The fault lines dividing protagonists of vaccination against highly pathogenic avian influenza (HPAI) and those against this modality were evident at the UEP Committee briefing on January 24^th and in hallways and show booths during the IPPE. The overwhelming sentiment within the egg production and turkey segments of the U. S. poultry industry is in favor of some application of vaccination as a supplement to existing control measures.  The broiler industry is opposed to vaccination based on the perceived impact on trade, since close to sixteen percent of RTC voume produced in 2013 will be exported.

The epornitic of 2022/3 is not a repetition of 2015.  The realities are:-

• The H5N1 strain with Eurasian genes is now a panornitic strain present in the E.U., Asia, and the Americas with Brazil, thus far, the only major poultry producing nation unaffected. Both Australia and New Zealand are at this time, free of infection due to remoteness from migratory flyways.
•  Highly Pathogenic Avian Influenza strain H5N1 is considered by many poultry health professionals to be de facto endemic in the U. S.  This opinion is based on the infection having been diagnosed on commercial farms in more than 35 states, has required the depopulation of 56 million birds to date, is affecting both commercial and backyard flocks and has continued for twelve months. This scorecard is inconsistent with an exotic infection.  Currently, many species of both migratory waterfowl and domestic birds show clinical signs and high mortality unlike previous H5 and H7 strains affecting only domestic poultry. 
• The infection is regularly isolated from free-living mammals, including foxes, skunks, mink, bears, seals and a walrus.  The limited surveillance of wildlife has provided inadequate confirmation of the extent of infection and the range of species involved.
• There is adequate anecdotal evidence to suggest that the disease can be transmitted over relatively short distances by the aerogenous route, thereby reducing the ability of commercial poultry producers to prevent infection through conventional biosecurity procedures.

It is an axiom that Highly Pathogenic Avian Influenza is the Newcastle disease of the 2020s.  During the 1960s and 1970s, velogenic viscerotropic Newcastle disease (vvND) was a catastrophic infection limiting production in intensive poultry industries in the E.U., Asia and Africa.  This commentator observed the futile attempts of the Department of Agriculture to stamp-out what was evidently an endemic disease in the Republic of South Africa.  When the Government ran out of money, resources and patience, and allowed vaccination, the industry responded by effectively suppressing the infection and restoring both production and profitability.

From comments provided by Julian Madeley, CEO of International Egg Commission, it is obvious that E.U. nations have recognized that HPAI H5N1 is endemic and are moving forward with adoption of vaccination as a component of their control programs.  Stamping-out has proven to be ineffective, especially with free-range flocks as in France.  Cynically it can be stated that this nation has successfully eradicated HPAI but on a successive annual basis over a number of years.

Dr. David Swayne recently organized an international conference on the application of HPAI vaccine. He emphasized the advantages of vaccination as an additional “layer of protection”.  Establishing immunized populations in specific areas reduces the outbreak threshold for a given disease and reduces the financial impact when combined with traditional measures including depletion of affected flocks, quarantine and surveillance activities. Research conducted both at major universities and institutes worldwide and by the bio-pharmaceutics industry have provided a portfolio of vaccines that can be applied to specific types and ages of commercial poultry.

Dr. John Clifford, Veterinary Trade Policy Advisor to the USAPEEC and formerly Chief Veterinary Officer for the USDA, noted the difficulties associated with preventing infection applying current biosecurity practices.  He highlighted the administrative restraints to vaccination that are based on the false premise that HPAI H5N1 is exotic and therefore can be eradicated. It is obvious that USDA-APHIS is using a playbook based on the1984 Pennsylvania epornitic that was self-limiting.  In the absence of epidemiologic investigations that have been urged by state poultry associations and promoted by EGG-NEWS, APHIS continues to expend funds provided by their presumably bottomless piggybank, the Commodity Credit Corporation.

The contention expressed by a Senior Staff Veterinarian In The Poultry Health Strategy and Policy component of USDA-APHIS  that the cost of a surveillance program would be as expensive as the cost of depopulation is fallacious and intended to support business-as-usual. Not only have the private and the public sector experienced losses as a result of HPAI, consumers have had to pay considerably more for eggs and turkey meat. If as is inevitable, infection moves into the broiler segment, HPAI will represent an even greater liability to the economy.

The concerns expressed by the broiler industry regarding trade have current validity.   It would be possible, as Dr. Clifford noted, for changes to be effected in current U.S. policy to allow for limited and controlled vaccination.  Nations importing leg quarters from the U. S. have in large measure endemic HPAI in their own industries or subsistence flocks.  There is no specific ban on trade if a nation vaccinates according to World Organization for Animal Health regulations, providing that surveillance is maintained.  It would be possible for states to certify that a specific complexe or flocks are free of HPAI by applying PCR prior to export of a consignment.  The obstacles to introducing vaccination as an adjunct to limited depopulation are more institutional than scientific.  Administrators of the USDA-APHIS have pursued a policy of  “stamping out” a supposedly exotic disease without accepting the reality that HPAI is a panornitic infection and is de facto endemic in the U.S. After 50 million plus birds depopulated  over a year without achieving eradication, it is difficult for any government agency to admit that they were wrong and accept a change in the approach to control.

