Poultry Industry News

The FSIS-New Swine Inspection System (NSIS) allows higher than conventional line speeds in six hog plants. After two years the USDA has agreed to extend the trial for an additional 90-days to gather data. It is estimated that collectively 40 percent of the Nation’s hogs are within 100 miles of one of the six plants operating under the NSIS.

High-speed slaughter facilitated through the NSIS has improved efficiency and reduced cost of packing.  In a competitive market, savings are generally passed on to consumers. Following litigation a Federal district court capped line speed at 1,106 head per hour in 2021. In practice with suitable equipment this rate can be exceeded without compromising either worker welfare of food safety

Enhanced line speeds are vigorously opposed by both worker’s unions and animal welfare activists. These entities are following their specific parochial interests.  Unions are concerned over maximizing head-count and membership.  Animal Rights Activists will use any issue including food safety to reduce the profitability and strength of intensive livestock production, irrespective of the outcome or cost to stakeholders.

Cargill announced that it will intensify efforts to eliminate deforestation and to support land conservation in both direct and indirect supply chains. This has specific reference to South American countries including Brazil. The initiative will be completed within five years. 

Cargill is a frequent target of environmentalists for making promises that are not consistently fulfilled. The latest commitment does appear to be significant given the influence of the company and its importance in world markets—but five years?

Judge Sharon D. Calhoun, an Administrative Law Judge, confirmed penalties imposed by OSHA against Mar-Jac Poultry arising from a fatality at the Hattiesburg, MS plant in 2021.  In this case, a night shift worker was killed after entanglement while cleaning an eviscerator.  The Court supported the findings of OSHA that there was inadequate protective guarding around the machine and that the company was liable despite the fact that the decedent was inebriated.  The 2021 case followed a previous fatality in the plant during late 2020.  Penalties of $13,000 were imposed for each of the deaths.

It would appear that Mar-Jac has a problem in its plant given that a 16-year-old boy died recently from injuries sustained during cleaning.  The Department of Labor and the Department of Justice are investigating human trafficking and employment of minors in hazardous situations in the meatpacking and poultry industries. Both civil and criminal cases are anticipated as a result of this series of possibly avoidable deaths in the Mar-Jac plant.

Tyson Foods has inaugurated a $300 million plant in Danville, VA. to prepare fully cooked products.  The plant will incorporate a high degree of mechanization for optimal efficiency.  The facility will extend over 325,000 sq. ft. and will create 400 new jobs.

Donnie King, president and CEO of Tyson Foods stated, “The Danville plant represents a significant commitment to the region, and we take our responsibility to enhance the communities where we live and work seriously.  This plant is also a significant step forward in our ongoing goal of operational excellence by investing in innovative technology and automation”.

Features of the plant include high-speed case packing with robotics, machine vision inspection of products including metal detection.  Workers will be equipped with armband devices that will detect and transmit any physical stress to receptors monitored by safety managers.

West Morris, Group President for Poultry at Tyson Foods stated, “The Danville plant incorporates the latest technology that brings real-time intelligence to our processes, products and workplace experience benefitting all team members.”

To ensure that workers have adequate training and opportunity for advancement, Tyson Foods has partnered with the Danville Community College to develop a training program in maintenance technology in addition to other skills.

In a side interview with media, Donnie King opined that Tyson became comfortable with high market demand and ability to maintain pricing pressure over the COVID pandemic period.  This created a culture of inefficiency that he characterized as “fat and lazy”.  The recent downturn in net earnings for the most recent quarter of fiscal 2023 justified extreme action taken by the company including plant closures and layoffs and consolidation to achieve efficiency. This approach also included centralizing the management of all of Tyson Foods operating segments at the corporate campus in Springdale, AR.

In a release dated November 29th Hormel Foods (HRL) reported on the fourth quarter of fiscal 2023 ending October 29th 2023, disappointing on both the top and bottom lines.  For the quarter the company earned a reported (GAAP) $195.9 million on revenue of $3,198 million (Zack’s consensus of $3,260 million) with a diluted EPS of $0.36.  Comparable values for Q4 of fiscal 2022 ending October 30th were net income of $279.6 million on revenue of $3,283 million with a diluted EPS of $0.51.

Compared to Q4 of FY 2022 sales declined by 2.6 percent, gross margin decreased from 17.3 percent to 16.1 percent; operating margin was down from 11.1 percent to 8.4 percent. Profit margin fell from 8.5 percent to 6.1 percent for the most recent quarter.

For FY 2023 Hormel earned $793 million on revenue of $12,110 million with a diluted EPS of $1.45. For FY 2022 Hormel earned $999 million on revenue of $12,459 million with a diluted EPS of  $1.82.

Effective October 2022, Hormel reorganized their operating divisions into Retail, Food Service and International.  The Jennie-O Turkey Store Division was integrated among the new three operating divisions.  Accordingly, releases for Fiscal 2023 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 despite recovery from the 2022 highly pathogenic avian influenza epornitic. During the analyst’s call CEO Jim Snee expressed ongoing concern for losses during November and December 2023 and for 2024.

Segment performance in both sales and operating profit for the most recent quarter was compared with Q4 FY 2022:-

• Retail Segment volume -3.0%:  sales -4.0%: segment profit -4.0%.
• Food Service Segment volume +5.0%: sales +2.0%: segment profit +13.0%.
• International Segment volume 5.0%: sales -12.0%: segment profit -67.0%

In commenting on Hormel results Jim Snee, Chairman, president and CEO stated “In fiscal 2023, we achieved our second consecutive year of net sales in excess of $12 billion, continued to reinvest in the growth of our leading brands, drove strong operating cash flows of $1 billion and returned a record amount of cash to our shareholders in the form of dividends," He added "Despite challenging operating conditions to end the year, our results were in line with the low end of our revenue and adjusted net earnings per share expectations, as a strong finish from our Foodservice segment was offset by pressure in our Retail and International businesses”.         Snee concluded "Looking ahead, our teams continue to navigate through a dynamic operating environment characterized by slowing consumer demand, inflationary pressures and headwinds in our turkey business”.

For FY 2024 the company projected a one to three percent increase in net sales growth compared to FY 2023 and full year diluted net earnings per share of $1.43 to $1.57.  

Hormel Foods posted total assets of $13,449 million on October 29th 2023 of which $6,685 comprised goodwill and intangibles. Long-term debt was $2,549 against an intraday market capitalization of $16,700 million on December 1st. HRL has traded over the past 52 weeks in a range of $30.12 (an 8-year low on October 23rd) to $47.64 with a 50-day moving average of $33.85.  HRL trades with a forward P/E of 17.5. HRL closed at $39.08 on August 30th pre-release. The share price closed at $30.59 on November 30th post release

The 12-month trailing operating margin is 9.3 percent with a profit margin of 6.6 percent. The Company has returned 4.9 percent on assets and 10.4 percent on equity.

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

According to a release by Marel hf. of Iceland, the multinational manufacturer of food processing equipment has received a non-binding proposal from John Bean Technologies (JBT) based in Chicago.  According to the release, John Bean Technologies has offered $2.6 million for Marel with payment comprising 25 percent cash and the remainder in JBT equity.

Marel, founded in 1983 by engineers, affiliated with the University of Iceland to manufacture onboard scales for the fishing industry.  The company grew by acquisition of 12 major competitors in the U. S., Netherlands, Australia, Denmark and Germany between 1997 and 2022.  In 2008, Marel acquired Stork in the Netherlands in a transaction that included Townsend. More recently Marel absorbed Wenger in the U. S. Approximately a quarter of the equity in Marel is owned by family-held EYIR Investments with the remainder by the Icelandic Pension Fund and other public entities.

The preliminary JBT offer was rejected by the Board of Marel but as with all first approaches, the Board indicated that any proposals that fully reflect the value of Marel would be considered. The merger would be subject to due diligence and approval by appropriate regulatory authorities.

If the transaction is completed the two largest multinational poultry meat processing companies would revert to U.S. ownership. Meyn Food Processing Technology b.v is a subsidiary of CTB Inc. a Berkshire Hathaway company since acquisition in 2018.

Investigation of a 2022 outbreak of salmonellosis in Italy disclosed inappropriate processing hygiene and procedures in the production of porchetta a spiced pork product.  Approximately 70 cases of Salmonella Typhimurium were diagnosed but is recognized that with most food-related outbreaks the actual number of patients exceeds the confirmed cases by a factor of ten.

Investigators determined that raw uncooked meat products were intermingled.  The infective strain of S. Typhimurium was isolated from implements, wooden chopping boards, work surfaces and even a refrigerator.

The plant was completely decontaminated and workers were re-trained in sanitary food handling including absolute separation of raw and cooked product.

On November 16th, Aviagen inaugurated a new pedigree farm in Crossville, TN.  The location includes a high-biosecurity feed mill, a hatchery, a production and administrative center and pedigree farms.  The complex was established in 1991 and currently has 7 farms of the planned 14 to be completed by the beginning of 2025.

Aviagen has operated in the Crossville area for 32 years having transferred pedigree breeding operations from Elkmont, AL. in 1991.

Jan Henricksen, CEO of Aviagen, stated, “We are pleased to be part of the great state of Tennessee and their welcoming and caring citizens.  I look forward to many more years of successful collaboration.”

The inauguration was attended by state and local invitees and was hosted by Hendricksen and by DeWet Nortje, GM of Higher Generation Production and Andy Goldman, VP of Pedigree Operations.

According to a Cargill study, 8 of 10 respondents surveyed purchased a whole turkey for their Thanksgiving celebration.

Hunts Kabat, President of Cargill North America Protein Business, stated, “Americans hold onto the belief that a whole turkey should be the centerpiece of a Thanksgiving meal with family and friends.”  Cargill considers that in 2023, purchase of whole turkeys reversed a trend towards turkey parts including breasts.  This may, in part, have been due to the reluctance of families to gather during the COVID period.

The Cargill study is supported by the November 2023 USDA Cold Storage Report.  Hen carcasses in storage decreased 24.8 percent during October 2023 compared to the previous month of September to 72.2 million pounds on October 31st 2023.  Although this figure was only 0.3 percent lower than on October 31st 2022, the draw down of hen carcasses confirmed seasonal demand in anticipation of Thanksgiving.  During October 2023, 20.3 million young turkeys were processed representing a 5.7 percent increase over October 2022.

Dr. Jessica D. Starkey of Auburn University recently reported on the effect of incubation temperature during the 4-to-11-day period.  The project, funded by the USPOULTRY Foundation as Project No. 725, compared a suboptimal temperature of 36.1C with a high temperature of 38.6C and a conventional temperature of 37.1C as a control.  It is known that muscle fiber and satellite cell populations are influenced by early incubation temperature. 

The results of the study demonstrated that irrespective of temperature, there were no differences in embryonic mortality, but hatch-of-fertile eggs was higher in the control group compared to either cold or hot treatments.  Chicks from eggs subjected to early cold temperature were heaviest at hatch compared to the chicks from eggs subjected to high temperature during early-stage incubation with a negative difference of ten percent.

Cold incubation impacted final body weight in addition to suppressing breast, wing, thigh and drum yield compared to controls.  Breast weight was reduced by 25g, or six percent compared to control and high-temperature incubation treatments.  Temperature did not affect the incidence of  pectoral myodegeneration (wooden breast or white striping). 

An important consideration from the study was the financial impact of low incubation temperature during the 4-to-11-day period.  The Auburn University team determined that a 1.25 million broiler per week complex would lose $7 million annually as a result of suboptimal early incubation.  By extension, a 1C lower early incubation period could cost the U.S. broiler industry as much as $850 million annually.

Monthly Turkey Production and Prices, November 24th 2023

Poult Production and Placement:

The November 17th 2023 edition of the USDA Turkey Hatchery Report, issued monthly, documented 25.75 million eggs in incubators on November 1st 2023 compared to 26.46 million eggs on November 1st 2022* The November 2023 set was down 2.8 percent (727,000 eggs) from November 2022 and 1,258,000 eggs (4.7 percent) lower than the previous month of October 2023.

A total of 23.0 million poults were hatched during October 2023 up 498,000 poults (2.2 percent) compared to 22.45 million in October 2022*. The October 2023 hatch was up 1,381,000 poults (6.4 percent) from the previous month of September 2023.

A total of 20.8 million poults were placed on farms in the U.S. in October 2023, compared to 20.5 million in October 2022*. The October 2023 placement was 1.6 percent, (318,000 poults) more than the month of October 2022. This data confirms disposal of 2.16 million poults during the month. Approximately 9.4 percent of the October 2023 hatch was not placed.

For the twelve-month period November 2022 through October 2023 inclusive, 273.5 million poults were hatched and 255.2 million were placed. This confirms disposal of 18.3 million poults over the 12-month period, corresponding to 6.7 percent of all poults hatched.

* USDA revision from previous monthly report.

 

In a press release dated November 13th JBS SA. (JBSAY) announced results for the 3rd Quarter of FY 2023 ending September 30th. The Company missed consensus estimates on earnings that declined by 85 percent from the 3rd Quarter of FY 2022.

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

Segment Revenue ($ million) EBITDA ($ million)

JBS USA Beef $5,953 $103

JBS US Pork $2,027 $209

Pilgrim’s Pride Corp. $4,356 $450

SEARA $2,092 $116

JBS Brazil $2,959 $ 99

JBS Australia $1,575 $136

Others $ 141 $ (4)

52-Week Range in Share Price: $6.20 to $9.24 50-day Moving average $7.80

Forward P/E 3.9 Beta 0.3

JBS SA Exports from Brazil, Total Q3 2023, $5,400 million:

China 28.1%; Africa/MS, 12.2%; Japan, 10.1%; S.Korea, 8.1%; U.S., 9.2%;

E.U., 5.8%; Other, 26.6%.

In commenting on results Gilberto Tomazoni, CEO Global JBS stated, “The results in the third quarter of 2023 demonstrate that we are on a path of consistent recovery, as we have indicated in previous quarters. Thanks to the strength of our globally diversified platform across geographies and proteins, and the implementation of significant improvements in managing our operations in Brazil and the United States, we have nearly added one percentage point to our consolidated EBITDA margin compared to the second quarter of this year, reaching 5.9 percent. This evolution in our cash generation also reflects our commitment to the fundamentals of our debt policy”.

Addressing performance in operating segments Tomazoni said “We continue to work toward restoring the profitability of two of our businesses that were performing below potential. In Seara, we have executed the majority of our previously identified adjustments. This should positively impact our results in the coming quarters. There is still room for improvement in results with the ramp-up from the new facilities, which are not yet operating at full capacity. We are very optimistic about the prospects of this business”. He added “In our U.S. beef business, operational measures adopted since March this year in the commercial and industrial areas are helping us navigate through the lowest point of the cattle cycle. The margins of the operation are showing gradual recovery, even in a scenario of tighter spreads and reduced cattle supply, demonstrating our commitment to operational excellence”.

Tomazoni concluded, “Our chicken and pork businesses are already benefiting from the reduction in grain prices, as seen in the results of Pilgrim’s and U.S. pork. The margins of our U.S. pork business have shown strong evolution, increasing from 1.5 percent in the second quarter of 2023 to 9.5 percent in the third quarter, also boosted by strong consumer demand. Similarly, our beef operations in Brazil and Australia are increasingly ready to capture the opportunities presented by more favorable cycles in both markets, and this movement is expected to intensify from the next quarter onward”.

Monthly Broiler Production and Prices, November 27th 2023.

Broiler Chick Placements.

According to the November 15th 2023 USDA Broiler Hatchery Reports 911,074 eggs were set over four weeks extending from week ending October 21st through November 11th inclusive. This quantity was down approximately three percent compared to the corresponding period in 2022.

Total chick placements for the U.S. over the four-week period amounted to 710,575 chicks. Claimed hatchability for the period averaged 80.3 percent for eggs set three weeks earlier (80.6 percent for the preceding four-week period). Each 1.0 percent change in hatchability represents 1.75 million chicks placed per week and 1.66 million broilers processed assuming five percent culls and mortality with the current range of weekly settings.

Cumulative chick placements for the period January 7th 2023 through November 11th amounted to 8.37 billion chicks, one percent lower than the corresponding period in 2022.

According to the November 20th 2023 edition of USDA Chickens and Eggs pullet breeder chicks hatched and intended for U.S. placement during October 2023 amounted to 7.73 million, up 6.0 percent (435,000 pullet chicks) from October 2022 and 1.17 million pullet chicks or 13.6 percent less than the previous month of September 2023. Broiler breeder hen complement attained 63.38 million on October 1st 2023, 0.9 percent higher (571,000 hens) than on October 1st 2022.

