Egg Industry News


PAHO Regional Health Conference on Epidemiology of HPAI

03/14/2024

PAHO Conference on HPAI

The emergence of H5N1 strain avian influenza in Latin America during 2022 resulted in the extensive loss of migratory birds, commercial poultry and marine mammals. Accordingly the Pan American Health Organization (PAHO) organized a regional health conference in Rio de Janeiro on March 16th to review transmissibility among mammals and to assess risk of human susceptibility.  Thirty-five nations participated in the Conference attended by world experts on the molecular biology and epidemiology of avian influenza.

 

During the ongoing panornitic, a large number of diverse migratory and domestic bird species died of the infection.  A more serious concern was the extensive mortality among seals and sea lions in which direct animal-to-animal transmission must have occurred to attain the magnitude of losses recorded along the coasts of Chile and Peru and recently extending into Antarctica.

 


HPAI Marine mammals

Molecular virologists are concerned over mutations that have occurred as confirmed by sequencing of isolates. Dr. Ralph Vanstreels of the University of California, Davis noted “We are seeing the virus doing little evolutionary steps that are on the long-term movement towards potential human infection.”  Nine mutations have been identified in South American strains of H5N1 compared to those circulating in North America.  Despite the fact that the World Health Organization regards the risk to humans from the current circulating strains of H5N1 as being ‘low’ pharmaceutical companies are developing avian influenza vaccine that can be administered to humans.

 

The Conference considered enhanced surveillance, whole genome sequencing of isolates from birds and mammals and protocols to respond to outbreaks including establishing databases and standardized laboratory procedures.  To date only two cases of confirmed avian influenza have been diagnosed in humans, both recording a history of contact with wild birds. The patients survived with appropriate supportive and antiviral therapy but the mortality rate among the low number of elderly patients in Asia infected with H7N9 strain exceeds 60 percent.

 


Dead Seals as a result of HPAI

It is self-evident that maintaining large commercial flocks exceeding one million hens represents the potential for point mutations and recombinant events to occur.  An obvious preventive measure would be vaccination of at-risk flocks in areas with a history of exposure to migratory birds disseminating avian influenza virus.

 


 

 

Egg Month

03/14/2024

REVIEW OF FEBRUARY 2024 EGG PRODUCTION COSTS AND STATISTICS

 

Commencing in 2024 the EIC has justifiably separated the production costs and unit revenue values for eggs derived from caged and cage-free flocks. Accordingly EGG-NEWS will continue to summarize data but will consolidate production and export statistics for the U.S. egg industry and compare financial data for the two shell-egg categories.

FEBRUARY HIGHLIGHTS

 

  • February 2024 USDA ex-farm blended USDA nest-run, benchmark price for conventional eggs from caged hens was 251 cents per dozen, up 45.9 percent from the January 2024 value of 172 cents per dozen. For comparison, average monthly USDA benchmark price over 2023 was 146.0 cents per dozen with a range of 323 cents per dozen in January down to a low of 57 cents in May. Stock levels and prices prior to the onset of flock depletions due to HPAI indicated a relative seasonal balance between supply and demand. Future nest-run and wholesale prices will be largely dependent on consumer demand for eggs and liquid and the rate of replacement of pullets and hens depleted due to HPAI. Other considerations include diversion to shell sales from the egg-breaking sector in an interconnected industry.
  • Fluctuation in wholesale price is attributed in part to the amplification of upward and downward swings associated with the commercial benchmark price discovery system in use. Restoration of seasonal prices commenced midway through the fourth quarter of 2023 with a plateau after Christmas followed by a seasonal decline through January 2024. A substantial rise in price occurred during early through late February but with a sharp decline thereafter to mid-March. An unknown factor in future pricing will be the incidence rate and severity of highly pathogenic avian influenza in spring months with northward migration of waterfowl. Close to 13 million hens and 2.5 million pullets were depopulated during the fourth quarter of 2023 among five states with heavy losses in California.
  • February 2024 USDA average nest-run production cost for generic eggs from caged flocks over four regions (excluding SW and West), applying updated inputs was down 1.6 cents per dozen to 76.0 cents per dozen compared to the January 2024 value of 77.6 cents per dozen, mainly attributable to a 4 percent lower average feed cost per dozen.  Approximately 60 cents per dozen should be added to the USDA benchmark nest-run cost to cover processing, packing material and transport to establish a realistic price as delivered to warehouses.
  • February 2024 USDA benchmark nest-run margin attained a positive value of 175.0 cents per dozen for generic eggs from caged flocks compared to a positive margin of 94.4 cents per dozen for January 2024. Average nest-run monthly margin over 2023 was 64.2 cents per dozen compared to 155 cents per dozen in 2022. This differential was mainly due to higher prices following HPAI-depletion of flocks. It is emphasized that the U.S. benchmark price reflects nest-run conventional eggs.
  • The February 2024 national flock in production (over 30,000 hens per farm) was stated by the USDA to be up 0.1 million hens (rounded) to 300.0 compared to the revised January 2024 value of 299.7 million. This figure apparently takes into account depletion of 4.2 million hens during December 2023 that were not recorded in the month. Approximately 3.0 million hens returned to production from molt in February together with projected maturation of 22.0 million pullets, with this number offset by depletion of spent flocks. During the fourth quarter of 2023 approximately 13 million hens and 2.5 million pullets were depopulated due to HPAI in five states.
  • January 2024 pullet chick hatch of 26.1 million was up 8.6 percent or 2.1 million chicks from December 2023.
  • January 2024 exports of shell eggs and products combined was down 34.8 percent from December 2023 to 394,000 case equivalents representing the theoretical production of 5.2 million hens. The decrease was attributed to depressed demand for shell eggs by importing countries.

 

TABLES SHOWING KEY PARAMETERS FOR FEBRUARY 2024.

Summary tables for the latest USDA February 2024 flock statistics, costs and unit prices made available by the EIC on March 13th 2024 are arranged, summarized, tabulated and compared with values from the previous February 16th 2024 posting reflecting January 2024 costs and production data as applicable. Monthly comparisons of production data and costs are based on revised USDA values.

 

VOLUMES OF PRODUCTION REFECTING THE ENTIRE INDUSTRY

                                                                   

PARAMETER

        January 2024

     February 2024

Table-strain eggs in incubators

49.1* million      (Jan.)

 59.1 million     (Feb.)

Pullet chicks hatched

24.2 million        (Dec.)

 26.1 million     (Jan.)

Pullets to be housed 5 months after hatch

21.8 million        (May.)

 22.8 million     (June)

EIC 2023 December 1st Flock Projection (estimate)

328.9                   (Jan.)

328.0 million    (Feb.)

National Flock in farms over 30,000 

299.7million       (Dec.)

300.0 million    (Jan.)

National egg-producing flock 

315.7* million    (Dec.)

310.4 million    (Jan.)

Cage-free flock excluding organic

103.9*  million     (Jan.)

106.5 million    (Feb.)

Proportion of flocks in molt or post-molt

     11.5%             (Jan.)

   11.2%             (Feb.)

Total of hens in National flock, 1st cycle (estimate)

 279.4 million     (Dec.)

 275.6 million   (Jan.)

 

Total U.S. Eggs produced (billion)

    8.143* December 2023

  7.98   January 2024

Total Cage-Free hens in production

  122.3 million   (Jan.)

   15.0*% Organic

124.8 million   (Feb.)

14.7% Organic

“Top-5” States hen population (USDA)1

   147.9 million  (Dec.)

  148.5 million (Jan.)

 * Revised USDA/EIC

Notes 1. Texas excluded to maintain confidentiality            

 

PROPORTION OF U.S. TOTAL HENS BY STATE, 2023/20241                                                                   

Based on a nominal denominator of 300 million hens in flocks over 30,000 covering 94.6 percent of the U.S complement.

USDA has amended inclusion of specific states in regions and eliminated Texas data to protect confidentiality of Company flock

Sizes

STATE

DECEMBER *

    2023

    JANUARY*

       2023

 

 Iowa

    14.3%

      13.8%

 

Indiana

    11.8%

      11.6%

 

Ohio

    12.6%

      12.9%

 

Pennsylvania

      8.0%

        8.3%

             

Texas (estimate)

      7.5% ?

        7.5%?

                   

California

      3.0%

        3.0%?

 

  1. Values rounded to 0.1% 

*USDA data is questioned based on known values for hen depopulation and pullet placements with discrepancies in stated values during the 4th quarter of 2023

 

Rate of Lay, weighted hen-week (USDA)          83.3% January 2024.    82.6% February 2024

 

Revised per capita       egg consumption 2020:-             285.6 (down  7.8 eggs from 2019)*

Revised per capita       egg consumption 2021:-             282.5 (down  3.1 eggs from 2020)*

Revised per capita       egg consumption 2022:-             279.0 (down  3.5 eggs from 2021 due to HPAI)                          Projected per capita   egg consumption 2023:-             280.9 (up        1.9 eggs from 2022)                                                Forecast per capita     egg consumption 2024                283.7 (up        2.8 eggs from 2023 accepting HPAI losses)

*Revised, using data from USDA Livestock, Dairy and Poultry Outlook February 14th 2023 taking into account demand from the food service sector and presumably including the effect of HPAI depopulation.

 

Egg Inventories at beginning of February 2024:

 

     Shell Eggs:        1.51 million cases down 17.5 percent from January 2024.

     Frozen Egg Products: 757,238 case equivalents down 15.7 percent from January 2024

     Dried Egg Products:  Not disclosed since March 2020 following market disruption due to

          COVID. Moderate level of inventory are assumed

Eggs broken under FSIS inspection (million cases)

 

 January 2024,  6.37       DECEMBER 2023,  6.31                   

Cumulative eggs broken under FSIS inspection 2023 (million cases)  78.7         JAN. to DEC.      

Cumulative 2023: number of cases produced (million)                       262.9         JAN. to DEC.

Cumulative 2023: proportion of total eggs broken                               29.9%        (30.8%  2022)

 

Cumulative eggs broken under FSIS inspection 2024 (million cases)   6.37         JAN.

Cumulative 2024: number of cases produced (million)                        22.17         JAN.          

Cumulative 2024: proportion of total eggs                                             28.8           JAN.

 


 


Commodity Report

03/14/2024

WEEKLY ECONOMY, ENERGY AND COMMODITY REPORT: March 14th 2024.

 

 OVERVIEW

 

Prices for corn and soybean meal were relatively unchanged compared to last week. Prices were influenced by short covering arising from geopolitical concerns and revised projections for crop sizes in Brazil. Secondary factors included disruption in shipping in the Red Sea and Panama Canal, carryover from the 2023 U.S. crop, export orders and predicted ending stocks of corn and soybeans for the 2024 crop.  There was minimal response to the March WASDE that retained projections for production and ending stocks from the February report,

 

At 12H00 on March 14th the CME price for corn was down 0.7 percent compared to the previous week to 423 cents per bushel for March delivery. Corn price was influenced by lower ethanol demand and the proportionally high ending stock of corn from the 2023 crop. Export orders for the current market year have increased in response to lower prices.  Volumes and prices are indirectly influenced by events in the Black and Red Seas. Orders by China resumed at the end of the 2022-2023 market-year and have extended through to March with a lower Dollar Index assisted by low FOB prices but with higher ocean freight. Total exports for the current market year are 31.5 percent higher than for the corresponding week during the 2022-2023 year.

Soybeans were up 3.4 percent from last week to 1,192 cents per bushel for March 2024 delivery. Gain was attributed to short covering and lower projections for the 2024 Brazil harvest. Total exports for the current market year are 18.9 percent lower than for the corresponding week in the 2022-2023 year.

 

 

Soybean meal was down 0.9 percent to $335 per ton for March delivery compared to $338 per ton last week. Price was influenced by demand coupled with high crush volumes for three consecutive months through December but with volume presumably restored after the impact of cold weather in January. Price will fluctuate to reflect the CME price for soybeans and the demand for biodiesel despite the adverse financial situation in this sector. The market previously responded to the increased 2023 crop and higher stocks together with projections for 2024 unchanged from February in the March WASDE Report.

 

 WTI was 0.3 percent higher from last week to $79.62 at 16H00 EDT on March 13th with low world demand in relation to supply. The rise in price is inconsequential in the face of disruption of shipping in the Red Sea, turbulence in the Middle East and is countered by U.S. production of 13.3 million barrels per day with ample reserves. The small upward trajectory in price may continue if production cuts by OPEC amounting to 2 million barrels per day and extended through June actually materialize. There was little inter-day fluctuation in price during the week ($76.95 to $79.92 range) with a small upward trend. Crude oil inventory in the U.S., other than the Strategic Reserve, was down 0.7 percent to 31.5 million barrels last week following the seasonal trend.  The U.S. production is constraining domestic and international prices

 

Factors influencing commodity prices in either direction over the past four

 weeks included:-

 

  • Weather conditions in areas of the World growing corn and oilseeds especially in Brazil and also Argentine with favorable rain recently under the influence of a strong El Nino event. The 2023 U.S. harvest was completed ahead of the corresponding weeks in 2022 with higher carryover (downward pressure).

 

  • Geopolitical considerations continue to move markets, especially in the Mideast. Cancellation of the BSGI in July and ongoing attacks on Ukraine port facilities impacted prices of wheat, corn, oilseeds and vegetable oils. Loaded bulk vessels are sailing from Black Sea and Danube River ports using the ‘Humanitarian Corridor” to various destinations. This route is operational despite threats by the Russian Federation to mine the entrance to ports and deploy airborne missiles.  Exports from Ukraine are approaching 1.5 million metric tons per week with a total of 26 million metric tons market year to date, down 11 percent from the equivalent period for 2022-2023 year. Grain production in Ukraine during the current year will be lower than 2022/2023 (Downward pressure on corn and wheat and an indirect effect on soybeans)

 

  • Macroeconomic U.S. factors:-
  • Most economists in academia and the private sector are confident of a “soft landing” for the economy following the release of revised Q4 2023 GDP and recent releases of economic parameters including the CPI and anticipated PPI and a decline in bond rates. Annual inflation as measured by CPI declined from 8.9 percent in June 2022 to 3.2 percent in February 2024. This is in part a response to a series of 11 FOMC rate raises that curbed inflation and cooled the labor market but without precipitating unemployment. There is evident stability in the bank sectors in both the U.S. and Europe. Large U.S. banks passed stringent mid-year “stress tests”. There is now concern over regional banks with exposure to commercial real estate.
  • The Federal Reserve held the benchmark interest rate steady at the monthly FOMC meeting on January 31st 2024, the fourth sequential pause.  The Federal Reserve commentary indicated that the rate would be held at 5.25 percent until a pivot with possibly two to three reductions of 25 basis points each in 2024, after the June meeting at the earliest. Chairman Powell in Congressional testimony and documented in FOMC minutes has indicated that decisions would be based on data and demonstrable progress in reducing inflation to achieve an annual 2.0 percent target by mid-2025. Market optimism with projections of five reductions during 2024 is  now unrealistically optimistic, with no reduction expected before July.
  • The February 28th Bureau of Economic Affairs announcement of the advanced estimate of Q4 GDP confirmed a value of 3.2 percent, slightly below the consensus estimate of 3.3 percent. The rise was attributed to increased consumer and government sector spending and investment in inventory.
  • The February 8th 2024 S&P Manufacturing Purchasing Managers’ Index Report (PMI) rose to 51.8 in January from 51.0 in December 2023. The PMI is approximately three percent below the 10-year average preceding the COVID years. The recent upward trend suggests recovery from the effects of successive raises in the Federal Reserve benchmark interest rate.
  • On February 29th the Bureau of Economic Analysis released the January Personal Consumption and Expenditure Price Index  (excluding food and energy) that was up 0.4 percent from the previous month. This was in line with estimates. Food prices increased 0.5 percent but energy was down 1.4 percent. The Index was up 2.4 percent year-over-year also corresponding to estimates. Food prices were up 1.4 percent and energy down 4.9 percent year-over-year. The PCPI is closely followed by the Federal Reserve and confirms declining inflation.
  • The March 12th Bureau of Labor Statistics release of the February 2024 CPI confirmed a 0.4 percent increase from January, and 0.1 percent above forecast. The annual increase of 3.2 percent was up from 3.1 percent in January and higher than the anticipated value. The increase in the core value (excluding food and energy) was 0.4 percent from January and 3.8 percent for the 12-month period, in line with estimates.  Food at home was unchanged from the previous month. Food away from home was up 0.1 percent from January.  On an annual basis all food was up 2.2 percent with food at home up 1.0 percent and food away from home up 4.5 percent. Energy was up 2.3 percent in February and down 1.9 percent over 12-months, mainly due to a decline in gasoline (-3.4 percent) and fuel oils (-5.4 percent). The shelter category was up 0.4 percent for the month and 5.7 percent over the past year. The macro trend is clearly towards reduced inflation due to a fall in energy prices but this category is moving up, detracting from deflation. The CPI heavily influences FOMC rate decisions.
  • The February Producer Price Index for Final Demand (PPI) released on March 14th was up by 0.6 percent from January compared to an expectation of 0.3 percent. The PPI was up 1.6 percent over the past 12-months. This is compared to a 6.4 percent increase in 2022. The increase in February was due to a 4.4 percent rise in energy and 1.2 percent for finished goods. The core PPI value excluding volatile fuel and food, was up 0.4 percent for February and up 2.8 percent for the 12-month period. Food was up 1.0 percent compared to a 0.3 percent decrease in January.
  • Retail sales in February were up 0.6 percent over January compared to an estimate of 0.8 percent and compared to a decline of 1.1 percent for the revised January value compared to December 2023.
  • A Federal Reserve release on February 15th confirmed that industrial production fell 0.5 percent in January against a projection of a 0.1 percent rise in December. Production was adversely affected by inclement weather during January 2024 with plant closures. Capacity utilization was down 0.2 percent to 78.5 percent, 1.1 percent below the 1972-2020 average.
  • The February 26th report on Durable Goods Ordered for January 2024 was unexpectedly lower by 6.1 percent against a consensus estimate of a 4.5 fall. Transportation and specifically aircraft orders were down 16.2 percent. Excluding the Transportation component, new orders decreased by 0.3 percent in January impacted by inclement weather. Shipments of durable goods decreased 0.9 percent following a fall of 0.6 percent in December 2023.
  • The February 15th release of retail sales data showed a monthly fall of 0.8 percent in January against an expected 0.1 percent decline. This value is compared to the revised 0.4 percent rise in December 2023. Core retail sales increased 0.6 percent in January. Retail sales in January were affected by harsh winter storms and a change in the basis of calculation. The Federal Reserve FOMC closely monitors this index as a measure of the trend in inflation.
  • The February 1st ISM® Manufacturing Index for January rose to 49.1 from 47.4 in December.
  • The Conference Board Consumer Confidence Index released on February 27th for January/February, declined to 106.7 points. This reading was down from a revised 110.9 for the preceding four-week period.
  • The March 1st University of Michigan Index of Consumer Sentiment fell to 76.9 for February down from a revised 79.0 in January.  The Index was up 14.9 percent from February 2023. Both the Current Economic Index (79.4 slightly down from 81.9 in January) and the Index of Consumer Expectations (75.2 down from 77.1 in January) denote a cautious increase in consumer sentiment influenced by lower interest rates and moderating inflation despite geopolitical concerns.
  • Non-farm payrolls added by 275,000 for February, as documented by the Bureau of Labor Statistics on March 9th. This was more than the anticipated 200,000, and compares to the revised January value. The increase is attributed to workers in the business, health care and government sectors. The unemployment rate rose to 3.9 percent with 15 million unemployed. Real average weekly earnings for January showed a 0.1 percent increase over January.  Average hourly earnings rose 0.1 percent to $34.57 in February up 4.3 percent over 12 months. Wage rates are closely followed by the Federal Reserve.
  • The Bureau of Labor Statistics Job Openings and Labor Survey report released on March 6th estimated 8.9 million job openings at the end of January, down 100,000 (-0.1 percent) from December 2023 and consistent with estimates. The January job openings number was the lowest value in 33 months and compares with the March 2022 value of 12.2 million during COVID.
  • The seasonally adjusted initial jobless claims figure of 209,000 released on March 14th was down 1,000 from the revised seasonally adjusted 210,000 for the week ending March 7th but lower than the Reuters  estimate of 218,000. The four-week moving average fell 500 to 208,000 The Bureau of Labor Statistics estimated 1.81 million continuing claims for the week ending March 1st.. There is evidence from data over the past three months that the labor market is cooling despite sporadic weekly reduction in new claims.
  • The February 1st Bureau of Labor Statistics report recorded a 3.2 percent increase in non-Farm Productivity for Q4; Unit Labor Cost was up by 0.4 percent on a normalized basis and Hours Worked was up by 0.4 percent in Q4
  • The ADP® reported on March 6th that private payrolls increased by 140,000 in February, up 29,000 from the revised 111,000 in January and compared to the Reuters estimate of 150,000 jobs. The increase in employment was mostly in the construction, transport and trade sectors. Annual pay was up 5.1 percent year-over-year compared to 5.3 recorded for January. The increase will not directly influence the probability of short-term future changes in interest rate since the ADP® is regarded by the FOMC as an unreliable statistic