Once the attitudinal block is resolved, programs to introduce vaccination on the basis of priorities can proceed.  Breeder flocks and long-lived birds including egg-producing hens should be vaccinated.  Flocks raised in areas of high population density especially with a history of HPAI could then be considered for protection.  Some areas of the nation would remain susceptible based on a low probability of exposure.   At the end of the day, scientific fact and sound principles of epidemiology should prevail.  Effective vaccination will clearly reduce transmission between farms located in close proximity and will reduce replication of the virus both of which are, in fact, the justification for depopulation.

An unspoken component of the current debate over control of HPAI relates to the emergence of a strain of pandemic significance to human populations.  The fact that H5N1 appears to have adapted to mammals should serve as a warning.  Given enough susceptible birds or free-living mammals or for that matter, farmed mink in close association, over time, it is highly likely that a mutation may occur that not only results in infection of human contacts but may evolve to allow human-to-human transmission.  The quicker that HPAI can be suppressed, but not necessarily eradicated in the short term, the greater will be the benefits to the poultry industries of the world and humanity. Vaccination against HPAI must be adopted as a valid consideration in control programs otherwise we will stumble on destroying flocks at great expense with consequential losses to producers and consumers.

USDA Weekly Egg Price and Inventory Report, February 2^nd 2023.

Market Overview

• The average wholesale unit revenue values for Midwest Extra-large and Large sizes were lower this week by 7.3 percent on average, continuing the downward move for the fifth consecutive week. Mediums were down 2.0 percent indicating an imbalance between supply and demand in this size with many pullets commencing production. This past week shell egg inventory was up 0.6 percent despite lower prices. Both retail price and demand will continue to erode as in previous years and as flock numbers are restored prices will moderate. For early 2023 retail purchases will be supported by consumer perceptions of value in an inflationary environment with concern over the high cost for other protein foods. Availability and hence prices are influenced by depletion of close to 44 million hens in 22 large complexes in eleven states extending from the last week in February through mid-December 2022 with the producing flock down on average by 20 million hens compared with pre-HPAI.
• Total industry inventory was down 1.5 percent overall this past week to 1.59 million cases with a concurrent 9.6 percent decrease in breaking stock attributed to higher food service and industrial demand. Wholesale unit prices during 2022 into 2023 contrasted favorably with 2020 and 2021 characterized by low ex-plant unit revenue.
• It is now apparent that the inventory held by chains and other significant distributors may be more important over the short term to establishing wholesale price than the USDA regional inventory figures published weekly.
• Due to the depletion of flocks as a result of HPAI, comparable high unit revenue will now be a reality into the first quarter of 2023. Sporadic outbreaks of HPAI are likely given the southward migration of waterfowl. The number and extent of outbreaks cannot be assessed until more information is available concerning the molecular and field epidemiology relating to cases. The USDA has yet to identify modes of transmission including airborne spread and possible deficiencies in biosecurity on affected complexes that presumably demonstrated specific risk factors. APHIS has been negligent in evaluating available data and providing timely practical guidance on prevention.
• The current relationship between producers and chain buyers based on a single price discovery system constitutes an impediment to a free market. The benchmark price amplifies both downward and upward swings as evidenced over the past three months. The benchmark functions to the detriment of the industry over the long term. 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 a net 0.4 million or 0.1 percent to 301.7 million hens during the week ending February 1^st. The flock in production includes about 3.0 million molted hens that resumed lay during the past week plus 4.0 million pullets attaining production.
• The ex-farm price for breaking stock was down 2.6 percent this past week to 222 cents per dozen. Checks delivered to Midwest plants were down 5.9 percent to 209 cents per dozen. Prices for breaking stock will remain high over the period of recovery from HPAI as replacement flocks mature but the price levels will be more extreme than during the 2015-2016 epornitic.

The Week in Review

Prices

According to the USDA Egg Market News Reports released on January 30^th the Midwest wholesale price (rounded to one cent) for Extra-large was down 7.3 percent to $3.06 per dozen. Large size was down 7.3 percent to $3.04 per dozen; the Medium price was down 2.0 percent to $2.44 per dozen as delivered to DCs. Prices should be compared to the USDA benchmark average 6-Region blended nest-run cost of 80.1 cents per dozen in December 2022, excluding provisions for packing, packaging materials and transport, amounting to 50 cents per dozen in mid-2022 according to the EIC. The progression of prices during 2022 to date is depicted in the USDA chart reflecting three years of data, updated weekly.

