. The Company statement noted:- “Net income for Butterball decreased $33 million for the three-month period of 2024 compared to the same period in 2023. The decrease in net income was primarily the result of a $38 million decrease in sales due to a 7 percent decrease in the average selling price related to a decline in commodity pricing and a 3 percent decrease in volumes sold. The decrease in sales was partially offset by a 14 percent decrease in production costs, primarily related to lower feed costs. 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 2024”.

At the end of FY 2023 on December 31st 2023, Butterball LLC posted assets of $1,120 million, with $172 million represented by goodwill and intangibles.  Given total liabilities of $408 million the shareholders’ equity is $702 of which $365 million accrues to the majority shareholder.

The National Cattlemen’s Beef Association supports the USDA Animal and Plant Health Inspection Service Program to introduce electronic ID ear tags.  The objective is to enhance traceability especially in the event of an outbreak of an exotic disease.  The recent emergence of bovine influenza-H5N1 is an example of how APHIS could regulate and control movement of both lactating and immature cattle to prevent dissemination of the infection.  Previously the need for positive and rapid traceability was demonstrated in investigation of cases of rare spontaneous atypical bovine spongiform encephalopathy.

Although the NCBA is concerned over cost, USDA has provided $15 million in funding to support the transition from existing “dumb” ear tags subject to detachment and fraud to a more effective and secure system.

Rhode Island Beef and Veal Inc. and owner Michael Quattrucci were found guilty of fraud by claiming that uninspected meat products had passed federal inspection.  The verdict resulted in a $20,500 fine for the company and three years of federal probation and a $1,000 fine, and one year of federal probation for the owner. 

The USDA-FSIS terminated federal inspection of the plant on August 20th for cause. Rhode Island Beef and Veal continued to process carcasses, fraudulently applying the USDA mark.  Subsequent inspection confirmed the violation resulting in the guilty plea and penalty.

In a press release dated May 2nd Maple Leaf Foods Inc. (MFI-TO) announced results for Q1 FY 2024 ended March 31st 2023.

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$0.73)

1.  Restructuring charge: Q1 2023, $5.6 million;

2.  Other expenses: Q1 2024, $0.9 million: Q1 2023, $3.1 million

52-Week Range in Share Price:  $15.71  to  $23.09   50-day Moving average  $17.01

Forward P/E 30.5      Beta  0.5

Insider shareholding 40.0%. Institutional shareholding 25.8%

In commenting on Q4 results Curtis Frank president and CEO stated “In the first quarter of 2024, we delivered Adjusted EBITDA of $116 million, 55% higher than the same period last year. With sales growth within our prepared meats portfolio, and a sequential improvement in our meat protein Adjusted EBITDA margin to 10.8%, and a 310 basis point improvement over last year, we took a meaningful step forward toward delivering our full business potential”.

Frank explained,  “The modest decline we saw in overall sales compared to Q1 2023 was primarily a function of sourcing decisions to reduce outside purchases in poultry and pork, impacting sales in the short term while setting us up to deliver on our plans moving forward.

He concluded, “Looking ahead, we expect the momentum in our business to continue to accelerate. Pork headwinds, while still a challenge, are easing, and our attention is squarely on executing our refreshed Strategic Blueprint,” continued Frank. “With a powerful platform of brands, a network of world-class assets and our leadership in sustainability, we have the right strategy and team in place to drive growth in Canada, accelerate our reach in the U.S. and fully realize the benefits of our recent capital investments.”

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

“The Company has combined its Meat and Plant Protein businesses and aligned its organizational structure to focus on its growth potential in key markets, drive operational efficiencies, and provide clear accountability for strategic execution. Based on this realignment and focus as a protein company, as of the first quarter of 2024, Maple Leaf Foods is reporting its business and operational results as a consolidated protein company, to align with how management monitors and measures business performance. With these changes, the Company believes it is positioned to achieve a consolidated Adjusted EBITDA margin target of 14% to 16% in normal market conditions. Previously, the Company's Adjusted EBITDA margin target of 14% to 16% in normal market conditions was solely for meat protein. The Company achieved an Adjusted EBITDA margin for meat protein of 10.8% in the first quarter of 2024”.

“As a consolidated protein company, Maple Leaf Foods has two operating units: Prepared Foods and Pork, which represent on average approximately 75% and 25% of total Company revenue respectively. Prepared Foods combines the operations of prepared meats, plant protein, and poultry, which represent on average approximately 50%, 5% and 20% of total Company revenue respectively”.

It will no longer be able to evaluate the plant-protein business or to confirm that this previous segment achieved profitability. It appears that Maple Leaf Foods has followed the approach of “if you can’t fix it, bury it”!

In a press release dated May 6th Tyson Foods Inc. (TSN) announced results for the 2nd quarter of FY 2024 ending March 30th 2024. TSN posted lower revenue than the $13,100 anticipated but was higher on adjusted earnings ($0.62 vs. $0.39).

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)

* Goodwill and intangibles 42.3 percent of total assets

52-Week Range in Share Price of TSN:  $44.94 to $61.71.  50-day Moving average,  $57.43

Market Close: Friday May 3rd $61.93. Monday May 6th Open post release, $61.02.

Forward P/E 27.0                  Beta 0.8

The Chicken Segment attained sales of $4,065 million ($4,430 million in Q2 FY 2023) representing 31.1 percent of Company revenue. GAAP operating income attained $158 million in Q2 representing 50.5 percent of net Company operating income. Operating loss in Q2 FY 2023 was $(258) million.  For the Chicken Segment the report stated:- “The USDA projects chicken production will be up 1.0% in FY 2024”. Anticipated adjusted operating income for the segment was forecast at $700 to $900 million for FY 2024. Improvement in the Chicken Segment is attributed to lower feed cost estimated at $190 million for Q2 and reduced operating expenses with consolidation following closure of six plants in four states.

For comparison among Tyson Foods’ business segments the adjusted operating income (loss) in Q1 2024 were respectively:- Pork, $(1) million; Beef, $(35) million; Prepared Foods $230 million and International $(40) million.

In commenting on results Donnie King, president and CEO stated, “During the second quarter, we continued our positive momentum and made progress on our key initiatives. The strategies we have implemented are delivering tangible results, as evidenced by our return to year-over-year bottom line growth." He added, "Looking to the back half of the year, we will continue to focus on executing the fundamentals and leveraging our multi-protein portfolio. We are energized by our progress to-date and laser-focused on driving long-term value."

Despite improved Q2 earnings TSN fell on negative comments during the investors’ call suggesting headwinds in Q3.

Guidance for FY 2024 included Revenue unchanged from FY 2023. Adjusted operating income for the Company was raised to $1.4 to $1.8 billion with Prepared Foods contributing $850 to $950 million. Capital expenditure was projected at $1.2 to $1.4 billion. In the Q2 2013 report Tyson Foods projected $1 billion in savings from the “Productivity Program” by the end of 2024 although this prediction was not confirmed as a quantitative value in the most recent quarterly report.