Broiler Production

As documented in the November 23rd USDA Broiler Market News Report for the processing week ending November 18th 2023, 166.8 million broilers were processed at 6.49 lbs. live. This was 0.3 percent more than the 166.3 million broilers processed during the corresponding week in the previous month of October 2023 and 4.2 percent less than the 174.1` million processed during the corresponding week in November2022. Broilers processed in 2023 to date amounted to 7.67 billion, less than 0.3 percent less than for the corresponding period in 2022.

Ready to cook (RTC) weight for the most recent week was 822.6 million lbs. (373,923 metric tons). This was 0.6 percent less than the 827.7 million lbs. processed during the corresponding week in October 2023 and 4.1 percent less than the 857.6 million lbs. during the corresponding week in October 2022. Dressing percentage was a nominal 76.0 percent. For 2023 to date RTC broiler production attained 37.24 million lbs. (16.93 million metric tons). This quantity was 0.4 percent less than the corresponding period in 2022.

Broiler Prices

The USDA National Composite Weighted Wholesale price averaged over the period November 20th to November 24th was up 0.5 cents per lb. or 0.4 percent compared to the corresponding week in October 2023 at 113.7 cents per lb. The attached USDA figures denotes average prices over three-years.

Leading QSRs are using increasing quantities of breast meat for sandwiches, strips and nuggets. Inflation is increasing consumer awareness of value with chicken benefitting at the expense of beef and pork

The USDA National benchmark prices in cents per lb. (rounded to nearest cent) are tabulated from the new version of the Broiler Market News Report.

 

The annual International Poultry Scientific Forum (IPSF) co-sponsored by the Southern Poultry Science Society, the Southeastern Conference on Avian Diseases and USPOULTRY will take place on Monday, January 29th through the morning of Tuesday, January 30th 2024.  As in previous years, the IPSF will be held concurrently with the 2024 International Production and Processing Expo (IPPE).

Pre-registration is $95 through January 12th.  Complimentary registration is offered to students.

For information concerning the IPSF and IPPE access  <ippeexpo.org>.

The unjust restrictions placed on entire states as a result of any diagnosis of HPAI in a  commercial farm in a single county has restricted exports of U. S. poultry products to the People’s Republic of China (PRC).  Recently, China lifted restrictions on seven states among which North Carolina, Delaware, Maryland and Texas are major broiler producers. The concession relates to product processed after November 10th.  China maintains a ban on importation from 31 U.S. states of which 13 are eligible for export under WOAH rules.

Over the first nine months of 2023 exports to China, valued at $576,346 comprised 67.4 percent paws and feet representing 73.2 percent of value with a unit price of $1,848 per metric ton.  In contrast, legs and leg quarters comprising 24.2 percent of volume and 14.2 percent of value were priced at $963 per metric ton below average export price. An evident trend in export to the PRC is a reversion of exports to the Special Administrative Region of Hong Kong with presumed transshipment to the Mainland.

The Peak 2024 Exhibition organized by the Midwest Poultry Federation will take place at the Minneapolis Convention Center from April 17-19, 2024.  The event will include the comprehensive trade exhibition, educational programs, social interaction and networking.  Registration and hotel reservations will open on December 6th.

For further information access info@midwestpoultry.com.

Activist group, Pro-Animal Denver, has petitioned the City of Denver to place a referendum before voters in 2024 to ban slaughterhouses within city limits.  Other organizations have attempted the same objective with voters rejecting the proposition. The question arises as to whether the petitioner is pro-animal or effectively pro-vegan, attempting to superimpose their lifestyle on consumers.

Pro-Animal Denver is specifically targeting Superior Farms that processes lambs with a 70-year history of operation both in Denver, CO and Dixon, CA.

Updated USDA-ERS Poultry Meat Projection for November 2023.

On November 16th 2023 the USDA-Economic Research Service released updated production and consumption data with respect to broilers and turkeys, covering 2022 (actual), a projection for 2023 and a forecast for 2024.

The 2023 projection for broiler production is 46,209 million lbs. (21.004 million metric tons) unchanged from 2022 but a 0.6 percent downward adjustment from the October report. USDA projected per capita consumption of 99.2 lbs. (45.1 kg.) for 2023, up 0.3 percent from 2022. Exports will attain 7,180 million lbs. (3.264 million metric tons), 1.5 percent below the previous year.

The 2024 USDA forecast for broiler production will be 46,650 million lbs. (21.205 million metric tons) up 1.0 percent from 2023 with per capita consumption up 0.2 percent to 98.4 lbs. (44.7 kg). Exports will be 1.3 percent higher than 2023 to 7,270 million lbs. (3.305 million metric tons) equivalent to 15.6 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 November 16th 2023

The November USDA projection for the turkey industry in 2023 included annual production of 5,500 million lbs. (2.500 million metric tons), up 5.3 percent from 2022 with 2023 consumption of 15.1 lbs. (6.9 kg.) per capita, up 3.4 percent from the previous year. Export volume will increase by 16.7 percent in 2023 to 475 million lbs. (215,910 metric tons). Values for production and consumption of RTC turkey in 2023 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 2024 forecast for turkey production will be 5,595 million lbs. (2.543 million metric tons) up 1.7 percent from 2023 with per capita consumption up 2.0 percent to 15.4 lbs. (7.0 kg). Exports will be 2.1 percent higher than in 2023 to 465 million lbs. (211,360 metric tons) equivalent to 8.3 percent of production.

Export projections do not allow for a breakdown in trade relations with existing major partners including Mexico and China 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. Feet represented 77.8 percent of volume during 2022 (483,538 metric tons) at a unit price of $1,926 per ton. Compared to January to September 2022, exports to China during the first nine months of 2023 were 29 percent lower in volume to 338,312 metric tons and 32 percent lower in value to $576 million.

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

U.S. Broiler and Turkey Exports for January-September 2023.

OVERVIEW

Total exports of bone-in broiler parts and feet during January-September 2023 attained 2,729,138 metric tons, 2.9 percent less than for January-September 2022 (2,811,026 metric tons). Total value of broiler exports declined by 10.2 percent to $3,549 million ($3,951 million).

Total export volume of turkey products during January-September 2023 attained 156,451 metric tons, 10.8 percent more than in January-September 2022 (141,235 metric tons). Total value of turkey exports declined by 5.7 percent to $451.6 million ($478.7 million).

Unit price for the broiler industry is constrained by the fact that leg quarters comprise over 97 percent of broiler meat exports by volume (excluding feet). From the first quarter of 2021 through 2022, unit value of leg quarters increased 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.

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. Mild overproduction is evident in the white-feathered broiler sector with implications for exports other than feet during the remainder of 2033.

EXPORT VOLUMES AND PRICES FOR BROILER MEAT

During January-September 2023 the National Chicken Council (NCC), citing USDA-FAS data, documented exports of 2,746,288 metric tons of chicken parts and other forms (whole and prepared) down 3.0 percent from the first nine months of 2022. Exports were valued at $3,608 million with a weighted average unit value of $1,314 per metric ton.

The NCC breakdown of chicken exports for January-September 2023 by proportion and unit price for each category compared with the corresponding months in 2022 (with the unit price in parentheses) comprised:-

• Chicken parts (excluding feet) 4%; Unit value $1,247 per metric ton ($1,344)
• Prepared chicken 0%; Unit value $4,414 per metric ton ($3,851)
• Whole chicken 6%; Unit value $1689 per metric ton ($1,926)
• Composite Total 0%; Av. value $1,314 per metric ton ($1,418)

The following table prepared from USDA data circulated by the USAPEEC, compares values for poultry meat exports during January-September 2023 compared with the corresponding months of 2022:-

 

Senator Deb Fischer (R-NE) has reintroduced the Real Marketing of Edible Artificials Truthfully Act, colloquially referred to as the Real MEAT Act.  The purpose of the intended legislation is to clearly define beef and pork for the purposes of labeling and to require the term “imitation” on packaging of alternative products.

This is a classic case of ‘feel-good” legislation pandering to a specific constituency and gaining financial support from the National Cattlemen’s Beef Association and similar organizations.  The justification for the legislation according to Senator Fischer is to avoid confusion among consumers.  There is no evidence that consumers, irrespective of their level of literacy, cannot distinguish between plant-based meat substitutes and animal-derived meat.  If avoiding confusion is the major justification, perhaps the proposed legislation should go beyond labeling and enforce separation of real meat and substitutes at point of sale. 

 When subjected to legal challenges, most of the state-enacted labeling laws have been declared unconstitutional.  With so many major fiscal and social issues facing Congress, the Real MEAT Act would appear to be Congressional theatre rather than productive legislation. The need for legislation to enforce labeling is probably moot given the declining sales of meat substitutes based on high price and inferior quality compared to real meat.

In a press release dated November 13th Tyson Foods Inc. (TSN) announced results for the 4th quarter and FY 2023 ending September 30th 2023. TSN posted lower revenue than anticipated but was higher on adjusted earnings.

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)

* Tyson Foods registered a goodwill impairment charge of $333 million for the Beef Segment

For FY 2023 Tyson Foods posted a GAAP loss of $(648) on revenue of $52,881 million with a negative diluted EPS of $(1.87). For FY 2022 the Company earned $3,238 million on revenue of $53,282 million with a diluted EPS of $8.92

52-Week Range in Share Price of TSN: $44.94 to $67.87. 50-day Moving average, $48.63

Market Close: Friday November 10th $46.95. Monday November 13th post release, at market close $45.61 down 2.9 percent.

Forward P/E 22.9 Beta 0.8

The Chicken Segment attained sales of $4,155 million ($4,619 million in Q4 FY 2022) representing 31.1 percent of Company revenue. GAAP operating loss was $(267) million in Q4 representing 57.7 percent of total Company operating loss after a charge of $118 million. Operating income in Q4 FY 2022 was $340 million representing 44.3 percent of the Company total. For the Chicken Segment the report stated:- “The USDA projects chicken production will increase slightly in FY 2014. Anticipated adjusted operating income was forecast at $400 to $700 million for FY 2024.

For comparison among Tyson Foods’ business segments the adjusted operating income (loss) in Q4 2023 were respectively:- Pork, ($11) million; Beef, $(323) million; Prepared Foods $118 million and International $20 million.

In commenting on results Donnie King, president and CEO stated “While economic headwinds persist, we are moving in the right direction and managing what we can control”. He added, "The decisions we have taken have made us more operationally efficient and aided a second quarter of sequential improvement in adjusted operating income. The strategy and leadership team we have in place will allow us to take advantage of the long-term opportunities in front of us and drive shareholder value.”

Guidance for FY 2024 included Revenue unchanged from FY 2023. Adjusted operating margin for the Company was stated to be $1.0 to $1.5 billion. Capital expenditure was reduced to $1.0 to 1.5 billion. In the Q2 report Tyson Foods projected $1 billion in savings from the “Productivity Program” by the end of 2024 although this prediction was not confirmed in the most recent quarterly report.

Moody’s lowered the outlook for Tyson Foods but the credit rating was not changed at Baa2, slightly above ‘junk’ status. The Company has $1.25 billion maturing in August 2024. Net interest will amount to $400 million n FY 2024.

Jonathan Kanter, U. S. Assistant Attorney General responsible for the Antitrust Division of the Department of Justice, has announced that the Attorneys General of Minnesota, California, North Carolina and Tennessee are joining the civil action against AgriStats, Inc.  The company is charged with violating Section 1 of the Sherman Antitrust Act “by collecting and distributing competitively sensitive price information, cost, work compensation and output among meat and poultry processors”.  It is generally accepted that AgriStats information is available to and used by the majority of U. S. broiler, pork and turkey producers.

The Department of Justice alleges that the comprehensive reports collated and distributed by AgriStats were applied by subscribers to limit production and hence, raise prices.

This misperception was reinforced in a statement by Rob Bonta, Attorney General for the state of California, who opined without justification, “Because of AgriStats’ business practices, Californians have been paying more for chicken, pork and turkey meat.”  He added, “Agricultural markets are the lifeblood of the California economy and the cost of putting dinner on the table matters to every family in this state.”

In reality, all segments of the meat production industry in the U. S. compete vigorously.  Agri Stats data is essentially historical and the comprehensive figures, irrespective of validity, are left to subscribers to interpret and to make their independent decisions.  The cyclic nature of earnings as posted by public quoted companies, including Tyson Foods, Pilgrim’s Pride Corporation and previously before de-listing, Sanderson Farms, Inc. suggests that there was no collusion based on actual expansion rates and profitability among the companies, all apparently presented with the same information.

The Department of Justice has filed a civil lawsuit against Koch Foods alleging that legally questionable penalties were imposed on contractors transferring to other integrators.  The Department of Justice considers that current and past actions by Koch Foods violate federal antitrust laws.  According to the DOJ complaint, Koch Foods imposes exit penalties on farmers who transfer to other integrators in contravention of the Packers and Stockyards Act and the Sherman Antitrust Act.

The Department of Justice has requested that Koch Foods enter into a consent decree requiring the company to “cease demanding, collecting or accepting termination payments”.  The Company should be “enjoined from any retaliation, intimidation or harassment against the independent contractors involved in termination payment disputes”.  The DOJ will require details of any termination payment obligations to be included in contract agreements.

The DOJ considers that imposing exit penalties including threats of lawsuits, serves as a deterrent to farmers in their exercise of their rights to enter into agreements with other integrators.

Tyson Foods will close further-processing plants in Jacksonville, FL. and Columbia, SC.  A spokesperson for the Company noted, “We are making the difficult decision to close two of our case-ready, value-added plants.”  The statement added, “We understand the impact of this decision and our team members and will make every effort to offer them opportunities to remain at other Tyson locations.”

The announcement by Tyson Foods follows decisions to close Van Buren, AR and Glen Allen, VA. poultry chicken processing facilities followed by a subsequent announcement to close plants in North Little Rock, AR., Corydon, IN. and Dexter, and Noel, MO.  An approximate ten percent reduction in head count was effected at the Wilkesboro, NC. complex as a result of decreased demand for chicken products.

The consolidation of facilities by Tyson required closure of a number of processing plants does not appear to be common to the industry and relates to the need of the Company to enhance return on investment and share price. Financial results for the fourth quarter and FY 2023 are reviewed in this edition

According to the USDA Food Safety and Inspection Service, fifteen tons of chicken patties were recalled by Tyson Foods.  The product was manufactured on September 5th and was recalled following an oral injury caused by metal contamination.  The recalled product, marketed as ‘fully cooked fun nugget breaded shaped chicken patties’ was distributed in eight states extending from Alabama to California with the majority delivered to the Midwest.

In order to promote the Perdue policy of “no antibiotics ever” the Company created Chix Mix as a human snack. Perdue claims that the product is analogous to diets fed to chickens that is somewhat of a stretch, with an emphasis on the absence of antibiotics.  Chix Mix comprises corn, wheat puffs and edamame. 

The promotional endeavor is aimed at strengthening the image of Perdue as a producer of chickens raised without antibiotics.  The program is intended to differentiate Perdue from Tyson Foods that is now labeling product as “no antibiotics important to human medicine” a decidedly squirrely claim that will result in consumer confusion.

In a press release dated November 8th Beyond Meat Inc. (BYND) announced results for the 3rd Quarter ending September 30th 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)

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

NOTES:

R&D expenditure declined 32.1 percent from Q3 2022 to $9.1 million or 12.1 percent of revenue

S&G expenditure declined 2.2 percent from Q3 2022 to $53.3 million or 70.8 percent of revenue

For FY 2023:-

52-Week Range in Share Price: $22.87 to $5.58 50-day Moving average $8.56

Forward P/E: Neg. Beta 2.3

Insiders hold 9.2 percent of equity, Institutions 37.3 percent.

Comments:-

For the 2nd Quarter of 2023:

U.S. sales represented 57.2 percent and International 42.8 percent

Of U.S sales 70.8 percent were through retail channels, down from 74.3 percent in Q3 2022

Of U.S sales 29.1 percent were through food service channels, up from 25.7 percent in Q3 2022

Average unit revenue in Q2 2023 for all sales attained $4.19/lb. compared to $4.74/lb.

during the corresponding quarter of 2022.