USDA Data On Cage-Free Production For January 2023

EGG-NEWS summarizes and comments on data and trends in the monthly USDA Cage-Free Report, correlating and interpreting the data posted weekly on the EGG-NEWS Egg Weekly Price and Inventory Report.

The USDA Cage-Free Report for January 2023, released on February 1^st 2023 documented a 2.8 percent reduction in the complement of hens producing under the Certified Organic Program at 17.5 million (rounded to 0.1 million). The number of hens classified as cage-free (but excluding Certified Organic) and including aviary, barn and other systems of housing was inexplicably up 6.3 percent from December 2022 at 93.6 million. A one month increase of 5.6 million hens is considered unrealistic given that the average number as reported by USDA over the past nine months was 87.9 million with 88 million in December 2022. Comparable values for hens over successive months are questioned given the continuing cycle of placing pullets, expansion of facilities and depletion of old hens, with some depopulation due to HPAI but with limited application of molting. The respective numbers of hens claimed for organic and cage-free flocks should reflected the realities of supply and demand in the market over successive quarters.

Average weekly egg production for Certified Organic in January 2023 was down by 3.9 percent compared to December 2022 with an average of 82.9 percent on a hen-week basis. Average weekly flock production for cage free flocks other than Certified Organic was up in January 2023 by 5.4 percent over December 2022 with an average of 81.8 percent on a hen-week basis Seasonally, younger flocks increase the availability of cage-free and organic eggs in response to pullet chick placements laid down in anticipation of pre-Easter and pre-Christmas demand. Average flock production in January 2023 should not have included HPAI depopulation, but reflected a number of older flocks some of which were previously molted together with the relatively higher production from pullet chicks placed during August 2022.

*Includes only MW and NW. Only 37 stores.

Negotiated nest-run cage-free price for January 2023 averaged $4.97 per dozen down by 9.8 percent from $5.51 per dozen in December reflecting lower demand. January 2023 advertised  U.S. retail prices for cage-free eggs were down 25.4 percent from December to an average of $2.67 per dozen based on only two regions. In reality a proportion of both cage free and organic production is downgraded and sold as commodity brown and white eggs.

The disparity between actual wholesale and retail prices indicates that chains are maximizing margins especially on Certified Organic and pastured categories. This strategy restricts volume of sales and is to the disadvantage of producers.

Based on the importance of cage-free production, the USDA-AMS issues the report on volumes and prices at monthly intervals for the information of Industry stakeholders. There is obvious doubt as to the accuracy of individual monthly flock numbers especially when reports show a marked change for the last month in a quarter or no change in the cage-free flock for sequential months. It is suggested that USDA should consider a quarterly report with more accurate and consistent hen data. This would be more useful to the industry for planning and marketing decisions.

Subscribers are referred to weekly USDA wholesale and retail prices posted in the EGG-NEWS Egg Price and Inventory Report E-mailed each Friday. The previous Monthly Cage-Free Report is available under the STATISTICS Tab.

Weekly Commodity and Energy Report: February 2^nd 2023.

OVERVIEW

At 14H00 on February 2^nd CME corn was down 1.2 percent to 674 cents per bushel and soybeans increased 0.7 percent in price to 1,534 cents per bushel for March delivery compared to the previous week. Corn price was influenced by higher ethanol production and export demand. Soybean meal was 2.5 percent higher to $491 per ton for March delivery. The market has now discounted projections of crop size and lower ending stocks as documented in the January 12^th WASDE #632. Commodity prices were influenced by a more moderate and stable Dollar Index of 102, possibly stimulating U.S. exports. Higher orders and shipments of corn to China and other importers were recorded by USDA-FAS during the past week following the holiday period.

Factors influencing commodity prices in either direction over the past four weeks included:-

• Fears of a U.S. recession in 2023 have moderated. The Federal Reserve increased the benchmark interest rate by 25 basis points on February 1^st but in the post-release commentary, Fed. Chairman, Jerome Powell suggested continued moderate increases for successive future rate settings by the FOMC to suppress inflation that he conceded was moderating. Equity markets have fluctuated during the past four weeks with inter-day closing prices up on sequential trading days this past week. On January 19^th seasonally adjusted jobless claims for December 2022 were down 15,000 to 190,000 with 3.5 percent unemployment. The GDP for the fourth quarter of 2022 attained 2.9 percent. (Transitory downward pressure on markets)
• Continuation in Federal funding was assured through passage of an 11^th-hour $1.7 trillion omnibus spending bill passed on December 22^nd. and enacted on December 29^th. It is evident that polarization in Congress will result in future conflict over funding SNAP, raising the debt ceiling and agricultural legislation including the Farm Bill. (Ultimately, downward pressure).
• A reduction in the December seasonally adjusted urban CPI to 0.1 percent unchanged from November compared to 0.8 percent in September and 0.4 percent in October indicate that inflation has plateaued. (Downward pressure)
• Geopolitical tensions that impact wheat, corn, oilseeds and vegetable oil exports from Ukraine persist. Limited restoration of Black Sea shipping was accomplished following security guarantees by Ukraine to the Russian Federation but volume is deliberately restrained. Russia has inflicted extensive and deliberate damage on the agricultural and energy infrastructure of Ukraine including elevators and crushing plants. (Upward pressure on corn and wheat and an indirect effect on soybeans if Black Sea shipping is interrupted.)
• There is an expectation of high soybean and corn harvests from Brazil for the 2022-2023 season although recent dry weather may have reduced yields. (Lower prices in the future subject to favorable reports on crop progress and actual harvests)
• The Dollar Index (DXY) has ranged from 95 to 116 over 52 weeks and has recently shown less volatility. The DXY was at 101 on June 2^nd peaking at 116 in late October but declining to 102 for the past four weeks. The dollar index influences timing and volume of export orders. (Fluctuation in corn and soybean prices, high value depresses U.S. sales)