In a press release dated May 1st Pilgrim’s Pride Corp. (PPC) announced results for the 1st Quarter FY 202 ending March 31st 2023. The quarterly figures showed positive earnings for all three segments with higher revenue and operating profit across all three geographic areas. Earnings were appreciably above Q1 2023 and exceeded consensus estimates on both revenue and earnings for Q1 2024.

The following table summarizes the results for Q1 2024 derived from the SEC 10-Q form and the Company release. Values are compared with the corresponding Q3 FY 2022 (Values expressed as US$ x 103 except EPS)

1. March 31st 2014/ December 31st 2023.

• Q1 2024, $10.3 million interest income (Q1 2023, $36 million)
• Q1 2024  $3.3 million miscellaneous income (Q1 2023, $22.7 million)
• Q1 2024  $4.3 million gain in foreign currency transactions (Q1 2023 $22.7 million loss)

Operating income and sales posted by the three business segments during Q1 2024 were:-

      U.S.      71.7 percent of company operating income on 59.1 percent of sales

      Europe  12.4 percent of company operating income on 29.1 percent of sales

      Mexico  15.9 percent of company operating income on 11.8 percent of sales

52-Week Range in Share Price of PPC:  $19.96 to $36.99.  50-day Moving average,  $34.05

Market Close: May 1st pre-release    $35.54.

             Close: May 2nd post-release $35.95.

Current Forward P/E 14.6    Beta 0.8  

Equity held by insiders and holding Company: 82.6 percent, Institutions, 17.0 percent

In commenting on Q4 results Fabio Sandri, CEO stated “Although we experienced depressed market conditions and persistent consumer inflation throughout 2023, we saw this as opportunity to enhance our competitive advantage. To that end, we focused on consistent execution of our strategies, controlling what we can control, and maintaining investment in our operations. These efforts further strengthened our business, accelerating our profitable growth as market conditions evolved,”

Sandri continued “During the first quarter, the U.S. continued to improve as Big Bird realized significant benefits from enhanced operational efficiencies and market fundamentals. Case Ready and Small Bird continued to grow from increased distribution to Key Customers, promotional activity, and the value of chicken to consumers. Prepared Foods also drove significant growth in both retail and food service through branded offerings, further diversifying the portfolio.

Addressing Europe, Sandri noted “Consumer inflation and labor costs continue to be challenging. Nonetheless, the team secured additional business with retail Key Customers, drove branded growth above category averages, and identified further

In relation to Mexico, Sandri observed, ”We improved through a combination of enhanced supply and demand fundamentals in the commodity market, increased Key Customer partnerships, and further momentum of branded offerings”.

Sandri concluded, “Our strategies continue to demonstrate their effectiveness as we’ve grown ahead of the markets with our Key Customers. Similarly, our branded portfolio continues to gain acceptance throughout the market, further diversifying our portfolio. When these efforts are combined with our operational excellence initiatives to expand capacity, we can further drive our profitable growth,”

The State Senate of Arizona has enacted a more moderate version of the State House Bill requiring labeling of cell-cultured meat and poultry products.  The House version would have banned the terms “meat” and “poultry” on cell-cultured products.  The amended version will require labeling that specifies that the product was not derived from a live-animal. As a result of the modification, the bill has been transformed from protectionist to informative in intent.

On May 1st Wingstop Inc. (WING) reported on Q1 ending March 30, 2024. Results exceeded consensus estimates on revenue by 7.2 percent and on earnings by 27 percent. For the period, total revenue including royalties and advertising fees attained $145,789 million. Net income was $28.8 million with a diluted EPS of $0.98. For Q1 FY 2023, total revenue was $108.7 million with net income of $15.7 million and a diluted EPS of $0.52.

Comparing Q1 FY 2024 with Q1 2023, revenue was up 34.1 percent and operating margin was 31.6 percent compared to 26.4 percent.

For Q1 growth in same-store sales attained 21.6 percent and digital orders represented 68.3 percent of systemwide sales.  At the end of Q1 Wingstop operated 2,279 locations of which 98 percent were franchised including 305 international units. The chain was extended by 65 locations during Q1.

In commenting on Q1, Michael Skipworth CEO stated, “Our fiscal first quarter 2024 showcased the momentum behind the Wingstop brand and the continued strength of our strategies, delivering same-store sales growth driven almost entirely by transaction growth,” He added, “Our domestic average unit volume exceeded $1.9 million, further strengthening returns for our brand partners and is strengthening our development pipeline, which gives us confidence in our ability to scale Wingstop into a Top-10 Global Restaurant Brand.”

Guidance for FY 2024 included low double-digit growth in domestic same-store sales.

The company posted total assets of $412.3 million of which $167.8 million comprised intangibles including goodwill, trademarks and ‘relationships’.  The company carries long-term debt of $730.8 million. 

Wingstop has a market capitalization of $11,410 million and has traded over 52-weeks in a range of $150.08 to $396.00 with a 50-day moving average of $368.85. The company generated a twelve-month trailing operating margin of 29.3 percent and a profit margin of 16.8 percent.  The return on assets attained 19.1 percent.  Shareholding is held almost entirely by institutions, but on April 15th, 6.9 percent of the float was short. 

USDA posted a wholesale price of $2.31 per pound for cut wings for the week ending April 19th.  According to the April 24nd USDA Cold Storage Report, there was a 19.6 percent decrease in inventory of wings on March 31st 2024, compared to the corresponding date in 2023 with a stock of 51.8 million pounds. During March 2024, inventory fell 1.7 percent reflecting stable demand despite sports events associated with consumption of chicken wings.

The USDA Food Safety and Inspection Service has proposed that the presence of Salmonella at a level of 1 CFU per gram in raw breaded stuffed chicken products would constitute adulteration.  This is effectively a zero tolerance for any Salmonella irrespective of pathogenicity in this class of product.

The problem of salmonellosis arises from failure by consumers to read and follow clear label instructions to prepare raw frozen breaded products.  The appearance of frozen chicken Kiev and chicken cordon bleu, with a slight browning, may confuse those who are either negligent or illiterate. This would result in their thawing and heating products in a microwave or for short duration in an oven.  Failure to reach 165 F for at least 30 seconds through the entire product will allow Salmonella that may be present to remain viable.  The number of confirmed cases of salmonellosis attributable to consumption of raw breaded stuffed chicken products in the U.S. is extremely small in relation to the volume of consumption.  It is however likely that infection from breaded chicken products is under-reported.  Through 2022, Canada experienced a disproportionate incidence of salmonellosis attributed to breaded stuffed raw chicken products.

Predictably the National Chicken Council is opposed to the FSIS proposal.  In the first instance, declaring Salmonella in any product as an adulterant can be regarded as a slippery slope. This is especially in view of the petitions submitted by William Marler requesting that a range of pathogenic Salmonella serotypes be regarded as adulterants in any chicken product.