Guidance for FY 2023 included:

Net revenue of between $330 and $340 million, approximately 20 percent below

FY2022

Gross margin at breakeven

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 $926,143 million.
• Trailing 12-month negative operating cash flow of $129 million
• Inventory of $194,570 represents 2.6 times Q3 sales
• Effective October 30th1 percent of float was short
• Share price off 54.6 percent over past 12 months
• Institutional holdings declined from 63 percent to 37 percent over past year.

According to news reports, LaBelle Patrimoine is now available in specialty grocery and supermarket stores in the mid-Atlantic and Northeast segments of the U.S.  The company located in Lancaster, PA. produces whole-bird and portion presentations. LaBelle uses air-chilling and chicks are derived from slow-growing broiler strains based on the French LaBelle Rouge.

LaBelle Patrimoine is a signatory to the Better Chicken Commitment and products are retailed at Whole Foods Market. This retailer recently named the company “Supplier of the Year for Quality and Innovation”.

The JBS Subsidiary, SEARA, has commenced production in two new further-processing facilities in Brazil.  The project is part of a $1.5 billion expansion to increase market share and contribute to company profit. The two plants have added 700 additional jobs in a company complex located in Rolandia in the state of Parana in southern Brazil. 

The breaded chicken plant has commenced operation and contributes to the one-third share of the domestic breaded chicken market in Brazil held by SEARA. The second facility produces sausages with improved quality and flavor. 

Given the extensive export market for whole birds and products, it is anticipated that breaded chicken and sausages will be added to consumption in the Middle East and other nations supplied by Brazil.

Perdue Farms has provided $300,000 for a project to support conservation in cooperation with the National Fish and Wildlife Foundation and the Alliance for the Chesapeake Bay.  The total initiative will be funded by a $1 million grant to reduce nutrient and sediment release.

Drew Getty, VP of Environmental Sustainability at Perdue Farms, stated, “At Perdue our responsibility as good environmental stewards includes partnering with various stakeholders to preserve and protect our natural resources.”  He added, “This partnership with the Alliance and the National Fish and Wildlife Foundation and together with our farm partners, is an example of collaboration to enhance the quality of the Chesapeake Bay Watershed.”  Approximately 80 Perdue contractors will receive technical and financial support under the initiative.

Improvements will include establishing environmental buffers, management of storm water and improving soil health. Specific concerns relating to broiler production include improved manure disposal and composting of routine broiler mortality.

USDA reports having issued $260 million to approximately 300 processors since initiation of a program “to strengthen the nation’s food supply chain”.  A second round of funding amounting to $5.6 million was completed with 14 of the original recipients obtaining additional support.

Grants allowed processors in numerous states to upgrade facilities to qualify for federal inspection, expansion in production capacity, installation of processing equipment and implementation of HACCP systems.

At some time in the future USDA will have to account for use of public funds by documenting the financial success of recipients, job creation and other quantifiable benefits.

On October 25th, a federal jury determined unanimously that Sanderson Farms did not participate in inter-industry collusion after a six-week trial.

Accusations related to the period 2008 through 2012, preceding the 2022 acquisition of Sanderson Farms by a consortium to form Wayne-Sanderson Farms.

Jeremy Kilburn, Chief Legal and Compliance Officer for Wayne-Sanderson Farms, stated, “The evidence presented over the last six weeks is clear, Sanderson Farms and the broiler industry did not conspire to produce less chicken.”

It is a matter of record that during the period during which the conspiracy was alleged to have occurred, Sanderson expanded by building a number of complexes and increased capacity of existing facilities.

Despite the fact that many competitors of Sanderson Farms settled with plaintiffs’ attorneys without admitting wrongdoing, for a total of $285 million, Sanderson dug in and prevailed.

The verdict serves as a vindication of the broiler industry with obvious implications that there was no collusion to either fix prices or to constrain production to the detriment of retailers and consumers.  The U. S. broiler industry operates according to a free-market system with intense competition.

On June 3rd, the Government of Colombia issued a temporary worldwide prohibition on poultry imports based on HPAI. Shortly thereafter, the U.S. was excluded from the prohibition based on a regionalization agreement that has operated since 2012.

In mid-August, the Government of Colombia noted that it would initiate a risk assessment on U.S. control programs although extending a temporary waiver through November 8th.

The U.S. Trade Representative noted that intervention to enforce existing agreements would be undertaken.

Beyond Meat (BYND) shares have declined from $22.57 to $5.64 over the past 12months with a 50-day moving average of $9.99.  Over the past five trading days, BYND has fallen from $8.01 to $5.68.  Forty-two percent of the float was short on October 15th.  The company has $211 million cash on hand but has incurred a cumulative debt to shareholders of $1.2 billion. Market capitalization has fallen to $395 million.

It is questioned for how long this Company can continue in operation without being acquired or alternatively, filing for protection.  With continuing short pressure and a declining share price, BYND is at risk of being ultimately delisted.

 A review of BYND financial performance for the most recent quarter can be retrieved by entering “Beyond Meat” in the SEARCH block.

Hybrid Turkeys has invested in an automatic trap-nest system to be used for phenotypic selection.  Hens select nests and software reads the individual hen RFID identification and matches the egg deposited to the specific bird.

The investment will enhance accuracy and reduce labor. This contributes to expediting selection and improving the production characteristics of future generations to the benefit of producers.

The U.S. Department of Labor has obtained injunctions against three interconnected poultry businesses in California.  Following investigations by the Department of Labor, Wage and Hour Division, three companies with joint ownership were shown to have employed minors and committed wage theft by failing to pay overtime.  In addition, the companies concerned intimidated and retaliated against workers and falsified documents.

Companies were owned and operated by Tony Brand and partners, operating as Exclusive Poultry Inc., Valtierra Poultry LLC., and Meza Poultry LLC.

During recent months, the Department of Labor has been active in investigating red meat and poultry processors for infractions of child labor laws, withholding overtime wages and other violations of federal law.

Aviagen recently presented the first Annual Hatch Symposium in Huntsville, AL. attracting producers, academia and technical personnel.

Billy Hufford, Vice President of North America Commercial Business, noted, “Hatchability plays a pivotal role in our customers’ economic success and their ability to sustainably nourish the world with a reliable source of protein.”  He added, “This symposium reflects Aviagen’s strong commitment to breeding success together with our valued customers.”

Topics considered included: -

• Nutrition of breeding flocks.
• Optimization of fertility.
• Coordinating aspects of flock management.

The Department of Agriculture, Land, Farm and Rural Development of South Africa has informed potential exporters that trade restrictions, unjustifiably imposed on the U.S. applying a pretext of avian influenza, have been lifted.

South Africa has consistently used avian influenza as a trade barrier.  This policy to protect the domestic industry has rebounded given the extensive outbreaks of both H5 and H7 avian influenza.  Although mortality has not been as high in the broiler sector as in table egg production, a shortage of chicken has developed. This is embarrassing to the ruling African National Congress party that faces a contentious National election between May and August 2024 following 30 years of failure to advance the wellbeing of the Nation’s population. The chicken in every pot principle is apparently universal to all politicians.

Monthly Turkey Production and Prices, October 26th 2023

Poult Production and Placement:

The October 16th 2023 edition of the USDA Turkey Hatchery Report, issued monthly, documented 26.31 million eggs in incubators on October 1st 2023 compared to 26.65 million eggs on October 1st 2022* The October 2023 set was down 1.3 percent (341,000 eggs) from October 2022 and 329,000 eggs (1.2 percent) lower than the previous month of September 2023.

A total of 21.60 million poults were hatched during September 2023 down 657,000 poults (3.0 percent) compared to 22.60 million in September 2022*. The September 2023 hatch was down 1.85 million poults (7.9 percent) from the previous month of August 2023.

A total of 19.23 million poults were placed on farms in the U.S. in September 2023, compared to 19.76 million in September 2022*. The September 2023 placement was 2.7 percent, (532,000 poults) more than the month of September 2022. This data confirms disposal of 2.37 million poults during the month. Approximately 10.9 percent of the September 2023 hatch was not placed.

For the twelve-month period October 2022 through September 2023 inclusive, 273.0 million poults were hatched and 255.0 million were placed. This confirms disposal of 18.0 million poults over the 12-month period, corresponding to 6.6 percent of all poults hatched.

* USDA revision from previous monthly report.

Turkey Production:

The October 20th edition of the Turkey Market News Reports documented the following provisional data for turkeys slaughtered under Federal inspection:-

• For the processing week ending October 14th 2023, 2.122 million hens were processed at 17.0 lbs. live. This was 17.4 percent more than the 1.808 million hens processed during the corresponding week in September 2023 and 4.3 percent less than the 2.217 million processed during the corresponding week in October 2022. Hen slaughter year-to-date has attained 73.73 million, 9.5 percent more than for the corresponding period in 2022.

 

Monthly Broiler Production and Prices, October 25th 2023.

Broiler Chick Placements.

According to the October 14th 2023 USDA Broiler Hatchery Reports 919,047 eggs were set over four weeks extending from week ending September 23rd through October 14th inclusive. This quantity was down approximately one percent compared to the corresponding period in 2023.

Total chick placements for the U.S. over the four-week period amounted to 732,024 chicks. Claimed hatchability for the period averaged 80.6 percent for eggs set three weeks earlier (80.0 percent for the preceding five-week period). Each 1.0 percent change in hatchability represents 1.85 million chicks placed per week and 1.76 million broilers processed assuming five percent culls and mortality with the current range of weekly settings.

Cumulative chick placements for the period January 7th 2023 through October 14th amounted to 7.66 billion chicks, one percent lower than the corresponding period in 2022.

According to the October 20th 2023 edition of USDA Chickens and Eggs pullet breeder chicks hatched and presumably placed during September 2023 amounted to 8.13 million, less than 0.1 percent (9,000 pullet chicks) from September 2022 and 104,000 pullet chicks or 1.3 percent less than the previous month of August 2023. Broiler breeder hen complement attained 63.34 million on September 1st 2023, 0.4 percent lower (226,000 hens) than on September 1st 2022.

Broiler Production

As documented in the October 20th USDA Broiler Market News Report for the processing week ending October 14th 2023, 166.3 million broilers were processed at 6.55 lbs. live. This was 2.1 percent less than the 169.9 million broilers processed during the corresponding week in the previous month of September 2023 and 4.7 percent less than the 174.5 million processed during the corresponding week in October 2022. Broilers processed in 2023 to date amounted to 6.83 billion, less than 0.1 percent more than for the corresponding period in 2022.

Ready to cook (RTC) weight for the most recent week was 827.7 million lbs. (376,246 metric tons). This was 1.4 percent less than the 839.0 million lbs. processed during the corresponding week in September 2023 and 4.9 percent less than the 868.3 million lbs. during the corresponding week in September 2022. Dressing percentage was a nominal 76.0 percent. For 2023 to date RTC broiler production attained 33.05 million lbs. (15.01 million metric tons). This quantity is less than 0.1 percent more than the corresponding period in 2022.

Broiler Prices

The USDA National Composite Weighted Wholesale price on October 20th 2023 was down 3.4 cents per lb. or 2.9 percent compared to September 16th 2023 at 113.2 cents per lb. The attached USDA figures denotes average prices over three-years.

Leading QSRs are using increasing quantities of breast meat for sandwiches, strips and nuggets. Inflation is increasing consumer awareness of value with chicken benefitting at the expense of beef and pork

 

Collusion Case Against Sanderson Farms Dismissed

A federal jury ruled unanimously in favor of Sanderson Farms in the broiler industry collusion lawsuit. Sanderson Farms elected to go to trial and not settle. Plaintiffs alleged inter-company collusion in the broiler industry from 2008 through 2012. The action related to events prior to the 2022 acquisition of Sanderson Farms with the formation of Wayne-Sanderson Farms. The verdict vindicates the Defendant and by inference the remaining integrators who previously settled their cases without admitting wrongdoing at a cost of $285 million plus legal fees.

In a press release dated July 26th Pilgrim’s Pride Corp. (PPC) announced results for the 3rd Quarter of FY 2023 ending September 24th 2023. The quarterly figures showed positive earnings for all three segments despite lower revenue and operating profit across all three geographic areas. Earnings were lower than in Q3 2022 but exceeded consensus estimates on the top and bottom lines.

The following table summarizes the results for Q3 2023 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)

• Q3 2023, $12.1 million interest income (Q3 2022, $2.7 million)
• Q3 2023 $2.2 million miscellaneous income (Q3 2022, $19.8 million)

Income and sales posted by the three business segments during Q3 2023 were:-

U.S. 25.7 percent of company net income on 57.1 percent of total sales

E.U and U.K. 29.4 percent of company net income on 27.9 percent of total sales

Mexico 45.1 percent of company net income on 12.8 percent of total sales

In commenting on Q results Fabio Sandri, CEO stated, “Throughout the quarter, we continued to strengthen our business through consistent application and execution of our strategies of Key Customer partnership, portfolio diversification, and operational excellence. Given our focus, profitability improved again relative to prior quarter across all regions despite uneven market conditions and persistent consumer inflation,”

With respect to the U.S. Sandri stated “Margins grew from the second quarter given further momentum in our operational excellence efforts and enhanced fundamentals in Big Bird. Margins were further aided by growth in promotional activity and increased distribution in Case Ready, along with strong performance in Small Bird. Prepared Foods generated growth in branded offerings as Just Bare® and Pilgrim’s® net sales collectively grew 65 percent compared to prior year. 

Sandri noted that for the U.K. and European business, profitability grew over 65 percent from the prior year given continued benefits from manufacturing network optimization, continued recovery of inflationary costs, and enhanced Key Customer partnerships. He added, “Over the past 18 months, the team has demonstrated remarkable determination to further cultivate operational excellence in our production facilities and back office activities. When these efforts are combined with our Key Customer focus, innovation pipeline, and diversified offerings, the business has strengthened the foundation to drive further profitable growth,” said Sandri.

Mexico achieved strong, counter-seasonal results for the third quarter through a combination of improved live operations, grain and currency favorability, and enhanced supply and demand fundamentals. Sandri opined, “Our Mexico team has shown extraordinary ownership to overcome challenges in live operations through operational excellence over the past year. Given these efforts, the team was well positioned to drive profitable growth with Key Customers and further cultivate its branded presence throughout the quarter.

Sandri concluded “Over the past year, we’ve faced a demanding set of business circumstances. Nonetheless, we maintained a leadership mindset given the opportunity in food and agriculture to reduce emissions and to create a better future for our team members. I look forward to continuation of these efforts to achieve our vision of becoming the best and most respected company in our industry”.

52-Week Range in Share Price of PPC: $19.96 to $26.57. 50-day Moving average, $24.16

Market Close: Wednesday October 25th pre-release $23.40. Close Thursday October 26th post-release $24.32 up 3.7 percent.

Current Trailing P/E 32.2

Equity held by insiders and holding Company: 82.7 percent, Institutions, 18.1 percent

Shares short of float October 13th, 6.5 percent

Following other states, Texas has enacted a law requiring clear and unambiguous labeling of plant-based alternatives to real meat products. The recently enacted Texas law was intended to “address the issue of unclear labeling on products that look and taste similar to traditional animal-derived products.”

The Texas law is based on political expediency and serves as an example of “feel good” legislation designed to appease ranchers and organizations representing the red meat industry.  When challenged, labeling laws that discriminate against plant-based protein have been ruled unconstitutional based on First Amendment rights.

In support of the bill, the Texas Farm Bureau and Texas Cattle Feeders cited a 2020 survey of 1,200 consumers suggesting that 20 percent of those purchasing a plant-based product felt “misled by the label noting that they had thought the product contained real meat”.

A review of products in coolers and on supermarket shelves leaves no question as to the composition of available plant-based products and the claims of confusion among consumers are essentially spurious.

The Texas law will be challenged and as with similar state legislation will probably be ruled unconstitutional.

According to press reports, the Department of Labor raided the Kidron, OH plant operated by Gerber’s Poultry during the night shift on October 4th.  Agents interviewed all workers and required identification, nation of origin, proof of status to work in the United States and the source of their documents.  It is understood that approximately 25 minors were at work in the plant in either processing or sanitation.

The Company subsequently issued a statement indicating their intent to cooperate with the investigation and to comply with federal regulations to verify eligibility for employment.  The company undertook to review relationships with third party vendors to ascertain compliance with federal labor laws.

Federal law disallows employment of any person under the age of 18 in a meat processing facility. Authorities are also investigating allegations of servitude with the minors forced to work in the plant by agents of traffickers based in Guatemala.