 

FACTORS INFLUENCING COMMODITY PRICES

 

  • The 2023 harvests of corn and soybeans were completed by late November 2023. The March 8th WASDE provided a projection for acreage to be planted, yields, crop size and ending stocks for the 2024 crop.
  • It is evident that both polarization in the closely divided chambers of Congress and intra-party conflict between and among both sides of the aisle in the House will delay adoption of appropriations bills. Passage of the 2023 Farm Bill will be contentious and is subject to a 12-month extension as a stop-gap measure. Progress on the 2023 Farm Bill has been impeded by contention over SNAP eligibility and other entitlements that collectively represent 75 percent of total expenditure. The August 2nd downgrade of U.S. debt from AAA to AA+ by Fitch Ratings recognizes Congressional dysfunction. On November 10th 2023 Moody’s downgraded U.S. credibility from ‘stable’ to ‘negative’ based on an inability to pass required fiscal legislation. After four Continuing Resolutions the House and Senate passed six appropriations bills including the FDA and USDA, avoiding a March 8th partial shutdown of the Federal Government. Agreements have yet to be concluded on the remaining appropriations bills before March 22nd
  • The delayed 2023 Farm Bill is mired in conflict in both the House and Senate. There is no consensus on major issues comprising the magnitude of SNAP payments and eligibility and requested price supports for crops. The Chair of the Senate Agriculture Committee Sen. Debbie Stabenow (D-MI) is standing firm on maintaining both SNAP-WIC benefits and climate remediation funding even if the Farm Bill is delayed through to the 119th Congress  
  • The March 8th WASDE #646 Projected both corn and soybean production parameters with a potential record corn harvest for the 2024 crop. There will be ample world availability of ingredients although inequitable distribution will result in shortages in some nations. Soybean exports will comprise 39 percent of the 2024 U.S. crop with a 12.5 percent increase in ending stock.
  • There is a projection by CONAB (the Soy production association in Brazil)  that at the midpoint of the harvest the 2024 soybean crop in Brazil will attain 147 million metric tons  (5,401 million bushels) down from a previous estimate of 155 million metric tons (5,695 million bushels). Exports of 100 million metric tons (3,674 million bushels) are anticipated and Brazil will crush 56 million metric tons (2,057 million bushels). The harvest will be 7 million metric tons (269 million bushels) lower than the 2023 record crop.
  • Corn production in Brazil for the 2023-2024 market year will attain 124 million metric tons (4,801 million bushels) from all three sequential harvests. But down seven percent from the previous year. Brazil is projected to export of 54 million metric tons (2,125 million bushels). Argentine will produce 56 million metric tons of corn (2,204 million bushels) up 56 percent from the previous year impacted by drought. (Lower prices in the future subject to favorable reports on crop progress and actual harvests)
  • The Dollar Index (DXY) was 103.3 on March 6th, down 0.5 point from last week but under a three-month high with fluctuation following uncertainty over future interest rates and prospects of a prolonged delay in the anticipated pivot by the Federal Reserve FOCM. The DXY has ranged from 99.0 to 107.0 over the past 52 weeks. The dollar index influences timing and volume of export orders and indirectly the price of WTI crude.


 


Cal-Maine Foods, Inc. Completes Acquisition of Dexter Complex

03/14/2024

Dexter MO Plant to be re-puposed by Cal-Maine Foods

On March 14th Cal-Maine Foods, Inc. announced completion of the previously announced acquisition of a complex comprising a broiler processing plant, hatchery and feed mill in Dexter, MO, closed by Tyson Foods, Inc. in 2023. The Company plans to repurpose the facilities to produce and pack shell eggs and egg products.

 

Sherman Miller, president and CEO stated, “We are pleased to join the Dexter community and are excited about the opportunities to expand our operations”. He added “We intend to partner with the existing strong network of local contract growers who can support our shell egg production”.

 

In commenting on the benefits of the transaction Miller stated “Dexter, MO. has a central geographic location and the strong work force will enhance our supply and distribution capacity for customers in Missouri and surrounding markets. Importantly, we will also benefit from closer proximity to sources for our primary feed ingredients.

He concluded “We look forward to the new production opportunities, including the potential for additional free-range capacity, in this new community and market for Cal-Maine Foods.”

 

Cal-Maine Foods, Inc. is the largest producer and distributor of fresh shell eggs in the United States and marketing in states across the southwestern, southeastern, mid-western and mid-Atlantic regions of the United States.


 

Wind Assisted Propulsion Evaluated

03/14/2024

Pyxis Ocean underway

During mid-2023, Cargill initiated a test of the Pyxis Ocean a bulk carrier converted to wind assisted propulsion by WindWings®.  The vessel owned by MC Shipping has made a number of voyages since August 2023 sailing the Indian, Pacific and Atlantic Oceans. The initiative is in response to the International Maritime Organization target of a five to ten percent reduction in carbon energy sources.

 


Pyxis Ocean with aerofoils extended

It was determined that over the test period, the vessel saved three metric tons of bunker fuel daily  representing a value of $2,100. Over a 30-day voyage a Panamax dry bulk vessel carrying 57,000 metric tons of soybeans would save shippers $1.10 per ton. Based on the results, the area of wind capture will be increased to achieve a potential fuel savings of up to ten tons per day with favorable winds providing proportionally higher savings.

 

The question arises as to the return on investment and long-term financial benefits given the capital cost of an installation and the operational components including maintenance.


 

Walmart Plans Third Milk Plant for Texas

03/13/2024

Walmart Inc. has announced a milk processing plant in Robinson, TX scheduled to open in 2026.  This plant will follow the 2018 facility in Fort Wayne, IN and will reflect the design of the previously announced plant to be located in Valdosta, GA.  Both the planned plants will cost approximately $350 million.

 

Bruce Heckman, Vice-president of manufacturing at Walmart stated, “This new facility continues our commitment to building a more resilient and transparent supply chain and ensuring that our customer’s needs are met for this everyday staple.  Products to be processed in the Texas facility will be distributed to approximately 750 Walmart stores in Texas, Oklahoma, Louisiana, Arkansas and Mississippi.  Milk will be marketed under the Walmart Great Value brand and for Sam’s Club under the Member’s Mark brand.

 


Proposed Walmart Milk Plant

 The fact Walmart has invested close to $1 billion in milk processing to stabilize their supply chain suggest that the Company might be interested in integrating backwards into egg production either through a joint venture or acquisition of an existing large producer. Establishing a series of egg complexes by Walmart is considered unlikely despite the investment by Costco in Lincoln Premium Poultry for rotisserie broiler production.


 

Vital Farms Posts Q4 and FY 2023 Financial Results

03/13/2024

In a March 7th release, Vital Farms Inc. (VITL), a Certified B Corporation posted financial results for the 4th quarter and FY 2023. This specialty egg producer competes directly with Eggland’s Best and other producers and distributors of USDA Certified Organic and pasture-raised products including Pete and Gerry’s, Hidden Valley and Egg Innovations. The Company experiences the same pressures of feed cost, contractor remuneration, labor and transport as competitors in a competitive and fluctuating market environment still restrained inflation.

 

For the 4th Quarter of FY 2023 ending December 31st 2021, net income was $7.2 million on revenue of $135.8 million with a diluted EPS of $0.17. 

 

Comparable figures for the 4th quarter of FY 2022 ending December 25th were net income of $1.9 million on revenue of $110.0 million with a diluted EPS of $0.04.

 

Sales increased 23.3 percent over the 4th quarter of FY 2023. Gross margin was 33.2 percent for the most recent quarter (30.3 percent Q4 FY 2022). Operating margin was 6.7 percent compared to 3.1 percent in Q2 2022.  

For the FY 2023, net income was $25.6 million on revenue of $471.9 million with a diluted EPS of $0.59.  Comparable figures for FY 2022 were net income of $1.2 million on revenue of $362.1 million with a diluted EPS of $0.03.

 

The Company increased guidance for FY 2024 projecting revenue of $552 million, an adjusted EBITDA of $57 million and capital expenditure of $35 to $45 million.

 

On December 31st 2023, VITL posted assets of $275.2 million, of which $3.9 million comprised intangibles against long-term debt and lease obligations of $17.3 million. The Company had an intraday market capitalization of $877.0 million on March 13th. VITL trades with a forward P/E of 208 and has ranged over a 52-week period from $10.23 to $21.42 with a 50-day moving average of $16.16.  Twelve-month trailing operating margin was 8.3 percent and profit margin 5.4 percent.  Return on assets over the past twelve months was 9.1 percent with 14.6 percent on equity. At close of trading on March 7th pre-release, VITL was priced at $19.87. Post-release on  March 8th VITL opened at at $21.18.

 

Approximately 36 percent of VITL equity is held by insiders with 61 percent owned by institutions. As of February 29th 6.1 percent of the float was short.


 

Revamp of H-2A Visa Program

03/12/2024

A bipartisan working group of the House Committee on Agriculture recently concluded a major review of the H-2A Visa program.  Recommendations include:

 

  • Expanding the program from seasonal to year-round eligibility to meet the needs of specific sectors of agriculture including dairy, hogs and poultry
  • Establishing standard wage rates based on duration of daily labor
  • Expediting procedural improvements in the face of an urgent need to legally employ additional workers

It is now up to both the House and the Senate to modify existing laws and for Federal and State agencies involved to cooperate to provide for a legal pathway to employ eligible workers.


 

South Dakota to Facilitate Summit Pipeline

03/12/2024

Following a denial by the Public Utilities Commission for Summit to proceed with a carbon dioxide pipeline, the South Dakota Legislature has passed bills that provide protection for landowners but will allow easements to facilitate the project.  Pipeline operators will have to pay for access to survey land and counties could collect a surcharge.  Pipeline companies would be responsible for damage and easements would be restricted to 99 years.  The final version of the legislation allows the Public Utilities Commission to overrule setbacks determined by individual counties.

Summit has proposed the $8 billion pipeline project that would collect carbon dioxide from 57 ethanol plants in South Dakota and neighboring states to be transported to North Dakota for underground sequestration.

 

Some funding will be provided by the federal government in form of tax credits to incentivize reduction of carbon dioxide release.  Tax credits were first introduced in 2008 and were expanded under the previous Administration.

 

The South Dakota Farmers Union was unhappy with the package of bills passed by the State House and Senate.  The Association commented on the domination of the legislature by “large special interest groups to the detriment of family farmers”.  It is significant that South Dakota Ethanol Producers Association supported the bill promoting the first Landowner Bill of Rights claiming that all parties would benefit.

 

 An obvious question is in the absence of a pipeline and sequestration, how is the ethanol industry currently disposing of carbon dioxide produced during the fermentation of corn?  It is understood that only a small proportion is disposed of by capture and sale or on-site subsoil injection.  If one-third of the corn crop is converted to ethanol then one-ninth of the mass of corn produced each year is vented. This contradicts the claim of ethanol being environmentally beneficial when added to gasoline at ten percent.


 

Kroger and UFCW Local 400 Reach Agreement

03/12/2024

A potential strike has been averted following agreement between the Kroger Company and UFCW Local 400 representing workers in West Virginia, Kentucky and Ohio.  The contract will include a starting wage of $13 per hour for new employees, provide raises for department leaders and cap health and welfare costs for the duration of the contract. Union members will be protected from any reduction in hours worked as a result of the Company using vendors and temporary workers.  Approximately 3,000 employees represented by the Union will now vote to approve the agreement. 


 

FDA Recommending Voluntary Recall of Cinnamon Products

03/12/2024

Based on elevated levels of lead in the region of 200 ppm, the FDA is recommending a voluntary recall of ground cinnamon products.  Six products have been identified that were distributed among retail outlets in California, Missouri, Illinois, Virginia, Florida and Maryland.

 

The levels of lead contamination assayed are lower than the 2,000 to 5,000 ppm in cinnamon associated with the recent recall of pouches of apple puree.

 

The Deputy Commissioner for Human Foods at the FDA, Jim Jones stated, “Today’s actions serve as a signal to industry that more needs to be done to prevent elevated levels of contaminants from entering our food supply.”  He added, “Food growers, manufacturers, importers and retailers share a responsibility for ensuring the safety of the foods that reach store shelves.”

The FDA is cooperating with the Centers for Disease Control and Prevention to evaluate elevated lead and chromium levels in children exposed to contaminated apple cinnamon puree. 

 

There is a world of difference between a recommended, voluntary recall and a mandated recall.  It is questioned why the FDA has not acted more forcefully.  Is this due to lack of authority or a structural and cultural inability to make decisions and to take action?


 

Product of the USA Label Rule

03/12/2024

In a March 11th release, USDA announced finalization of the Rule relating to labeling meat, poultry, and eggs as “Product of the USA”.  The label claim can only be applied to foods that were derived from flocks or herds hatched or born, raised, processed and packed in the U.S. 

 

The Rule is intended to prevent deceptive labeling and to assure consumers of the domestic U.S. origin of products.  The label incorporating the “Product of the USA” will be applied on a voluntary basis.  Although no specific pre-approval is required from USDA, processors must maintain documentation to establish the veracity of the “Product of the USA” claim.\ that will be subject to audit.


 

Kentucky to Ease Restraints on Child Labor

03/12/2024

Following the example of Arkansas, the Kentucky House of Representatives voted to approve House Bill 255.  This legislation will allow minors to work up to six hours per school day and up to eight hours on non-school days with a limit of 30 hours a week during the school term.  Federal rules are more restrictive for the 16-and-17-year age group. It is possible that Kentucky legislature is enacting a law legitimizing ongoing irregularities. 

Education officials are critical of HB255 that creates the potential for children to be exposed to hazardous occupations.  The duration of work would detract from schooling and there is a potential for exploitation of children from low-income families.  The move towards more extensive employment of minors is in response to availability of workers especially in agriculture and under the prevailing economic situation. 

 

Education presents a pathway for upward mobility.  Depriving children of scholastic opportunities will contribute to perpetuation of a class dependent on federal support programs and may even result in elevated crime rates.


 

Dispute with Mexico over GM Corn

03/12/2024

Mexico has submitted a response to the USMCA Dispute Settlement Panel regarding their ban on importation of GM corn for human consumption. The situation arose following a Presidential Decree banning GM corn for human consumption and the use of glyphosate herbicide. Mexico is claiming a deleterious effect from both glyphosate and GM corn but without substantiation.

 

The U.S. justifiably maintains that GM corn is innocuous given consumption over four decades. The Mexican position is that the U.S. must provide scientific evidence that genetic modification is not harmful. In contradistinction, it should be up to Mexico to demonstrate the actual harm resulting from consumption of GM corn.  The U.S. maintains that in accordance with USMCA rules, decisions to restrict products must be based on sound science.

Mexico imports yellow GM corn that is to be used in animal feed although the Presidential Decree initially called for a phase-out of GM product that would place both U.S. and Mexico at a disadvantage.  The action by the Government of Mexico has placed the U.S. in the invidious position of having to prove that GM corn is not inherently harmful. This is a far more difficult alternative than actually demonstrating a deleterious effect from consumption of a food especially if the Precautionary Principle is applied.

 

Outgoing President Andres Manuel Lopez Obrador (“AMLO”) is ill advised. It is hoped that his most likely successor, Dr. Claudia Sheinbaum, an environmental scientist, will quietly squelch the issue for the benefit of consumers in Mexico and the Nation’s economy.


 

Vulto Creamery Enters into Plea Agreement over Listeriosis

03/12/2024

Vulto Creamery, located in upstate New York, has a history of producing cheese contaminated with Listeria. In March 2017, the facility was linked to an outbreak resulting in eight hospitalizations and two fatalities. An investigation by the FDA led to an indictment alleging “introducing adulterated food into interstate commerce”. Swabs taken by FDA have yielded Listeria monocytogenes and other Listeria spp. over the period July 2014 through February 2017. The owner of Vulto Creamery faces a $100,000 fine and a one-year suspended sentence.  The company faces a fine of $250,000 with appropriate court supervision.

 

U.S. Attorney Carla V. Freedman of the Northern District of New York, stated “This investigation and prosecution holds accountable the defendant who does business who through unsafe practices caused illness and death to consumers in an entirely preventable tragedy.”  She added, “The law enforcement and regulatory partners involved in this case will continue to work together to bring to justice those who endanger the public through unsafe and unsanitary products and facilities.”

 

During the past five years, FDA, the CDC and the Department of Justice have cooperated in prosecuting cases of foodborne infection that can be attributed to negligence or willful distribution of known contaminated products. This evidenced evidenced by the DeCoster, Peanut Corporation of America and Blue Bell Creamery cases.

 

Although the prevalence of SE is negligible in the commercial egg production industry, management should be aware of their responsibilities with respect to public health and should conform to the FDA Final Rule on Salmonella prevention.


 

ICE Breaks Smuggling Ring from China

03/11/2024

Six members of a smuggling ring were arraigned in a New York court on March 5th.  The Government alleges illegal importation of raw poultry from China destined for ethnic restaurants.  Huang Chen and partners organized a network to import, distribute and sell prohibited items from chickens, ducks and geese.  The ring has operated since August 2022 importing shipments incorrectly described on manifests as ‘frozen seafood’.  In raids, accompanying the arrests, the USDA and agents of the Office of the Inspector General confiscated product valued in excess of $150,000.