The NCC response appears a little extreme noting that, “200 million servings of these products will be lost, and 5,100 people will lose their jobs and that the proposal will drive small producers of this product out of business entirely.”  The NCC response continues, “the Council remains confident that these products can be prepared and consumed safely and NCC member companies will continue to work day-in and day-out to implement sound, science-based safety programs that will continue to make Americas most popular protein even safe.” There are science-based solutions available.  Electron beam irradiation would effectively destroy Salmonella and Campylobacter but the technology analogous to an X-ray, although safe and effective, is considered to be unacceptable by consumer advocacy organizations.   

Since it is evident that precautionary labeling and education are not absolutely protective,

the question arises as to why the industry is marketing a raw product.  If cooked to the critical temperature, foodborne non-spore forming pathogens would be destroyed and all those claimed jobs would be saved!

It is currently a question of conjecture whether the proposed action by USDA-FSIS is justified in relation to the balance between the public good and the financial impact on the industry.  What does stand out is the optics of the NCC, representing the chicken industry, opposing on the basis of financial impact, what consumers may regard as an acceptable regulatory action, irrespective of validity or potential benefit.

Faced with declining demand for pork and the challenges of African swine fever, Danish Crown a major multinational pork producer has announced the intended closure of the Ringsted Packing Plant, currently employing 1,200.

Jais Valeur, Group CEO stated, “It is a heavy decision to close the abattoir in Ringsted but is a necessary measure in our efforts to develop Danish Crown as a modern food company.”  He added, “In making these changes we are doing all we can to improve efficiency at the abattoirs and to sell many more processed products to our key European customers.”

The production capacity at Ringsted will be transferred to other plants in Denmark. It is intended to offer positions at these facilities to displaced employees.  Savings from closing the Ringsted plant will be applied to improve efficiency at four other facilities, creating 300 new positions over three years.

Since 2021, Danish Crown has followed a strategy of providing further-processed pork items and has invested in production capacity in other markets including the U.K.

The decision to rationalize production and to concentrate on higher-value items parallels the recent decisions by Tyson Foods in the U.S. and Olymel in Canada to close obsolete or unprofitable plants and to consolidate production capacity.

According to news reports, the proposed House of Raeford broiler plant is unlikely to proceed in the selected location in South Carolina. The Aiken City Council has declined to change an ordinance to approve the facility.  The problem relates to available wastewater treatment capacity.  According to the County Council, the City of Aiken can process a maximum of 500,000 gallons of additional capacity per day with the proposed plant requiring 1.7 million gallons using current wastewater treatment technology.

South Carolina Governor Henry McMaster, is in favor of the project based on job creation and the substantial economic impact. He noted, “I am committed to assist in identifying state funding to help address water and sewer infrastructure so that Aiken County will accommodate both the House of Raeford plant and to have sufficient capacity for future growth.”

The discrepancy between available wastewater processing capacity in Aiken County and the needs of House of Raeford should have eliminated the location for a proposed plant in the initial site evaluation. Failure to identify this preeminent restraint suggests a lack of coordination in conducting the preliminary feasibility study.

The need for a new plant is indicated by the age of the West Columbia plant erected in 1959 and acquired by Raeford in 1998. The location in an area undergoing gentrification is now inconsistent with the community and is engendering opposition to its presence based on odor and depression of property values.

Aviagen in collaboration with Jamesway Incubator Company presented a hatchery workshop on April 8th to 11th at the Aviagen Development and Training Center in Albertville, AL.  Presenters included members of the Aviagen Global Incubation Team and specialists affiliated with Jamesway.

Eddy van Lierde, Global head of Incubation Services stated, “Attendees at the North American Hatchery Workshop experienced a blend of theoretical knowledge and practical insight into embryo development to improve hatchery performance.”  He added, “Aviagen is committed to ensuring our customers’ success providing them with the latest technology to achieve continuous improvement in their hatchery and businesses.”

Dr. Keith Bramwell, Director of Hatchery Consultancy for Jamesway observed, “We are honored to collaborate with Aviagen on this well-attended workshop.  It is always a pleasure to share our knowledge with hatchery managers and improve operations.”

Aviagen will collaborate with allied industry suppliers to present short modules that will complement the production courses including the month-long Production Management School.  The focused modules will be presented throughout the year and will address specific management topics benefiting Aviagen customers.

A preliminary release on April 15th by USPOULTRY addressed Project #719 Longitudinal Assessment of Skeletal and Cardiac Structures in Broilers Reared Under Slow Versus Fast Growth Rate Regimen and its Relation to Lameness, Ascites and Woody Breast Condition.

The study conducted by Dr. Prafulla Regmi of the Department of Poultry Science, University of Georgia addressed critical issues in live broiler production.  Due to the restrictions placed by major journals on release of specific data prior to publication, release of results will be deferred to an appropriate time.  The USPOULTRY release did however include the comment that restricting growth rate can influence welfare parameters but the frequently quoted 50 g per day growth rate promoted by welfare activists is invalid.  The breaking strength of bones is not increased by reducing growth rate.

CHICK-NEWS will review the article and its implications on publication and will comment on data in relation to production programs.

According to USDA-FAS GAIN Report E42024-06 released on February 27th, projected broiler production among E.U. nations will increase by 0.8 percent from calendar 2023 to 11.11 million metric tons.  Imports will attain 750,000 metric tons representing 6.8 percent of production.  Exports will rise to 1.67 million metric tons or 15 percent of production.  Net exports will therefore represent 8.2 percent of production at 0.92 million metric tons.  Given an E.U. population of 450 million, projected per capita consumption will amount to 22.6 kg (49.8 lb.) approximately half that of U.S. consumption.

Restraints to output include highly pathogenic avian influenza that has persisted since 2021.  Other hindrances include environmental restraints with limits on nitrogen emissions in the Netherlands and Belgium.  Although the price of ingredients has declined, production costs in France remain high and are limiting output. Economists forecast increase demand for chicken based on the competitive price and availability of pork and beef.

A major issue of contention is the importation of chicken from Ukraine without duty following E.U. regulation 2023/1077.  Poland, the largest producer in the E.U. has requested limits on the importation of broiler products from their eastern neighbor.

Although the U.K. represents a strong market for E.U. chicken, supplied mainly from Poland and Germany, there is now increased supply from Brazil, Thailand and Ukraine. Competition from Brazil, the consistently low-cost supplier has eroded markets for the E.U. in Africa, the Middle East and especially South Africa.

Dr. James Barton has gained extensive experience in the poultry industry in the Southeast and California regions of the industry.  He is currently applying Ancera technology to solving practical problems throughout the poultry industry.  Recently EGG-NEWS had the opportunity to review his activities in the areas of reducing the impact of coccidiosis and Salmonella infection.

CHICK-NEWS:  James, please share your background and experience with our Subscribers.