The fact that minors were apparently employed in a meat processing facility in early October suggests a willful lack of concern for compliance with federal and state laws.  After disclosures relating to Packer’s Sanitation Services, Inc. the circular letter from the Secretary of Agriculture and the penalties imposed on processors for employing underage workers, it is difficult to understand how any plant HR function could have failed to purge its headcount of ineligible workers.  The expedient of using third party contractors to provide services such as cleaning should be no excuse for contravention of federal laws. Apart from moral responsibility, Companies contravening child-labor, food safety, environmental or welfare laws are exposed to publicity with resulting degradation of brand image extending to loss of major customers.

Food Safety Net Services is offering a series of 2-hour virtual Best Practices training sessions.  These include: -

• GMPs (November 8)
• Pest management (November 15).
• Recalls (November 29).
• Foreign material (December 6).
• Root cause analysis (December 13).
• Regulatory responses (December 20).

All sessions are held from 11H:00 to 13H:00 central time.  Registration is $50 per session.  For additional information, access <FSNS.com/Best-Practices-Series>.

There is considerable confusion among consumers as to the terms “free-roaming”, “pasture-grown”, “pasture-fed”, “pasture raised” and “free-range”. Accordingly Perdue Farms, Inc. filed a petition with the USDA-FSIS in March requiring the Agency to define and differentiate between “free range” and “pasture-raised” management systems.  Perdue proposed that “pasture-raised” should require chickens to spend at least the majority of their lives physically on pasture, defined as land covered in the majority with rooted-in-soil vegetation. 

Kestral Burcham, representing the Cornucopia Institute, supported the Perdue petition noting, “Cornucopia concurs that FSIS should amend its interpretation of “free-range” raised chickens as defined in its current guideline document and to remove “pasture-raised” from the list of claims synonymous with “Free-Range”.  Cornucopia is in agreement with Perdue Foods that “pasture-raised” claim should be separate from all other descriptors used for housing systems and should conform to clearly defined standards.

Effective November 1st, both Jennie-O® Turkey Store and Butterball will establish telephone hotlines to assist consumers to cook their Thanksgiving and Christmas turkeys with convenience and safety.  The Jennie-O® hotline will be available from November 1st through November 26th.  The company can be accessed at 1-800-TURKEYS or by text TURKEY 273876.  Jennie-O® offers live chat at JennieO.com/contactus.  The Jennie-O® website www.JennieO.com/how-tos provides information on thawing, preparation and cooking.

Kim Anderson, Brand Manager for Jennie-O®, stated, “While Thanksgiving is one of America’s favorite holidays, we know it can be stressful and challenging for the host.”  She added, “That’s where Jennie-O® comes in specifically with our 1-800-TURKEYS hotline”.

Jennie-O® will participate in the Macy’s Thanksgiving Day Parade with a turkey-themed float.

According to a recent article in Meating Place, USDA grants to restructure meat production in the U. S. favored three states.  According to the article, Iowa received 35 grants representing 10 percent of the 320 awarded but comprised 18 percent of the $262 million total.  Cattlemen’s Heritage Beef Company, LLC, received $520 million for a new plant.

Missouri received 21 grants, totaling $4.5 million with Zimmerman Meats receiving $730,000 for a major expansion and compliance with federal inspection to facilitate interstate transport.  Michigan received 16 grants totaling $7 million reflecting support of small operations that may have local benefits but certainly will not move the national needle to any extent.  South Carolina received three grants with Prestage Farms of South Carolina receiving $25 million.

The current Administration under Secretary Tom Vilsack has attempted to shift the concentration of hog and beef packing from the four major companies to smaller packers.  This policy was introduced partly in response to the transitory sharp fall in supply of red meat during the 2020 COVID outbreak that disproportionately impacted large plants.  The initiative to support small packers is an expression of an inherent bias against large but highly efficient packing that allows economies of scale.

Paul Bredwell, Executive Vice-president of USPOULTRY for Regulatory Programs updated current issues at the 2023 Environmental Management Seminar. Items of concerns to the poultry industry include:-

• Waters of the U.S. Rule that has been the subject of litigation for many years through three administrations.

• Anticipated Effluent Limitation Guidelines due for release in December.

• Petition to revise the Clean Water Act, applicable to Concentrated Animal Feeding Operations (CAFOs).

• Emergency planning and community right-to-know reporting requirements.

• Regulations relating to polyfluoroalkyl substances that contaminate drinking water.

His presentation was supplemented by contributions from Dr. Morgan Teachey with the Environmental Protection Agency.  Dr. Teachey reviewed the Effluent Limitation Guidelines emphasizing that the industry and environmental advocacy groups will have the opportunity to comment on proposals in advance of the Final Rule projected for August 2025. Litigation will commence shortly thereafter!

Smithfield Foods, a wholly owned subsidiary of the WH Group is investigating the feasibility of being re-listed according to the Wall Street Journal.

The WH Group acquired Smithfield in 2013 for $4.7 billion and was accordingly de-listed.  Recently, the company initiated a program of consolidation closing hog farms in the mid-west and a plant in Charlotte, NC.

Since acquisition of Smithfield, the company has engendered adverse publicity due to corporate ownership by a company based in China.  It is possible that the intended re-listing of Smithfield may have the objective of diminishing scrutiny and criticism by politicians and welfare advocates by attempting to re-establish image as a U.S. company.

Seaboard Corporation has announced that it will erect two farms each comprising two barns to rear 2,500 gilts.  The 7-acre facilities will be built east of Bucklin in Ford County, KS. following approval granted by the County Commission.

Manure will be contained in pits under slated floors and will be applied to agricultural land seasonally in accordance with state requirements.

Seaboard did not disclose whether the new facilities were for future expansion or to replace existing obsolete or contractor housing.

The Department of Higher Education and Workforce Development of the State of Missouri has organized job fairs to assist workers who will be laid off following the closure of the Dexter and Noel facilities by Tyson Foods.  On September 12th, 300 workers interacted with 32 prospective employers at a fair in Dexter.  A similar event in Noel in early October assisted 500 workers with introductions to 40 employers.

Andrew Bailey, Attorney General of Missouri, has requested Tyson Foods to sell the two processing facilities even to competitors to ensure long-term employment.

The Dexter plant acquired from the Swift Poultry Company opened in the mid-1930s during the Great Depression.  The effect of the plant closure in Noel can be judged by the 1,500 workers who will be impacted in a city with a population of 2,100.  The Dexter plant closure will affect 700 workers.

In addition to termination of plant workers, the closures will affect growers and the staff of feed mills and hatcheries and companies supplying the two complexes with consumables and services necessary to maintain operations.

Funding through the USDA Food Distribution Program for Indian Reservations will support small and mid-size bison herd managers to deliver product to tribal communities.  Encouraging local purchase will reduce transportation costs and improve market opportunities for tribal and local bison operations.  Partners in the pilot project include the Cheyenne River Sioux Tribe, the Standing Rock Sioux Tribe and the Lower Brule Sioux Tribe.  These entities will cooperate with Dakota Pure Bison Inc.

USDA Agricultural Marketing Services has awarded bison contracts to five tribal groups and will enhance procurement and distribution of bison products.

On October 9th, Smithfield Foods Inc. announced their intention to close a processing facility in Charlotte, NC.  Production will be transferred to the Tarheel, NC. facility to allow the use of existing capacity.  The closure will affect 107 employees who will be offered an option to relocate to other Smithfield facilities.  Those wishing to remain through the fourth quarter will receive an incentive package.  Smithfield has a head count exceeding 10,000 in North Carolina with 40,000 throughout the U.S.  Smithfield is a wholly owned subsidiary of the WH Group headquartered in China.

According to USDA-FAS GAIN Report SF2023-0034 released on October 11th, both H5N1 and H7N6 strains of avian influenza are responsible for extensive losses in both the broiler and egg industries.  Although the broiler industry has been less affected than egg production, it is anticipated that losses will escalate.  Independent hatcheries have restricted supplies of chicks based on mortality in parent supply flocks.  The two major integrators have also experienced losses.  Mortality in both the egg and broiler segments of the South African poultry industry will impact the feed manufacturers with a predicted reduction in demand for corn.

An indication of concern is the consideration of a temporary customs rebate on imported edible offal, MDM, whole chickens and bone-in parts.  The temporary rebate may also extend to anti-dumping duties that currently restrict importation of leg quarters from the U.S.  The GAIN report states “If implemented, the rebates may increase imports and mitigate against the expected price increase of chicken.”  The availability of chicken is not only an economic issue, but it will also have a bearing on the upcoming national election which is expected to show reduced support for the ruling African National Congress Party. The Governor of Louisiana, Huey Long promised a “chicken in every pot” during the Great Depression. This has become a sine qua non for autocratic governments under pressure. Since the fall of apartheid in 1994 the party in power has failed to deliver on economic reforms or to resolve the problems of progressively diminishing availability of power, water and housing and to suppress corruption and street crime.

 The Department of Agriculture, Land Reform and Rural Development has implemented ineffective short term traditional responses to HPAI based on depopulation. Faced with the ongoing introduction of infection by migratory birds coupled with defective biosecurity, introduction of vaccination is now considered a necessary expedient. It is anticipated that a program will commence in November with the support of the South African Poultry Industry. 

Over the short term the broiler industry is planning to import fertile eggs in anticipation of losses due to HPAI.

Chicken is the principal animal protein consumed by all demographics in the Republic of South Africa. Replacement with pork is not a viable option given the relatively small production base that is further diminished by concurrent outbreaks of African swine fever.

In July, U.S. District Judge Thomas Durkin dismissed claims against AgriStats, Inc. in the Broiler Chicken Antitrust lawsuit.  Subsequently in September, the Department of Justice filed a complaint against the company alleging anticompetitive exchange of information through “distribution of competitively sensitive information relating to price, cost and output among broiler, pork and turkey integrators to the detriment of customers and consumers”.

On October 6th AgriStats filed a motion to have all documentation submitted in the civil action sealed since release of confidential information could be prejudicial to subscribers. AgriStats pointed to the disclosure of some information in the complaint filed with the Federal Court as justifying the need to impose a seal to maintain confidentiality.

The motion was opposed by the DOJ. On review the Court declined to impose a seal citing the Amended Antitrust Civil Process Act allowing the DOJ to release materials.

Hormel Foods Corporation and the United Food and Commercials Workers Union Local 663 have announced a tentative agreement on a new contract covering four plants in Minnesota, Georgia, Wisconsin and Iowa.  Four unions representing workers at these facilities cooperated in negotiating an acceptable agreement.

If ratified by union members, the agreement will provide labor stability over the coming four years.  Negotiations have been contentious with the Union rejecting initial offers from the Company although Hormel remained optimistic that an accord would be reached without a strike.

According to Dr. Rafael Monleon, the Aviagen Group will establish a breeding operation in the Philippines to supply the domestic market.  A feasibility study is in progress to confirm the viability of an enterprise intending to supply parent stock. This will require housing and a hatchery conforming to World Organization for Animal Health standards to attain Compartment status.

Dr. Monleon announced the intended project during a trade mission to Manila that included major U.S. agribusiness companies.

According to USDA-FAS GAIN Report DR2023-0011 released on October 3rd, negotiation between the USDA and their counterpart in the Dominican Republic has resolved restrictions on access to their market.  The Dominican Republic imposed restrictions on U.S. hatching eggs, live birds and products at the onset of the HPAI epornitic in 2022.

The Dominican Republic will now follow the policies of the World Organization for Animal Health that incorporates regionalization (zoning).  Exporters will submit health certificates specifying facility and county of origin certifying freedom from HPAI infection in commercial poultry that is derived from a location more than a six-mile radius of an affected farm.  Exports can resume 28 days after completion of decontamination as certified by APHIS.

During 2022 the Dominican Republic ranked 18th among importers received 43,348 metric tons  of broiler products from the U.S. valued at $69.6 million, down 24% in volume from 2021. For the first eight months of 2023 the Dominican Republic imported 37,076 metric tons of broiler products from the U.S. valued at $51 million. Imports are required to compensate for losses in domestic pork production due to endemic African swine fever.

Tyson Foods has announced a 250-person reduction in headcount at their Wilkesboro, NC. plant.  The action was taken to reduce output, affecting workers on the second shift. The decision will save the company at least $110,000 per week in wages without benefits.

In the statement announcing the reduction, Tyson indicated that it would offer impacted employees alternative positions in other facilities.

Hormel Foods Corp has activated a solar array at a Jennie-O turkey store plant in Montevideo, MN.  The eight-acre project will generate 3.2 million kWatt hours over a year.  It will supply ten percent of the plant power requirement.  The Company claims that the installation will reduce greenhouse gas emission by 2,265 metric tons of carbon dioxide equivalents annually.

As part of the $330,000 allocation of research grants, USPOULTRY and the USPOULTRY Foundation have selected three projects that relate to emerging issues in the industry.

• The University of Nebraska-Lincoln will apply MALDI-TOF mass spectroscopy to identify virulent strains of Enterococcus faecalis isolates responsible for locomotory dysfunction.

• The University of Georgia was awarded a grant to develop a web-based artificial intelligence system to monitor broiler activity.

• Mississippi State University will investigate the additive effect of sprinklers on cool cell systems in relation to flock performance.

Verisk Analytics subsidiary Cargo Net has reported that 566 cargo theft incidents occurred in the U.S. in 2022, a 57 percent year-over-year increase.  The value of goods stolen exceeded $44 million in the second quarter of 2023 and shipments varied in value from $100,00 to $260,000.

The states of California, Texas, Florida and Illinois were most affected.

CHICK-NEWS has previously reported on misappropriation and theft of loaded trailers directly from Midwest pork and beef plants.  Recently a ring was arrested in Florida responsible for a number of cases. 

Theft of over 20 tons of meat products suggests organization to distribute a large quantity of perishable products through retail outlets and ultimately to consumers.  Disposing of poultry and meat is infinitely more complicated than clothing and electronics that find their way to warehouses for subsequent sale on legitimate online businesses.

USDA FSIS has issued a public health alert for SPAM classic produced in a Hormel Foods plant in Austin, MN. on October 17. All product was shipped to H.E.B. retail outlets in Texas.

This incident demonstrates that HACCP systems work to prevent food-borne outbreaks.  In this case, the plant was able to ascertain that product packed over a limited period was improperly heated. Monitoring this critical performance level identified a potentially contaminated batch and with appropriate trace forward it was withdrawn from the market.

No reports of adverse reaction have been received as a result of the plant malfunction.

The USPOULTRY has requested preproposals to develop commercial diagnostic systems to detect and confirm Ornithobacterium rhinotracheale infection (ORT) in turkeys recognized as a significant detractor from production efficiency since 2016.

Since the infection is clinically similar to other respiratory infections, a rapid sensitive and specific diagnostic procedure is required.  As a corollary to the request, isolation and characterization of ORT strains will be required as a precursor to developing vaccines.

On September 28th, the Department of Justice filed an antitrust lawsuit against AgriStats, Inc.  The Agency claims that AgriStats, Inc. exchanged confidential information at the expense of competition within the meat and poultry industry.  The complaint was filed with the District Court of Minnesota and alleges violation of Section 1 of the Sherman Antitrust Act by distributing “competitively sensitive” data on production costs, worker compensation and production levels.

The complaint notes that data distributed by AgriStats encompassed 90 percent of U. S. broiler and turkey production and 80 percent of U. S. pork.  The DOJ further noted that through the exchange of information, subscribers to the AgriStats systems were able to manipulate markets and prices.

Jonathan Kanter, Assistant Attorney General of the Antitrust Division, stated, “The Justice Department is committed to addressing anticompetitive information exchanges that result in consumers paying more for chicken, pork and turkey.”  He added, “This case is the latest effort by the Justice Department to protect American consumers, farmers and workers from anticompetitive practices in the agricultural industry.”

AgriStats has functioned since 1985 and claims that it has made the respective industries more efficient resulting in lower prices for consumers.  In 2012, the company was subject to an antitrust investigation by the Department of Justice without finding wrongdoing.

AgriStats was a co-defendant in the broiler chicken antitrust litigation that resulted in settlements by the majority of defendants but with cases yet to proceed to trial. The Company was dismissed as a co-defendant.

The Department of Justice under Jonathan Kanter was unsuccessful in convincing judges and juries that collusion had occurred between two specific broiler integrators with dismissals and hung juries in a series of cases, without obtaining a criminal conviction.  Notwithstanding the outcome of the criminal cases, the prominent integrator whose executives including the CEO and his successor were implicated, settled with the Department of Justice for a substantial penalty.

A federal court has ordered the owners of a LaPuente, CA., processor to reimburse workers for withheld overtime wages amounting to $1 million.