Illegal importation of raw ethnic delicacies from China represents both livestock and human health hazards. The extensive foot-and-mouth disease outbreak in England during 2001 was introduced through illegal importation of pork from China


 

SEC Amends Greenhouse Gas Disclosure Requirements

03/11/2024

The Securities and Exchange Commission (SEC) has amended proposed regulations requiring public traded companies to disclose greenhouse gas emissions.  Scope 1 emissions that are directly produced and Scope 2 comprising indirect emissions associated with the use of energy in operations will have to be disclosed.  Scope 3 requirements that arise from suppliers to the company concerned were removed from the Rule. 


This would mean that a public traded company producing a packaged food product would be required to disclose Scope 1 and Scope 2 emissions of greenhouse gases arising from manufacture of products including direct use of energy. They would not have to take into account greenhouse gas emissions from agricultural operations supplying ingredients used in the manufacture and packaging of food products.

There is considerable opposition to the SEC disclosure rules that have yet been finalized.


 

State Politicians Become Involved in Missouri Prime Beef Plant Closure

03/10/2024

As a result of environmental contamination with inadequately treated wastewater, the Missouri Department of Natural Resources withdrew the relevant permit for Missouri Prime Beef effectively closing the plant.

Representative Jim Kalberloh is cooperating with Representative Mike Stephens on a resolution to the problem to allow over 300 workers to return to the facility.  Kalberloh stated “I understand the impact of fresh water and clean water, so it’s a kind of thin line to try to walk. We are just trying to work out a deal where both can coincide and to live and come to a peaceful conclusion” The solution to the problem would be for the new owners of the plant to make the necessary investment in an effluent treatment plant to conform to state and industry standards.

If legislators strong-arm environmental regulators, over an issue of obvious contamination, the entire process of control will be eroded, with adverse consequences to the residents of the area. It is understood that a petition with 1,000 signatures was presented to the State protesting the release of incompletely treated effluent into the Pomme de Terre River adjacent to the plant. That should grab the Legislators’ attention!

 


 

Almond Boom Has Fizzled

03/10/2024

The price of almonds has halved in ten years to $2 per pound.  This has impacted individual farmers and cooperatives that took on debt to establish orchards.

A major California consortium of growers, Trinitas Farming has filed for Chapter 11 bankruptcy based on illiquidity.

 

A number of egg producers established almond orchards on their properties to add to revenue. This is now is in question.


 

USDA-WASDE REPORT #646, March 8th 2024

03/08/2024

OVERVIEW

 

The USDA provided preliminary values for the production of corn and soybeans in the March 8th World Agriculture Supply and Demand Estimates (WASDE) #646, reflecting the anticipated 2024 crop. These values were understandably unchanged from the February edition given the month and are based on projections of acreage, yield, carry-forward levels from 2023, and with realistic assumptions of domestic use and exports giving rise to ending stocks.

 

The March 8th WASDE report predicted that corn would be harvested from 86.5 million acres, unchanged from February. The soybean crop will be harvested from 82.4 million acres also unchanged.

 

The most recent report retained the yield value for the 2024 corn crop at 177.3 bushels per acre. By comparison yield was 174.9 bushels per acre in 2023. The soybean yield was held at 50.6 bushels per acre compared to 49.9 bushels per acre in 2023.

 

The March 2024 USDA projections for the ending stocks of corn were 2,172 million bushels, up 0.5 percent from 2,162 million bushels respectively.

 

The March 2024 WASDE lowered the ex-farm price of corn by 5 cents to 475 cents per bushel. The projected price for soybeans was unchanged from the February WASDE at 1,265 cents per bushel. Soybean Meal was unchanged at $380 per ton.

 

Projections for world production included in the March 2024 WASDE report reflect the most recent estimates for commodities in the Southern Hemisphere with an emphasis on Argentine and Brazil. Economists also evaluated the likely impacts from hostilities in Ukraine with occupation of ten percent of the Nation’s land area by the Russian Federation and following extensive destruction of agricultural infrastructure. It is evident that production and hence exports of wheat, corn and sunflower from Ukraine will be reduced compared to pre-war averages. Exports from Ukraine have been restored following the collapse of the Black Sea Grain Initiative and destruction of Black Sea and Danube Delta port installations. These adversities have been partly overcome by aggressive naval action allowing the “Humanitarian Corridor” that traverses the national waters of friendly countries along the western Black Sea coast.

 

It is accepted that USDA projections for export are also based on the perceived intentions and needs of China. This Nation has sharply curtailed purchases of commodities and especially U.S. soybeans during the current market year despite drought and taking into effect relaxation of COVID restrictions on consumers with higher demand.

 

Reports on volumes of commodities exported are included in weekly editions of EGG-NEWS, derived from published USDA-FAS sales data.

 

CORN

Based on increased yield and acreage projections for the 2024 corn harvest, January through March WASDE Reports predict a crop of 15,342 million bushels compared to 15,234 million bushels in 2023. The U.S. 2023 harvest was a record, 2.0 percent above the previous record harvest of 15,148 million bushels in 2016. The “Feed and Residual” category was unchanged from February at 5,675 million bushels. The Feed and Seed category was retained at 1,405 million bushels. The “Ethanol and Byproducts” Category was held at 5,375 million bushels consistent with estimated demand for E-10 and higher blends. Gasoline consumption is restrained despite lower prices, easing of inflation and changes in commuting patterns persisting from COVID restrictions. Projected corn exports were unchanged at 2,100 million bushels, based on recent orders, the volume of projected shipments to China and taking into account the anticipated lower availability of coarse grains from Eastern Europe and World weather patterns under an El Nino event. Ending stocks of corn in the March WASDE report were unchanged at 2,172 million bushels.

 

The forecast USDA farm price for corn in the March WASDE report covering the 2024 crop was reduced 5 cents to 475 cents per bushel. At 16H00 on March 8th after the noon release of the WASDE the CME spot price for corn was 440 cents per bushel, up 1.6 percent from the quotation on February 8th and down 7.4 percent from the March USDA projection.

 

MARCH 2024 WASDE #646 Projections For The 2024 Corn Harvest:

Harvest Area

86.5 m acres (0.7% lower than Dec. 2023)

(94.6 m. acres planted), harvest corresponding to 91.4% of acres planted)

Yield

177.3 bushels per acre

(Updated from 174.9 bushels per acre in the December WASDE.)

Beginning Stocks

1,360 m. bushels

 

Production

15,342 m. bushels

 

Imports

25 m. bushels

 

Total Supply

16,727 m. bushels

Proportion of Supply

Feed & Residual

5,675 m. bushels

33.9%

Food & Seed

1,405 m bushels

 8.4%

Ethanol & Byproducts

5,375 m. bushels

32.1%

Domestic Use

12,455 m. bushels

74.4%

Exports

2,100 m. bushels

12.6%

Ending Stocks

2,172 m. bushels

13.0 %

Up 0.5 from 2,162 m bushels in the January WASDE

1 metric ton = 39.368 bushels

 

Average Farm Price: 475 cents per bushel. (Down 5 cents per bushel from from the February WASDE Report reflecting the 2024 projected crop)

 

SOYBEANS

 

Based on a prediction of acreage to be planted the USDA March WASDE projected the 2024 soybean crop at 4,165 million bushels with an estimated yield of 50.6 bushels per acre from 82.4 million acres harvested. Crush volume was unchanged from the February WASDE report at 2,300 million bushels. Projected exports were held at 1,720 million bushels despite China indicating lower pork production and reduced imports. Ending stocks were anticipated to be 315 million bushels, unchanged from the February WASDE report.

 

There is uncertainty over orders from China for the current 2023-2024 market year. This is attributed to competition from Brazil and an assumption of lower requirements for animal feed despite relaxation of previous strict COVID restrictions. In reality traders in China are obligated to order on a stable or declining market unless faced with shortages. Prior to 2018, China, the largest trading partner for U.S. agricultural commodities, imported the equivalent of 25 percent of U.S. soybeans harvested.

 

The USDA February 2024 projection for the ex-farm price for soybeans for the 2024 harvest was unchanged from the February WASDE report at 1,265 cents per bushel. At 16H00 on March 8th following release of the WASDE, the CME spot price was 1,185 cents per bushel, down 0.8 percent compared to the February 8th quotation and 6.3 percent below the March USDA projection.

 

MARCH 2024 WASDE #647 PROJECTION FOR THE 2024 SOYBEAN HARVEST:-

Harvest Area

82.4 m acres (Down 0.5% from Dec. 2023 WASDE)

83.6 m. acres planted. Harvest corresponding to 99.6% of planted acreage)

Yield

50.6 bushels per acre

(Updated from 49.9 bushels per acre in the Dec. WASDE)

Beginning Stocks

264 m. bushels

(Down 1.5%from the Dec. WASDE for the 2024 crop)

Production

4,165 m. bushels

 

Imports

30 m. bushels

 

Total Supply

4,459 m. bushels

Proportion of Supply

Crushings

2,300 m. bushels

51.5%

Exports

1,720 m. bushels

38.6%

Seed

102 m. bushels

 2.3%

Residual

22 m. bushels

 0.5%

Total Use

4,144 m. bushels

92.9%

Ending Stocks

315 m. bushels

7.1%

(up 12.5% from January WASDE )

1 metric ton = 36.74 bushels

Average Farm Price: 1,265 cents per bushel (Unchanged from the February 2024 WASDE Report)

 

SOYBEAN MEAL

 

The projected production of soybean meal from the 2024 soybean crop will be 54.25 million tons. This was up 0.1 million tons from the February WASDE but inconsistent with an unchanged crush of 2,300 million bushels of soybeans. This figure is questioned based on increased demand for biodiesel with a proportional increase in U.S. crushing capacity. Production is driven both by exports and domestic consumption for livestock feed and for soy oil supplying the food and biodiesel segments. The projection of domestic use was reduced 1.0 percent to 39.03million tons. Exports were raised 0.5 million tons to 15.8 million tons. The USDA retained the ex plant price of soybean meal at $380 per ton as an average for the 2023-2024 season based on supply and demand considerations as reflected in an unchanged ending stock of 400,000 tons representing 0.7 percent of supply.

 

At 16H00 on March 8th the CME spot price for soybean meal was $342 per ton, down 1.4 percent compared to the February 8th CME quotation and $38 per ton or 10.0 percent lower than the March WASDE projection of $380 per ton.

 

MARCH 2024 WASDE #646 PROJECTION OF SOYBEAN MEAL PRODUCTION AND USE

Beginning Stocks

371

Production

54,254

Imports

600

Total Supply

55,225

Domestic Use

39,025

Exports

15,800

Total Use

54,825

Ending Stocks

400

(Quantities in thousand short tons)

 

Average Price ex plant:$380 per ton (Unchanged from the February WASDE Report)

 

IMPLICATIONS FOR PRODUCTION COST

 

The price projections based on CME quotations for corn and soybeans suggest stable feed production costs for broilers and eggs. Going forward, prices of commodities will be determined by World supply and demand and U.S. domestic yield, use and exports.

 

For each 10 cents per bushel change in corn:-

  • The cost of egg production would change by 0.45 cent per dozen
  • The cost of broiler production would change by 0.25 cent per live pound

 

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

  • The cost of egg production would change by 0.35 cent per doze
  • The cost of broiler production would change by 0.30 cent per live pound.

 

WORLD SITUATION

 

With respect to world coarse grains and oilseeds the February 2024 WASDE Report included the following appraisals by USDA:-

 

COARSE GRAINS:

 

“Global coarse grain production for 2023/24 is forecast 2.7 million tons lower to 1,507.4 million. This month’s foreign coarse grain outlook is for reduced production, larger trade, and smaller ending stocks relative to last month. Foreign corn production is forecast lower with declines for South Africa, Ukraine, Mexico, Venezuela, and Russia that are partly offset by increases for Argentina and Syria. South Africa is down reflecting lower yield prospects. Mexico is cut based on expectations of lower winter corn area. Ukraine and Russia are reduced based on reported harvest results to date. Argentina is raised based on higher expected area. Foreign barley production is down, with reductions for Iraq and Syria that are partly offset by an increase for Australia”.

 

“Major global trade changes include higher corn exports for Ukraine and Argentina but reductions for South Africa and India. Corn imports are lowered for the EU, Saudi Arabia, Israel, and South Korea but raised for Mexico, Venezuela, and Indonesia. Barley exports are raised for Australia. Foreign corn ending stocks are lower, mostly reflecting a decline for Ukraine that is partly offset by an increase for Brazil. Global corn ending stocks, at 319.6 million tons, are down 2.4 million”.

 

OILSEEDS:

 

“Global 2023/24 oilseed production is reduced 0.7 million tons to 658.7 million, on lower soybean and sunflower seed production partly offset by higher rapeseed. Sunflower seed production is reduced on lower output for South Africa. Rapeseed production is increased on higher output for India, Russia, and Ukraine. Global soybean production is reduced 1.4 million tons on lower production for Brazil and South Africa”.

 

“Global 2023/24 soybean supply and demand forecasts include lower beginning stocks, lower production, lower crush, higher exports, and lower ending stocks compared to last month. Beginning stocks are lowered 1.4 million tons mainly on historical crush and import revisions for China. Soybean crush for China is raised for 2020/21 to 2022/23 based on a review of in-country estimates and supplies. Soybean imports for China for 2022/23 are also raised to reflect shipping data by major exporters”.

 

“Global soybean production for 2023/24 is reduced on lower production for Brazil and South Africa. Soybean production for Brazil is lowered 1.0 million tons to 155 million on harvest results in Parana and poor weather conditions in Sa~o Paulo offset by favorable conditions in the north and Rio Grande do Sul. South African soybean production is lowered 0.4 million to 2.1 million on lower yield prospects. Global crush is reduced for Brazil and South Africa on lower supplies, and lower for Ukraine on higher soybean exports. Global soybean exports are raised 3.0 million tons on higher shipments to date from Brazil and Ukraine. Soybean imports are raised on higher imports for China, which are now 0.5 million tons higher than the prior marketing year’s revised estimate. Global soybean ending stocks are lowered 1.8 million tons to 114.3 million on lower stocks for Brazil that are partly offset by higher Chinese stocks”.

 

Factor: Million m. tons

Coarse Grains

Oilseeds

Output

1,507*

659

Supply

1,839

779

World Trade

243

200

Use

1,492

541

Ending Stocks

346

131

*Values rounded to billion metric ton

(1 metric ton corn= 39.37 bushels) (“ton” represents 2,000 pounds)


 

World Decline in Food Prices

03/08/2024

On March 8th the United Nations Food and Agricultural Organization released the Index of Food Commodities for February 2024.  A sequential 12-month reduction in food prices is evidenced by the 10.3 percent decrease in the Index from 131.1 in February 2023 to  the most recent value of 117.3.

 

Component indices included:-

  • The Cereal Index was down 6.1 percent from January to 113.8 points due to lower corn and wheat prices but offset by a raise in rice.
  • The Vegetable Oil Index was down 1.2 percent from January to 120.9 points with lower soy and sunflower oils but higher palm oil on increased demand.
  • The Dairy Index was up 1.3 percent from January to 120.0 points
  • The Meat index was up 2.0 percent from January tp 112.4 points with higher poultry and beef  prices but lower prices for pork products with decreased demand from China

Boutiful crops in Brazil and Argentina with restoration of Black Sea shipping using the ‘Humanitarian Corridor’ along the eastern seaaboard have collectively reduced concern over availability of grains and oilseeds and contributed to a moderation in prices for agronomic commodities.


 

Egg Exports

03/08/2024

Exports of shell eggs during the 12-month period commencing March 2022 were constrained by availability due to progressive and cumulative depletion of 44 million hens as a result of HPAI divided among spring and fall waves. The national flock was about 20 million hens lower than the pre-HPAI complement on an average weekly basis during 2022. Sharp rises in price as a result of supply-demand disequilibrium made U.S. export prices non-competitive as denoted by lower volumes over successive months from March 2022. Egg products were also impacted but to a lesser extent than shell eggs. During June 2023 shell and product exports combined represented 2.5 percent of total production, more than double the volume recorded in January 2023 but exports declined in July to 1.9 percent of production by U.S. flocks. At the present time the national flock is approximately 17 million hens lower than pre-HPAI levels with relatively high prices sufficient to constrain exports of shell eggs. Combined shell and product exports in December 2023 represented 2.6 percent of the output of the national flock. It is questioned whether lost markets other than the USMCA and Caribbean nations will be reclaimed over the intermediate term. Sporadic and short-term exports may be made to various nations based on supply disruption caused by HPAI.

 

USDA-FAS data collated by USAPEEC, reflecting export volume and values for shell eggs and egg products are shown in the table below comparing 2023 with 2022:-

PRODUCT

Jan. 2023

Jan. 2024

Difference

Shell Eggs

     

Volume (m. dozen)

5.7

4.6

-1.1 (-19.3%)

Value ($ million)

17.0

8.7

-8.3 (-48.8%)

Unit Value ($/dozen)

2.98

1.89

 -1.09 (-36.5%)

Egg Products

     

Volume (metric tons)

1,652

2,083

 +431 (+26.1%)

Value ($ million)

10.7

11.3

+0.6 (+5.6%)

Unit Value ($/metric ton)

6,476

5,424

 -1,052 (-16.2%)

 

U.S. EXPORTS OF SHELL EGG AND EGG PRODUCTS DURING

JANUARY 2024 COMPARED WITH 2023

 

SHELL EGGS

 

Shell egg exports from the U.S. during January 2024 decreased by 19.3 percent in volume and 48.8 percent in total value compared to 2023. Unit value declined 36.5 percent to $1.89 per dozen compared to the corresponding month in 2023.

 

Canada was the leading importer of shell eggs during January 2024, with 2.2 million dozen representing 47.8 percent of volume and 47.1 percent of the $8.7 million total value of U.S. shipments of shell eggs. Unit price in January 2024 was $1.86 per dozen compared to $3.23 per dozen for consignments in January 2023. Imports by Canada are driven by consumer demand balanced against availability from the controlled supply situation in Canada. This inhibits flexibility necessitating imports from the U.S. to cater for demand.

 

The Bahamas was a distant second in shell egg imports from the U.S. during January 2024, with 0.6 million dozen representing 13.0 percent of volume and 12.6 percent of the total value of U.S. shipments of shell eggs. Unit price in January 2024 was $1.83 per dozen

Mexico was the third-ranked importer of shell eggs in January 2024 with a volume of 0.4 million dozen representing 8.9 percent of export volume and 6.9 percent of value. This price discrepancy was due to a low unit value of $1.50 per dozen compared to an average value of $1.89 per dozen for all exports.