EXPORTS

The restored and functional ‘legacy’ FAS Export Report released on February 2^nd for the week ending January 26^th reflecting market year 2022-2023, confirmed that outstanding export orders for corn amounted to 13.02 million metric tons (512.5 million bushels) with 12.6 million metric tons (496.0 million bushels) actually shipped. Net orders for the past week covering the 2022-2023 market year attained 1.59 million metric tons (62.7 million bushels) with 0.60 million metric tons (23.5 million bushels) shipped over the past working week. For the current market year outstanding sales of corn to date are 35.5 percent lower than for the corresponding week a year ago. For market year 2023-2024 outstanding sales this week amounted to 1.43 million metric tons (56.2 million bushels), with 0.16 million metric tons (6.4 million bushels) ordered for the 2023-2024-market year.

(Conversion 39.36 bushels per metric ton)

The FAS Export Report for the week ending January 26^th reflecting market year 2022-2023, recorded outstanding export orders for soybeans amounting to 11.7 million metric tons (429.2 million bushels) with 35.6 million metric tons (1,307.5 million bushels) actually shipped. Net weekly soybean orders attained 0.74 million metric tons (27.0 million bushels) with 1.96 million metric tons (71.9 million bushels) shipped for the past week. For the current market year to date outstanding sales of soybeans are 1.9 percent lower than for the corresponding week a year ago. Sales recorded for market year 2023-2024 amounted to 0.72 million metric tons (26.4 million bushels) with sales of 0.19 million metric tons (7.1 million bushels) this past week. (Conversion 36.74 bushels per metric ton)

For the week ending January 26^th 2022 net orders of soybean meal and cake amounted to 165,400 metric tons for the market year 2022-2023. During the past week 288,300 metric tons of meal and cake combined was shipped, representing 7.4 percent of the total 3,885,400 metric tons shipped during the current marketing year. This quantity is 92.2 percent of the volume shipped during the corresponding weeks of the previous market year. For the next market year outstanding sales attained 52,500 million metric tons with 42,000 metric tons sold this past week.

Projected harvests and ending stocks were documented in the January 12^thWASDE #632, posted under the STATISTICS Tab. Corn yield attained 173.3 bushels per acre with a crop of 13,730 million bushels. Soybean yield was 49.5 bushels per acre with a crop of 4,216 million bushels. This report was based on actual harvest data and incorporated amended domestic use and export categories. The WASDE presumably considered the predicted impact on world prices following disruption of the 2022 Ukraine crop by the invasion from the Russian Federation.

Two producers at the 2023 International Production and Processing Expo were recognized as the “Best of the Best”.  This designation is awarded to either an innovative technology or service that could contribute to the advancement of the industry. 

• Datastor-DSL Systems was recognized for the Imperium4Feed software.
   
• Amlan International received an award for Phylox® a non-pharmaceutical plant based anticoccidial.

In 2004, H5N1 avian influenza virus was isolated from three kittens by Kasetsart University in Thailand.  The susceptibility of domestic cats was confirmed in 2006 following controlled exposure conducted at the Erasmus Medical Center in Rotterdam Holland. 

On January 27^th ProMED Mail reported on a case in a domestic cat located in Nouvelle-Aquitaine France.  An investigation by the Health and Food Safety Agency of France implicated infection from a duck farm. The report considered the possibility of cats serving as a means of disseminating HPAI among farms and to humans but also representing a danger of emergence of a mammalian-adapted strain that could infect other animals and humans.

Generally, it is inadvisable to have domestic animals including cats in and around poultry houses.  Their ability to suppress rodents is negligible and they represent a risk of pasteurellosis, salmonellosis and now HPAI.