The court action follows an investigation by the U.S. Department of Labor, Wage and Hour Division.  The entity, TL Foods and affiliates, Express Poultry Services, Inc. and K. P. Poultry violated the Fair Labor Standards Act over a five-year period extending from 2015 to 2020.  Department of Labor Regional Solicitor, Marc Pilotin, stated, “For years the employers in this case attempted to hide their wage violations.”  He added, “We will continue to use every legal tool available to protect the rights of vulnerable workers under federal law.”

On September 29th, the USDA Agricultural Marketing Service announced purchase of 8.9 tons of large whole chilled chicken in bulk for child nutrition and related food assistance programs.  Product was purchased at an average of $1.45 per pound with deliveries to be made during November 2023.

An additional small purchase of 0.9 ton of chilled chicken legs was placed by the USDA Agricultural Marketing Service for child nutrition and related food assistance programs.  Product was purchased for an average of $0.66 per pound. The two purchases amounted to $26.6 million.

USDA FAS-GAIN Report MX2023-0041 released September 5th quantified broiler production in Mexico for the current year and 2024. Total domestic broiler production will increase by 2.0 percent from 2023 to 3.875 million metric tons (8,525 million lbs.) in 2024.  Net imports will amount to 1.020 million metric tons (2,244 million lbs.) representing 21 percent of the total availability of 4.900 million metric tons (10,780 million lbs).  Per capita consumption, assuming a population of 127 million, will be 38.5 kg per annum (84.8 lbs.).

Mexico is the largest importer by value and volume from the U.S. During 2022 Mexico imported 664,013 million metric tons (1,461 million lbs.) valued at $766 million, respectively 7 percent and 8 percent lower than in 2021. Over the first seven months of 2023 Mexico ranked first in both volume and value, importing 416,324 million metric tons (0.916 million lbs.) valued at $463.9 million, respectively 14 percent higher in volume and 4 percent in value.  Year to date, Mexico has exceeded the value of exports to China.  Unit value over the first seven months of 2023 declined by 11.8 percent from $1,263 per metric ton to $1,114 per metric ton compared to an average for all broiler exports for the first seven months of 2023 of $1,296 per metric ton.

The current relationship with the Government of Mexico under President Andres Manuel Lopez Obrador (“AMLO”) is as best confrontational despite the requirements of the USMCA Agreement.  The major agricultural issue relates to an ill-conceived ban on GM white corn and the application of glyphosate herbicide that are currently the subject of a USMCA dispute panel. 

An election for president will be held in 2024 with the incumbent obliged to retire.  The likely successor is Dr. Claudia Sheinbaum, formerly Mayor of Mexico City and the leading contender for the position.  Dr. Sheinbaum earned a doctorate in environmental engineering and would be more amenable to a resolution of the GM dispute on the basis of scientific reality.  Dr. Sheinbaum, who has the support of AMLO has pledged to continue the Fourth Transformation that combines socialistic policies and retention of fossil fuels. Given her background she would be expected to move Mexico in the direction of more green sources of energy.  Her opponent Xochitl Galves, a computer scientist and entrepreneur, served in the PAN administration of Vincente Fox and is currently a serving Senator.

 The 2024 election will also select 500 members of the lower house and 128 in the Senate.  Based on civic concerns over crime and security, the ruling Morena Party will probably lose seats and may not retain their two-thirds majority.  This will place a heavy burden on the incoming Presidenta to govern effectively.  Political stability in Mexico has an important influence on the U.S. economy given the move to replace China as a source of manufactured goods. This has benefitted our southern neighbor. Prosperity in Mexico equates to higher protein consumption representing larger exports of corn, soybeans and processed chicken.

RCL Foods reported that its subsidiary Rainbow Chickens depopulated 400,000 broilers following exposure to H7 highly pathogenic avian influenza that is currently impacting all poultry segments in South Africa including competitor Astral Foods. For FY 2023 the Chicken segment of RCL Foods generated an EBITDA of $1.8 million on revenue of $710 million before the full impact of the current H7 epornitic was apparent. The Chicken segment produced approximately 3.5 million birds per week and manufactured 1.4 million tons of feed with half of the quantity consumed by company flocks.

Despite the prematurely optimistic comments by the South African Poultry Association, (SAPA) the nation will be short of chicken for the Christmas surge in demand. This will result in widespread consumer disaffection given that chicken is the major animal protein across all demographics.  It is inevitable that questions will be raised concerning the influence and involvement of SAPA on government agencies that placed protective duties on imported chicken that would otherwise have satisfied demand.  Shortage of chicken during December will intensify criticism of the ruling African National Congress that has been in power since the end of Apartheid.  Voters in the predominately black nation complain of soaring unemployment, deteriorating infrastructure, power failures, shortage of water and uncontrolled crime.

Avian influenza must now be regarded as endemic in the Republic of South Africa. Given the variable level of biosecurity and the vast backyard and subsistence population of chickens, the commercial industry will only be viable following adoption of an effective vaccination policy to provide durable immunity to both broilers and long-lived breeder and egg-production flocks.

Following a previous June announcement that the FSIS would sample product from beef labeled “raised without antibiotics”.  The Agricultural Research Service is investigating sampling protocols and assays.

Liver and kidney samples will be collected from cattle and be analyzed for up to 150 compounds incorporating all classes of antibiotics.  The program will apply to all “raised without antibiotics” claims including “no antibiotics”; “no antibiotics ever”; “antibiotic free” and other iterations on labels.

The initial round of sampling will provide data that can guide extensive programs of monitoring intended to prevent misbranded product from entering the market.  FSIS anticipates that companies receiving notice of antibiotic detection will then initiate investigations to ascertain how contamination occurred and to implement corrective action to maintain the relevant label claim.

For the five weeks ending July 2, Circana, previously IRI reported that sales of plant-based meat products were down 12.6 percent to a value of $106 million.  Unit sales were down 19.8 percent.  In contrast, refrigerated meat sales were down by 2.7 percent on a year-over-year basis with a value of $8.4 billion. This means that the plant based meat substitute market represented 1.3 percent of real meat over the period. During the five-weeks, unit sales of meat declined by 2.3 percent.

The disproportionate decline in plant-based meat sales compared to real meat is taking place against food deflation.  Circana estimates that the cost of all foods and beverages in multi-outlet stores increased by 6.4 percent over the five-week period down from double digits during the first quarter.

Consumer disaffection with plant-based meats is based on higher prices compared to real meat, lack of variety and inferior organoleptic qualities.  After initial increases in demand with sales of 58.8 million pounds in 2020, up 76 percent over the previous  year with 33.4 million pounds, sales plateaued in 2021 at 59 million pounds and thereafter declined with 51 million pounds in 2022, a 13.6 percent reduction.  The June 2023 uptake of 4.1 million pounds represented a 25.1 percent reduction over June 2022.

Innovad has introducedis offering the Myco-Marker®, a specific diagnostic service to confirm the presence of mycotoxicosis in flocks.  This approach supplements traditionally, feed assay for an individual or a range of known pathogenic mycotoxins is used to ascertain their presence and levels in feed ingredients in order to assess risk and implement corrective action.

Innovad has developed the RISE approach to detecting and manageing mycotoxicoseis. The system is intended to anticipate both subclinical and performance-related effects of mycotoxin contamination inof feed ingredients.  The RISE approach comprises: -

R - Risk evaluation.
I – Impact on performance and financial return as a result of mycotoxicoses.
S – Strategy to limit the impact of mycotoxicoses.
E - Evaluation of remedial and management modalities and calculation of the benefit-to-cost ratio of interventions.

A consideration of the diagnostic advantages of Myco-Marker® are timely, given that harvesting of the 2023 corn crop has commenced.  Dry weather during the stage of silking in June and July created the likelihood of fungal contamination and the elaboration of mycotoxins for much of the U.S. corn crop. This was has been promoted by subsequent rainfall and high humidity during August and early September leading into harvest.  

Conventional analysis for ingredients or feed comprises:-
On farm or in-mill mConventional mycotoxin assays include the uses of rapid test kits applying immunoassay technology. Results are These provide either qualitative or semi-quantitative results but the range of tests available is generally confined to the five most commonly encountered mycotoxins including aflatoxins, DON, zearalenone, ochratoxin and T-2.

More sophisticated GLC assay performed by suitably equipped laboratories can provide accurate, sensitive and quantitative results analyzing for as many as 36 mycotoxins.

 

Kemin is marketing BactoCease® a liquid propionic acid antimicrobial for ready-to-eat meat and poultry products to suppress bacterial contamination.  The companion compound BactoCease® NV is a buffered vinegar product available in a liquid, dry or sodium-free formulation to be added to brines, marinades, spice blends or for direct application to meat.

Proteus® the third compound in the range is a combination of functional proteins that can be added to products to maintain clean-label status.

Courtney Schwartz, marketing director of Kemin Food Technologies stated, "with Kemin solutions, hot dog manufactures can overcome their color, flavor and microbial challenges and provide high-quality, clean-labeled products.

In an attempt to limit the spread of African swine fever, authorities in the region of Lombardy, in Italy have apparently preemptively culled 34,000 hogs on twelve farms.  African swine fever has been prevalent in the region since 2022.  Lombardy produces almost half the ten million hogs reared annually in Italy.

A spokesperson for the Department of Agriculture stated, "our objective is to extinguish this outbreak so that the problem does not become a danger for the supply chain of the entire Italian sector".

African swine fever will only be effectively controlled through a combination of biosecurity and deployment of a safe and effective vaccine providing durable protection.

Senator Josh Hawley (R-MO) recently introduced legislation directed against consolidation in the meat and poultry industries.  He is especially concerned over the decision by Tyson Foods to close two plants in Dexter and Noel in his State of Missouri.  Tyson has countered by offering to sell the plants, even to a competitor, as they undertake a restructuring program to enhance efficiency and profitability.

As an extension of his apparent antagonism towards Tyson Foods, he has addressed a letter to the company requesting information on child labor.  At this time there is no evidence that Tyson Foods has engaged in any illegal activity. The letter included the comment “I’m alarmed by new reports that Tyson Foods has actively participated in dangerous and illegal child labor practices” This was apparently based on an article appearing in the February 28th edition of The New York Times.  Senator Hawley has requested information on past child labor violations over a five year period, and documentation on internal controls to detect and prevent illegal employment.

Monthly Broiler Production and Prices, September 25th 2023.

Broiler Chick Placements.

According to the September 20th 2023 USDA Broiler Hatchery Reports 1,182 million eggs were set over five weeks extending from August 19th through September 16th inclusive. This quantity was down approximately one percent compared to the corresponding period in 2023.

Total chick placements for the U.S. over the five-week period amounted to 937,067 chicks. Claimed hatchability for the period averaged 80.0 percent for eggs set three weeks earlier (79.4 percent for the preceding five-week period). Each 1.0 percent change in hatchability represents 1.88 million chicks placed per week and 1.78 million broilers processed with the current range of weekly settings.

Cumulative chick placements for the period January 7th 2023 through September 16th amounted to 6.93 billion chicks, less than one percent lower than the corresponding period in 2022.

According to the September 22nd 2023 edition of USDA Chickens and Eggs pullet breeder chicks hatched and presumably placed during August 2023 amounted to 8.24 million, up 7.3 percent (562,000 pullet chicks) from August 2022 and 277,000 pullet chicks or 3.3 percent less than the previous month of July 2023. Broiler breeder hen complement attained 63.63 million on August 1st 2023, 0.9 percent higher (585,000 hens) than on August 1st 2022.

Broiler Production

As documented in the September 22nd USDA Broiler Market News Report for the processing week ending September 16th 2023, 169.9 million broilers were processed at 6.49 lbs. live. This was 0.7 percent more than the 168.7 million broilers processed during the corresponding week in the previous month of August 2023 and 2.0 percent less than the 173.3 million processed during the corresponding week in September 2022. Broilers processed in 2023 to date amounted to 6.15 billion, 0.4 percent more than for the corresponding period in 2022.

Ready to cook (RTC) weight for the most recent week was 839.0 million lbs. (381,379 metric tons). This was 3.2 percent more than the 812.9 million lbs. processed during the corresponding week in August 2023 and 1.9 percent less than the 854.8 million lbs. during the corresponding week in September 2022. Dressing percentage was a nominal 76.0 percent. For 2023 to date RTC broiler production attained 29.68 million lbs. (13.49 million metric tons). This quantity is 0.5 percent more than the corresponding period in 2022.

Broiler Prices

The USDA National Composite Weighted Wholesale price on September 16th 2023 was up 6.6 cents per lb. or 5.9 percent compared to August 18th 2023 at 116.6 cents per lb. The attached USDA figures denotes average prices over three-years.

Leading QSRs are using increasing quantities of breast meat for sandwiches, strips and nuggets. Inflation is increasing consumer awareness of value with chicken benefitting at the expense of beef and pork

 

Astral Foods, a multi-segment company and the largest broiler producer in the Republic of South Africa, posted results for the first half of Fiscal 2023 ending March 31st.  For the period, the company posted a profit of $3.27 million on revenue of $524.41 million with a diluted EPS of $0.09.  For the corresponding first half of Fiscal 2022, revenue was $496.17 with a profit of $29.57 million and a diluted EPS of 0.72.  Gross margin declined to 13.9 percent compared to 22.2 percent during the first half of Fiscal 2022.  The operating margin declined to 1.0 percent from 8.3 percent and profit margin was 0.6 percent compared to 6.9 percent for the corresponding first half of Fiscal 2022.

The broiler operation reported a loss of $14.9 million compared to a profit of $24.5 million for the first half of FY 2022.  Feed for hogs and poultry including internal consumption for broilers and outside sales generated a profit of $20.1 million compared to $15.5 million during the first half of FY 2022.  During the first half of 2022, feed ingredients increased by 30 percent in price.

Management attributed the decline in performance to interruption in power supply due to deficiencies in the grid and the failure of the government to invest in new generating capacity and to maintain obsolete coal-fired plants.  Other problems encountered by the company in common with all industrial and farming enterprises in South Africa included water supply, the cost of labor, fuel and an unfavorable operating environment.

The South African broiler industry is impacted by relatively lower cost imports from Brazil, the U. S. and the E. U. These nations can land and sell chicken cheaper than domestic production despite punitive tariffs to protect the domestic industry.

In 2022, the U. S. exported 55,449 metric tons of bone-in chicken to the Republic of South Africa valued at $54.8 million.  These figures were respectively 21 percent lower in volume and 14 percent lower in value compares to 2021.  For the first seven months of 2023, the U. S. exported 30,994 metric tons of bone-in chicken to the Republic of South Africa valued at $29.9 million.  These figures were both 21 percent lower in volume and value compared to the corresponding months in 2022.

Japan has embargoed importation from the state of Mato Grosso do Sul in Brazil. This action followed reports of highly pathogenic avian influenza in migratory birds and backyard flocks.

In May and June, Japan halted imports from other states in Brazil following localized outbreaks of avian influenza that did not affect commercial flocks.  Bans were lifted after 28 days.

Although Japan has experienced a number of outbreaks of highly pathogenic avian influenza introduced by migratory waterfowl, there is concern over possible importation of novel strains of avian influenza.  According to statements by health officials, Japan is taking action not only to protect domestic flocks that are in any event exposed to migratory waterfowl, but also to reduce the possibility of an emergence of an exotic zoonotic strain.

Analysts at T. D. Cowen have downgraded Beyond Meat to underperform based on declining sales, continuing losses and the need to acquire additional capital to survive.

CHICK-NEWS reviewed the Q2 results for BYND that can be retrieved by entering Beyond Meat in the SEARCH block.  U. S. retail revenue was down 38.5 percent year-over-year and international was down 15.6 percent.  The U. S. Food Service Revenue was lower by 45.4 percent. This is consistent with the fact that most QSRs that have trialed Beyond patties have terminated purchase based on consumer rejection related to price and quality relative to real meat.

Cowen notes that Beyond will have “difficulty in attaining a path to sustainability”.  Given an 18 percent projected sales decline for Fiscal 2023, sales will only attain $330 million and operating expenses will be in the region of $220 million.  In Q2, Beyond Meat posted a loss of $53 million and the company accumulated $1.1 billion in debt.