 

During January 2024 the next three significant importing nations (Netherlands Antilles, Cayman Islands and Hong Kong.) with a collective volume of 0.5 million dozen represented 10.9 percent of U.S. exports. Value of exports to these importing nations amounted to $0.8 million in January 2024 compared to $1.1 million in January 2023. Unit price for these importers in January 2024 averaged $1.60 per dozen, compared to the January 2024 average USDA export price of $1.89, per dozen, tray packed, excluding processing but with inland transport and outer cartons. The average 12-month trailing USDA benchmark price for nest-run large shell eggs was $1.37* per dozen weighted by high prices during shortages during the second half of 2022 and the first quarter of 2023 resulting from depletion of flocks infected with HPAI.

 

*USDA 12-month USDA benchmark nest-run unit prices per dozen: February 2023, $2.13; March, $2.74; April, $1.38; May, $0.60; June, $0.82; July, $0.83 and August, $0.90; September, $1.00; October, $0.89; November, $1.65; December, $1.81 and January 2024, $1.72.

 

EGG PRODUCTS

 

The total volume of exported egg products during January 2023 increased 26.1 percent to 2,083 metric tons compared to January 2023. Total value of $11.3 million was higher by 5.6 percent compared to January 2023. Unit value decreased by 16.2 percent to $5,424 per ton compared to January 2023. During 2023 the U.S. exported 29,814 metric tons of egg products valued at $134.3 million with a unit price of $4,505 per metric ton. Fluctuation in unit price reflects the composition of exports and the relationship between World supply and demand. Ukraine is now restrained in production but India continues as a significant exporter.

 

Mexico was the 1st-ranked importer by volume of egg products during January 2024 receiving 672 metric tons from the U.S. valued at $2.4 million representing 32.3 percent of volume and 21.2 percent of value with a unit price of $3,571 per metric ton. Volume for January 2024 was up by 47.1 percent but value was lower by 17.2 percent compared to January 2023.

 

Japan fell to the 2nd ranked importer from the U.S. during January 2024 based on a volume of 382 metric tons with a value of $1.7 million, representing 18.5 percent of volume and 15.0 percent of the total value of U.S. exports of egg products. Exports to Japan fell by 35.5 percent in volume and 34.6 percent value compared to January 2023. The unit value of $4,392 per metric ton can be compared with the average unit value for U.S. exports of all egg products at $5,425 per metric ton. During 2023 Japan imported 10,352 metric tons of egg products from the U.S., valued at $49.9 million. With the conclusion of a bilateral trade agreement, the U.S. is no longer at a competitive disadvantage with respect to the E.U.

 

South Korea was ranked third among importers of egg products during January 2024 with a volume of 315 metric tons valued at $1.2 million. Most flocks in South Korea have been restored to production after depopulation following 2021-2022 outbreaks of HPAI. Import volume may have been influenced by limited but rising flock depletion or alternatively increased demand in advance of the Lunar New Year. In 2023 South Korea imported 1,141 metric tons valued at $5.3 million. Imports to South Korea resumed during November 2023 and continued through December with 237 metric tons valued at $0.7 million. Depending on severity, the return of HPAI may result in a disparity between local availability and demand requiring imports in 2024 as in 2022

 

Canada was the 4th-ranked importer in January 2024 based on a volume of 240 metric tons with a value of $1.1 million. Canada represented 11.5 percent of volume and 9.7 percent of value with a unit price of $4,583 per metric ton. Volumes shipped reflect restoration of the institutional and food service sectors and relative availability of domestic product in Canada.

 

COMMENTS

 

During 2021 the value of shell eggs and egg products attained $101.8 million or 32.7 percent of combined export value. Exports in 2022 amounted to $126.5 million in value equivalent to 47.5 percent of the combined value of shell eggs and products. During 2023 exports valued at $150.7 million represented 50.8 percent of shell egg and egg products amounting to $296.5 million. Canada represented 59.0 percent of the $162.2 million for shell eggs and 10.3 percent of egg products valued at $121.2 million, shipped during 2023, emphasizing dependence on this USMCA partner. During January the USMCA represented 41 percent of combined shell egg and product sales valued at $20 million.

 

Aspirational volumes of exports in excess of five percent of domestic production are unrealistic. Japan, South Korea and Taiwan will buy according to their needs for undifferentiated shell eggs and products based on landed price in a competitive World market. Purchase decisions for commodities are determined by FOB price, freight, duty and broker margins. Shell eggs and the various categories of egg products are essentially commodities and are non-responsive to promotion.

 

Exports will be dependent on the willingness of importers to accept the World Organization for Animal Health (WOAH) principle of regionalization (zoning) in the event of outbreaks of exotic Newcastle disease or isolation of either H5 or H7 avian influenza (AI), in commercial flocks, irrespective of pathogenicity. Most importing nations are now applying regionalization and permitting imports on a zonal, county or state-exclusion basis following H5 or H7 AI infection. Canada and the U.S. operate according to a 2018 bilateral agreement to maintain trade in the event of outbreaks of catastrophic exotic diseases including HPAI and END.

 

Generally pasteurized egg products should not be subject to any embargo imposed following reports of AI or Newcastle disease in a region.


 

TekniPlex to Introduce New Technology for Fiber Cartons

03/08/2024

TekniPlex Consumer Products has developed a proprietary two-stage dried-in-mold process that compresses fibers during fabrication creating a stronger and denser carton that inhibits condensation on the shell surface.  The new manufacturing process results in a smooth finish that assists in de-nesting of cartons during packing even with high throughput. Cartons have improved shelf-appeal with either direct printing or labels. The dried-in-mold process offers strength equivalent to foam that is required for 18 and 24-count cartons. Deflection of cartons does not occur even under conditions of high humidity, minimizing shell damage during transport and handling by consumers, minimizing wastage

 

Fiber egg cartons are inherently more sustainable than plastic alternatives but the new process produces cartons that contribute to customer sustainability goals without sacrificing protection of eggs or detracting from shelf-appeal.

 

TekniPlex will commence production of the new packs at their Van Wert, OH. plant to satisfy anticipated demand by the indust


 

Oklahoma Rescinds Sales Tax on Groceries

03/07/2024

Following the initiative of Illinois that imposed a one percent tax on groceries, Oklahoma will eliminate their existing 4.5 percent tax.

In a signing ceremony, Governor Kevin Stitt regarded the rescission as the largest single-year tax cut in Oklahoma history. Grocery taxes are extremely regressive and place a disproportionate burden on lower-income demographics.

 

Grocery taxes in other states include Mississippi at 7 percent, Kansas, 6.5 percent, Idaho, 6 percent, South Dakota at 4.5 percent and seven additional states ranging from 1.5 percent to 4 percent.

The Oklahoma sales tax made it worthwhile for border residents to purchase their groceries in adjacent Texas despite the added inconvenience and cost of travel.  It is estimated that eliminating the sales tax would save an average family $700 annually.

 


 

Whole Foods Market Introduces Daily Shop Format

03/07/2024

in an ongoing search for alternative store formats, Amazon has established Whole Foods Market Daily Shops.  Stores will range between 7,000 and 12,000 square feet and will be located in urban areas to provide fast and convenient service. Offerings will emphasize prepared meals, snacks and fresh produce.

 

Christina Minardi, Executive Vice President for Growth and Development for Whole Foods Market and Amazon stated, “We are excited to introduce a new way for our customers to quickly pick up their Whole Foods Market favorites making the early morning or after-work grocery trips more efficient and enjoyable”.

 


 

Kroger Company Posts Q4 and FY 2023 Results

03/07/2024

On March 7th The Kroger Company (KR) posted results for Q4 and FY 2023 ending February 3rd 2024. Kroger beat substantially on earnings compared to consensus estimates but provided anemic FY 2024 same-store sales and EPS projections.

 

 Kroger is the second largest retailer of groceries in the U.S. and is a pure supermarket play subject to the pressures of escalation in food costs, logistics and labor and the impact of inflation in common with all national and regional competitors. Kroger has announced the intention of acquiring competitor Albertsons Cos. This would create a merged enterprise with 5,000 stores. In late February the FTC filed to block the transaction that is opposed by the Attorneys General of seven states and both major national unions representing workers. To comply with anticipated regulatory pressure Kroger and Albertsons have proposed selling 413 stores in 18 states to C&S Wholesale Grocers for $1,900 million. This strategy is in question given the history of the bankruptcy of Hagen that divested stores to facilitate the acquisition of Safeway by Albertsons. It is possible that other bidders such as Ahold-Delhaize N.V. will emerge as potential purchasers of some, all or a greater number of stores as negotiated and subsequently approved by the FTC.

 

 For the 4th quarter, Kroger reported earnings of $736 million on sales of $37,064 million with a diluted EPS of $1.01. For the corresponding Q4 of FY 2022, Kroger earned $451 million on sales of $34,823 million with a diluted EPS of $0.62.  Comparing Q4 of 2023 with the corresponding quarter of FY2022, revenue was 6.4 percent higher; Gross margin increased from 21.7 percent to 22.7 percent for Q4 2023. Operating margin increased from 2.4 percent to 3.2 percent for the most recent quarter.

 

For FY 2023, Kroger reported earnings of $2,164 million on sales of $150,039 million with a diluted EPS of $2.96 For FY 2022, Kroger earned $2,244 million on sales of $145,258 million with a diluted EPS of $3.06. 

 

In commenting on 4th quarter and FY 2023 results, Rodney McMullen CEO stated, “Kroger achieved strong 2023 results, in line with our long-term growth model and built upon three consecutive years of historic growth. As customers manage macroeconomic pressures, we are lowering prices and offering even more ways to save with personalized promotions and rewards. Our unique seamless shopping experience provides customers the products they want, when and how they want them, with zero compromise on quality, convenience and selection”. 

He added, “We respect and appreciate our associates who are delivering a full, fresh and friendly customer experience. Over the last five years, we've made historic investments in associate wages, benefits and career development opportunities, including significant investments to help stabilize associates' future pension benefits”.    

 

McMullin concluded, “We are increasing customer visits and growing loyal households through the strength of our retail business, which positions Kroger for more ways to drive sustainable future growth. We expect to continue our momentum in 2024 by delivering value for customers, investing in associates and generating attractive and sustainable shareholder returns."  

 

The Company released adjusted FY 2023 Guidance:- 

  • Identical Store Sales growth of 0.25 to 1.75 percent excluding fuel,
  • Adjusted EPS of $4.30 to $4.50,
  • Adjusted FIFO Operating Profit of $4.6 billion to $4.8 billion,
  • Capital expenditure of $3,400 to $3,600 million,
  • Adjusted free cash flow of $2,500 to $2,700 million,

 

Comparable same-store sales for Q4 decreased by 0.8 percent (excluding fuel) compared to Q4 FY 2022; digital sales were up by 10.0 percent;

 

On February 3rd 2024 Kroger posted total assets of $50,523 million of which $3,815 million comprised goodwill and intangibles. Long-term debt and lease obligations amounted to $20,882 million.  

 

The Kroger Company had an intraday market capitalization of $36,320 million on March 7th 2024.  The Company has traded over the past fifty-two weeks in a range of $42.10 to $55.53 with a 50-day moving average of $46.64. KR trades with a forward P/E of 11.7. On March 6th 2024 KR closed at $50.53 pre-release but opened on March 7th post-release at $53.33

 

Twelve-month trailing operating margin was 2.0 percent and profit margin 1.3 percent.  The Company generated a return on assets of 5.8 percent and 17.8 percent on equity

 

At the end of FY 2022 The Kroger Company operated 2,726 stores with 2,252 pharmacies and 1,613 fuel centers, under 25 banners in 35 states and D.C. Kroger operates 34 food plants and 45 distribution centers with five Ocado fully automated fulfillment centers with as many as twenty planned


 

USDA Program to Fund Biosecurity

03/07/2024

The USDA APHIS will present an informational webinar on Tuesday, March 12th at 15h30 EDT.  The webinar will incorporate a presentation from the Farm Service Agency on loading programs to assist producers with funding biosecurity.  For information on joining the zoom webinar, contact <katrina.e.redyj@usda.gov>.

 


 

Costco Corporation Posts Q2 FY 2024 Results

03/07/2024

On March 7th Costco Wholesale Corporation (COST) posted results for Q2 FY 2024 ending February 18th 2024. The Company exceeded the consensus estimate for earnings by 8.2 percent but was light on sales by 0.1 percent. COSTCO as the leading club chain serves as a bellwether for omni-channel warehouse in-store and on-line buying. The Company is a barometer of consumer confidence, offering groceries, clothing, household necessities in bulk in addition to discretionary appliances, recreational, luxury and electronic items.

 

For the most recent quarter, the Company earned $1,743 million on revenue (including fuel and membership fees) of $58,442 million with a diluted EPS of $3.92. For the corresponding Q2 of FY 2023 ending February 12th, Costco earned $1,466 million on equivalent revenue of $55,266 million with a diluted EPS of $3.30.  Revenue was 5.8 percent higher than in Q2 FY 2023 and net earnings were up by 18.9 percent. Gross margin for Q2 FY 2024 was 10.7 percent, unchanged from the corresponding quarter in FY 2023. Operating income attained 3.4 percent also unchanged from Q2 FY 2023, despite increased freight, transport, wages and utilities.

Comparable global same-store sales for Q2 2024 (excluding fuel and foreign exchange) rose to 5.8 percent. U.S. same store sales were up 4.8 percent; Canada by 9.0 percent and the Other International category, 8.2 percent. E-Commerce was up by 18.2 percent.

 

Costco did not raise membership fees as expected but in the Q4 2023 investors’ call, the Company commented this is a situation of “when and not if”. There are currently 33.9 million Executive Level memberships at $120 annually representing 46 percent of the total but accounting for 73 percent of sales.

 

 


Richard Galanti Retiring CFO

presided at the Q2 Investors' Call

On February 18th Costco posted total assets of $66,323 million. Long-term debt and lease obligations attained $10,875 million. Costco had an intraday market capitalization of $343,200 million on March 7th. COST trades with a forward P/E of 49.2 and has ranged over the past fifty-two weeks from $460.80 to $787.08 with a 50-day moving average of $700.41. Costco closed pre-release at $785.59 on March 7th but fell in after-hours trading, post-release by 3.5 percent to $756.64. Twelve-month trailing operating margin was 3.4 percent and profit margin 2.7 percent.  The Company generated a return on assets of 7.8 percent and 27.4 percent on equity.

 

At the end of the recent completed quarter, Costco operated 875 warehouses. There are 603 in the U.S; 109 in Canada; 40 in Mexico; 33 in Japan; 29 in the U.K. and 61others in seven other nations among the E.U., Asia and Australia. This was a net increase of ten warehouses during Q1 with nine added in the U.S.


 

Josh Tetrick Shutters Singapore Operation

03/07/2024

Shuttered Tetrick facility in Singapore

According to the Straits Times the cell-cultured meat project established by Josh Tetrick in Singapore has apparently ceased operation.  The facility in Bedok Food City extending over 30,000 square feet was heralded as an advance in sustainability and the future independence for the City-State from meat imports in a ceremony during late February. 

 

It is understood that the facility involved an investment of $60 million.  A second facility established as a subsidiary of Tetrick’s holding company to produce liquid egg products has apparently also closed.  In March 2022, Eat Just announced a plant in the Pioneer industrial district but this project will evidently not proceed.

 

Tetrick’s companies are mired in legal claims from suppliers of equipment including an action for $100 million from a manufacturer of bioreactors ordered to produce cell-cultured meat.

 

Aspirant producers of cell-cultured meat have encountered numerous problems relating to transition from laboratory-scale production using plastic roller bottles to commercial volumes using bioreactors. Substrate required to culture cells is expensive and the process is inherently energy and water intensive.

 


Tetrick (center) in better days

There are now questions as to the consumer acceptability of cell-cultured meat even if available at prices equivalent to the real product. The entire cell-cultured meat segment has disappointed investors in both an inability to produce saleable quantities due to technical restraints and the vast amount of money required for research and development.  Venture capital companies are also reviewing the potential sales figures for plant-based meat alternatives and their high production costs relative to the products they intend to displace. To add to problems faced by start-ups livestock-producing states in the U.S. and individual E.U. nations are enacting restrictive legislation on the sale and labeling of cell-cultured chicken and beef even before any product becomes commercially available.

 


Promise unfulfilled

Authorities in Singapore approved the sale of cell-cultured meat products in December 2020.  Despite investment and unsubstantiated hype, Tetrick’s companies have only produced token quantities of cell-cultured chicken sold at a gourmet restaurant principally as a curiosity.  The USDA and FDA approved the U.S. sale of cell-cultured meat from Good Meat, a Tetrick company, and Upside Foods in June 2023.  Neither company has produced commercial quantities of faux beef or chicken. 

 

There has always been a taint of Theranos associated with the cell-cultured meat segment that has been reinforced by allegations of deception and failure to deliver on promises and projections.


 

G6 Strain Responsible for ILT Outbreaks

03/07/2024

Dr. Maricarmen Garcia

In a recent webinar under the auspices of the American Association of Avian Pathologists, Dr. Maricarmen Garcia of the University of Georgia reviewed changes in the epidemiology of infectious laryngotracheitis (ILT).  Since the disease is caused by a herpesvirus, infected flocks remain shedders of the virus with persistence in the environment of houses after an affected flock has been depleted.

 

In past decades, most clinical outbreaks were attributed to the use of chick embryo origin (CEO) ILT vaccine that reverts to virulence.  More recently, the G6 field strain has emerged demonstrating increasing virulence.  According to Dr. Garcia, infection of SPF leghorn pullets with a G6 strain isolated in 2014 resulted in 30 percent mortality.  In chicken receiving G6 virus isolated in 2022, none of the infected birds survived.

 

EGG-NEWS previously raised the question of a possible co-pathogen involved in outbreaks of coryza characterized by high mortality.  There is evidence that the prevalent strain of coryza associated with outbreaks in the Midwest and California in recent years is similar to decades old isolates when subjected to whole genome sequencing.  It was previously suggested in CHICK-NEWS that emerging avian metapneumovirus may have been a co-factor exacerbating clinical signs including a precipitous drop in production and high mortality, not characteristic of conventional coryza.  ILT should now be considered as a possible co-factor and accordingly attempts at isolation and identification of G6 from flocks at an early stage of a coryza outbreak should be considered to determine if other than a vaccine strain of ILT was present.

 


Classic gasping with ILT

HVT-vectored ILT and IBD vaccines are now used extensively to immunize replace pullet flocks.  Experience has shown that clinical signs of ILT occur in flocks vaccinated either in ovo or at day-old.  Accordingly, producers are administering either a tissue culture origin or a chick embryo origin ILT vaccine at 7 to 10 weeks by the intraocular route when birds are handled for administration of epidemic tremor, pox and pasteurellosis vaccines. 

 


Periocular swelling with conjunctivitis and

lachrymation has a broad differential diagnosis

Biosecurity and vaccination are the only modalities available to producers to suppress ILT.  With multi-aged complexes, solid immunity against ILT is a necessity due to the carrier state.  Implicit in the prevention of viral disease is the unsettling realization that if small contract and organic farms cannot exclude ILT they will also not be able to prevent introduction of HPAI.