Dr. James Barton:  My earliest memories of poultry production involved visits to the Animal Science Building at the University of Arkansas with my father Dr. Lionel Barton, who was the Extension Poultry Specialist for the state.  At an early stage I realized that poultry was a growing industry and wanted to contribute to progress in feeding people.

CHICK-NEWS:  Your formal training?

Dr. James Barton:  After three years of a pre-veterinary BS in Agriculture at the University of Arkansas I entered the LSU School of Veterinary Medicine, graduating in 1990.  I applied for and completed a residency in poultry veterinary medicine through the University of California Diagnostic Laboratory System. This enabled me to gain experience in broilers, egg production and turkeys.  Satisfying requirements, I earned Diplomate status in the American College of Poultry Veterinarians in 1992.  Subsequent practical experience allowed me to become a Charter Diplomate of the American College of Animal Welfare.

CHICK-NEWS:  Please describe your industry experience.

Dr. James Barton:  My first professional appointment was with Indian River in Texas as the veterinarian responsible for flock health and technical service both in the U.S. and for international customers.  I accepted a position with Zacky Farms in California working with broilers and turkeys as the company veterinarian.  I was subsequently offered and accepted a position with Cargill Turkeys in Arkansas that involved nine years of managing flock health, establishing a Salmonella control program, and initiating an animal welfare program.  From 2006 to 2009 I was responsible for flock welfare at Tyson Foods, requiring the implementation of procedures to demonstrate compliance with the emerging animal welfare expectations of customers and society.  At the request of the Arkansas Poultry Federation, I modernized the NPIP-approved laboratory while maintaining a consulting practice in the broiler, turkey, and layer industry.

CHICK-NEWS:  When did you join Ancera?

Dr. James Barton:  I was excited to become a member of the Ancera team in 2020 because of their advanced technology that offered food producers the opportunity to focus pathogen monitoring on financial objectives.  Ancera’s platforms provide insights that enable better decision making to maximize profits by lowering cost and increasing production.  Through the unique coccidia-monitoring program, it is possible to quantify the amount of coccidia exposure so that live production managers and vets can move off a failing program quicker and stay on an effective program longer.  Optimizing coccidia control has become even more necessary with the adoption of drug-free and NAE broiler production.

CHICK-NEWS:  How is the program implemented?

Dr. James Barton:  Individual fecal samples are analyzed at our laboratories with a novel diagnostic device called PIPER, which specializes in high-quality, high-throughput microbial enumeration techniques. The basic oocyst per gram data are converted into a graphical image representing the status of the house, farm, and complex over time.  More importantly, Bayesian modeling expresses the current coccidia control status relative to optimal performance expected from the specific control program.

CHICK-NEWS:  Ancera is now applying technology to monitor Salmonella.  Please elaborate.

Dr. James Barton:  Ancera has acquired the global commercial rights for technology developed by Dr. Nikki Shariat at the University of Georgia which involves identification of the CRISPR gene sequences that are unique to Salmonella serotypes. By commercializing this technology and building a user-friendly software platform, our first integrator customers are monitoring the prevalence of their KPI serotypes and getting new visibility into transmission risk patterns. Ancera believes that the future of pre-harvest control of Salmonella infection will depend on recognizing that each Salmonella serotype has a specific behavior – rather than trying to treat Salmonella as a generic organism.  Because traditional Salmonella culture techniques select for the serotypes that are best adapted to artificial media, the presence of multiple serotypes within a flock is overlooked very, very often.  The serotypes that are missing detection in the live flocks can be the ones that are problematic in post-chill carcasses, parts, and ground poultry meat.  Ancera believes that it is necessary to have a close relationship between poultry health and quality control teams within a production company to achieve effective control of potential foodborne pathogens.

CHICK-NEWS:  What does Ancera offer for the future?

Dr. James Barton:  We are very close to launching an assay for Total Viable Bacteria (TVB) that will be independent of culture technology. We are also well down the path of developing a quantitative assay for Clostridium perfringens based on fecal counts that will be valuable in managing programs to inhibit necrotic enteritis and potentially related infections. Finally, we regularly hear from customers about the need to objectively understand whether their vendors’ products used in control programs and interventions are working as intended. We’re excited to share some new developments in this area shortly.

CHICK-NEWS:  Do you have any observations based on your extensive experience?

Dr. James Barton:  The post-DVM training programs should reevaluate the advanced education of poultry veterinarians given the need to base technical decisions on the financial performance in an industry that continues to undergo consolidation.  It is imperative that technical experts become even more involved in quantifying the return on investment from products and management practices – driving the management decisions with effective messaging, based on high quality evidence.

Superior Farms has operated within the city of Denver for decades.  The company processes  mutton and is the last remaining abattoir in the City that once was the terminal of cattle trails hosting extensive stockyards. A 2024 ballot initiative will determine the fate of the company in its present location.  The proposed ordinance is intended to eliminate slaughtering operations in the City of Denver. The justification is not on the basis of nuisance, odor, pressure on effluent treatment as would be expected but is advanced by the deliberate misnomer of ‘welfare’. It is evident that the proponents of the ballot initiative are appealing to sentiment with the true agenda of veganism obscured by the concept of welfare. This is evidenced by the wording of the ballot that included “to promote community awareness of animal welfare, bolstering the City’s stance against animal cruelty and in turn to foster a more humane environment in Denver.” 

Superior Farms slaughters lambs and processes carcasses through to case presentation.  The plant employs 160, of whom 80 percent are Denver residents. Rick Stott, CEO maintains that despite polls showing even levels of either support or rejection “voters will resonate with a message of saying it’s not fair to target a particular business.”  Superior Farms operates a facility in Dixon, CA.  

Forced closure of the plant in Denver would reduce the supply of domestic lamb to the U.S. market that will simply be substituted by imports from New Zealand and Australia. Even if the ballot initiative fails the proponents will be back in two years. They recognize the vulnerability of Superior Farms and the publicity associated with an eventual victory. Success in pro-vegan ballots generates funding for the organizers and reinforces a feeling of self-satisfaction through aggressively promoting a lifestyle that is opposed to intensive livestock production.

In an April 8th release, USPOULTRY and the USPOULTRY Foundation approved funding amounting to $363,000 for three research projects dealing with poultry meat production. 

These comprised: -

• Necrotic enteritis in chickens: understanding the immunological basis of host immunity North Carolina State University
• Cross-sectional and longitudinal epidemiologic investigations of Ornithobacterium in commercial turkeys.  Iowa State University
• Technology for poultry hatcheries to simultaneously deliver vaccines and prebiotics.  University of Delaware

In September 2023, animal welfare association Animal Partisan filed a petition with FSIS urging local and state investigation and prosecution of overt abuse of livestock in abattoirs.  The Veterinary Association of Farm Animal Welfare (VAFAW) supports the petition but deviates from Animal Partisan in maintaining that states do not have the right to supersede federal officials with respect to oversight of welfare.  The VAFAW has requested the FSIS to interact with local and state agencies in the event of any deviations from the Federal Meat and Poultry Inspection Acts.