Over the past two years, the Department of Energy has granted $500 million for biorefinery research and development through the Bioenergy

Technology Office.  On Friday January 27^th, the Department of Energy announced $118 million in funding for 17 projects ranging from $0.5 million to $80 million with an average grant of $2 million. Projects will investigate approaches to develop domestic supplies of bioenergy to reduce greenhouse gas emissions. 

The Department of Energy has a goal to achieve cost-competitive biofuel production by 2030. Awards were for proof of concept, pre-pilot, and demonstration projects including conversion of biomass to aviation fuel for military and civilian use.  Production of biofuel will be beneficial to the environment and if financially and technically feasible, advances should reduce diversion of food to fuel. To date the Department of Energy has received minimal returns in the form of commercial production of biofuels compared to the billions “invested”

ProMed Mail posted reports of outbreaks of HPAI strain H5N1 in Russia, confined to wild birds and backyard flocks. It is interesting that most E.U. nations report cases of HPAI in wild birds and both backyard flocks and commercial farms.  In contrast Russia does not seem to be affected by outbreaks on commercial farms. Is this attributed to failure to report to the WOAH; superlative biosecurity; exceptional luck or are they deploying an AI vaccine?

The major cluster of outbreaks this month occurred in Romania with three presumably egg-producing units near Codlea in the central part of the Nation infected with H5N1 strain HPAI. The farms concerned housed 42,000, 65,000 and 113,000 birds respectively all of which were depopulated.

A significant case in Germany comprised a flock of 65,000 commercial ducks in the state of Bavaria that were diagnosed and depleted on January 17th. 

In a commentary the website reported that the World Organization of Animal Health has documented the depletion of 10 million commercial birds over a five-week period covering December 2022 through early January 2023 with H5N1 as the principal serotype involved in outbreaks.

The 2023 PEAK event sponsored by the Midwest Poultry Federation will take place at the Minneapolis Convention Center from April 10^th through 13^th

The 2023 program will include:

Monday, April 10^th 08H00 to 17H00* CST- North Central Avian Diseases Conference

     Tuesday, April 11^th 08H00 to 12H30 – North Central Avian Diseases Conference

• 08H00 to 12H00  – Purina Animal Nutrition Symposium
• 09H00 to 17H00 - Organic Egg Farmers of America –
• 13H00 to 15H00 – Pre-Show Nutrition and Poultry Health Symposium concurrently

                               with the Multi-State Poultry Feeding and Nutrition Conference 

• 15H15 to 16H15 – Education-Broiler Track
• 15H15 to 16H15 - Education, Business Track
• 15H15 to 16H15 -Education-Feed Manufacturing and Technology
•  15H15 to 16H15 - Education-Turkey Track
•  17H00 to 21H30 – Peak Unhatched

      Wednesday, April 12^th,

• 09H00 to 10H00 – Education-Broiler Track

•  09H00 to 10H00 – Education-Business Track
•  09H00 to 10H00 – Education-Feed Manufacturing and Technology
•  09H00 to 10H00 – Education-Pullet/Egg Layer Track
•  09H00 to 10H00 - Education-Turkey Track
•  10H00 to 17H00 –  Exhibition Hall open
•   2023 PEAK Student Careers Program

      Thursday, April 13^th 8H30 to 09H30 – Education-Broiler Track

•  08H30 to 09H30 – Education Business Track 
•  08H30 to 09H30 – Education Pullet/Egg Layer Track
•  08H30 to 09H30 – Education Turkey Track
•  08H30 to 09H30 – Exhibit Hall Open
•  12H00 to 13H00 – CST Slice of Learning

* all times CST

Poultry TED talks will be presented on April 12^th and 13^th in the Exhibit Hall.

Items to be presented:

• The use of dynamic lighting systems to optimize cage-free systems
• Optimizing diet costs, growth performance and nutria sorption with bio-surfactants
• Nutritional needs of cage-free flocks
• Creating added value to chicken manure waste

Consumers in the U. K. are experiencing higher rates of inflation than in the U. S.  A fivefold increase in the cost of natural gas and inflation in agricultural inputs including fertilizer, diesel fuel and packaging are, in part, responsible for higher prices at the shelf. The price of food and non-alcoholic beverages increased in December by 16.9 percent over the corresponding month in 2021 and was the 17^th consecutive monthly rise in headline inflation.

In a recent BBC appearance, John Allan, Chairman of the Tesco supermarket chain, injudiciously agreeing with the interviewer who offered a loaded question. His answer supported the suggestion that “Food firms are jacking up prices and taking advantage of the poorest in society”  

The response by Allan elicited an immediate reaction from the National Farmers Union (NFU) equivalent to our Farm Bureau Federation, pointing to higher input costs of raw ingredients and power as reasons for higher prices to chains. The NFU maintain that “a climate of collaboration” would be more helpful than criticizing producers and suggesting that price increases were motivated by a profit incentive in an inflationary environment.