 

Appropriations Bill Considers Foreign Ownership of U.S. Agricultural Land

03/07/2024

Legislators in predominantly agricultural states have expressed concern over the potential for foreign ownership of land by adversarial nations including China, Russia and Iran.  The USDA will now participate in the Committee on Foreign Investment in the United States that has the power to block transactions with foreign entities. 

 

It is estimated that 43 million acres or 3.5 percent of U.S. agricultural land is leased or owned by foreign companies with the vast majority comprising Canada with forest holdings and western E.U. nations operating cropland. 

 

 

National security is a significant consideration in the context of foreign purchases of U.S. land.  China has demonstrated an affinity for purchasing tracts of land or enterprises in close proximity to military installations with evident implications.


 

Campbell Soup Releases Q2 FY 2024 Financial Results

03/07/2024

In a March 6th 2023 release, Campbell Soup Company (CPB) released predictable financial results for the second quarter of Fiscal 2024 ending January 28th 2023. The Company can be regarded as representative of the manufacturing and packaged food sector with competitors including Post Holdings, Conagra Brands, Treehouse Foods and Kraft-Heinz, all currently under pressure to reduce prices to the major retail and supermarket chains. In an inflationary environment consumers are turning to less expensive private brands although the trend to eat-at-home may benefit Campbell Soup and competitors.

 

For the second quarter of FY 2024, net income was $203 million on net revenue of $2,456 million with a diluted EPS of $0.68.  Comparable figures for the second quarter of FY 2023 ending January 29th 2023 were net income of $232 million on net revenue of $2,485 million with a diluted EPS of $0.78

The release included results for the two operating segments:-

 

  • Meals and Beverages: Operating profit of $247 million down one percent from Q2 2023, on revenue of $1,382 million, down two percent from Q2 2023
  • Snacks: Operating profit of $161 million, up seven percent, on revenue of $1,074 million, unchanged from Q2 2023

 

For the second quarter of FY 2024 (with the values for the corresponding quarter of FY 2023 in parentheses) Campbell Soup achieved a gross margin of 31.6 percent (30.5) and an operating margin of 13.0 percent (14.5). Revenue was down 1.1 percent.

 

In commenting on Q2 results Mark Clouse CEO stated,  “We once again delivered on our commitments, with a sequential improvement in volume trends and year-over-year operating margin expansion in both our Meals & Beverages and Snacks divisions,” He added, “We are excited about the anticipated completion of the acquisition of Sovos Brands which will bring incremental growth to our Meals & Beverages division and continue the transformation of our highly advantaged portfolio."

 

Guidance for FY 2024 was amended indicating a trend towards the lower end of forecasts. Values included net sales growth ranging from -0.5 to 1.5 percent; an adjusted increase in EBIT of 3 to 5 percent and an adjusted EPS of between $3.09 and $3.15.  

 

Campbell Soup listed assets of $12,106 million, including a disproportionate  $7,071 million as goodwill and intangibles. Long-term debt and other obligations amounted to $6,119 million, up 9.3 percent from Q2 2023.

 

The Company had an intraday market capitalization of $12,800 million on March 6th. CPB trades with a forward P/E of 14.0 and has ranged over a 52-week period from $37.94 to $56.04 with a 50-day moving average of $43.28. Insiders held 35.7 percent of equity with 7.0 percent of the float short on February 15th.

 

Twelve-month trailing operating and profit margins were 15.6 percent and 8.6 percent respectively. The Company generated a twelve-month trailing return of 7.0 percent on assets and 22.0 percent on equity.


 

Egg Week

03/06/2024

USDA Weekly Egg Price and Inventory Report, March 13th 2024.

Market Overview

  • The average wholesale unit revenue values for Midwest Extra-large and Large sizes were down by 4.9 percent but Medium size was unchanged this past week. Wholesale prices for Midwest in cartons were approximately $0.50 per dozen above the 3-year average for early March. This past week shell egg inventory was up by 2.1 percent, following a fall of 1.0 percent the previous week. Although there has been a progressive weekly increase in pullet flocks transferred to laying houses hen numbers are reduced by the loss of close to thirteen million hens due to HPAI on twelve complexes holding from 250,000 to 2.6 million hens during the 4th Quarter of 2023. Pullets are in short supply with losses of 2.5 million growing birds mainly in California.
  • This past week, chains widened the spread between delivered cost and shelf price. This could result in a potential increase in generic stock unless compensated by a proportional rise in demand and constant re-ordering to fill the pipeline through mid-month. Discounters are holding prices on generics influencing mainstream retail stores. Eggs are still highly competitive in price against the comparable costs for other protein foods.
  • Total industry inventory was up by 1.9 percent overall this past week to 1.71 million cases with a concurrent 1.3 percent increase in breaking stock, following a 1.8 percent rise during the preceding processing week. Demand for egg products will presumably increase in the weeks preceding Easter (March 29th Good Friday) with more home baking and entertaining. Egg products are required for the food service and manufacturing sectors although exports are at a moderate to low level attributed to domestic price. USDA Benchmark wholesale prices for eggs in cartons were approximately $0.35 per dozen lower than the corresponding week in 2023.
  • It is now apparent that the inventory held by chains and other significant distributors may be more important over the short term in establishing wholesale price compared to the USDA regional inventory figures. Changes in stock held by DCs and in the pipeline as determined by weekly orders are probably responsible for cyclic fluctuation in weekly industry stock, especially after a holiday weekend.
  • Cases of HPAI in the commercial poultry industry and backyard (non-commercial WOAH) flocks have tapered, coincident with the end of the Fall migration of waterfowl that was extended in late 2023 by mild weather. The number and extent of future possible outbreaks during the spring and fall months of 2024 cannot be projected but the epornitic appears to be over with migratory birds having moved south following colder weather in January. Unfortunately sporadic cases in backyard poultry in diverse states continues and HPAI was diagnosed in turkeys in recent weeks in Missouri and North Carolina. More surveillance information should be released by USDA-APHIS concerning the prevalence rate of carriers among resident domestic free-living birds and a review of molecular and field epidemiology for the 2022 spring and fall waves of HPAI. The USDA has yet to identify specific modes of transmission for the 2022-2023 epornitic including likely airborne spread from wild birds and their excreta over short distances.
  • The current relationship between producers and chain buyers based on a single commercial price discovery system constitutes an impediment to a free market. The benchmark price appears to amplify both downward and upward swings as evidenced over the past two years. A CME quotation based on Midwest Large, reflecting demand relative to supply would be more equitable. If feed cost is determined by CME ingredient prices then generic shell eggs should be subject to a Midwest Large quotation.
  • According to the USDA the U.S. flock in production was down by 0.3 million hens (0.1 percent) to a new level of 302.3 million for the week ending March 13th The stated total flock of 306.6 million included about two million molted hens that will resume lay during coming weeks plus 5.0 million pullets scheduled to attain production. Given the latest figures it is estimated that the producing flock is at least 17 to 20 million hens lower than before the onset of HPAI in 2022. It is evident that USDA has now provided a more realistic figure of flock size having adjusted figures to account for depopulation of 13 million hens spread over the last quarter of 2023. There were evident discrepancies between published figures and the theoretical number of hens taking into account known losses and predetermined pullet replacements.
  • The ex-farm price for breaking stock was up 0.7 percent to $1.51 per dozen.Checks delivered to Midwest plants were unchanged at $1.38 per dozen this past week. Prices for breaking stock should follow the wholesale price for shell eggs usually with a lag of about one to three weeks.

 

The Week in Review

 

Prices

According to the USDA Egg Market News Reports released on March11th 2024, the Midwest wholesale price (rounded to one cent) for Extra-large was down 4.9 from last week to $2.16 per dozen. Large was down 4.9 percent to $2.14 cents per dozen. Mediums were unchanged at $1.78 per dozen delivered to DCs. Prices should be compared to the USDA benchmark average 4-Region blended nest-run cost of 76.0 cents per dozen as determined by the Egg Industry Center based on USDA data for February 2024. This value excludes provisions for packing, packaging materials and transport, amounting to 57 cents per dozen as determined in mid-2023 from an EIC survey (with low response) and now realistically 60 cents per dozen.

 

Currently producers of generic shell eggs should be operating with positive margins irrespective of region and customer-supply agreements. The progression of prices during 2023 and 2024 to date is depicted in the USDA chart reflecting three years of data, updated weekly.

 

The March 11th edition of the USDA Egg Market News Report confirmed that the USDA Combined Region value (rounded to the nearest cent), was down $0.80 per dozen to $2.34 per dozen delivered to warehouses for the week ending March 4th 2024. This average price lags current benchmark Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $2.25 per dozen. At the high end of the range, the price in the South Central region attained $2.41 per dozen. The USDA Combined Price last week was approximately $0.50 per dozen above the 3-year average of $1.85 per dozen. This past week Midwest Large was approximately $0.35 per dozen below the corresponding week in 2023 that was rising on demand to $2.70 per dozen as production recovered from HPAI depletion and with declining market demand.

 

Flock Size 

Previously the loss of approximately 13 million hens due to HPAI during the fourth quarter was not reflected in weekly USDA figures. The USDA has now adjusted data to reflect losses due to HPAI depopulation in recent weekly reports.

 

Given the importance of weekly flock numbers to pricing accurate values of flock size devoid of obvious discrepancies are required by producers.

 

According to the USDA the number of producing hens reflecting March 13th 2024 (rounded to 0.1 million) was apparently down 0.3 million as an adjustment from last week to 302.3 million. The total U.S. flock includes about one to two million molted hens due to return to production Approximately 5.0 million new pullets on average reach maturity each week, based on USDA monthly chick-hatch data for 20-weeks previously. The increase is offset by routine flock depletion in addition to residual losses during the Fall phase of the 2022 HPAI epornitic and an additional loss of approximately 13 million hens during the last quarter of 2023. To date some flocks have been replaced. Based on inventory level and prices, the population of hens producing table eggs and breaking stock should now be producing at or above seasonal demand by consumers. Industrial and food service off-take although increasing, is approaching pre-COVID levels. Prices will continue to fluctuate but commenced a seasonal albeit late rise in price two weeks ago.

 

According to the USDA the total U.S. egg-flock on March 13th 2024 was stated to be down by 0.3 million hens to 306.6 million including second-cycle birds and those in molt. The weekly difference of 4.3 million hens between flocks in production and total hens is an approximate value with the difference from last week denoting that molted hens are resuming production consistent with current demand. Given the season and the trajectory in benchmark wholesale prices, only a few older flocks were molted or depleted before mid-January 2024. At present it is estimated that there are 15 to 21 million fewer hens in the total flock now reflected in weekly USDA figures. The apparent difference is equivalent to about 5.3 percent of the pre-HPAI 2022 national flock of 326 million hens.


 


Target Corporation Posts Q4 and FY2024 Results

03/05/2024

On March 5th Target Corporation (TGT) the Nation’s 6th-ranked retailer, posted results for Q4 and FY2023 ending February 3rd, beating estimates for the top and bottom lines.  For the quarter, the Company earned $1,382 million on revenue of $31,919 million with a diluted EPS of $2.98.  For the corresponding Q4 FY2022, Target earned $876 million on sales of $31,395 million with a diluted EPS of $1.89. Revenue was higher by 1.6 percent and net earnings increased by 57.7 percent. Gross margin increased from 23.2 percent in Q4 FY2022 to 26.7 percent for the most recent quarter. Operating margin rose from 3.7 percent to 5.8 percent.

For FY2023 the Company earned $4,138 million on revenue of $107,402 million with a diluted EPS of $8.94.  For the corresponding FY2022, Target earned $2,750 million on sales of $109,120 million with a diluted EPS of $5.98. Inventory was down 11.9 percent from the end of FY2022 reducing markdowns.

 

For the fourth quarter, comparable same-store sales declined by 5.4 percent. FY2023 comparable sales were down by 3.7 percent due to a reduction of 2.4 percent in transactions offset by a 1.4 percent increase in the average value of each transaction. Digital sales were down 0.7 percent during Q4 compared to a decline of 3.6 percent recorded for Q4 2022. Store-originated sales attained 81.7 percent of total in FY2023 with digital accounting for the remaining 20.3 percent.

 

Effective April 1st The Company will introduce Target Circle 360, a paid membership benefits program.

In commenting on results Brian Cornell Chairman and CEO stated, Our team’s efforts changed the momentum of our business, further improving our sales and traffic trends in the fourth quarter while driving profitability well ahead of expectations,” said Brian Cornell, chairman and chief executive officer of Target Corporation”. He added "Throughout the season, guests responded to newness, value, and the inspiration and ease of our in-store and digital shopping experience. Looking ahead, we’ll continue to invest in the strengths and differentiators that have delivered strong financial performance over time. We’ll also roll out fresh innovations, including our new Target Circle membership program, as part of our roadmap for growth aimed at meeting consumers where they are, reigniting sales, traffic and market share gains, and positioning Target for profitable growth in 2024 and beyond.”

 

The Company maintained guidance for fiscal 2024. Target expects a flat to two percent increase in same-store sales growth and an adjusted EPS ranging from $8.60 to $9.60.

 

At the end of FY2023, Target Corporation operated 1,956 stores with a total retail area of 245,939 square feet excluding offices and DCs. The company invested $4,806 million in property and equipment during FY2023.

On February 3rd Target posted total assets of $55,356 million, up 3.8 percent from the end of FY2022. Long-term debt and lease obligations attained $20,140 million. Target Corporation had an intraday market capitalization of $69,480 million on March 5th. The Company has traded over the past fifty-two weeks in a range of $102.93 to $171.24 with a 50-day moving average of $144.17.  TGT trades with a forward P/E of 17.0. On March 4th,pre-release the share closed at $150.79 but after the morning release opened on March 5th at $169.12.

 

Twelve-month trailing operating margin was 5.5 percent and profit margin 3.4 percent.  The Company generated a return on assets of 5.8 percent and 30.9 percent on equity.


 

Devenish Nutrition Acquired by Easy Bio

03/05/2024

Easy Bio a major nutrition company based in South Korea has announced the acquisition of Devenish Holdings Ltd. based in Northern Ireland, with subsidiary Devenish Nutrition LLC in the U.S. 

 

Devenish Nutrition has operated in the U.S. since 1998 producing premixes and feed additives distributed in the U.S. and Mexico.  Easy Bio has secured markets for its products directed to antibiotic-free production systems in the E.U. and Asia with representation in 50 nations.

 

Stevenson Hwang CEO of Easy Bio stated, “Devenish Nutrition is already a leading company in the North American market with its solid technology and various solutions and many talented people in the company including management.”

Cory Penn CEO of Devenish Nutrition stated, “With the help and support of the Easy Bio Group we will continue to expand our footprint across North America with investment in people, research and manufacturing facilities.”

 

It is intended that Devenish Nutrition will continue to operate with current management but with additional financial resources and access to an innovative product portfolio.

 


 

Panera Backtracks on Menu Changes

03/05/2024

Before registration for an anticipated IPO, Panera Bread has reverted to a previous concentration on breakfast and lunch mealtimes reversing the move towards the dinner period.  New menu items will be introduced in early April.  New menu items will include various sandwiches and salads and some items will be upgraded. Flatbreads will be dropped.

 

Panera is also emphasizing cost with numerous items under $10 in the “transformed menu”.

 

The Company announcement of menu changes “confirms that Panera is close to its customers and recognizes the need for changes to accommodate the needs and budgets of its clientele”.


 

Individual State Bans on Additives will Create Problems for National Brands

03/05/2024

FDA Asleep at the Switch?

California has introduced legislation banning Additives including Red dye number 3, brominated vegetable oils and potassium bromate from human food.  Similar action is contemplated by Indiana, Illinois and by both Washington and New York states.

 

A  patchwork approach to banning specific additives for human food although based on valid scientific criteria and potentially benefiting consumers in those states will create problems for food manufacturers in their formulation and labeling.  It would be preferable for the implicated ingredients to be designated as unacceptable by the federal government through FDA action creating a level playing field.  The FDA has been tardy in assembling data and making decisions that would be beneficial to consumers and convenient for manufacturers.  In some respects, state agencies including those in California and New York are more influenced by the European Union that employs the precautionary principle than the FDA.

 

The difference between approaches to food safety in Europe and the U.S. is a function of the pressure exerted by industry lobby groups by both industry and consumer advocacy organizations on U.S. federal agencies.  In many instances U.S. manufacturers have voluntarily ceased using additives and compounds that are regarded as potentially or overtly harmful without regulatory intervention.  Brominated vegetable oil has not been used in citrus-flavored beverages for many years in the U.S. despite the state restrictions.

 


 

Orthorexia Emerging as a Marketing Consideration

03/05/2024

In 1997, an eating disorder termed orthorexia was described.  The term includes the Greek for ortho or right and orexis or appetite.  The condition that has yet to be included in the Diagnostic, Statistical Manual Of Mental Disorders (DSM) comprises an obsessional preoccupation with “pure” food and nutrition.  Orthorexia is frequently associated with other disabilities including anxiety and obsessive-compulsive disorder.  Mild forms can be characterized by excluding all but certified organic foods from the diet, avoiding gluten without evidence of intolerance or an obsession with “clean” labels.  More severe forms include a frequently progressive disinclination to exclude certain foods from the diet that ultimately progresses to malnutrition.

 

 

Orthorexia should be differentiated from both anorexia nervosa and bulimia, both of which involve the volume of food consumed.  Those suffering from orthorexia are more concerned with the type and source of the food in their diets. With extreme manifestations of the condition, volume will be reduced. Behavioral abnormalities expressed by individuals including eating disorders may be intensified by intemperate use of social media that may exacerbate the intensity of their conditions. 

 

 

 

 

A further complication of orthorexia is the desire to extend personal choices in eating to others.  It is possible that some of the zealous vegans who oppose all forms of livestock production are not concerned with the welfare of herds and flocks. They may be responding to a compulsion to inflict their dietary proclivities on others by promoting a vegan agenda. This is evident among aggressive and proselytizing vegans who influence decisions on school and institutional meals and as elected officials and even members of Congress oppose animal agriculture.


 

Publix Releases Q4 and FY 2023 Results

03/05/2024

Publix, a privately held, employee-owned corporation, released limited Q4 and FY 2023 financial data on March 1st for the period ending December 30th 2023.  Sales for Q4 2023 attained $14,700 million, down 3.9 percent from Q4 2022 at $15,300.  Net earnings were $1,178 million compared to $1,278 million in Q4 of 2022, down 7.8 percent. Earnings per share attained $0.39 compared to $0.32 in Q4 2022. Comparable same store sales were up 0.4 percent compared to Q4 2022.

 

Sales for FY2023 attained $57,100 million, up 4.8 percent from 2022 at $54,500.  Net earnings were $4,439 million an increase of 48.2 percent compared to $2,918 million in 2022. Earnings per share attained $1.23 compared to $1.20 in FY2022.

 

According to the Publix SEC Q-10 submission, total assets on December 30th 2023 were $34,348 million with long-term debt and lease obligations of $3,404 million.

 

Share price was adjusted upward from $15.12 to $15.20 on March 1st.

 

In commenting on results CEO Kevin Murphy stated, “I’m proud of our friendly, knowledgeable associates who help our customers create memorable meals with their families and friends. I’m so thankful to serve with them in providing Publix’s premier service in our communities.”