USDA inspectors are empowered to close plants by suspending inspection in the event of abuse.  Referring cases to local or state officials is a reasonable action and could serve to strengthen welfare by focusing management attention on this aspect of plant operations.

The Environmental and Natural Resources Division of the Department of Justice (DOJ); the USDA Animal and Plant Health Inspection Service (APHIS) and the USDA Office of General Counsel have issued a Memorandum of Understanding (MOU) on civil and judicial implementation of the Animal Welfare Act. In the event of an overlap among federal agencies, MOUs designate the relative jurisdiction and responsibilities and coordination of activities including the sharing of information and enforcement.  

Following an infraction of the Animal Welfare Act the Federal government can implement civil action through the DOJ requiring federal district court action.  In most cases, the APHIS can pursue administrative enforcement that can involve a warning with a settlement agreement with or without imposing a monetary penalty.  APHIS has the authority to suspend or revoke licenses, issue cease-and-desist orders and impose civil penalties through the administrative law process.

The MOU establishes a priority for repeat offenders and egregious violators.  Plants that will receive attention include facilities with a history of multiple citations or involving noncompliance.  Licensees considered for suspension will have previously denied inspectors access or operate with defective records or exhibit a pattern of interference with inspectors. The MOU will facilitate coordinated action by the agencies involved.

The MOU is probably a response to a petition by animal rights and welfare organizations to allow local law enforcement and judicial agencies to intervene in cases of alleged deviations from the Animal Welfare Act.

Additional information can be obtained from the APHIS website www.aphis.usda.gov/awa/enforcement

A recent study by Dr. Matthew Stasiewicz at the University of Illinois indicated that regulatory concentration on high levels of known virulent Salmonella serotypes would benefit public health.  To date, Salmonella standards have been based on prevalence resulting in an evident reduction in recovery from processed poultry. Unfortunately there has not been a corresponding reduction in the incidence rate of chicken-related salmonellosis among consumers. 

The risk assessment concluded that specific products with high levels of pathogenic serotypes should receive attention in order to develop appropriate control modalities.  Dr. Stasiewicz suggested that programs focusing on generic prevalence of Salmonella may contribute to the emergence of more pathogenic serotypes such as Salmonella Kentucky.

The risk assessment was supported by a grant from the USPOULTRY Foundation.

The Attorney General of Georgia, Chris Carr, has joined 26 other Attorneys General to oppose the Effluent Limitations Guidelines proposed by the U.S. Environmental Protection Agency.

Opposition to the proposed guidelines is based on the high cost of compliance that would increase the price of meat, poultry and egg products to consumers.  It is estimated that with the more stringent guidelines, EPA jurisdiction over 150 processing plants would be increased to 3,000 facilities.

The letter submitted by the AGs noted “Evident escalation in the intensity of regulations issued by federal agencies, harms the integrity of our judicial system and this Administration should stop abusing the legal system to achieve results it otherwise cannot get”.  Legality of the Effluent Limitations Guidelines is questioned since the proposed rule would extend the statutory authority of the Environmental Protection Agency under the Clean Water Act.

Hormel Foods has agreed to pay three classes of Plaintiffs in a suit alleging collusion on pork prices.  Commercial indirect purchasers will receive $2.4 million, direct pork purchasers, $4.8 million and consumer indirect purchasers, $4.5 million.

Collectively, there were 146 claimants in 27 cases that were consolidated during December 2022.

The settlement by Hormel Foods follows a June agreement by Seaboard Foods to pay the class of direct purchasers $9.8 million to settle the lawsuit.

Costco is undertaking a five-year action plan to reduce the use of plastic packaging.  The company markets close to 150 million rotisserie chickens annually, currently presented in two-part PET containers.  Following test in Canada, the Company has introduced a flexible plastic bag with insulating capability for their chickens.  The change will reduce plastic use for this application by 75 percent, representing a saving of 17 billion pounds of resin annually and a reduction of 4,000 metric tons of carbon dioxide released.  This, according to a Company claim will be equivalent to the output of 1,000 trucks annually when fully implemented across 850 warehouses globally.

Tim Wahlquist responsible for Costco packaging stated, “The goal is to reduce packaging waste while still protecting products, ensuring food safety and complying with laws and regulations. As a corporate policy, Costco will replace plastic packaging with potentially recyclable content as feasible alternatives become available.

The Department of Labor has filed lawsuits against three California poultry processors alleging violations of child labor law.  The Wages and Hours Division has been reviewing plant employment records and conducting inspections uncovering “oppressive child labor at poultry processing facilities.” According to the submissions by the Department of Labor the three companies concerned employed children under the age of 18 to debone poultry in contravention of child labor laws.

Defendants include L&Y Food Inc., Moon Poultry Inc. and JCR Culinary Group Inc. and their three respective managers in their personal capacities.

The Department of Labor was granted an injunction embargoing products from the plants although there was evidence that the restraining order was defied.  The Agency alleged that the defendants obstructed investigations including review of employment data.

The California Air Resources Board (CARB) has requested the EPA to allow California to issue regulations to limit emissions by locomotives.  The proposed requirements would include:-

• Decommissioning of locomotives older than 23 years at the beginning of 2030,
• Impose reporting requirements and administrative fees
• Require railroads to shut down other than zero-emission locomotives when transiting in certain areas.

The proposal has resulted in considerable opposition including the National Chicken Council and ninety federal and state agencies and infrastructure associations.  A joint letter to the Director of the EPA stated, “If the CARB regulations are authorized by EPA, we believe freight rail carriers and their customers would be significantly hindered financially and operationally”. Clearly the proposed requirements presume technology that is currently unavailable or will be impractical to implement.

The proposed CARB restrictions appear to be preempted by federal law that allows the Surface Transportation Board to exercise jurisdiction over the operation and activities of freight railroads in interstate commerce.

Subscribers will recall the difficulties encountered by Foster Farms in obtaining adequate quantities of corn due to reduced rail transport during COVID and 2023 labor action against railroad operators, resulting in litigation and appeals to the Surface Transportation Board.

Case Foods and Mountaire Farms have agreed to pay $8.5 million and $13.5 million respectively to the class of workers alleging collusion in setting wage rates.

The lawsuit was filed in 2019 and claimed interaction among employers to agree on wage rates and to indirectly share information through AgriStats®.

Recently Perdue Farms settled for $60 million, but there are eighteen integrators still named as defendants.

Cody Easterday currently serving an 11-year prison sentence for defrauding Tyson Foods of $144 million has filed suit against the Company.  At issue, is a claim that Easterday was offered a share of the profits from sales of meat products designated “Cody’s Beef” marketed in Japan.

Cody claimed $100 million for using his name and image on product labels.  His original filing with the U.S. Court of Appeals for the Ninth Circuit was dismissed but Easterday is persisting in his litigation.  Tyson Foods categorically rejects the claim based on the absence of any proof relating to any obligation by Tyson Foods to share in profits.