Despite optimistic pronouncements from management the financial state of Beyond Meat is precarious. At the end of the second quarter of FY 2023 critical values were:-

• An accumulated deficit of $856,651 million.
• Trailing 12-month negative operating cash flow of $197 million
• Effective July 14th 36.2 percent of float was short
• Share price off 64.3 percent over past 12 months
• Institutional holdings declined from 63 percent to 37 percent over past two quarters

Holmes Foods, located in Nixon, TX. was fined $60,000 by the Occupational Safety and Health Administration (OSHA) for a variety of contraventions.  An inspection on March 15th as part of the Regional Emphasis Program for Poultry Processing Facilities disclosed discrepancies with respect to a lock-out on machinery and guards over rotating shafts and chains, all representing ergonomic hazards.

The significance of this OSHA action relates to increased scrutiny by the Agency emphasizing the need for plant operators to eliminate workplace hazards.  Audits on both farms and plants frequently reveal the potential for trips and slips, exposure to electrical and chemical hazards and failure to reinstall protective covers over machinery following maintenance or repair.  A random OSHA audit will disclose any defects present that may result in fines.  An injury of a worker will elicit a more aggressive response by OSHA.

The emergence of H7N6 highly pathogenic avian influenza virus has reduced the availability of broiler products, reflected in rapidly escalating prices to consumers.  The effect of flock depletion will become apparent at the end of the current broiler cycle with prospects for lower availability and high prices extending into the pre-Christmas period that represents a seasonal peak in demand.  Losses have occurred among breeder flocks as well as on grow-out farms.  It is anticipated that South Africa will be forced to adopt vaccination as a preventive measure using products available in the E.U. and subsequently, locally manufactured vaccines.

The second problem facing broiler producers is the inadequate and inconsistent supply of power due to incompetence, corruption, lack of planning, investment and failure to maintain coal-fired plants and the national grid, Brown-outs are a continuing reality and producers are obliged to operate diesel-powered generators for farms and hatcheries and are unable to maintain regular plant operation schedules. Similar problems occur regionally with adequate supplies of potable water.

South Africa imposed antidumping duties of up to 260 percent for bone-in chicken that could have been supplied by Brazil in addition to duties imposed on leg quarters that would otherwise be supplied from the U.S.  The Government of South Africa has also used avian influenza as a barrier against importation to protect the local industry, notwithstanding that the infection has been endemic in the nation for a number of years. Domestic requirements could have been  satisfied by major exporters following World Organization of Animal Health guidelines on trade.

Labor is a further restraint to efficient and profitable production with militant unions demanding high wages and benefits and imposing ‘featherbedding’ Labor when available is generally untrained and unreliable.

The South African Poultry Association is in large measure responsible for the current problem as a result of combination greed in myopia.  It’s apparently adopting an optimistic outlook maintaining that it will have adequate supplies of chicken to meet December demand for both eggs and broiler meat.

Over the first seven months of 2023 South Africa ranked 16th among importers received 30,994 metric tons of leg quarters from the U.S., down 21.5 percent from the corresponding first seven months of 2022.  Total revenue declined to $29.9 million down 20.7 percent from January-July 2022. During July 2023 South Africa did not rank among the top 20 importers.

South Africa anticipates a 0.5 percent growth in GDP during 2023, has a claimed unemployment rate of 33 percent, a budget balance of -5.7 percent and an exchange rate of SA Rand19.2 to US$1, a deterioration of 11 percent over 12 months.

USDA-FAS GAIN Report TH2023-0053 released on September 7th provides an overview of the broiler industry in Thailand.   During 2023, production will increase by 1.2 percent over 2022 to attain 3.450 million metric tons (7,590 million lbs.).  Of this quantity, 31.5 percent will be exported, up 6.8 percent from 2022 to 1.09 million metric tons (2,398 million lbs.).  Assuming a population of 72 million, domestic consumption will be 71.5 lbs. per capita.  Expansion of the industry is limited by static demand with the hotel and restaurant sector still impacted by reduced tourism as an overhang of COVID and fewer visitors from China.  Feed costs have increased by approximately 10 percent from 2022 further reducing margins and depressing expansion.

Thailand is a significant exporter to Japan based on the relatively low cost of labor-intensive prepared products.

According to USDA-FAS GAIN Report JA2023-0086 released on September 11th, the poultry meat industry in Japan is recovering from the effects of decreased demand following COVID and lower production due to HPAI.  During 2023, production will attain 1.775 million metric tons (3,905 million lbs.), down 0.2 percent from 2022.  Japan will import 1.09 million metric tons (2,398 million lbs.) in 2023, representing 36.2 percent of total supply, projected to be 3.014 million metric tons (6,631million lbs).  Based on a population of 125 million, per capita consumption will be 50.6 lbs. in 2023.  Approximately six percent of all chicken meat consumed in Japan is derived from spent layer hens. 

Consumers in Japan are faced with inflation in all purchases including food. During the first half of 2023, consumers purchased 8 percent more chicken in volume compared to the corresponding months in 2022 but paid 20 percent more than in 2019.

Broiler production is undergoing a number of changes with intensification of production on farms.  As of February 1st, 2023, 19.9 percent of the 2,120 broiler-growing farms in Japan ranged from 3,000 to 100,000 birds.  This category was 12 percent lower than for the previous year.  There was relative stability among the operations holding 100,000 to 200,000 birds, representing 29.4 percent of production, up by 4 percent from 2022.  The largest category of farm capacity with 300,000 or more birds representing 32.8 percent of farms increased by 2 percent over 2022.

Production going forward will be driven by tourist demand following relaxation of COVID restrictions and by relatively lower prices for chicken compared to pork or beef.  Thailand will ship 230,000 metric tons with approximately 75 percent in prepared form both chilled and frozen for the hotel, restaurant and institutional sector. Brazil is the second-ranked supplier to Japan with a volume of 210,000 metric tons in 2023.  China will supply 75,000 tons of prepared chicken from Mainland joint-ventures with Japan. 

Following representations by Rep. Raja Krishnamoorthi (D-IL) responding to complaints from constituents, the Environmental Protection Agency will investigate reports of odors associated with a Smithfield Foods plant in St. Charles, IL.  Rep. Krishnamoorthi addressed a letter to the EPA on August 18th noting the urgency of the issue and requesting feedback.  On September 12th, three weeks later, the Agency stated that it would commence an investigation but was unable to share any findings if and when available.

The St. Charles facility processes pork into sausages and salamis and is not a primary packing plant.  Smithfield Foods claims to have invested $350,000 in odor neutralization and has embarked on a program of upgrading wastewater installations using professional consultants.  The question arises as to whether action taken by Smithfield has resolved issues responsible for complaints that were raised over a month ago.

Representatives Randy Feenstra (R-IA) and Elissa Slotkin (D-MI) have introduced the Livestock Consolidation Research Act.  This would require the Economic Research Service of the USDA to undertake a study of the beef, dairy, pork and poultry industries.  Rep. Slotkin is especially concerned over the disruption of production in the red meat sector during the COVID emergency when production was curtailed by absenteeism in large plants.

The proposed ERS study would concentrate on consolidation that is evident in red meat with the “big four” responsible for 80 percent of processing of pork and beef.  In contrast, the broiler industry, although an oligopoly, has at least 50 integrators with their breeder and grow-out contractors provided with a high level of income security and technical support.

Over the past two years, Tyson Foods has donated $5 million to Feeding America®.  Tyson has committed to providing this public service nonprofit with an additional $2.5 million for food banks.  In honor of Hunger Action Month®, Tyson Foods will donate 2.5 million lbs. of protein to provide 10 million meals to be delivered to communities with obvious food insecurity.

Tim Grailer, Senior Director of Social Impact at Tyson Foods, stated, “At a time when millions of people across America face hunger, we are proud to continue our partnership with Feeding America® to help provide families and communities with access to nutritious, quality foods.”

Since 2020, Tyson Foods has donated 41 million lbs. of protein to the network of food banks and partner agencies of Feeding America®.

In addition to cash and protein donations, Tyson Foods responds to weather and other emergencies, distributing protein and setting up kitchens to provide first responders and victims of disasters such as floods, fires, hurricanes and tornadoes.

JBS has appointed Jason Weller to the position of Global Chief Sustainability Officer to implement ESG.  The company has establish a commitment to achieve net zero energy requirement by 2040.  JBS Worldwide has made strides in advancing sustainability on four continents including Scope 1 and 2 emission reduction projects requiring a capital investment of $123 million to date.  This has facilitated a 45 percent use of renewable electrical power.

In announcing the appointment, Gilberto Tomazoni, Global CEO for JBS stated, “Food insecurity is a significant issue around the world and the need to produce more while considering accessibility and curbing climate change is more important than ever before.”

In commenting on his appointment, Weller noted, “Our team at JBS is focused on making our own operations better everyday working with our farmer and rancher partners to improve practices and building partnerships to identify and unlock progress.”

Dr. Phil Stayer was the Senior Veterinarian responsible for flock health at Sanderson Farms. Following the acquisition of the company by a consortium of Cargill, Inc. and Continental Grain to form Wayne-Sanderson Farms, he elected to take a severance package and initiated a consultancy practice.  Recently, CHICK-NEWS had the opportunity to review his career and future plans.

CHICK-NEWS:  Phil, please share your background and training with the readership.

Stayer:  I was raised in York, PA in a suburban home and after high school graduation, enrolled at Penn State.  As a pre-vet major during this time, I worked as a student assistant on the poultry research farm as my first introduction to poultry production.  After graduation, I enrolled in a DVM program at the University of Tennessee, graduating in 1989.  During my final clinical year of veterinary studies I undertook a mixed externship with Rocco Poultry in Virginia that stimulated my interest in broiler production.  After a short period in general small animal practice, I undertook an MS program in poultry disease at Mississippi State University College of Veterinary Medicine, graduating in 1991.  I was board certified as a member of the American College of Poultry Veterinarians in 1994.

CHICK-NEWS:  What experience did you obtain in industry after graduation?

Stayer:  I worked with Arbor Acres Farm, now part of Aviagen, for three years in various roles advising customers and interacting with fellow poultry health professionals.  This was followed by an 8-year term with Elanco Animal Health as a Technical Service Veterinarian with both domestic and international exposure.

CHICK-NEWS:  Your major involvement with the broiler industry was with Sanderson Farms.  Please share some observations.

Stayer:  I joined Sanderson in 2001 until my resignation in 2023 from successor company  Wayne-Sanderson Farms.  At Sanderson I became the customer a reversal of when I was on the other side of the customer-supplier relationship. In 2001, Sanderson Farms had five Live Production divisions in Mississippi and Texas.  Over the next 22 years I participated in growing, protecting and producing broilers in six more brand-new facilities in three states, with Sanderson Farms becoming the third largest broiler producer in the US. 

During my tenure I built bonds with other Sanderson Farms team members, mostly in Live Production, but also in Management, Processing, Quality Assurance and Training.  Through the company expansion I recruited three other ACPV certified veterinarians for Live Production. 

The position required interaction with universities, state veterinarians, diagnostic laboratories and trade associations in every state in which Sanderson Farms operated. My work involved aspects of animal welfare, biosecurity attesting to the need for adaptability and flexibility in modern broiler production.

CHICK-NEWS:  During your tenure with Sanderson Farms, was there any experience that was extremely rewarding?

Stayer:  I enjoyed working with students undertaking externships.  Students that spent more than two weeks with me had the opportunity to conduct projects worthy to reporting at AAAP or similar venues.  They were assigned projects and there was considerable satisfaction in observing their progress in diagnostic accumen and relating field observations with their theoretical knowledge. 

CHICK-NEWS:  From your career perspective, what challenges face poultry health professionals at the current time in the industry?

Stayer:  There is a lack of available interventions through the restrictions imposed by FDA.  The second contentious aspect is the definition of a veterinarian-client-patient relationship which limits one’s professional practice to the wishes of the client, most demonstrable in flocks destined for Raised Without Antibiotics or similar marketing claims.  From a practical perspective, emergence of variants of existing viral and bacterial pathogens represents a challenge in determining treatment and more importantly prevention.

CHICK-NEWS:  Do you have any messages for the Profession?

Stayer:  Veterinarians have an important role in promoting the industry, especially to consumers with regard to food safety and welfare. As respected professionals we have to constantly dispel misinformation and convince consumers that the broiler industry is ethical and responsible for producing inexpensive, high-quality protein that is sustainable.  As professionals and scientists, we must be prepared to evaluate new technology including a range of vector vaccines and innovative methods of administration.  Specialty trained poultry veterinarians are uniquely trained to assist with implementation of new technologies to improve flock health and bird performance, so I foresee a bright future for poultry veterinarians.

According to a September 14th SEC filing, Stewart Glendinning currently president of Prepared Foods at Tyson Foods Inc. has resigned.  He was appointed to his current position in October previously serving for a five-year term as the CFO of the company.  Prior to joining Tyson Foods in December 2017 Glendinning was president and CEO of Molson Coors International.  He has also gained extensive industry experience with KPMG and the Hackett Group.

In a company statement, Tyson Foods acknowledged the contribution of Glendinning as CFO and more recently as president of Prepared Foods.

The question arises as to the apparent fluid structure among the executive ranks at Tyson Foods.  A number of high-level appointments and resignations and retirements have occurred during the past two years including a short-term CEO.  Either the company is executing a predetermined strategy for long-term profitability or there are problems relating to reporting relationships, organizational jurisdiction, and culture.  The fact that Glendinning was displaced from his position as CFO, possibly the second most important position in the company, to be replaced by the nephew of the Chairman raises some questions among observers especially given that Glendinning resigned within a year of assuming his position as president of Prepared Foods.

Tyson Foods has partnered with Gatik AI to introduce a fleet of refrigerated box trucks that will shuttle among plants in northwest Arkansas.  The program is based on an 18-hour per day operation with box trucks transferring packaged products from plants to distribution centers and storage facilities in the Rogers and Springdale AR. region.  Each autonomous vehicle is equipped with a 26-foot temperature-controlled body specially designed to convey frozen items over short distances.  During the initial stage of implementation, safety drivers will be present in cabs. 

Patrick Simmons, VP of transportation for Tyson Foods stated, “Our partnership with Gatik allows us to strategically place our drivers where they are needed most while all will still reliably and safely transport protein from plants distribution centers.

Gatik has considerable experience in autonomous short distance transport focusing on short-haul business-to-business cooperation with major companies. Founded in 2017 by veterans of the emerging autonomous vehicle industry, the company has earned a number of prestigious awards for innovation.  Currently Gatik vehicles operate in two states in the U.S. and in the province of Ontario, Canada.

USDA-FAS GAIN report KS2023-0014 released on September 7th, quantified poultry meat production and consumption in South Korea. For 2023, domestic production will attain 930,000 metric tons.  Approximately 75 percent of this total will comprise conventional broilers harvested at 1.6 kg. live weight.  The second category comprises a domestic hybrid comprising a cross between a white-feathered broiler and an egg-producing, brown-feathered strain grown to 0.85 kg. and accounting for 17 percent of production. The remainder will be derived from indigenous chickens consumed at the subsistence level.

South Korea will import 225,000 metric tons of poultry meat principally as bone-in products but will export 60,000 metric tons of poultry meat resulting in a net import volume of 165,000 metric tons in 2023 representing 15.3 percent of consumption.  Assuming a population of 52 million with consumption of 1,080,000 metric tons, per capita consumption is estimated at 20.7 kg. (45.7 lbs.).

Currently, Brazil supplies 75 percent of imported chicken with Thailand 20 percent, China 3 percent and the U.S. 2 percent.  Outbreaks of HPAI in the U.S. during 2015 and then subsequently in 2022 impacted exports together with “unresolved trade policy issues”.

Drumsticks were stated to represent 81 percent of imports.

The price comparison incorporated in the report suggests a wide differential between domestic retail and CIF prices.  The retail price for domestic legs is $2.62/lb.  By comparison, imported prices for legs from four supplying nations comprise, U.S. $0.78, Brazil $0.99 (deboned?), Denmark $0.96 and Thailand $1.11.

Given the magnitude of imports and domination of supply by Brazil, the USAPEEC and USDA should apply commensurate effort to resolve outstanding issues relating to trade policy and contrived ineligibility as a result of HPAI.

A cooperative project compared the rate of in-vitro breakdown among available soybean-based protein ingredients. The study was conducted jointly by scientists with Hamlet Protein and colleagues at Aarhus University in Denmark. Hydrolysis was measured by determining the k-value indicating the rate of degradation of amino acids. 

The study compared Hamlet Protein, comprising a high quality soybean meal subjected to enzymatic treatment, with three soy protein concentrates, two extruded soy products and two fermented soybean meal products. Hydrolysis was measured in-vitro in an aqueous suspension adjusted to pH 8.0 at 39 C in the presence of an enzyme solution.