 

Genus Commercializing Pigs Resistant to PRRS-Implications for Poultry?

03/05/2024

Genus plc. a biotechnology company in the U.K. has successfully removed the CD163 gene applying CRISPR technology to produce pigs resistant to porcine reproductive and respiratory syndrome (PRRS).  This infection is estimated to cost the hog industry $3 billion annually.  Four commercial lines of pigs have been modified and are now available to breeders.

 

Genus plc. has applied to the USFDA for approval of gene-deleted pigs.  Under current FDA procedures, gene deletion applying CRISPR is regarded as a “investigational new drug” that will impose both expense and time before approval.  CRISPR does not involve any introduction of genetic material but is simply the removal of a gene.  Approval of genetically modified salmon by the FDA required decades for a decision although the Aqua Bounty product required the introduction of genes from other species.

It is hoped that the GENUS application to the FDA will be expedited since this will make possible the approval of CRISPR gene deletion that may in the future create strains of poultry that will be resistant to specific diseases including avian influenza.  It is also possible at the present time to create egg production strains that allow simple and effective gender sorting obviating the current bridge technology assaying hormones in allantoic fluid.

 

The outstanding question is whether consumers will accept gene deletion or even genetic modification of poultry and livestock.  Perhaps the restraint is the disinclination of breeders to adopt CRISPR and gene modification based on their perception of consumer demand.  The opposition to applying a patented and proven technology for gender determination may well be moot if China in its determination to become a world-class breeder of broiler and egg producing strains applies advanced technology. Their domestic market is large enough to support breeding programs with and without CRISPR technology and GMO. With successful implementation China will enter export markets competing with traditional breeders in the E.U. and the U.S.


 

JBS Faces NY State Lawsuit over Greenwashing

03/05/2024

 


NY A/G Letitia James

Attorney General of New York State, Letitia James has filed a lawsuit against JBS USA Food Co. relating to unsupported claims relating to greenhouse gas emissions.

 

Ms. James stated, “As families continue to face the daily impacts of the climate crisis, they are willing to spend more of their hard-earned money on products from brands that are better for the environment.”  James bases her lawsuit on alleged false advertising expressing a commitment to sustainability that misleads consumers.

 

Last year JBS USA was criticized by the Better Business Bureau, National Advertising Division, Review Board.  The company was advised to discontinue claiming that the it is committed to be net zero by 2040 and claiming that animal products can be produced with net zero emissions.

 

In 2021 JBS Group the parent company of U.S. JBS subsidiaries reported 71 tons of global greenhouse gas emissions.

 

The New York lawsuit is intended to enjoin JBS from its Net-zero by 2040 advertising campaign and to subject the Company to fines for violations on misinformation.

JBS USA responded by noting disagreement with the lawsuit.  The company stated, “We take our commitment to a more sustainable future for agriculture very seriously.  JBS will continue to partner with farmers, ranchers and our food system partners around the world to help feed a growing population.”  Their statement did not directly address expressed claims or their substantiation.


 

1994 to 2024 National Egg Quality School – 30th Anniversary

03/04/2024

https://neqs.org/

The National Egg Quality 30th Anniversary School will be held May 20 to 23, 2024 in Park City, UT and will continue the tradition of a curriculum that is designed for the serious-minded student who is willing to learn as much as possible about egg quality and safety in a concentrated, comprehensive four days.

 

The course provides a combination of lectures, individualized instruction, and hands-on laboratory experience with a written and practical exam on the fourth day. The school has proven to be successful in preparing students to be a more knowledgeable egg emissary. Do not miss the opportunity to enhance your egg quality and safety knowledge.

 

Back in the 1930's, quality standards were developed to establish a common language for buying and selling eggs. There was a need for both industry and government to uniformly apply the quality standards. Egg Schools began to develop on a regional basis to meet that need as well as educate industry on maintaining egg quality and safety, understanding the nutritional benefits of eggs, the latest processing information, and other topical issues. Later, as the industry consolidated, these regional Egg Schools began to consolidate and in 1993 work began to establish a National Egg Quality School. Since 1994 the National Egg Quality School has trained more than 1860 students. Today, the staff leading the school come from Industry, State & Federal agencies, and Land Grant Universities. With a National School mandate, we have crisscrossed the United States for 30 years conducting this training in more than 16 states!

 

The school will have Anniversary memorabilia for attendees, so don’t hesitate to secure your spot in the 2024 National Egg Quality 30th Anniversary School by registering today; Register - The National Egg Quality School (neqs.org) (Early enrollment deadline: April 1, 2024).

Paul H. Patterson, Director, National Egg Quality School


 

UFCW Strike Against Kroger Imminent

03/04/2024

Members of the United Food and Commercial Workers (UFCW) Local 400 voted with a majority of 87 percent to reject a contract proposal offered by the Kroger Company, and authorized a strike by the same margin.  Approximately 3,000 UFCW workers are employed at 38 supermarkets spread among West Virginia, Kentucky, and Ohio.  The strike vote is intended to wring concessions from Kroger after negotiations collapsed.  Following intercession by Senator Joe Manchin (D-WV) and the Federal Mediation and Conciliation Service of the Department of Labor, contract negotiations were reconvened.


 

Illinois Considering Cage Ban for Laying Hens

03/04/2024

State Senator Linda Holmes, Chairperson of the Illinois Senate Committee on Agriculture and Economic Development, has introduced Bill S.3655 that would eliminate cages and mandate housing consistent with the UEP Animal Husbandry Guidelines.  The Bill would also restrict the sale of eggs derived from hens held in other than conforming housing.

If the Bill is enacted, a target date of January 1st, 2026, is intended. This is clearly too soon to allow replacement of existing cages.  In the course of subsequent debate on the bill, the compliance date will most probably be extended following the lead of Utah that has delayed complete transition to 2030.


 

Kent State University Promoting Alternatives to Meat

03/04/2024

Kent State University has established a goal of 30 percent of meals to be plant-based by 2026.  Currently, this category comprises 15 percent of servings in residential dining halls.  Kent State University is cooperating with the Humane Society of the United States through the Forward Food program.  Sarah Korcan, RD., the Assistant Director of the University Culinary Service, stated, “With over a third of our student body embracing diverse dietary preferences, including vegan, vegetarian and flexitarian lifestyles, it is imperative to cater to their needs by offering a wide selection of meat-free alternatives”.


 

PFAS Compounds No Longer Used in U.S. Packaging

03/04/2024

According to the Food and Drug Administration, coatings for food packaging no longer contain per polyfluoroalkyl (PFAS) compounds.  This includes wrappers for QSR servings, microwave popcorn bags and paper-board containers.

 

In recent years, the potential toxicity of PFAS compounds has been documented. PFAS compounds have been extensively used as a coating for cookware, food packaging and food processing installations has been recognized.

The FDA announcement is a tribute to the voluntary commitment by manufacturers to eliminate PFAS as a grease-proofing coating on food packaging.


 

Private Label Sales Higher in 2023

03/04/2024

According to a February 29th release by the Private Label Manufacturers Association (PMLA), products in their category rose 4.7 percent in dollar value to $236 billion in 2023 compared to the previous year.  The increase can be compared to a 3.4 percent rise for national brands.

 

Peggy Davies, president of the PLMA, stated, “One of every five food or non-food grocery products sold in the U.S. carries a retailer’s name or own brand.”  She added, “Most of all the store brands, continue to be well positioned providing offerings are “value-right” and with strong perceived value for money and quality in categories where shoppers are targeting cutbacks.”

Unit sales for private brands dropped 0.1 percent to $58.1 billion in 2023 compared to unit sales for national brands that fell by three percent to $222.9 billion.


 

Retail Analysts Comment on Kroger-Albertsons Merger

03/03/2024

Following the announcement that the FTC will oppose the intended merger of the Kroger Company and Albertsons Corporation, analysts have reviewed the impact of both the present situation with a merger of the companies.

 

Under the present Administration, there is doubt that the transaction will be completed.  It is possible that further restrictions could be placed on the parties in the form of additional divestment of stores above the 413 offered. The FTC may designate an alternative to C&S Wholesale Grocers as the purchaser of divested stores.  This is based on the experience with Haggen filing for bankruptcy in 2015 shortly after acquiring stores from the Albertsons, Safeway transaction. 

 

Should the merger not take place, Walmart would be the major beneficiary maintaining a 24 percent share of the grocery market in the U.S. through a chain of 4,700 stores.  The buying power of Walmart contributes to their ability to maintain low shelf prices for packaged food from manufacturers. Campbell Soup and ConAgra Brands are heavily committed to Walmart in an asymmetric relationship.  The fact that ten chains control 60 percent of the retail grocery market  suggests that smaller producers of dairy, eggs and produce are at a disadvantage in dealing with large retailers, especially with buyers of eggs able to take advantage of the industry benchmark price-discovery system.

 

From recent quarterly reports released by the major chains, it would appear that Kroger, despite its size, is impacted by the deep discounters and major large competitor.  Kroger posted a 0.6 percent drop in comparable same store sales in 2023 compared to a four percent rise attained by Walmart.

 

On balance, a merger between Albertsons and Kroger would be to the disadvantage of both large and small suppliers and would disfavor competitors Walmart, Ahold-Delhaize and Target in addition to the three wholesale clubs.  If the merger is not concluded, both competitors of the two companies and suppliers would benefit.

 


 

Swamp Shootout Claims 15,000 Pigeons

03/01/2024

According to press reports, a pigeon massacre was organized at the Quail Creek Sporting Ranch in Okeechobee, FL.  Pigeons were transported to the facility and were released from boxes using an ejection device to be shot. Not very sporting despite the name of the venue.

 

Apart from the wanton slaughter of birds that were not gathered for food, many of the abandoned carcasses containing lead shot will be consumed by scavenging raptors and mammals resulting in lead toxicity. Moving large numbers of pigeons from numerous states to a central location also adds to the risk of disseminating avian influenza.

 

According to reports of the swamp shootout event, there did not appear to be any hunting skill required and the activity could easily have been replaced with clay targets that are usually offered.

 

Appropriate complaints have been filed with the Florida Fishing and Wildlife Conservation Commission and the State Attorney General.


 

Avian Influenza Confirmed on Mainland of Antarctica

03/01/2024

Argentine scientists on their Antarctic base, Primavera, have collected samples from dead Arctic skuas (Stercorarius parasiticus) that yielded H5N1 virus. This species breeds in Scandinavia and Scotland and migrates the longest distance of all marine birds to the Antarctic. Mortality among breeding colonies due to H5N1 was extensive in 2023.

 

If the disease spreads as expected, colonies of marine birds including penguins will be impacted, resulting in severe mortality as has occurred in many species of marine birds in both the northern and southern hemispheres over the past two years.



 

Dollar General Opens 20,000th U.S. Stores

03/01/2024

On February 24th, Dollar General opened their 20,000th store in Alice, TX.  In commemoration of the event, Dollar General donated $20,000 to support educational and tutoring programs divided between the Alicia Salians Public Library and the Boys and Girls Club of Alice.

Steve Deckard, Executive Vice President of Store Operations and Development for Dollar General stated, “we believe each store provides a positive impact on our hometowns through convenient access to affordable essentials, providing career growth opportunities for employees and benefits for local non-profits through the Dollar General Literacy Foundation”.


 

Alltech Appoint Chief Regulatory Officer

03/01/2024

Alltech has announced the appointment of Dr. Colm Moran as Chief Regulatory Officer.  Dr. Moran is a twenty-year veteran of Alltech and most recently served as Director of European Regulatory Affairs and chairman of the Alltech Crisis Management Team. 

 

Dr. Moran has twenty-three years of experience in the feed industry.  He earned his Bachelor’s degree in Biotechnology from the University of Wales and subsequently three master’s degrees in Food Biotechnology, Food Regulatory Affairs and in Brewing from universities in Scotland Ireland and England.  His Doctoral degree in Fermentation Microbiology was awarded by the University of Plymouth.  Dr. Moran serves on the board of directors of the International Feed Industry Federation. 

 

In commenting on the appointment, Dr. Mark Lyons, president and CEO of Alltech stated, “Our regulatory strategy is moving into new strength under Colm’s leadership.  This positions Alltech firmly at the leading edge in delivering innovation to our customers.”


 

STOP PRESS

03/01/2024

Egg-NewsFederal Shutdown Averted?

With the imminent passage of the third in a series of continuing resolutions today it is apparent that a Federal shutdown on Saturday midnight will be averted.  There is a tentative agreement between the House and Senate to pass the required series of appropriations bills to maintain government services. 


 


 

Pirbright Institute Develops Novel Approach to IB Vaccines

03/01/2024

A research team at the U.K. Pirbright Institute has demonstrated a novel approach to a vaccine against avian infectious bronchitis (AIB).  Applying reverse genetics, it was possible to incorporate a heterologous spike gene from a non-pathogenic Beaudette strain of infectious bronchitis virus into a field strain (M41) prevalent in the E.U.  The recombinant designated M41K-BEAU(S) is naturally attenuated but can replicate in Vero cells.  This approach makes it possible to manufacture an AIB vaccine at a lower cost and in greater quantity than using conventional chick embryo propagation required for current commercially available vaccines.

Dr. Erica Bickerton leader of the coronavirus research team at the Pirbright Institute stated, “This research opens opportunities to create novel, innovative vaccines that could be effective against many strains of AIB and potentially reveal ways to create vaccines for other viruses in the coronavirus family.”


 

 

Congress Averting Government Shutdown

03/01/2024

Congress has agreed to a continuing resolution to fund the Departments of Veterans Affairs, Transportation, Agriculture, Energy and other agencies and will vote today to avert a Saturday March 2nd shutdown of Federal Agencies.

 

Opinion within Congress varied from the urgent need to pass appropriations bills to favoring a shutdown over narrow issues. The text of appropriations bills must be in the hands of members of Congress 72 hours in advance of a vote hence the need for a continuing resolution.

 

A significant point of contention has been the funding of the USDA SNAP-WIC program for which $6.3 billion was included in the Senate bill.  The minority party in the House had requested $7 billion but the leadership placed a cap of $6 billion on the program.  A second obstacle was the requirement that the Veteran’s Administration report the names of patients who require assistance with management of their benefits to a background check system used to screen potential purchasers of weapons.

 

 The Speaker of the House, Rep. Mike Johnson (R-LA) presided over a contentious conference call on Friday February 23rd while Congress was in recess.  If a government shutdown does occur, it is apparent that both parties will be blamed for the inconvenience and damage to the national economy. This prospect will hopefully engender compromise that would normally be expected. 

 

The continuing resolution is essentially kicking the can down the road for the third time after two previous iterations. The final passage of the series of appropriations bills will be based on mutual political expediency and not the wellbeing of the Nation and our citizens. This is no way to run a democracy. We deserve maturity and wisdom in our elected representatives that rises above middle-school intransigence and adherence to narrow and parochial considerations.

 


 

Family Dollars Stores Fined Over Substandard Storage

03/01/2024

In 2022 EGG-NEWS reported on unsanitary conditions at a Little Rock, AR distribution center operated by Family Dollar a subsidiary of Dollar Tree Inc.  Inspection by state and FDA officers confirmed rodent infestation and contamination of FDA-regulated products including cosmetics, food, drugs and medical devices.  Family Dollar recently entered into a plea agreement with the Department of Justice accepting a fine amounting to $41.7 million.  The plea agreement also mandates that the holding company and its subsidiaries should meet robust corporate compliance and reporting requirements for a three-year period.

 

Acting Associate Attorney General Benjamin C. Micer stated, “When consumers go to a store they have the right to expect that food and drugs on the shelves have been kept in clean uncontaminated conditions.”  He added, “When companies violate their trust in the laws designed to keep consumers safe the public should rest assure that the Justice Department will hold companies accountable.”

 

The company admitted that the Little rock, AR. distribution center that shipped to more than 400 stores in six southern states, was aware of a rodent problem in 2020 and that by the beginning of 2021 products were held under unsanitary conditions. Notwithstanding the extent of the situation the Company continued to ship products until January 2022 when the facility was closed by the FDA.  Corrective action included fumigation of the distribution center and a recall of all products shipped after January 1st, 2021 to 404 stores.

 

News reports indicated that 1,200 rat and mouse remains were collected after fumigation of the closed facility. The fine works out to approximately $35,000 per rodent!

 


 

USPOULTRY Donates to Atlanta Community Food Bank

02/29/2024

The organizers of the 2024 International Production and Processing Expo raised $33,314 for the Atlanta Community Food Bank.  Approximately half was donated by the IPPE and the rest from individual company and personal contributions.

 

The organizers of the IPPE stated, “we have been raising funds through the Giving Back To Atlanta campaign since 2016.  With the help of exhibitors and attendees who give to the campaign every year, more than $213,000 has been donated to date to the Atlanta Community Food Bank.

 

It is estimated that 750,000 residents of Metro-Atlanta relay on food pantries and meal service programs to feed their families each year.



 

Elanco Animal Health Posts Q4 and FY 2023 Results

02/29/2024

In a press release dated February 26th, Elanco Animal Health (ELAN) reported on Q4 and FY 2023 ending December 31st.  For the period, the company posted a loss of $141 million on revenue of $1,035 million with a diluted EPS of $(0.29). Although ELAN beat on the top line against Zack’s estimate of $999.7 million, EPS was far below the $0.10 anticipated.  For the corresponding Q4 FY2022, ELAN lost $55 million on sales of $985 million with a diluted EPS of $(0.1).  Comparing Q4 2023 with Q4 2022:

 

  • Revenue increased by 5.1 percent
  • Gross margin declined from 54.5 to 50.1 percent
  • Operating margin declined from 13.6 to 11.0 percent

 

For FY 2023 the Company lost $(1,195 million) on sales of $4,417 million with a diluted EPS of $(2.50). During FY 2023 the Company incurred a charge of $1,042 million for goodwill impairment. Comparable figures for FY 2022 were a loss of $(78) million on sales of $4,411 million with a diluted EPS of $(0.16).

 

During FY 2023 sales to the livestock sector attained $2,271 million, representing 51.4 percent of total company sales. Sales to the poultry sector amounted to $$765 million. Sales of companion animal products attained $2,104 million or 47.6 percent of the Company total.

 

The Company recently announced the divestment of their aquaculture business to Merck Animal Health for $1,300 million in cash.

 

Guidance for FY 20234 included revenue of $4,450 to $4,540 million but with a net loss of $(62) to $(17) million.  EPS will range from $(0.12) to $(0.03).

 

In commenting on results, Jeff Simmons, CEO stated, Elanco ended 2023 with momentum, returning to constant currency revenue growth for the full year and delivering 5% growth in the fourth quarter, primarily driven by our farm animal business, innovation revenue and price growth," Simmons continued, "As we look at 2024, we expect our existing portfolio to deliver constant currency revenue growth of 1% to 3%, with both pet health and farm animal expected to contribute to growth. We remain encouraged by our three late-stage pipeline products under regulatory review that have a path toward approval in the first half of 2024 and would be additive to our topline expectations in the second half of the year. Continuing our efforts to improve efficiency, today we announced a strategic restructuring to continue the shift of our investments into more significant value creation areas. We are investing to enhance our launch efforts, prioritizing cash flow improvements and meaningfully reducing leverage, from both our improving free cash flow and the expected sale of our aqua business. We believe that the investments we are making in 2024 will provide the foundation to enable sustained revenue growth over the medium and long term."