According to USDA-FAS GAIN report IN2024-0015 released on March 25th India will allow importation of duck meat. During early March, the Ministry of Commerce and Industry authorized imports of premium frozen duck meat in accordance with a harmonized tariff system.

Import duties for duck meat have been reduced with expectations of shipments to the Nation from the U.S albeit it in competition from producers in the E.U. and Asian nations including Thailand and China.

Legislation banning the sale of cell-cultured meat in Florida, will take effect on July 1st, 2024.  This legislation is essentially a “feel-good” measure in response to political pressure since there will not be any commercially available cell-cultured meat on July 1st, 2024, or for that matter, in the foreseeable future.

Vegan advocates consider that cell-cultured meat would be an improvement over conventional beef, pork and chicken based on welfare and environmental criteria.  Organizations opposing animal agriculture are also pushing the health aspects of non-meat diets citing an unproven scientific relationship between intake of dietary cholesterol and cardiovascular disease in otherwise healthy consumers.

The U.S. District Court for the Western district of Missouri ruled as constitutional the 2018 statute relating to potential misrepresentation of vegetable-based products as meat.

The Missouri statute, according to the court, did not prohibit commercial speech and was in accordance with the First Amendment.  Turtle Island Foods, manufacturer of Tofurky, clearly labels its product as being ‘plant-origin’.

Missouri Attorney General, Andrew Bailey, stated, “Ensuring that the truth of products sold within the state of Missouri is of importance to both consumers and the farmers and ranchers that produce food.”  The Missouri Cattlemen’s Association welcomed the judgment, noting “The legislation in no way prohibited the sale of consumption of these imitation products but it did require truthful and accurate labeling.  Misleading consumers is unacceptable.”

Opponents of restricted legislation maintain that consumers are not confused by meat substitutes with labels that clearly indicate plant-based origin. These products are usually placed in display areas separate from animal-derived meat and with clear labeling of packages.

Chick-fil-A has dropped the strict No Antibiotics Ever (NAE) to a modified No Antibiotics Important to Human Medicine (NAIHM).  The Company has not specified the compounds that will be allowed but if this includes ionophore anticoccidial there will be a benefit to producers with no adverse effect for consumers.  Ionophores are not regarded as “antibiotics” in the E.U. but because the compound suppresses some intestinal bacteria they were unjustifiably included as “antibiotics”, with respect to the FDA classification.  If the Chick-fil-A standard allows the  use of feed additive bacitracin, there will be no deleterious effect since this compound is not used for human medicine other than as a topical application and does not contribute to the emergence of antibiotic resistance.  Inclusion of bacitracin in broiler diets will suppress Clostridium spp. responsible for necrotic enteritis and gangrenous dermatitis.

It will be interesting to observe consumer response to the change in policy that will probably rise to the level of a large yawn. This will hold providing the chain maintains quality and value and can assure customers of ongoing welfare in production that conforms to the NCC standards.

The action by Chick-fil-A parallels the earlier announcement by Panera Bread and could initiate a trend among QSRs and mid-priced supermarket chains to adopt a more realistic policy on antibiotics consistent with scientific and financial realities.

A ProMed report confirmed a recent outbreak of H5N1 avian influenza in Chang Hua County involving 20,000 hens that were depleted.  Previous outbreaks have occurred in Ping Tang and Tainan in February.  Since January “tens of thousands of hens” have been culled in Yunlin County resulting from exposure to H5N1 presumably from wild birds. 

With numerous small and intermediate-sized duck and egg farms in close proximity and a live bird market system for broilers, Taiwan is candidate for vaccination against avian influenza H5N1. This is based on the location of the island nation on migratory bird routes and a history of recurring avian influenza suggesting a seasonal endemic status justifying protection.

According to USDA-FAS GAIN Report BR2024-0002, Brazil will increase broiler production to 15.10 million metric tons (33.22 million lbs.) of RTC, an increase of 1.3 percent over 2023.  Of this total, 33.0 percent will be exported amounting to 4.975 million metric tons (10.94 million lbs.) or an increase of 4.3 percent over 2023.  Assuming a population of 220 million, domestic per capita consumption will be 46.0 kg (101.3 lb.).

The GAIN Report noted that in 2023, feed cost representing 68 percent of live-bird cost declined by 22 percent with a corresponding 14 percent drop in chick cost representing 15 percent of live bird cost.  The major increase was a 13 percent rise in the cost of electrical power that represented 2.5 percent of live bird cost.

With regard to exports, Brazil introduced electronic certification for the E.U. that will expedite approval of shipments and reduce cost.  The Brazilian Association of Animal Protein (ABPA) noted expansion into new markets including Israel, the Pacific Islands and Algeria.  In the case of this nation, Brazil donated 10,000 metric tons of chicken meat as a humanitarian gesture and to gain a foothold in the market.

For 2023, the top importers of chicken from Brazil comprised China (14 %); UAE (9%); Japan (9%); Saudi Arabia (8%) and South Africa (7%).

Brazil has apparently benefited from its status as “free of avian influenza in commercial farms”.

This situation is questioned since the nation reported 158 cases of H5N1 HPAI in backyard flocks and wild birds but miraculously none in commercial flocks.  Eight states reported HPAI including all the major broiler producing areas.

A July 2022 lawsuit filed in Federal court in Georgia against Perdue Farms was recently dismissed. Roger Parker the Plaintiff, claimed misclassification as an “independent contractor” and that the Company retaliated by terminating his contract for registering  complaints under the Packers’ and Stockyards Act. The Plaintiff, also claimed improper compensation due to under-weighing of broilers delivered.

Parker held that since contractors are “treated like employees” they should receive employee benefits including overtime. This is a somewhat fallacious characterization given the nature of the relationship between the contractor who supplies housing, labor and utilities and the integrator providing chicks and feed and extending service as defined in the contract.

Parker was unable to establish a Class for the lawsuit as he faced understandable lack of interest among contractors willing to participate in the litigation.

Freirich Foods, a family-owned enterprise established in 1921, recently filed for Chapter 11 bankruptcy protection.  This action was taken following a $7 million loss arising from 1.2 million pounds of product that was mishandled by a third-party cold storage company. 

The filing will allow the company to restructure finances, maintain solvency and to restore profitability for the benefit of the owners, creditors and indirectly, 100 workers.

In a statement, the CEO noted, “Bankruptcy protection will enable our company to safeguard our business, employees, customers, and partners while we seek to recover our financial loss and propose a plan to restructure debt and renegotiate contracts. We will emerge from this process with a stronger balance sheet”.

It is questioned whether the company can recover the loss through insurance or a lawsuit alleging negligence.

Taylor Farms has recalled ten tons of ready-to-eat apple walnut chicken salad due to non-label disclosure of wheat. Affected product was manufactured between February 28th and March 9th and marketed in Kroger stores in twelve western states.