Recently, Tesco and other supermarket chains have made one-time ex gratia payments to producers of cage-free eggs to maintain supply in the face of high feed and fuel costs. For years, the supermarket chains have pressured producers to accept transfer prices that have not allowed for an acceptable return on investment in new facilities and housing and were insufficient to accumulate reserves to survive increases in production costs.

Four Cooper Farms employees were selected to participate in the 11^th Annual Young Leaders Under 30 program sponsored by USPOULTRY. Each program participant received a plaque recognizing their acceptance into the program as well as complimentary registration to IPPE.

Gary Cooper, CEO of Cooper Farms commented “This year marks our company’s 85th anniversary and supporting the development of our industry’s young leaders is key to ensuring our family’s business will continue to thrive for decades to come,” He added “Our four team members selected to participate in this prestigious program are worthy of the honor, and we’re pleased they were provided this unique opportunity to strengthen their leadership skills while expanding their knowledge of our growing industry.”

Those honored were Arlyn Cooper, Joelle Hemmelgarn, Nick Link and Nick Mansfield.

Cooper Farms raises turkeys, hogs and chicken egg layers. The company currently produces fully cooked and ready-to-cook turkey, ham and chicken products, as well as eggs.

In a release dated January 31^st McDonald’s Corporation, a bellwether for the QSR segment of the restaurant industry, reported results for the fourth quarter and FY 2022 ended December 31^st 2022. For the period, the Company earned $1,903 million on total revenue of $5,926 million with a diluted EPS of $2.59.  Comparable figures for the fourth quarter of fiscal 2021 were net income of $1,639 million on total revenue of $6,001 million with a diluted EPS of $2.18. Revenue declined by 1.4 percent but operating margin increased from 39.3 percent in the fourth quarter of 2021 to 43.6 percent for the most recent quarter. Gross margin for Company-operated stores in the fourth quarter fell from 17.3 percent in 2021 to 15.2 percent for the most recent quarter attributed to higher costs for labor, ingredients and packaging despite rises in menu items.

For FY 2022, the Company earned $6,177 million on total revenue of $23,183 million with a diluted EPS of $8.33.  Comparable figures for fiscal 2021 were net income of $7,545 million on total revenue of $23,223 million with a diluted EPS of $10.04. Results for 2022 include a $1,281 million charge resulting from the withdrawal from the Russian Federation; $271 million from the sale of Dynamic Yield and a $537 million tax settlement with the Republic of France.

In commenting on results, Chris Kempczinski, president and CEO stated, “Our Accelerating the Arches strategy is driving growth and building brand strength, delivering exceptional full-year performance in 2022 with over 10 percent comparable sales growth and 5 percent comparable guest count growth globally," He added, "While we expect short-term inflationary pressures to continue into 2023, we remain highly confident in Accelerating the Arches, which now includes a greater emphasis on restaurant openings."

For the fourth quarter of 2022, McDonald’s posted comparable sales growth in the U.S. of 10.3 percent compared to sales growth for the international operated markets segment of 16.5 percent and with global sales growth of 12.6 percent During the fourth quarter digital sales in the six top markets accounted for 35 percent of sales and attained $7 billion.

Projections for 2023 in the SEC 8K report included net restaurant expansion contributing 1.5 percent to system wide sales with an operating margin of 45 percent. On December 31st 2022 there were 40,375 McDonald’s locations with 2,106 Company-owned restaurants. During 2023 the Company will open 1,500 new restaurants with global sales increasing by 12.6 percent.

McDonald’s Corporation had a market capitalization of $199,600 million on January 31^st 2023.  Total assets on December 31^st 2022 amounted to $50,436 million of which 42.1 percent comprised lease right-of-use assets, goodwill and intangibles.  Long-term debt and lease obligation were $50,638 million. MCD has ranged over 52-weeks from $217.68 to $281.67 with a 50-day moving average of $270.04. MCD trades with a forward P/E ratio of 25.6.  The 12-month trailing operating margin was 43.7 percent and profit margin, 25.4 percent.  Prior to release MCD closed on January 30^th at $270.98 but opened lower post-release on Tuesday 31^st closing down 1.3 percent to $267.48.

A study commissioned by the American Egg Board conducted by Dr. Harry M. Kaiser, Professor of Economics at Cornell University, demonstrated a 10-fold return to the industry on checkoff funding. Benefits have successively increased from 8.1:1 in 2011 to 9.0:1 in 2017 and 10.1 for the most recent 5-year series.

According to the economic analyses, benefits included:

• Additional revenue of $914 million, annually.
• Indirect benefits including additional 12,000 jobs and employment income of $735 million.
• $1.2 billion added to the U. S. economy with an increase in U. S. gross domestic product of $3.5 billion.

The study included all six marketing and research activities conducted by the American Egg Board. Individual returns on AEB programs included Domestic promotion that yielded a 15.6:1 benefit; Foreign market development, 5.1; Channel marketing, 7.3; Nutritional education and research, 2.5.