 

This self-adulatory statement is at variance with the reality of continued losses and shareholder disaffection.

 

Ancora an investment group with three percent of the equity has proposed a slate of independent candidates to the 12-person Board to replace four retiring members. Ancora has characterized the current Board and CEO as “barriers to success”.

 

On December 31st ELAN posted total assets of $14,362 million including goodwill and intangibles of $$9,588 million with long-term debt of $6,147 million. On February 29th the market capitalization attained $7,850 million The Company has traded over the past 52-weeks in a range of $7.88 to $16.20 with a 50-day moving average of $15.42.

 

On a twelve-month trailing basis, operating margin was 1.6 percent and profit margin -27.9 percent.  The company achieved a return on assets of 1.4 percent and -18.2 percent on equity.

 

After meeting with Ancora following release of FY 2023 earnings, Elanco announced a program to enhance shareholder value. This will include a shift from livestock to higher-margin companion animal products, cancellation of 420 positions with layoffs and changes in representation and distribution to reduce costs.  


 

Ojai City, CA, Passes Right to Bodily Liberty Ordinance for Elephants

02/28/2024

Supported by the Nonhuman Rights Project, the City Council of Ojai passed the “Right to Bodily Liberty for Elephants” Ordinance.  This is the first legal recognition of animals having the rights usually extended to humans. Accordingly, elephants cannot be confined within city limits.

 

For four decades, the Nonhuman Rights Project has championed the release of primates and more recently, elephants.  Consistently, courts have ruled against the nonprofit refusing to grant habeas corpus rights to animals. The organization maintains that the elephants in the Fresno zoo are held captive ‘against their will for the benefit of human captors” and should be released to a sanctuary. The City of Ojai Ordinance has yet to be challenged and could be ruled unconstitutional.

 

The success gained by the Nonhuman Rights Project in California was muted by the announcement of the February 15th passing of Stephen Wise,

 

Founder of the organization in his 73rd year. Wise, a lawyer by profession, graduated from Boston University Law School in 1976.  A turning point in his career was the influence of Animal Liberation by Peter Singer, an Australian philosopher.  This led to the establishment of the Nonhuman Rights Project in 1995.

 

Recognition of other than humans as possessing bodily autonomy whether for elephants or nonhuman primates would represent a slippery slope.  It could be considered that all livestock is held against their collective will. Granting habeas corpus for a wide range of animals including poultry with courts appointing guardians.  This has the potential of destroying livestock production as we know it.  This might be acceptable to vegan environmental extremists, but it certainly does not represent the inclinations and lifestyle of the majority of our population.


 

Predictable Consequences of the California FAST Act

02/28/2024

The FAST Act, AB1228 applying to Quick Service Restaurants (QSRs) takes effect on April 1st, 2024.  Fast food chains with a designated number of stores will be required to pay workers a minimum wage of $20 per hour with further 3.5 percent annual increases through 2029. Conditions of employment and wage rates would be subject to the decisions of a nine-member Council with equal worker and employer representation.

 

Oxford Economics conducted a study that determined that restaurants would have to raise prices by 4 to 5 percent to cover wage increases and that 6,000 workers would lose their jobs with 360 restaurants closing.  Quick service restaurants are taking preemptive action by laying off workers, increasing mechanization and in some cases, ceasing operation. The McDonald’s Restaurant Owners Association estimated that wage increases would cost each of the franchises approximately $250,000 annually.  Pizza Hut has laid off 1,200 delivery drivers in anticipation of the higher wage rate.

 

Some economists believe that costs claimed by QSRs are overstated with a study prepared by Michael Reich, a Professor at UC Berkeley and affiliated with the Institute for Research on Labor and Employment maintains that restaurants could cover a 10 percent increase in wages with a 0.5 percent price increase.  Observers noted that many QSRs are already paying between $17 and $20 per hour based on the availability of workers and that AB1228 will not have a material effect on earnings.

 

Full service restaurants are not covered by the law but if wage rates increase for QSR workers, other categories of restaurants will have to pay more to compete for the available labor pool.


 

Chicago Restricts New Dollar Stores

02/27/2024

The City of Chicago has passed an ordinance restricting the location of new Dollar Stores within one mile of an existing unit. Issues raised by proponents of the ordinance included defective maintenance, poor security and price gouging.

 

The ordinance would be more acceptable in a free-market economy if it were not for the fact that the City has entered into competition with grocery stores establishing retail outlets in so-called food deserts.  Although Dollar stores have introduced fresh produce and widened their offering of foods, inner-city and predominantly minority communities have limited access to conventional supermarkets.  Chains including Aldi, Target and Walmart have attempted to operate stores in some Chicago communities, but these have been unprofitable due to theft and security issues.



 
  

 

Kroger “Charm Offensive” Unsuccessful

02/27/2024

In an attempt to facilitate FTC approval of the proposed merger with Albertsons, Kroger  committed to reducing shelf prices among the combined stores by $500 million following completion of the $25 billion transaction.  The question arises as to whether this was window dressing to influence the FTC towards a positive outcome? In the event the offer was unsuccessful given the action by the Agency on February 26th. Alternatively offering to reduce prices may have represented an exercise in predation to attract clientele following the merger with subsequent ratcheting up of prices. We have seen this movie before.

 

Kroger Company also offered to invest $1.3 billion in upgrades of Albertsons stores. Similar promises to cut prices and improve stores were made before acquisition of the Harris Teeter chain.  At the present time, Harris Teeter, regarded as an “upmarket” banner has prices considerably higher for the same items than local North Carolina competitors including Food Lion.

 

Before releasing their decision the FTC had time to review the merger and consulted with the two unions, state Attorneys General and other parties involved. This suggests that they will be able to defend their decision to block the transaction given the inevitability of a hearing before an Administrative Law Judge and subsequent prolonged litigation.

 

Kroger continues to promote the transaction that would increase the market share of the combined companies to compete with Walmart the leader in grocery retail and on-line sales. To support their position Kroger and Albertsons have established a joint website emphasizing the potential cost savings for consumers.

 

Irrespective of whether shoppers would have benefitted over the short term, the proposed merger had negative implications for suppliers, especially those west of the Mississippi.


 

Illinois to Eliminate Tax on Groceries

02/27/2024

According to the proposed FY 2025 Illinois budget, Governor J.B. Pritzker will eliminate the one-percent tax on groceries. He stated, “Removing the tax will be for the good of our state’s working families.”  He added, “It is one more regressive tax we don’t need.  It reduces inflation for families from four percent to three percent even if only puts a few hundred bucks back in families’ pockets.”  Illinois is among 13 states imposing a tax on grocery purchases.  State taxes range from a high of seven percent in Mississippi to 1.2 percent in Missouri.  With the exception of Hawaii at four percent, all states imposing a tax on groceries are regarded as “red states”.

 

The Illinois Policy Institute noted that 70 percent of respondents to a poll were in favor of eliminating the tax that is borne disproportionately by low-income families.


 

Studies on Long-COVID Establishes Prevalence and Possible Causation

02/26/2024

Studies are now in progress to evaluate the long-term effects of COVID infection in the U.S.  According to a report in the Centers for Disease Control and Prevention Morbidity and Mortality Weekly Report, the national prevalence of long-COVID is 6.4 percent of all adults ranging from 1.9 percent in the U.S. Virgin Islands to 10.6 percent in West Virginia.  Long-COVID at 30 days was 43 percent lower in respondents that were fully vaccinated before infection.  Symptoms of long-COVID were 58 percent less evident in vaccinated individuals at 90 days after infection.  This is considered noteworthy as 17.5 percent of respondents among 4,605 surveyed in the Michigan COVID-19 recovery surveillance study reported symptoms 90 days after infection.

 

Individuals affected by long-COVID demonstrated high levels of interferon gamma (IFN- γ) for up to 31 months after infection.  This protein usually declines shortly after recovery from COVID.

 

MRI scans of patients with long-COVID and neural abnormalities showed dysfunction of the blood-brain barrier.  These changes were absent in patients recovering from COVID without self-reported symptoms including “brain fog”.

 

It is well established that immunization against COVID protects against the consequences of acute infection.  It now is apparent that immunization protects against the adverse effects extending beyond 90-days post infection.


 

Disease Outbreaks Linked to Dairy Company Using Raw Milk

02/25/2024

Food Safety, the house website of Marler Clark points to the abysmal record since 1906  of foodborne infection associated with Organic Pastures Dairy Company and its successor Raw Farm LLC.  The dairy has been implicated in twelve recalls resulting from outbreaks of a range STEC, Listeria and Campylobacter infections, acquired from raw milk and cheese produced using non-pasteurized milk.

 

The latest outbreak occurred in February 2024 involving ten diagnosed cases infected with STEC in four states.  Hospitalization rates attained 50 percent with complications including hemolytic uremic syndrome. Investigations are in progress by the Centers for Disease Control and Prevention applying interviews and whole genome sequencing.


 

Continuing Incidence of HPAI in Backyard Flocks

02/25/2024

Migratory waterfowl are now in their winter habitat in the Gulf states.  This cohort is evidently not responsible for sporadic outbreaks of HPAI recorded during recent weeks in Idaho, Massachusetts and West Virginia.  It is also accepted that the number of diagnosed backyard flocks is considerably lower than the actual incidence rate. 

 

The occurrence of diagnosed HPAI suggests that domestic resident birds in specific areas have become reservoirs and disseminators of the virus.  This is a situation of concern since it presumes outbreaks in commercial farms  outside of the seasonal periods of waterfowl migration as has emerged in turkey flocks in North Carolina and Missouri.

 

It would be appropriate for APHIS to conduct surveillance on a wide range of domestic birds to ascertain the current prevalence of infection and to further investigate the epidemiology of avian influenza.


 

Winter Storms Ease Drought Concerns for California

02/25/2024

Heavy precipitation has filled California reservoirs that are at 118 percent of their average levels for late winter.  Shasta Lake (47 miles2in surface extent) is at 87 percent capacity and Lake Oroville (25 miles2) is at 82 percent.

 

In addition, storms have increased snowfall on the Sierra Nevada with the snow pack now at 86 percent of normal up from 28 percent a few weeks previously.  The Department of Water Resources has increased its allocation of supplies to 15 percent of full allotment, up from 10 percent in December.  The State Water Project will reassess allocations through March.

 

The extent of refilling aquifers that have been depleted is however important for long-term function of wells. Many egg complexes rely on subterranean water for their flocks, in addition to evaporative cooling and processing.


 

Wendy’s to Evaluate Dynamic Pricing in 2025

02/24/2024

Wendy’s announced on Tuesday 27th that it is considering to follow the lead set by airlines and rideshare companies in adjusting menu prices according to demand, a policy referred to as “surge pricing”.  The strategy as presented was intended to even out customer flow across the meal periods.  Based on rideshare and airline experience, the strategy could, in theory, increase sales value and hence profits. If Wendy’s would have been the first restaurant to introduce dynamic pricing, and the approach were predictably rejected by consumers, the company would have suffer severe degradation of image benefitting competitors. Extensive social media criticism of the intention to introduce surge pricing led

 

Wendy’s to backtrack on Wednesday 28th. The Company clarified the earlier statement falling back on the semantics of “dynamic” and “surge” pricing. The Company explained that installation of electronic menu boards would allow the prices to be adjusted down during off-peak periods and provide value. Now the Company has created a self-inflicted problem of credibility and effectively created an undesirable web persona.

 

If Wendy’s were to introduce any form of variable pricing, it would be advisable to select the market and carefully analyze results before embarking on an extensive application of the strategy.  The potential to lose customers to adjacent QSR chains is a real possibility and a loss in traffic could more than offset any incremental revenue from surge pricing

 

On February 15th, Wendy’s Company reported results for the fourth quarter and Fiscal 2023 ending December 31st, 2023.  For the full year, net income was $204 million on total revenue of $2,182 million with a diluted EPS of $0.97.  For the corresponding FY2022, Wendy’s earned $177 million on total revenue of $2,1096 million with a diluted EPS of $0.82.  The increase in revenue resulted from higher sales at company-operated restaurants and franchise royalty revenue and advertising contributions.  During 2024, Wendy’s invested $55 million in advertising breakfasts.  Thirty million dollars was used to increase the number of digital menu boards that would be necessary for the company to introduce some form of variable pricing.

 

For 2023, systemwide sales growth attained 6.1 percent with 5.1 percent in the U.S. and 14.1 percent in the International Segment.  Same restaurant sales growth in the U.S. was 3.7 percent.

 

Guidance for 2024 included systemwide sales growth of 5 to 6 percent and adjusted EBITDA of $535 to $545 million with an adjusted EPS of $0.98 to $1.02.

 

The Company reported increased digital sales and the opening of 250 new restaurants worldwide during the fourth quarter.


 

Rise in Cage-Free Production in China

02/24/2024

China, is the world’s leading egg producer responsible for 40 percent of output. In 2022 the Nation produced 49 billion dozen from a flock of 3.3 billion hens but with a corresponding 180 eggs per hen on average. This denotes inefficiency on a national scale attributed to a combination of modern complexes achieving international standards compared to more primitive production systems with disproportionally lower yield.

 

The rise of supermarkets in urban areas and growing disposable income among affluent demographics has created a demand for specialty eggs.  Large egg producers including Hubei Shendan, Ovodan, Dalian Hanwei, Fujian and Guangyang and Tiancheng have initiated production of cage-free eggs involving large complexes equipped with aviaries and in-line grading installations.

 

Liu Wen, Marketing Director in China for Big Dutchman, stated, “Globally, the number of egg-laying hens raised in our cage-free system has increased from100 million in 2019 to over 160 million today.  This rapid transition towards cage-free production is evident worldwide and China is poised to become a significant market for these eggs.”  He added, “We will expedite the localization of most components, minimize costs and offer competitive pricing to cater for the growing interest in cage-free production.”

 

Lever China, a Shanghai based consultancy group is promoting cage-free production systems in response to consumer and corporate demand.  It is evident that China has more cage-free hens in production than the U.S. that has the advantage of a decade lead.

 

Interest in cage-free production in China is evidenced by a large delegation of producers who attended the 2024 IPPE to evaluate available equipment and to review production procedures.


 

No Progress on 2023 Farm Bill

02/22/2024

Secretary of Agriculture Tom Vilsack characterized his five-hour testimony before the House Agriculture Committee as a “wasted opportunity”.  The 2023 Farm Bill is mired in controversy in both Chambers of Congress.  Issues in contention include the magnitude of SNAP support and eligibility for the program.  The second conflict concerns farm assistance.  The current Administration wishes to divert support to small-scale farmers at the expense of larger operations that are the most productive contributing to the bulk of grains and oilseeds required for the domestic market and for export. There is also opposition from the right on climate-related expenditure.

 

What ever happened to compromise and deadlines?


 

Demise of “Ghost Kitchens”

02/22/2024

Press reports suggest that many ghost kitchens established during the COVID period have closed.  Despite unjustified projections of market demand in 2020, and some participation by QSRs, patronage has withered and consumers are taking advantage of home delivery, drive-thru and even in-person dining. 

 

In an attempt to remain viable, Nimbus Kitchen based in New York City is diversifying into catering for functions and events.


 

Consumer Reports Highlights Chemical Contamination of Foods

02/21/2024

Consumer Reports has issued a report purporting to show high levels of bisphenols and phthalates in wide variety of food products.  It is not a question of whether these chemicals compounds are present in prepared foods, but the reality is the level in relation to acute and clinical effects.

 

The compounds analyzed were in the low nanogram per serving range and it is questioned whether the quantum assayed could be correlated to possible clinical effects.  This said there is now no question that bisphenols and phthalates are potentially toxic with adverse effects on metabolism and neural development, following accumulation in tissues and organs.

 

The Consumer Reports findings should however be a warning that food scientists and manufacturers should do everything possible to restrict the levels the accumulation of potentially toxic compounds among consumers.  This will involve evaluation of packaging materials with specific reference to polymers used to coat paper and other packaging.


 

Iowa Proposes to Allow Unapproved Application of Animal Waste

02/21/2024

The Iowa Department of Natural Resources requires adherence to regulations governing disposal of animal waste from Concentrated Animal Feeding Operations (CAFOs).  Approved plans are based on the need for soil nutrients and the possibility of runoff given the capacity of designated fields. Iowa operates a Nutrient Reduction Strategy that presumes pre-approval of plans to dispose of waste by soil application.

 

Given problems relating to compliance and implementation, situations have arisen such as the Supreme Beef situation in April 2023 in which conflicts arose between the Department of Natural Resources and operators of a CAFO.

 

Proposed Senate Bill 3152 would effectively “water down” current procedures relating to the assessment of suitability of agricultural land to receive waste and to allow CAFOs to operate under plans that have been rejected, pending an appeal. Given considerable opposition, the Bill intended to “water down” regulation of waste will have to be amended and will then be referred to the Senate for consideration.

 

 

It is noted that Iowa with 40 million hens representing 14 percent of the nation's total produces considerable quantities of manure over and above the contribution from hog farms and feed-lots. Collectively livestock waste adds nitrates and phosphorus to waterways, aquifers and ultimately drinking water supplied from wells and by municipalities.  Accordingly large egg-production complexes should consider installation of manure drying and processing installations that would reduce the necessity for application of waste to agricultural land.


 

HPAI Outbreaks in Asia

02/21/2024

Authorities in India and Taiwan have reported outbreaks of H5N1 strain highly pathogenic avian influenza to the World Organization for Animal Health. 

 

The case in India involved at least two egg-producing farms in the Nellore region in Andhra Pradesh. In Taiwan, a small-scale commercial farm in Pingtung County was diagnosed with HPAI. 

 

Appropriate control measures have been implemented although with the high density of chickens in both locations, and also ducks in the case of Taiwan, deficiencies in biosecurity will most probably lead to additional cases. Early diagnosis relies on farmers alerting regulatory officials to clinical signs and mortality to initiate control measures.


 

Walmart Announces Q4 and FY 2024 Financial Results

02/20/2024

In a February 20th release, Walmart Inc. (WMT) posted financial results for the 4th quarter and Fiscal 2024 ending January 31st 2024. All U.S. retailers, both brick-and-mortar and online are subject to the same pressures from increased costs for goods, transport and labor in a competitive environment with most consumer demographics and especially lower earners concerned over expenditure. As a multinational company, Walmart faces additional risks associated with currency fluctuation, geopolitical events and adverse policies by regulators in host-nations. Walmart serves as a bellwether for U.S retail combining groceries, clothing, electronics, drugs, toiletries and household necessities.