Product recalls are usually attributed to contamination with pathogens, the presence of foreign material or improper labeling. Misbranding involving the inclusion of a non-declared allergens is a self-inflicted wound and can be avoided by appropriate quality control and coordination within a company.

HPAI Infects Dairy Herds in Three States

According to an APHIS release on March 25th and postings on ProMED,  Federal and state authorities are responding to outbreaks of highly pathogenic avian influenza in dairy herds in Texas, Kansas and New Mexico.  The serotype has not been revealed but is presumably H5N1. The source of infection is most possibly wild birds apparently found dead in the vicinity of premises in Texas. Affected animals demonstrated clinical depression and lowered milk production. Avian infectious virus was isolated from udder milk samples and oropharyngeal swabs.

Affected herds have been quarantined and milk has been destroyed. A more detailed report will be posted in the Friday edition of EGG-NEWS

The National Turkey Federation has announced that Leslee Oden has been appointed as the president and CEO of the producer association.  This action follows the retirement of Joel Brandenberger after a 17-year tenure.

Ms. Oden has worked at the NTF for 15 years and was named Senior Vice President of Legislative Affairs in 2018.  Leslee earned baccalaureate and master’s degrees in poultry science from Texas A&M.

John Zimmerman, Chairman of the NTF stated “It was clear that Leslee was the candidate with in-depth knowledge needed to help navigate our industry through challenging issues.”  He added, “Her tenure at NTF brings a wealth of knowledge, key industry relationships and an understanding of legislative and regulatory priorities that will continue to lead the turkey industry into the future.”

Peter McGuinness, president and CEO of Impossible Foods recently announced the introduction of new packaging at the National Products Expo West.  McGuinness stated, “We want packaging that lived up to and reflected the deliciousness of our products while really popping on the shelf.”  He added, “What we want to do is educate consumers that they can still enjoy meat by incorporating into their diet a version that’s made from plants instead of animals.” 

McGuinness is clearly a marketing expert but appears to be insensitive to both accounting realities and the organoleptic properties of his products.  Plant based meat alternatives are clearly inferior with respect to appearance, texture and taste.  Shelf prices are higher than the product they purport to replace.  Although Impossible Foods is not a publicly quoted company and therefore does not release financial reports, competitors Beyond Meat and the plant-based division of Maple Leaf Foods confirm non-profitability.

Impossible Foods should concentrate more on improving the quality of the product since the packaging is discarded and not eaten.  The fact that the Bezos Earth Fund is making available grants to food science departments of universities to improve organoleptic qualities of plant-based foods confirms the reality of inferiority despite the Impossible Foods hype.

An ongoing outbreak of Salmonella Mbandaka infection commencing in 2021 has resulted in 300 diagnosed and confirmed cases through March 2024.  Outbreaks have been recorded in the U.K., Finland, France, Germany and the Netherlands.  Extensive, epidemiologic investigations including whole genome sequencing have identified the source as steam-cooked chicken breast  and other products from Ukraine.

According to the European Commission, corrective measures have been implemented in the implicated plant with enhanced surveillance and upgrading of food safety.

The persistence of one strain for over four years suggests vertical transmission that should be evaluated.  It would be interesting to learn whether producers in Ukraine and specifically the single largest integrator and exporter have implemented preventive vaccination at either or both the breeder and grow-out levels.

Tyson Foods has come under criticism for offering employment to legal asylum seekers for open positions. The company is a participant in the Tent Partnership for Refugees that has as its goal, placing in employment 181,000 migrants sent to New York City. Tyson has pledged to hire 2,500 refugees over a three-year period.

The Tyson workforce of 120,000 currently includes 35 percent non-native born legal workers.  Tyson Foods along with other packers and integrators encounters a 40 percent turnover of line workers each year necessitating recruitment and hiring of about 50,000 people to fill vacancies.

Garrett Dolan, Associate Director of Human Resources, for Tyson Foods pointed to the need to employ migrant labor despite the search for qualified domestic candidates. 

The company offers a $1,000 initial relocation bonus, six days of temporary housing and a $4,000 payment after permanent housing is obtained, Spanish-speaking community liaison, assistance with enrolling children at school and other needs are provided. Tyson Foods has committed $1.5 million for legal and citizenship service to immigrant workers.

Criticism of Tyson Foods and other companies participating in the Tent Partnership for Refugees is based on xenophobia.  The U.S. needs immigrants to fill available positions.  More important will be the second generation who will benefit from U.S. acculturation, schooling and universities to become productive members of society. Our nation is aging and requires a large and active young workforce to sustain social security programs. 

It must be remembered that irrespective of our heritage, we all have immigrant antecedents, even those who walked across the land bridge over the Bering Strait millennia ago.

In a press release dated February 27th Beyond Meat Inc. (BYND) announced results for the 4th Quarter ending December 31st 2023.     

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)

NOTES:

R&D expenditure declined 29.0 percent from Q4 2022 to $9.2 million or 12.5 percent of revenue

S&G expenditure increased 44.5 percent from Q4 2022 to $67.7 million or 91.7 percent of revenue  

For FY 2023 net loss was $(338.14) million on sales of $334.38 million with a diluted EPS of $(5.26). Comparative values for FY 2022 were a net loss of $(342.77) million on sales of $418.93 million with a diluted EPS of $(5.75).

For FY 2023:-

52-Week Range in Share Price:  $16.13  to  $8.31    50-day Moving average  $7.59

Forward P/E: Neg.                  Beta 2.5

Insiders hold 8.7 percent of equity, Institutions 38.7 percent.

Comments:-

For the 4th Quarter of 2023:

          U.S. sales represented 58.0 percent and International 42.8 percent

         Of U.S sales 75.0 percent were through retail channels, up from 70.8 percent in

            Q4 2022. The remainder of sales was to the food service sector.

            Of International sales 42.9 percent were through retail channels, down from

            45.1 percent in Q4 2022. The remainder of sales was to the food service sector

Average unit revenue in Q4 2023 for all sales attained $4.23/lb. compared to $4.96/lb.

          during the corresponding quarter of 2022.

Guidance for FY 2023 included:

      Net revenue of between $315 and $345 million, approximately 2.5 percent below

           FY2022

      Gross margin mid to high teens

      Operating expenses $180 million

      Capital expenditure $20 million

      Continued negative cash flow

In commenting on results Ethan Brown president and CEO stated:- “Though we are encouraged by pockets of growth, particularly in the EU where we saw double digit gains in net revenues on a year-over-year basis, we are disappointed by our overall results as we continue to experience worsening sector-specific and broader consumer headwinds. As we shared last week, we are conducting a review of our global operations for purposes of further and significantly reducing our operating expense base as we seek to accelerate our transition to a sustainable and, ultimately, profitable business. And while we expect current headwinds to persist in the coming quarters, we have confidence in the long-term trajectory of our business, its central relevance to the intensifying health, climate and natural resource challenges facing our global community, and our ability to emerge as a stronger, leaner organization as a result of the decisive measures we are undertaking to fit the current macroeconomic reality and business environment.”