Financial benefits for the industry accrued from a 5.4 percent increase in consumption of eggs by consumers and industry relative to the projected consumption in the absence of AEB marketing programs.

Additional information can be accessed on www.IncredibleEgg.org/ROI.

Following accusations by Senator Jack Reed (D-RI) that large egg producers were exploiting consumers following the emergence of highly pathogenic avian influenza (HPAI), Vital Farms commented on their pricing policy. Russell Diez-Canseco, CEO of the company confirmed that retail prices were raised from $5.99 to $6.99 for a dozen free-range specialty eggs.  He claimed that the increase was as a result of higher prices paid to contractors together with escalation in ingredient, packaging and fuel costs.

Senator Reed has accused major egg producers and distributors of price gouging in a letter addressed to Federal Trade Commission. A major egg producer pointed to the depopulation of 44 million hens as a result of that has reduced the U.S. producing flock by approximately constant 20 million hens over a 12-month period, equivalent to a six percent reduction in supply.

 Contributory factors to the rise in price for generic eggs include:-

• Reduced availability due to national flock six percent lower on an ongoing basis
• Strong demand based on perceived value against other protein foods.
• Disruption in supply chains,
• Distortion of prices by the prevailing benchmark price discovery system that amplifies swings in market price
• High retail margins imposed by chains in an inflationary environment
• Disinclination by chains to promote generic eggs other than as infrequent loss leaders.

At the end of the day, prices for eggs and other agricultural commodities are determined by supply and demand.  The cost of production is irrelevant to wholesale prices and should be discounted as a contributory factor in determining shelf prices to consumers.

The 16^th Annual International Feed Regulators meeting, organized by the International Feed Industry Federation and the Food and Agriculture Organization of the United Nations, recently was held at the 2023 IPPE.

The organizers of the meeting confirmed the importance of collaboration between the public and private sectors to support animal production and to promote sustainable agriculture and food systems.

Topics considered at the meeting included nutritional strategies to improve animal health and welfare, an update of the Codex Alimentarius relating to livestock feed.  A workshop on emerging feed sources and technologies was also incorporated into the program. 

Daniela Battaglia of the Food and Agriculture Organization, commented, “Feed operators could contribute to animal production and food sectors, enhancing sustainability and suppression of antimicrobial resistance. This would promote public, animal and environmental health.”

Reuud Tijssens, Chairman of the International Feed Industry Federation, noted, “This dialogue is an important example of the private sector collaborating with the FAO and regulators from around the world.  We believe that only by working together can we continue to ensure feed and food security and safety while meeting the global demands for food sustainability.”   

The Public Health Agency of Sweden has announced that more than 50 confirmed cases of Salmonella Enteritidis infection have been diagnosed.  There is an expectation that the number of patients will increase given the extent of distribution of eggs from the affected farm. Cases have been documented in 19 regions of the nation to date. Case reports extended from early December 2022 to mid-January 2023.

The outbreak was traced to the affected farm that yielded SE on environmental sampling.  Whole genome sequencing confirmed that isolates from the farm and patients were identical.  Implicated eggs have been recalled from supermarkets, groceries and restaurants all of which had a best-before date of January 28^th, 2023.

The implicated farm operated by CA Cedergren housed 165,000 hens all of which were depleted.  The source of the SE infection is currently unknown although an epidemiologic investigation is in progress.  Mandatory monitoring of commercial poultry flocks is a standard procedure in Sweden. The vaccination status of the flock was not disclosed.

A fire destroyed a high-rise house at the Bozrah Complex of Hillandale Farms in Connecticut on Saturday, January 28^th.  The cause of the fire is under investigation.  Fortunately, there were no injuries in confining the blaze, but a flock estimated at 100,000 hens was lost.

In a January 24^th announcement, the American Egg Board has established a partnership with HATCH, a nonprofit involved in distribution of eggs for hunger relief.  The announcement of the Memorandum of Understanding was made at the 2023 IPPE in Atlanta.

The association of HATCH for Hunger with AEB will facilitate refrigeration and distribution of eggs to food banks and pantries.

Emily Metz, CEO and President of AEB, stated, “Egg farmers have long been committed to ensuring that every American has access to the incredible protein.  That commitment includes donations of eggs from coast to coast that totaled 90 million last year.”  She added, “Our new partnership with HATCH will facilitate even greater donations in the coming years through enhanced packaging, transport and refrigeration.  We know that eggs are one of the most requested items at food banks but there are challenges in obtaining and storage”.

Danny Leckie, Executive Director of HATCH for Hunger, stated, “This new partnership with the American Egg Board elevates animal protein’s role in bringing food security to vulnerable communities across the country.”  He added, “Coming together we increase our ability to create generational change in local communities giving consumers the tools they need to better build lives starting with wholesome animal protein.”