The rate of hydrolysis over a 120-minute period was determined as a measure of protein degradation.  The rate was numerically higher in the Hamlet Protein sample subjected to enzymatic treatment compared to an untreated, selected, high-quality soybean meal.  Statistically significant inferior rates of degradation were recorded for the three soy-protein samples and the two fermented soybean meals that were evaluated.  There was a statistically significant difference between the two extruded soybean meal samples, one of which was inferior to both the Hamlet Protein sample and the high-quality soybean meal.

The initial evaluation that was performed in-vitro suggests that enzymatic treatment, as used in the patented Hamlet Protein process, would enhance digestion and absorption. Hamlet Protein will conduct live bird studies to confirm earlier trials demonstrating an advantage in early feed conversion and growth rate when a proportion of Hamlet Protein displaces conventional soybean meal in starter diets for chicks and poults.

* Bible, M. R. et al In-vitro evaluation of protein kinetics of soy-based ingredients. Proceedings of the 2023 Poultry Science Association.

The Cobb Research Initiative has awarded grants to nine projects relating to aspects of broiler breeder productivity.  The intended research will be conducted by programs at Auburn University, Oregon State University, Georgia Tech. Research Institute, University of Connecticut, North Carolina State University, the University of Tennessee in the U. S. and the University of Oxford in the U. K.

Reproductive efficiency and especially fertility and hatchability were concerns in 2021 and 2022 with average U. S. hatch values ranging from 77.5 to 80.5 percent now restored to 79.5 to 82.2 percent.

Topics awarded funding include: -

• The impact of restricted feeding regimens on reproductive ability.
• Data collection and analytics for broiler breeder livability.
• Application of advanced diagnostic procedures including CT scans.
• An artificial intelligence-assisted gait scoring system for individual birds among flocks.
• Attaining genetic progress through improved assessment of welfare.
• Evaluation of mating behaviors in broiler breeders.

Conagra Brands has recalled 123 tons of Banquet brand frozen chicken strips due to possible contamination with plastic material.  The product was processed at a Marshall, MO. plant (EST. P-9) on either June 20th, July 11th or 17th.

In a separate case, the Hillshire Farms subsidiary of Tyson Foods has recalled eight tons of smoked sausage comprising blended beef and chicken meat containing bone fragments.  In this case, the recall was confined to a relatively small quantity of product since the batch processed on June 14th at EST. 756A was restricted to one shift.

In a release dated August 31st Hormel Foods (HRL) reported on the third quarter of fiscal 2023 ending July 30th 2023, disappointing on both the top and bottom lines.  For the quarter the company earned a reported $162.7 million on revenue of $2,963 million (consensus of $3,100 million) with a diluted EPS of $0.30.  Comparable values for Q3 of fiscal 2022 ending July 31st were net income of $218.9 million on revenue of $3,034 million with a diluted EPS of $0.40.

Compared to Q3 of FY 2022 sales declined by 2.3 percent, gross margin increased from 16.6 percent to 16.8 percent; operating margin was down from 9.6 percent to 7.3 percent. Profit margin fell from 7.2 percent to 5.5 percent for the most recent quarter.

Effective October 2022, Hormel reorganized their operating divisions into Retail, Food Service and International.  The Jennie-O Turkey Store Division was integrated among the new three operating divisions.  Accordingly, releases for Fiscal 2023 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 despite recovery from the 2022 highly pathogenic avian influenza epornitic.

Segment performance in both sales and operating profit for the most recent quarter was compared with the corresponding period in FY 2022:-

• Retail Segment volume +0.8%:  sales -1.7%: segment profit -7.3%.
• Food Service Segment volume +2.1%: sales -2.9%: segment profit +13.6%.
• International Segment volume 10.4%: sales -6.0%: segment profit -50%

In commenting on Hormel results Jim Snee, Chairman, president and CEO stated “Our third quarter results reflect the strength of our leading brands, the value of our balanced business model and our team's commitment to improving our performance," He added "In an increasingly dynamic and competitive environment, we grew volume across all our segments, delivered adjusted net earnings per share in line with last year and made further progress addressing the near-term challenges impacting the business. This progress included reducing inventory, building momentum in the Planters® snack nuts business and driving adjusted operating margin improvement compared to last year."

Snee concluded, “Our Foodservice segment delivered another quarter of strong bottom-line growth, and the Retail segment delivered margins ahead of our expectations. Earnings growth from our U.S. businesses in aggregate was more than offset by significantly weaker-than-expected results in our International segment, supply chain disruption caused by a third-party logistics provider shutdown and an adverse arbitration ruling."

The company guided lower with a negative 4.0 percent to neutral decline in net sales growth compared to FY2022 and full year diluted net earnings per share to attain $1.51 to $1.57, down over a range of 11 to 14 percent.

Hormel Foods posted total assets of $13,427 million on July 30th 2023 of which $6,722 comprised goodwill and intangibles. Long-term debt was $2,524 against an intraday market capitalization of $21,080 million on September 1st. HRL has traded over the past 52 weeks in a range of $37.79 to $49.73 with a 50-day moving average of $40.04.  HRL trades with a forward P/E of 21.5. HRL closed at $39.08 on August 30th pre-release. The share price closed at $38.50 on Thursday August 31st

The 12-month trailing operating margin is 9.8 percent with a profit margin of 7.6 percent. The Company has returned 5.7 percent on assets and 12.2 percent on equity.

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

A lawsuit initiated by convicted fraudster Cody Easterday against Tyson Foods was recently dismissed by Judge Stanley A. Bastian, of the U.S. District Court for the Eastern District of Washington State.  Easterday is currently serving an eleven-year sentence for fraud. His imprisonment relates to false claims amounting to $244 million for non-existent cattle purported to have been raised by Easterday Ranches. All claims against Tyson Foods were settled when his company entered bankruptcy.  Easterday had claimed that he was owed $163 million for the period 2010 through 2020 when he raised cattle to be packed by Tyson in their Pasco, WA.  plant.

Wingstop has announced the introduction of the Cajun Meal Deal comprising either a cook-to-order chicken sandwich, boneless or classic wings or tenders, all featuring Cajun seasoning.  The meal deal will be available at $8.99 in participating stores and can be ordered on the Wingstop app or on Wingstop.com.

O’Charley’s restaurant is offering “Tacos and Tenders” as an August college football promotion on Thursdays and Saturdays in store.  Menus include a $7 tender and fries, comprising hand-breaded chicken tenders with a range of seasonings.  O’Charley’s will also offer chicken tender platters to-go comprising 36 pieces for $42, either as a takeout or delivered.

In a strange and fortunately rare incident, a disaffected farm worker was arrested on allegations of animal cruelty and criminal mischief. It is alleged that he interfered with the water supply to 200,000 broilers on a contract farm growing for Pilgrim’s Pride Corporation.  A high temperature alarm alerted the farm owner to the situation, presumably because of a shutdown of water to evaporative cooling pads. On investigation it was determined that the water supply to all six houses had been deliberately shut off.  The worker concerned was also accused of sending threatening messages to the grower and the integrator.

According to a release by Mountaire Farms, former CEO Dave Pogge passed on August 26th at the age of 72 years. A native of Iowa he graduated from his state university in 1973. He joined Cargill Inc. and rose through senior positions in the broiler operation over a 16-year tenure.

He was appointed as president and CEO of Mountaire Farms in June 1989 at a time of financial stress for the Company that at the time comprised only the Selbyville, DE complex.  While serving as CEO through his retirement in December 2012, Mountaire expanded with the acquisition of the Piedmont Poultry, Lumber Bridge complex in 1996 and the Millsboro complex in 2000 complemented by establishing breeder supply flocks and a feed mill in North Carolina.

Brady Stewart who joined Tyson Foods from a competitor in late 2022 as President of Fresh Meats has assumed the additional responsibility of rationalizing the company supply chain. In a concerted effort to increase efficiency and enhance profit, Tyson Foods is centralizing transportation, sourcing of products and logistics.

CFO, John R. Tyson, stated, “The creation of an enterprise Supply Chain Center advances our capabilities and enables the organization to drive data-focused decision making through the expanded use of digital tools.”  He added, “Our commitment to cost structure improvement is at the core of our supply chain management strategy and will be a competitive advantage for our company.”

A report on the Q3 financial results for Tyson Foods can be retrieved by entering “Tyson” in the SEARCH block.

Environmental activist groups including the Rainforest Action Network filed complaints with the U.S. Securities and Exchange Commission concerning the proposed listing of JBS S.A. on the New York Stock Exchange.  A spokesperson for the activist group noted, “We request the FCC conduct a thorough investigation into the pattern of alarming and unacceptable corporate conduct by JBS before granting an IPO.”  Mighty Earth a second opponent of the IPO has challenged the validity of the climate impact component of the prospectus.

JBS previously attempted an IPO in 2018.  This was shelved following a scandal in which controlling shareholders Wesley and Josey Batista were accused of insider trading amid revelations of widescale corruption.  Recently the Batista brothers were cleared of wrongdoing removing a potential obstacle to an IPO.

JBS S.A. has extensive investments in the U.S. in pork and beef packing. Involvement in chicken comprises a majority shareholding in Pilgrim’s Pride Corporation.

In response to negative publicity, JBS commented, “We are confident our dual listing proposal will create opportunities for our company, team members and shared communities and all stakeholders.”  The spokesperson added, “The proposal accelerates our efforts to enhance corporate governance and transparency through adherence to SEC standards with the formation of a majority independent board.” 

Environmentalist may not be the only opponents to the proposed IPO.  It is anticipated that unions will file an objection given questionable labor practices during the COVID period and based on their growing militancy expressed as opposition to the Kroger-Albertsons transaction.

Wingstop (WING) has embarked on an accelerated share repurchase agreement in conjunction with Morgan Stanley and Company.  The intent is to repurchase $125 million of common stock in accordance with a $250 million share repurchase program.

On July 1st Wingstop posted $451 million in total assets of which $135 million was represented by intangibles and goodwill.  Long-term debt increased to $711 million with the company accumulating a stockholder deficit of $365 million.

WING had a market capitalization of $5,050 million on August 2nd.  The 50-day moving average share price is $189 and WING trades with a forward P/E of 85.

On the basis of a same store sales growth of 16.8 percent for Q2 2023 an increase in gross margin to 26.3 percent and an operating margin of 24.0 percent, Benchmark upgraded WING citing “solid” results and setting a target of $200 compared to the August 7th close of $164. We shall see!

Commentary and results for Q2 can be retrieved by entering “wingstop” in the SEARCH block.

Walmart is now offering home delivery for rotisserie chicken in both original and lemon pepper flavors. Orders can be placed on the Walmart App. or on Walmart.com.

Any promotional exercise relating to chicken benefits the industry. Walmart has a log way to go however to match the volume of iconic rotisserie bird served by Costco at a fixed and stable price.

The 2023 National Safety Conference for the Poultry Industry co-sponsored by USPOULTRY and the Georgia Tech Research Institute provided updates on safety programs and stressing prevention.

The unfortunate accident at the Foundation Food Group plant on January 28th 2021 that claimed six lives in Gainesville, GA. highlighted dangers associated with liquid nitrogen.  Matt Spencer, Vice President of HR and Safety Programs with USPOULTRY, reviewed the EPA Risk Management Plan for cryogenic chemicals.  USPOULTRY offers the Accident Prevention and Response for Cryogenic Chemicals as a resource for processors.  Spencer advised on emergency planning in cooperation with first responders.

Boilers represent a potential hazard to workers.  Dr. David Schaller, Director of Safety and Policy at Darling Ingredients, reviewed safety measures including maintenance, operation and training of personnel.

The emphasis of the meeting was on prevention, planning for contingencies, developing emergency response plans and creating a work environment and culture focusing on safety.

For the U.S. (presumably Smithfield), the Packaged Meat Segment contributed $578million out of the total Segment operating profit of $1,068. The Pork Segment in the U.S. posted an operating loss of $495 million with total Segment loss of $409 million including positive operating profits from China ($42 million) and the E.U. ($44 million)

Dr. Ravi Kulkarni of the Department of Population, Health and Pathobiology of the College of Veterinarian Medicine, North Carolina State University, recently concluded a USPOULTRY-funded research project on detection of necrotic enteritis.  The first component of the program involved reproduction of necrotic enteritis administering a specific pathogenic strain of Clostridium perfringens to create a dysbiosis-model.  Previously, reproduction of necrotic enteritis required the administration of sub-clinical doses of mixed species of Eimeria to reproduce intestinal coccidiosis, the natural precursor of the condition.

It was demonstrated that broiler chickens undergoing necrotic enteritis released volatile organic compounds that could be detected by gas chromatography in manure and air.  Trials showed that two amines were present at high concentration in manure from affected experimental birds compared to non-infected control subjects.

The initial results will have to be be validated with field trials to demonstrate that the presence of the two volatile amines serve as an early and specific indicator of the presence of the condition in flocks.

The practical significance of this research has yet to be determined since NE can be readily diagnosed on gross and histopathologic lesions

On August 29th and 30th, truckers implemented a coordinated protest involving blockage of major highways to draw attention to their justified grievances.

Security is a major issue since truckers belonging to the Mexican Alliance of Transporters’ Organization claim that security on roads is neglected resulting in hijackings, robberies, assaults and murders.  Extortion is rife and both state and municipal authorities are unable to provide security.

David Castro, President of the Mexican Association of Poultry Producers, is urging negotiators in his Nation and in the U.S. to come to an agreement on importation of GMO corn that will be restricted for inclusion only in animal feed.

The U.S. has filed a complaint with USMCA requesting a dispute settlement panel claiming that the proposed ban is capricious and lacks scientific merit.  The U.S. has been joined by Canada in the dispute as a third party.

According to the Poultry Producers Association, the producers in Mexico consume 13.5 million tons of GM corn annually, representing 80 percent of imports with the U.S shipping product to the value of $5 billion.

The Association points to the extensive production and consumption of GM corn that has not been associated with any deleterious effect for over three decades.

The Kesler family, with 14 growing houses, has filed suit against Tyson Foods in Stoddard County, MO. as a result of the decision by the integrator to close the Dexter MO. plant.  As a result, the Kesler family has been deprived of income since they are located approximately 50 miles from the nearest complex that may or may not be in a position to extend a contract. The Kesler family claim that they expanded their operation and invested in new housing and equipment at the request of Tyson Foods.

The case will be an important test of relationships between integrators and contract growers.  In many areas with processing plants operated by different companies in close proximity, cancellation of a contract allows a contractor to affiliate with an alternative integrator.  In the case of the Dexter, MO. complex and others, especially new operations situated remotely in non-traditional broiler growing states, contractors are in a difficult position with respect to receiving chicks and growing flocks should contracts be terminated for other than justifiable cause.

At present contracts may extend from a single flock to a year or more but Federal guaranteed mortgages are usually for 15 years. This discrepancy has attracted the attention of the USDA in their attempt to “restructure” intensive livestock production favoring independent farmers and contractors.

The USDA-FAS GAIN Report CH2023-0112, released on August 24th, quantifies chicken meat production for the current and proximal years.  In 2023, domestic production comprising white-feathered broilers, traditional yellow birds and hybrids will attain 14.30 million metric tons.  In 2024, production will decline by 3.0 percent to 13.87 million metric tons.  In 2024, imports will increase by 2.6 percent from 2023 to 770,000 metric tons.  Taking into account exports of 530,000 metric tons, net imports will amount to 240,000 metric tons equivalent to 1.7 percent of projected production.  Availability of 14.11 million metric tons corresponds to a per capita consumption of 9.7 kg. (21.3 pounds) based on a population of 1.45 billion.

Chicken production in China is divided among conventional white-feathered broilers for QSR servings and consumers purchasing processed chicken in supermarkets through a cold chain.  This segment will decline in volume in 2024 since there is a shortage of parent level breeding stock.  This is a self-inflicted wound since government policy has discriminated against primary breeders in the E.U. and the U.S. who will not supply great-grandparent level stock that would enable China to become self-sufficient and to emerge as a competitor within a number of years, China has been attempting to reverse-engineer breeding stock and has purchased pure lines from a second-ranked breeder.  In addition to discriminating against major breeders, China has also imposed unjust restrictions on importation of grandparent-level chicks on the flimsy justification of avian influenza.  Primary breeders have established breeding facilities certified as “compartments” according to the standards of the World Organization for Animal Health.  Primary breeders have also established facilities in nations such as New Zealand that are free of avian influenza.  As a result of shortages in available parent level breeders, franchisees of the major breeders have implemented production programs including molting and extending production cycles.