Despite this optimistic commentary the reality includes:-

• An accumulated deficit of $1,081 million.
• Trailing 12-month negative operating cash flow of $108 million
• Inventory valued at $130,336 representing 1.8 times Q4 sales
• Effective February 29th 38.1 percent of float was short
• Share price off 47.9 percent over past 12 months
• Institutional holdings declined from 63 percent to 39 percent over past year.

Foster Farms has announced that Jayson Penn will serve as CEO effective March 18th.  He succeeds Donnie Smith, previously CEO of Tyson Foods after retiring in 2016.  Smith was appointed as CEO, presumably as a caretaker in 2022, following the acquisition of the family-owned company by Atlas Holdings.

Penn was most recently President of John Soules Food having served previously as CEO of Pilgrim’s Pride Corp. and gaining experience at Case Foods, Marshall Durbin Company and Sanderson Farms.

James Richards was named CFO.  His experience includes two decades at General Electric Company in senior financial positions and, most recently, participating in turnaround of businesses including Kodi Collective.

A spokesperson for Atlas Partners, Sam Astor, Ed Fletcher and Mike Sher, stated, “We are excited to have Jason on board to lead the transformation journey now underway.  He brings immediate strength to the leadership team from his industry experience and commitment to operational excellence.”

The March 18th edition of USAPEEC MondayLine includes a tribute to Sarah Li who has retired after 38 years representing our poultry export promotion organization in China and Taiwan.  Appointed as the Director for Market Development for the region in 1989, Sarah opened the first USAPEEC office in China in the city of Shanghai in the early 1990s followed by the Beijing office in the early 2000s.

She notes as significant career achievements the opening of both the China and Taiwan markets over a 20-year period following her appointment.  This required representation and negotiation with officials in China including the General Administration of Quality Supervision, Inspection and Quarantine and also Customs Agency over the years.  Apart from long-term market development, Sarah has been instrumental in firefighting when consignments were embargoed or situations required urgent resolution through her abilities and contacts.

The Bezos Earth Fund will distribute grants to the value of $60 million to various research institutions including universities to improve the texture and taste of plant-based meat.  This allocation will be part of a $1 billion fund intended to “transform the food industry”.

Proponents of plant-based meat alternatives now recognize the lack of consumer acceptance of the category characterized by declining sales. Producers of faux meat that publish financial reports confirm losses. 

Andy Jarvis, Director of the Future of Food, at the Bezos Earth Fund, quoted in Bloomberg, observed that plant-based substitutes for meat “need to cost less and need to be more flavorful”.  This is a tacit admission of the inferiority of current plant-based products and lack of variety despite higher prices.

The Department of Agriculture and Rural Development of the Republic of Mexico has expressed opposition to the recent announcement of the USDA Voluntary Product of USA Label Rule.

Mexico, our partner in the USMCA believes that the Rule does not recognize the extent of integration of livestock and meat industries within North America and represents an unnecessary trade barrier inconsistent with the World Trade Organization.  The Voluntary Product of USA Rule could be regarded as a successor to the Country of Origin Label (COOL) that was the subject of a WTO dispute panel leading to an adverse ruling against the U.S. 

The Product of USA Rule is a domestic matter and responds to consumer demands for a clear, concise and certainly non-ambiguous label descriptor confirming that beef, pork, chicken and turkey products were derived from herds or flocks born or hatched and then grown, processed and packed entirely in the U.S.  Previously, cattle or hogs were imported into the U.S., slaughtered, packed and distributed with a Made in the U.S. label.

It is anticipated that Canada will raise objections to the Product of USA Rule on the basis of discrimination in trade, contrary to USAMC and WTO regulations.

The annual Poultry Processor Workshop for 2024 will be held May 15-16 at the Embassy Suites by Hilton Downtown, in Nashville, TN.

Featured speaker will be Dr. Jose Emilio Esteban, Undersecretary of the USDA for the Food Safety and Inspection Service.  Other speakers will include Clint Rivers, CEO of Wayne- Sanderson Farms, with his perspectives on leadership.  Topics will comprise animal welfare, reduction of Salmonella contamination, adapting to a changing workforce, process safety, automation and a series of case studies in plant management.

For additional information including the agenda, registration and booking access <www.uspoultry.org>.

The Food Safety and Inspection Service (FSIS) of the USDA has announced that vaccine strains of Salmonella administered to flocks would be excluded from calculations applied to establish the status of plants under the Raw Poultry Performance Standards.

It is recognized that vaccine strains are innocuous given multiple gene deletion and with their biological activity confined to stimulating an antibody response. The decision by the FSIS was based on an analysis of data from eleven pilot projects evaluating pre-harvest strategies.

Dr. Ashley Peterson, NCC Senior Vice President of Scientific and Regulatory Affairs, stated, “Companies will no longer be penalized for using a Salmonella vaccine should the strain be detected in the processing facility by FSIS.”

Before the change in FSIS policy that will be effective on April 1st, any vaccine strain Salmonella isolated counted against the participating establishment and effectively served as a deterrent to vaccination as a viable intervention measure.  The change in policy will be beneficial to producers and ultimately, consumers given the efficacy of vaccination.

On March 11th, USDA announced grants totaling $9.5 million to 42 projects under the Local Meat Capacity Grant Program.  This tranche is part of the $75 million available as announced in April 2023.  The intent is to “build resilience in the meat and poultry supply chain by providing producers with more local processing options and strengthening their market potential”.

The USDA Agricultural Marketing Services administering the program has entered into an agreement with the New Hampshire Community Loan Fund to process grant awards. These will range from $10,000 to $250,000 to purchase processing equipment including mixers, smokers and packaging installations.

It is questioned whether awards with an average of $226,000 will make any impact on national production although most individual recipients in various localities will benefit. As with all “giveaway” programs implemented under the present Administration it is questioned how the USDA AMS will evaluate increased productivity and improved financial performance given that taxpayer funds are involved. Do we anticipate an accounting in four years’ time? Naah!

Following restructuring and radical reduction in operating costs, Canadian Cooperative, Olymel LB posted a profit of $101 million for Fiscal 2023 compared to a loss of $329 million in FY2022.

According to Pascal Houle, CEO of the holding company, Sollio Cooperative Group, by closing unproductive plants, reducing headcount and adjusting production to balance sales contributed to the turnaround.

Houle commented, “The pork industry is in a major crisis around the world.”  He added, “We all want a strong, dynamic pork sector that is a goal of the robust recovery plan we implemented.”

The improved profitability attained by Olymel is a model for companies producing livestock that are obliged to trim expenses and unprofitable facilities in accordance with market realities. It is apparent that the major broiler integrators are evaluating efficiency and productivity as evidenced by Tyson Foods closing broiler plants in Missouri and Arkansas and a large hog plant in Iowa. Smithfield Foods has closed sow operations and plants. Companies are consolidating production to achieve cost efficiency.