The Dunnhumby Retailer Preference Index for 2022 is based on a survey of 10,000 grocery shoppers conducted in November 2022.  The survey evaluates price, promotion, rewards, speed of purchase, convenience, quality, digital satisfaction and operations.

H-E-B rose to the top position followed by Costco and then Amazon. This Company was displaced from the leader in the previous survey.  The top ten included Wegman’s as fourth followed by Sam’s Club, Market Basket, Amazon Fresh, Trader Joe’s, WinCo and BJ’s Wholesale.  The list was rounded out by Target, Aldi, ShopRite, Walmart Neighborhood Market and in 15^th position, Walmart.

The survey demonstrated that leaders in retail are growing at a faster rate than lower-ranked stores.  Club stores are gaining recognition based on rankings, indicating that consumers are seeking value and are prepared to forego glitz.  Fifty percent of consumers used online grocery shopping during the pandemic although the proportion declined subsequently. In a post-COVID environment, it is anticipated that this channel will continue to share demand with in-store shopping.

According to NHK News, the current HPAI outbreak in Japan is restricting supply and is reflected in higher prices for eggs on store shelves.  According to the Department of Agriculture, 70 cases of HPAI have been diagnosed in 25 prefectures and approximately 12 million hens have been depopulated through the fourth quarter of 2022. 

Dr. Linnea M. Tracy, Director of Technical Services for Eggland’s Best was selected as a participant in the Young Leaders Under 30 program organized by USPOULTRY for the 2023 IPPE.

Dr. Tracy earned a BS degree from Stanford University in biology followed by a Master of Public Health from the University of Minnesota and a Doctorate in Veterinary Medicine from the University of Pennsylvania.  She subsequently earned the Master of Avian Medicine from the University of Georgia and is a Diplomate of the American College of Poultry Veterinarians.

In her current position, she is responsible for developing and implementing audit programs for Eggland’s Best, LLC, providing technical service to franchisees and coordinating certifications for the brand.  Since joining Eggland’s Best, Dr. Tracy has participated in health management schools including the Shell Egg Academy and serves on a number of committees of U. S. professional associations involved in poultry health.

In a self-inflected wound, consumers in New Zealand are facing both high prices for eggs and a severe shortage.  In 2017 the Government, prompted by welfare organizations banned conventional cages with a projected date of transition to alternative housing on December 31, 2022.  The national flock at the time of the decision comprised 3.0 million hens.  Given a population of 5.1 million, New Zealand consumers represented a relatively low annual consumption of 175 eggs per capita.

Due to the cost of conversion and disinclination by many farmers to continue producing eggs, the national flock has fallen to 2.5 million hens.  This 16 percent reduction would be equivalent to 50 million hens in the U.S.  Currently 10 percent of the national flock is still in conventional cages, 33 percent in enriched colony modules, 24 percent in barns and 33 percent as free range.

Disruption of supply following well-intentioned lobbying to ban cages and a fragmented industry has resulted in the present situation of undersupply with resulting high prices. Given the pristine flock health status of New Zealand, importation of commercial shell eggs is not a consideration

It is evident that production will eventually increase in response to demand but producers will have to receive a fair price for their product to allow for both fixed and variable costs.  Inflation in the price of ingredients, fuel, power and packaging will require higher ex-plant prices and restraint on the part of supermarket chains in determining margins.  If consumption in New Zealand were to be raised by 70 eggs per capita to 240, the national flock would increase to 4.2 million hens.  It would appear practical for expansion to be achieved through enriched colony modules and barn housing, including housing for 300,000 hens still in conventional cages requiring an additional 2 million hen places.

The Iowa Legislature has vacillated over a range of proposed restrictions on food purchased by SNAP recipients.  Originally fresh meat, butter, sliced cheese and bagged salads were among the list of restricted products.  Following protests, the House Health and Human Services Subcommittee amended the proposal to remove many of the illogical and onerous restrictions.  The current proposal is that food purchased under the Supplemental Nutrition Assistance Program would match approved foods for the Women, Infants and Children Program (WIC).  There was general agreement that candy and soda should be excluded from SNAP eligibility in the interest of promoting healthy eating.

The intent of Iowa legislators is to place restrictions on SNAP and Medicaid benefits and also require Medicaid recipients to work 20 hours per week.

The proposals to restrict benefits are strongly opposed by advocacy organizations that have identified unintended consequences and obvious hardships to recipients with specific disabilities.  Proposals will be reviewed by the Iowa House Health and Human Services Committee and appropriate amendments are anticipated.

The issues raised in Iowa will be revisited in other states and ultimately in Congress in framing the Farm Bill. In some states with both chambers and the governorship controlled by one party modifications to rules can be decided upon with a minimum of debate. The situation in an almost evenly divided Congress will require diplomacy, concessions to political doctrine and time to achieve consensus.

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