 

For the 4th quarter of FY 2024 ending January 31st 2024 net income was $5,494 million on net revenue of $173,388 million that beat consensus estimates yielding a profit margin of 3.2 percent.  Comparable figures for the 4th quarter of fiscal 2023 ending January 31st 2023, were  net income of $6,277 million on total revenue of $164,048 million with a profit margin of 3.8 percent. Diluted EPS declined from $2.32 for the 4th quarter of FY 2023 to $2.03 for the most recent quarter.

 

Comparing the 4th quarter of FY 2024 with the corresponding quarter of the previous year, revenue was up 5.7 percent; comparable store sales up 4.0 percent for the U.S.; gross margin rose from 22.1 percent to 23.3 percent; operating margin increased from 3.4 percent to 4.2 percent for the most recent quarter.

 

For FY 2024 net income was $15,511 million on net revenue of $648,124 million.  Comparable figures for FY 2023 were net income of $11,680 million on total revenue of $611,289 million. Diluted EPS increased to $5.74 in FY 2024 compared to $4.27 for FY 2023.

 

In commenting on Q4 results, in the Investor’s Call, Doug McMillon, CEO and president stated “We were strong in the U.S., Mexico, Canada, and India, where we had the best Big Billion Days ever, and we continued the strong performance in China with the start of Chinese New Year. Typically, we see some of our customer experience scores dip during the high-volume hours and days we experience during the holidays. During Q4, the Walmart U.S. team delivered three-year high customer scores in our stores for pickup and delivery from stores and for those orders that flow directly from our e-commerce fulfillment centers”.

 

McMillon concluded “I'm excited about the omnichannel net promoter score trends the team is driving. Across countries, we continue to see a customer that's resilient but looking for value. As always, we're working hard to deliver that for them, including through our rollbacks on food pricing in Walmart U.S. Those were up significantly in Q4 versus last year, following a big increase in Q3”.

 

Forward guidance for FY 2025 included:- A 3.0 to 4.0 percent increase in consolidated revenue; operating income over a range of 4.0 to 6.0 percent, and an adjusted EPS of $6.70 to $7.20 (pre-split). Capital expenditure will be equivalent to 3.2 percent of net sales.

 

For the 4th quarter of FY 2024 segment results comprised:-

  • Walmart US: Net sales of $117,600 million, up 3.4 percent over Q4 FY 2023. Operating income $5,100 million with strong gains in groceries and general merchandise. Comparable same-store sales were up 4.0 percent (excluding fuel). Transactions were up 4.3 percent but ticket was down 0.3 percent. Growth in E-commerce, was up 17 percent over the corresponding quarter of FY 2023. Inventory declined approximately 4.5 percent.
  • International: Net sales of $32,400 million, up 17.6 percent. Operating income was $1,300 million. Growth in E-commerce, 44 percent over the corresponding quarter of FY 2023.
  • Sam’s Club U.S.: Net sales of $21,900 million, up 2.0 percent excluding fuel. Operating income was $600 million. Comparable same-store sales were up 3.1 percent. Membership revenue grew 10.0 percent. Growth in E-commerce, increased 17 percent over the corresponding quarter of FY 2023, attributed to curbside pick-up service and delivery.

 

Walmart operates more than 10,500 stores worldwide of which 5,400 are in the U.S. including 600 Sam’s Club warehouses. Walmart trades under 46 banners in 19 nations and employs 2.1 million.

 

On January 31st 2024, Walmart posted assets of $252,399 million including goodwill of $28,113 million. Long-term debt and lease obligations amounted to $54,784 million. The Company had an intraday market capitalization of $458,650 million on February 20th. WMT trades with a forward P/E of 24.1 and has ranged over a 52-week period from $136.09 to $181.35 with a 50-day moving average of $160.95.  Twelve-month trailing operating margin was 3.9 percent and profit margin 2.6 percent.  Return on assets over the past twelve months was 7.3 percent with a return on equity 19.7 percent. At close of trading on February 19th pre-release, WMT was priced at $170.39. On November 20th WMT opened post-release at $179.97, up 5.6 percent.  

 

WMT will split three-for-one on February 23rd.


 

Benson Hill Divests Soy Plant

02/20/2024

Benson Hill (BHIL) has concluded the sale of the Creston, IA. soybean crushing plant for $72 million.  According to the CEO, Deanie Elsner, the company will concentrate on core activities including specialized soybean cultivars and an “expanded focus on animal feed markets”.

 

For the nine months of FY 2023 ending September 30th, the company posted a net loss of $77.5 million on revenue of $356.8 million.  Over the past 52 weeks, the share price of BHIL has declined from $2.34 to $0.12.  On a trailing 12-month basis, operating margin was -21 percent and profit margin -28 percent.  The company has generated a return on assets of -13 percent and  -57 percent on equity. This suggest a downward spiral ending in acquisition or bankruptcy.


 

Deere and Co. Reduces FY2024 Sales Projection

02/20/2024

Deere and Co. is regarded as a bellwether of the agricultural sector.  In their report for the first quarter of Fiscal 2024 released on February 15th, the company reported sales of $12,185 million, down 4 percent from the corresponding first quarter of Fiscal 2023.  Net earnings were 11 percent lower at $1,750 million and the company posted a diluted EPS of $6.23 compared to $6.55 for Q1 FY 2023.  The company projects lower revenue for FY 2024 in the range of $7,500 to $7,750 million.  Sales in USA and Canada will decline by between 10 and 15 percent with sales to large agricultural operations down 5 percent and corresponding reductions in the forestry and construction markets.  Demand in Eastern Europe will be affected by ongoing hostilities in Ukraine and economic conditions in other markets.  Reduced sales to small agricultural operations is evidence that many farmers are reluctant to assume additional debt at prevailing high interest rates and are delaying replacement of high-priced equipment.


 

Ahold-Delhaize Posts Q4 Results

02/20/2024

Ahold-Delhaize, the multinational food retailer operating numerous banners in the U.S. including Food-Lion, Giant Food, Hannaford and Stop & Shop, recently published results for the 4th quarter of Fiscal 2023.  U.S. sales attained $14,854 million, representing 60 percent of total group sales including the E.U.  During the most recent quarter U.S. operating income attained $470 million, 65 percent of group operating income.  Sales were down 1.5 percent from the corresponding 4th quarter of FY2022 and operating income was 46 percent lower. 

 

During the quarter, Ahold divested FreshDirect. During Q4 U.S. comparable sales were lower by 1.0 percent with online sales down 3.6 percent.


 

Shake Shack Held to Account over “Hormone-Free” Claim

02/19/2024

Along with a number of chicken producers and restaurants, Shake Shack has claimed that its chicken is “hormone-free”.

 

Label regulations imposed by USDA require an explanatory statement to the effect that administration of hormones to livestock for food production is disallowed.  It is a matter of fact that the use of stilboestrol implants was banned in the late 1940s.

 

The Shake Shack claim has been challenged by the Accountability Board and has called on Shake Shack to justify the claim that has apparently been condoned by both management and the Board of the Company.  In response, Shake Shack has amended a 2024 proxy statement to state, “No added hormones”.  This is a justifiable statement but is intended to create the impression that chicken served by Shake Shack is in some way superior or more healthy than chicken served by other chains.  This is clearly not the case since no U.S. raised chicken receives any “added hormones”.  The same can be said for the deceptive “cage-free” claim with respect to broilers and turkeys. This claim also implies that competitive brands of chicken might be raised in other than barns or in enclosures with access to pasture.


 

USPOULTRY 2024 Feed Mill Management Seminar

02/19/2024

The 2024 Feed Mill Management Seminar will take place on March 7th and 8th at the Embassy Suites by Hilton Downtown in Nashville, TN.  The program will include an update on regulatory and FSMA aspects, an OSHA update, inventory management, transportation, energy saving and sustainability in feed production.

 

Additional information and registration can be obtained from the organizers by accessing <www.uspoultry.org>.


 

Costco January Sales

02/19/2024

In a February 7th release, Costco Wholesale Corporation reported net sales of $22,100 million for January comprising five weeks ending February 4th.  This was a 4.5 percent increase over the corresponding period in 2023 but with one less shopping day.

 

Over the five-week period, the comparable same store sales increase amounted to 1.6 percent for the U.S., 6.2 percent for Canada and 5.1 percent for other international warehouses, contributing to a total company increase of 2.7 percent.  E-commerce increased by 21 percent over the corresponding five-week period in 2023.

 


 

Nebraska Public Schools Using Collection Agencies to Recover Overdue Payments for Meals

02/19/2024

According to an investigation by the School Nutrition Association, in 2023, Lincoln Public Schools referred 1,700 school lunch debts to Professional Choice Recovery, a collection agency.  Among the 20 largest districts in Nebraska, Kerney, Columbus and Scotts Bluff also use private collectors, according to a study conducted by Flatwater Free Press.  If parents are unable to pay the complete debt, judgement is obtained, substantial costs are added and the wages of parents are garnished.

 

Other school districts in Nebraska, including the largest in Omaha, do not refer debts to collection agencies.  Apart from the stress associated with dunning letters and phone calls, a judgement negatively impacts credit scores with far-reaching consequences.

 

As a result of the revelations, the Nebraska Legislature is considering a bill that would prevent school districts referring debts to commercial collection agencies. 

 

Kate Murphy, the Food Service Director for Kerney Public Schools, is apparently opposed to the proposed bill claiming that using collection agencies “Helps their meal programs stay afloat amid challenging economic circumstances and holds families responsible for the deficits they accrue”.  Murphy opined that “If the bill is passed, it will remove the incentive for parents to pay their kids’ lunch bill.”  Consistently the Lincoln Public Schools system has referred debts to collectors at a rate higher than any other school district in Nebraska.  More than a quarter of the 1,681 referrals were for debts under $50 with the public school system receiving 40 percent of the approximately 38 percent recovered from debtors. This 15 percent recovery is hardly sufficient to “keep the meal programs afloat”.

 

The clamor over attempts to recover overdue payments for school meals in Nebraska has played out concurrently with the December 2023 decision of Governor Pillen to refuse approximately $17 million in federal funding for summer supplementary food assistance.  This decision was reversed by the Governor during February after counseling by political advisors, strenuous opposition included a petition with 6,000 signatures and vigils outside his home.

 

EGG-NEWS is strongly in favor of free meals for K-12 students to provide necessary nutrition and to avoid “food shaming” of disadvantaged children. Extending school feeding programs should indirectly increase consumption of shell eggs and products.


 

Utah Extending Deadline for Cage Ban

02/19/2024

The Senate Business and Labor Committee of the Utah Legislature voted unanimously to advance Bill SB222 on February 14th.  This would extend the date for housing hens as cage-free in the state to January 1st 2030. Senator Mike McKell the sponsor stated, “We need to delay the implementation date”

 

The 2021 Act that mandated cage-free housing by 2025 was apparently accepted by both producers and consumers.  Utah farms are currently between 50 and 70 percent converted at considerable cost and could not be completely transitioned to alternative housing systems.  Significant issues that have emerged since passage of the 2021 measure include the status of eggs from both caged and alternative housing introduced from other states. 

 

If SB222 is approved by the Senate, the House of Representatives will have to enact similar legislation before adoption.  Since passage of California Proposition #2 in 2008 and the subsequent California Proposition #12, it is evident that the cage-free market is well supplied and that a large proportion of consumers who are unconcerned over welfare select the cheapest generic eggs to match their budgets. 

 

Perhaps with the passage of time, both economic realities and reason have prevailed and that now even states are reneging on their commitments in addition to retailers. Many on either side of the check-out counter recognize the implications of decisions that were made on the basis of emotion and sentiment without consideration of unintended consequences. The most important is the “Pacelle Tax” borne by consumers in California and similar states that mandate cage-free eggs to the detriment of many consumers who are deprived of choice.


 

Harvard University Team Develops Synthetic Antibiotic

02/19/2024

Based on the structure of the lincosamide class of antibiotics, a Harvard University team led by Dr. Andrew Myers has developed a synthetic antibiotic.  Cresomycin was synthesized using component-based technology that will allow more effective binding to bacterial ribosomes.  It is anticipated that the synthetic antibiotic will overcome the protective mechanism developed by bacteria by producing ribosomal RNA methyltransferase.

 

If clinical trials demonstrate the efficacy and safety of cresomycin, it will represent a new class of antibiotics effective against both Gram-positive and Gram-negative pathogens and especially against multidrug resistant strains of Staphylococcus, Escherichia and Pseudomonas


 

Interim Director of EIC Appointed

02/19/2024

Dr. Brett Ramirez has been appointed Interim Director of the Egg Industry Center located on the campus of Iowa State University. Since April 2023, Dr. Ramirez has served as the Assistant Director assisting Dr. Richard Gates who sadly passed in November.

 

Dr. Ramirez holds appointments as an Associate Professor in the Department of Agricultural and Biosystems Engineering with research and extension responsibilities. His research relating to the egg industry includes livestock housing, ventilation, energy efficiency and environmental control.  He was a key collaborator in the review of the 2022 Environmental Protection Agency Draft Emissions Model.

 

Dr. Ramirez earned Bachelors’ and Masters’ degrees in agricultural and biological engineering from the University of Illinois and a Doctoral degree in agricultural engineering from Iowa State in 2017.  He received the 2021 Young Engineer of the Year award from the American Society of Agricultural and Biological Engineers.

 

In accepting the interim position, Dr. Ramirez stated, “My goal is to continue the great things that Dr. Rich Gates started and to add my unique style to accomplishing and furthering those goals.” He added, “I will strive to drive the EIC mission forward and ensure we achieve our goals supporting the Nation’s egg industry through evidence-based research.”


 

SpartanNash to Deploy Additional Robotic Tally Units

02/19/2024

Following a successful trial in 15 stores, SpartanNash will now extend the use of Tally Robots to 60 additional company stores.

 

Tom Swanson executive V-P for Corporate Retail stated, “Tally saves associates time in inventory tracking and gathering real-time data intelligence.”  He commented that the robots allow associates to spend more time on the floor serving guests and ensuring that produce is adequately stocked and is fresh.

 

Tally Robots using Simbe store-intelligence software, provide details on products on shelves to facilitate ordering, merchandising and fulfillment of E-commerce orders.

 


 

Opposition to Kroger-Albertsons Merger in Colorado

02/19/2024

Phil Weiser, Attorney General of Colorado has filed a lawsuit against Kroger and Albertsons alleging contravention of the Colorado State Antitrust Act.  At issue is an apparent “non-poach agreement” that was entered into after a 10-day strike by workers at King Soopers, a Kroger banner during January 2022.  Consumers were obliged to obtain pharmaceutical and other requirements from competitor, Safeway during the strike.  It is also alleged that the two companies agreed not to solicit pharmacy customers.  The State of Colorado is seeking $1 million in civil penalties as a result of the agreements that the state alleges harmed workers and “blatantly violated antitrust law”.

 

Attorney General Weiser is also suing to block the proposed merger between Kroger and Albertsons based on the reality that it would reduce competition and ultimately result in both inconvenience and higher prices for consumers.  Kroger operates 148 King Soopers and City Market stores in Colorado with Albertsons owning 105 Safeway and Albertsons stores.

 

There is considerable skepticism over the viability of the proposed spin-off of over 400 stores to C&S Wholesale Grocers. This is based on the debacle following divestment of 168 stores as a condition for the 2015 merger between Safeway and Albertsons. The acquirer, Haggen was overwhelmed and filed for bankruptcy within a year.  Albertsons then bought back the stores at a low price and many were closed.  Attorney General Wiser predicts that a similar situation will occur if C&S Wholesale Grocers that currently operates 23 stores finds itself responsible for 413 locations divested following the combination of Kroger and Albertsons.  Of the designated units, 50 Safeway and 2 Albertsons stores are located in Colorado.

 

In the event that the transaction is completed, and the combined company shuts either of the two banners in any small town, consumers would have no choice other than to drive considerable distances to a competing grocery chain.

 

Currently the Federal Trade Commission is evaluating the proposed merger but has delayed a ruling for many months while Kroger is actively planning the merger of the two companies in a $25 billion transaction.


 

Kentucky Senate Approves “No Flyover” Bill

02/19/2024

Kentucky Senate Bill SB16 would prohibit flying drones over concentrated animal feeding operations (CAFOs) and food processing facilities, including meat and poultry packing plants.  In addition, the Bill would ban unauthorized photo and video equipment in the vicinity of agricultural operations and the distribution of recordings.

 

 

The Senate Bill is simply an extension of Ag Gag legislation that is generally ruled unconstitutional when challenged in federal courts.  Legislators in agricultural states are ever eager to frame and pass legislation that is subsequently ruled as unconstitutional.  State laws to ban intrusion and distribution of videos by animal rights organizations, while justifiable, appear unfortunately to be unenforceable.


 

Instacart to Reduce Head Count

02/19/2024

Instacart has announced a seven percent reduction in employees representing 250 jobs.  Chief Operating Officer Asha Sharma will leave the company of March 1st without a replacement.

 

CEO Fidji Simo stated, “Today we made the tough decision to part with approximately 250 of our talented team members, this will allow us to reshape the company and flatten the organization so we can focus on our most promising initiatives that we believe will transform our company and industry over the long term.” Projects that will receive attention include AI-powered smart carts, enhancing the retail media network and other rationalization initiatives.

 

For FY 2023 ending 31st December, Maple Bear Inc. trading as Instacart posted a loss of $1,624 million on revenue of $3,042 million with a diluted EPS of $(12.43).  Comparative figures for FY 2022 were a net income of $97 million on revenue of $2,551 million with a diluted EPS of $0.96.  For the most recent fiscal year, gross margin was 74.9 percent, but operating margin was (70.4 percent) due mainly to an eye-watering research and development cost of $2,312 million representing 76 percent of revenue.  General administrative costs attained $803 million up from $339 million in FY 2022.

 

Maple Bear Inc. (CART) has traded over a 52 week range from $22.13 to $42.95.  On February 15th the company had a market capitalization of $7,350 million and traded with a forward P/E of 105.3. On a trailing 12-month basis, profit margin was -53.3 percent and operating margin 5.7 percent.  The company has generated a return on assets of 32.0 percent and on equity -48.5 percent.  Nine percent of the equity is held by insiders and 53.3 percent by institutions.  Six percent of the float was short as of January 31st, 2024.

 

 


 

Oklahoma to Assist in Conversion to Group Housing of Sows

02/19/2024

A bill has been introduced into the Oklahoma Senate to provide financial support to producers to convert from gestation crates to group housing.  The Bill is sponsored by Senator George Young who evidently is responding to concerns by hog producers faced with pressure exerted by animal welfare groups.  Senate Bill 1325 would establish a $4 million fund to be administered by the Department of Commerce to provide grants to farmers to establish sow housing compliant with Proposition #12.

 

There is now adequate U.S. production of pork derived from group-housed sows to satisfy Proposition #12 and Question #3. Belatedly the hog industry has recognized the impact of both consumer and retailer concern over gestation crates and the groundswell for conversion.

 

It is interesting that the legislature of Oklahoma recognizes the need to provide financial support to farmers to transition from gestation crates.  There was no assistance requested by or offered to egg producers to comply with California Proposition #2 after 2008.  The transfer of approximately 100 million hens from conventional cages to alternative housing systems was financed entirely by producers without state or federal assistance.


 




























































































































































































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