Consumption of yellow-feathered broiler strains has declined based on urbanization favoring purchase of chicken in supermarkets and concurrent closing of wet markets, especially since the advent of COVID.  A variety of hybrids have been developed with combinations of traditional yellow-feathered and imported white-feathered broiler strains. Obviously, the varieties of “817” broilers have feed conversion efficiency and growth rates inferior to white-feathered broilers.  With an escalation in feed costs, production of traditional, yellow-feathered birds and hybrids is less profitable than white-feathered birds.  Notwithstanding the inherent efficiency of conventional broilers, it is noted that Cargill, Inc. has divested broiler production operations and Tyson Foods is attempting to sell facilities and withdraw from production in China.

Pork is the predominant animal protein with a per capita consumption of 39 kg. representing 60 percent of all animal protein in contrast to consumption of chicken at 9.7 kg. per capita,.  For the period January 2022 through July 2023, the average chicken meat price ranged from $1.25/lb. to a peak of $1.65/lb. in late 2022.  At this time, pork averaged $2.69/lb., approximately 1.6 times the value of chicken.  At the present time, pork and chicken are equivalent in price reflecting restoration of pork production following control of African swine fever. 

During the first six months of 2023, Brazil supplied 64 percent of broiler products imported by China.  The United States was second in volume with 17 percent followed by Thailand (7 percent), Russia (6 percent) and Argentina (4 percent).

During the first half of 2023, U.S. exports of all broiler products to China were 13.2 percent lower by volume to 358,418 metric tons and 29.5 percent lower by value at $401.3 million compared to the corresponding six months of 2022.  Volume represented 13.2 percent and value 16.8 percent respectively of U.S. exports during the period.  The average price of all products was $1,638 per metric ton compared to the average price of all exports excluding China of $1,234, demonstrating the weighting of the unit value of feet.

For the first six months of 2023, chicken paws imported by China declined by 12 percent to 670,000 metric tons.  Over the period, the United States supplied 23 percent, Brazil 30 percent, Russia and Belarus combined 27 percent and other nations 20 percent.  Paws and feet are subject to further processing on arrival in China including pickling, flavoring and even deboning to produce snack foods. Over January to June 2023, paws and feet represented 66 percent of the total volume of 244,982 metric tons shipped.  This was 32 percent less than the quantity shipped during the first half of 2022 with a decline in unit price of 11.5 percent from $2,040 per metric ton to $1,804 per metric ton in 2023.

China imposed retaliatory Section 301 tariffs on U. S. chicken products with an exclusion allowed during February 2020 by the State Council Tariff Commission.  Importers of chicken products apply for tariff exclusions approved on a case-by-case basis.

The question arises as to the long-term stability of China as a market for U.S. broiler products. There will be a demand for feet and low-priced edible giblets but in competition with Brazil. Prospects for other products appear less promising given mutual geopolitical competition, freight rates and the differential in FOB cost with competitors.

On August 23rd the USDA Agricultural Marketing Service announced purchases of shelf-stable chicken products amounting to 2,899 tons of chicken products valued $9.4 million for child nutrition and related food assistance programs. Deliveries will be made during September 2023 through January 2024.

Purchases comprised:-

• 208,000 lbs. (5,200 cases of 40 lbs.) of boneless breasts at an average price of $2.49/lb.
• 1,300,000 lbs. (32,500 cases of 40 lbs.) of consumer pack split breasts at an average price of $2.54/lb.
• 532,000 of frozen portioned chickens at an average price of $1.89/lb.
• 36,000 lbs. frozen oven roasted chicken at an average price of $4.72/lb.
• 3,722,400 lbs. frozen whole bagged chicken at an average price of $1.19/lb

Monthly Turkey Production and Prices, August 25th 2023

Poult Production and Placement:

The August 14th 2023 edition of the USDA Turkey Hatchery Report, issued monthly, documented 27.44 million eggs in incubators on August 1st 2023 compared to 27.21 million eggs on August 1st 2022* The August 2023 set was up 0.8 percent (222,000 eggs) from August 2022 and 451,000 eggs (1.7 percent) higher than the previous month of July 2023.

A total of 22.54 million poults were hatched during July 2023 up 70,000 poults (0.3 percent) compared to 22.47 million in July 2022*. The July 2023 hatch was down 1.44 million poults (6.0 percent) from the previous month of June 2023.

A total of 21.92 million poults were placed on farms in the U.S. in July 2023, compared to 22.03 million in July 2022*. The July 2023 placement was 0.5 percent, (107,000 poults) less than the month of July 2022. This data confirms disposal of 616,000 poults during the month. Approximately 2.7 percent of the July 2023 hatch was not placed.

 

Monthly Broiler Production and Prices, August 25th 2023.

Broiler Chick Placements.

According to the August 16th 2023 USDA Broiler Hatchery Reports 967.14 million eggs were set over four weeks extending from July 22nd through August 12th inclusive. This quantity was down one percent compared to the corresponding period in 2023.

Total chick placements for the U.S. over the four-week period amounted to 749,910 chicks. Claimed hatchability for the period averaged 79.4 percent for eggs set three weeks earlier (79.4 percent for the preceding five-week period). Each 1.0 percent change in hatchability represents 1.88 million chicks placed per week and 1.78 million broilers processed with the current range of weekly settings.

Cumulative chick placements for the period January 7th 2023 through August 12th amounted to 5.99 billion chicks, less than one percent lower than the corresponding period in 2022.

According to the August 21st 2023 edition of USDA Chickens and Eggs pullet breeder chicks hatched and presumably placed during July 2023 amounted to 7.85 million, up 0.7 percent (555,000 pullet chicks) from July 2022 and 551,000 pullet chicks or 0.7 percent more than the previous month of June 2023. Broiler breeder hen complement attained 65.16 million on July 1st 2023, 3.3 percent higher (2.09 million hens) than on July 1st 2022.

 

Chick-fil-A® will introduce a honey-pepper pimento chicken sandwich at restaurants nationwide commencing August 28th for a limited period.  The variation uses the basic Chick-fil-A® sandwich and incorporates a spread of pimento cheese and a drizzle of honey.  Pickles are replaced by jalapenos.

Chick-fil-A® has followed a policy of limiting menu offerings to increase efficiency and speed of service.  The introduction of the new sandwich reflects expansion of the chain into areas where demographics have different taste preferences.  The honey-pepper pimento chicken sandwich has been tested over the past three years in various locations in the Carolinas, although no decision has been made on permanent inclusion in the menu.

Good Meat Project a nonprofit promoting conventional meat has used the Good Meat™ trademark since 2018.  The nonprofit has sued Good Meat and parent company Eat Just Inc. maintaining that enterprise operated by Josh Tetrick has infringed on their trademark in violation of the 1946 Lanham Act allowing for registration of trademarks.

The complaint alleges that consumers will be confused by the similarity of names and by implication that the Good Meat Project endorses cell-cultured meat.  Eat Just received a notice of allowance from the U.S. Patent and Trademarks Office in April 2022.

Good Meat Project are seeking an order to prevent Eat Just from using the term Good Meat™ together with damages and attorney fees.

According to a report in Reuters, Tyson Foods has engaged Goldman Sachs to advise on the sale of its chicken assets in China.  The integrated operation has annual sales of $1.1 billion. Tyson Foods International sales amounted to $1.9 billion out of $39.5 billion total over nine months ended July 1st.

The entire international segment of Tyson Foods operating income attained $5 million for the first quarter of Fiscal 2023.  The protein market in China is oversupplied relative to the purchasing power of consumers as evidenced by the recent decline in the price of pork reflected in the quarterly report of the WH Group.  A number of U. S. companies have withdrawn from China with a combined value of divestment attaining $8.4 billion in 2023.

Cargill disposed of its chicken business last year to DCP Capital.  Manufacturers of infant formula including Reckitt Benckiser Group and Dutch Dairy Cooperative FrieslandCampina have also withdrawn from China.

In a press release dated August 14th JBS SA. (JBSAY) announced results for the 2nd Quarter of FY 2023 ending June 30th.

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

Segment Revenue ($ million) EBITDA ($ million)

JBS USA Beef $5,811 $83

JBS US Pork $1,777 $27

Pilgrim’s Pride Corp. $4,308 $249

SEARA $2,082 $85

JBS Brazil $2,825 $137

JBS Australia $1,509 $130

52-Week Range in Share Price: $6.20 to $ 12.46 50-day Moving average $7.68

Forward P/E 3.9 Beta 0.3

Capex, $394 million, of which 48 percent for expansion.

JBS SA Exports from Brazil, Total Q2 2023, $4,800 million:

China 30.3%; Africa/MS, 1.3%; Japan, 8.8%; S.Korea, 8.8%; U.S., 8.3%;

E.U., 6.6%; Other, 26.9%.

In commenting on results Gilberto Tomazoni, CEO Global JBS stated, “The second quarter of 2023 once again demonstrated the strength of our diversified global platform and our ability and agility to implement operational management measures to improve our commercial and industrial performance, even in an adverse scenario. Our promising prospects for 2023 have begun to materialize. Although the global context remains challenging for the protein sector, we have confidence that we have started a gradual recovery of our margins.”

Responding to market challenge Tomazoni noted, Facing a situation of increased supply of poultry in the global market and tighter margins in the beef business in the United States, in the second quarter we executed a series of measures aiming to increase the efficiency of our businesses in Brazil and the United States. These initiatives have already started to have an effect on our operations, as shown by the improvement of our margins, reinforcing our belief that we should focus on what we control to achieve superior financial performance in challenging scenarios like the current one for the global protein industry.”

Expressing optimism he observed, “In the coming months, we also see a scenario of a more balanced poultry supply, with potential positive impacts on sector prices, and we are already capturing the decrease in corn prices in our cost structure, a situation that also benefits our pork business.”

Tomazoni added, Even with market challenges, investing in the expansion of our operations and distributing $440 million in dividends, we kept our net dollar debt stable compared to the first quarter of 2023. We are prepared to navigate the current scenario safely, having extended the average term of our debts, increased liquidity and reduced the cost of our debt.”

With regard to the intended IPO on the NYSE Tomazoni stated “Our dual listing strategy will give us more flexibility to finance our growth and de-leverage, in addition to reducing capital costs. We will have access to a broader investor base, with great financial capacity, favoring the unlocking of value of our shares and expanding our investment capacity. With the registration of our bonds in the United States, we are already a company regulated by the Securities and Exchange Commission (SEC) and will also disclose our financial results in dollars. This is aligned with our investors ´ wishes for an easier comparison of our performance against our global peers. It also more accurately represents the company's operational framework, given that a significant portion of our revenue is in dollars”.

He concluded “As JBS celebrates its 70th anniversary, we look to the future with confidence that our global platform, coupled with our culture and strong team, will allow us to continue generating value for our stakeholders, and create opportunities for both the communities where we operate and our more than 260,000 employees around the world.”

According to research firm Circana representing the merger of IRI and NPD, volume sales and dollar value for plant-based alternatives to meat fell by 20 percent for the 52 weeks ending July 1st, 2023. This reality is reflected in the sales and volume data posted by Beyond Meat and for the Plant Protein segment of Maple Leaf Foods.

Factors mitigating against consumption include inferior organoleptic quality as perceived by consumers; higher price relative to real meat; restricted range of products available; complicated labels denoting the extent of processing including additives. Consumer curiosity drove sales after the initial introduction of products but peaked in 2020.  Sales were in part maintained during the COVID period by relative shortages and consequential high prices for pork and beef.  Since restoration of production, consumers have returned to traditional purchase patterns.

In an attempt to stimulate sales, the plant-based industry is promoting products emphasizing “health” although there is no scientific justification for these claims.  It is becoming apparent that the non-quantifiable welfare and sustainability attributes of plant-based meat substitutes are discounted by consumers especially when faced with large price differentials at check-out.

The customer base for plant-based meat substitutes will include vegetarians and a growing number of flexitarians but these demographics will be unable to move the needle. During 2022 beef sales attained $29.5 billion with ground beef representing 60 percent of the total. In contrast sales of all plant-based meat substitutes amounted to $1.4 billion At the end of the day plant alternatives represent an insignificant proportion of the total meat market with a sharp decline in sales volume and value in 2022 compared to the upward trajectory in pre-COVID years.

In an August 15th release, Wayne-Sanderson Farms has engaged Targan located in Durham, NC to install a high-speed vision system to contribute to efficiency and welfare in hatcheries.  The first installation will be completed during the 3rd quarter of 2023.

Ramin Karimpour, founder and CEO of Targan stated, "we are pleased to have Wayne-Sanderson Farms, a well-respected company with a long history and exceptional expertise in the poultry industry as our first commercial collaboration".

Dr. Yan Ghazikhanian, a specialist in turkey production and health programs passed on July 29, 2023, at an advanced age.  His professional career commenced 1974 and extended over 34 years entirely with Nicholas Turkey Breeding Farm. His activities contributed to the advancement of the industry through his retirement in 2007.

Dr. Ghazikhanian was a graduate of the University of Tehran where he earned his DVM.  He subsequently obtained Masters and Doctoral degrees in Comparative Pathology from the University of California, Davis.  Dr. Ghazikhanian was a charter member of the American College of Poultry Veterinarians in addition to serving on committees of poultry scientific associations. 

He is best known for his practical research on measures to eradicate vertically transmitted mycoplasmosis and salmonellosis in turkey breeding flocks.

He was inducted into the AAAP Hall of Honor in 2016 and was well recognized as an expert in many nations where his experience contributed to the advancement of turkey production worldwide.

The European Food Safety Agency is investigating a series of outbreaks of salmonellosis in member nations attributed to Salmonella Enteritidis (SE).

• Austria has recorded 14 documented cases. 
• Denmark,15 cases in
• Germany, 6 cases.
• Belgium, 8 cases

Whole genome sequencing conducted by the State Serum Institute in Denmark confirmed a common SE serotype conforming to isolates from other E. U. nations.

Poland is a significant producer of broiler meat that is exported to other E.U. nations.  Recently, investigations have demonstrated deficiencies in detection and control of Salmonella contamination of poultry and eggs with evident consequences in importing nations.

Purdue University College of Agriculture recently conducted surveys to determine consumer preferences for real beef compared to plant-based and cell-cultured alternatives. Considering  organoleptic attributes, including appearance, freshness, naturalness, price and farmer well-being, consumers rated natural beef as superior to alternatives.  Of those surveyed, 71 percent rated beef as ‘much better’ or ‘somewhat better’ compared to plant-based alternatives. Similarly 73 percent considered beef from cattle as more preferable to cell-cultured product.

Simple surveys frequently provide unreliable results.  To gauge consumer sentiment, it is necessary to conduct a conjoint analysis, allowing responders to select from among alternatives with tangible attributes including price, quality and non-quantifiable aspects including welfare.  Tradeoffs motivating purchase would provide a more realistic measure of acceptability among alternatives to traditionally grown and processed meat.

Tom Vilsack, Secretary of the USDA, has addressed a formal letter to the government of Brazil urging improvement in the detection and reporting of bovine spongiform encephalopathy (BSE).  His letter stated, “I urge Brazil in the strongest terms to continue its progress in streamlining timely animal disease reporting.”  Vilsack intends to follow up with discussions on the topic. 

The question of delays in reporting BSE arises from two cases of atypical infection that were diagnosed without notification to the WOAH or to importers.  China imposed a temporary ban on beef from Brazil that was subsequently lifted after confirmation that the cases were in older animals unlikely to be associated with transmission of prions to consumers. The restrictions imposed on Brazil cost exporters $20 million due to diversion of sales of 140,000 metric tons of beef to importers willing to receive the products.

The fact that Brazil has repeatedly failed to report cases of BSE raises the question of HPAI in commercial flocks.  It is known that seven nations surrounding Brazil have reported H5N1 infection in either free-living birds, backyard flocks or on commercial farms.  To date, Brazil has only acknowledged the presence of H5N1 virus in migratory birds.

Based on market conditions, Smithfield Foods will cease operations at thirty-five sow farms in Missouri, resulting in pink slips for close to a hundred employees.  Smithfield Foods operates a complex comprising 132 farms in addition to contracting with 109 units in Missouri supplying their processing plant in Milan, MO. 

This move follows similar action by Olymel of Canada in reducing output and the recent bankruptcy of HyLife in Windom, Minnesota.  The average price of pork was 15 percent lower during the second quarter of 2023.