Editorial


Southeast Amazon Rainforest Net Generator of Carbon Dioxide

A nine-year study conducted by the National Institute for Space Research in Brazil (equivalent to U.S. NOAA) reported that carbon dioxide concentrations in columns of air above the southeast quadrant of the Amazon rainforest is releasing more carbon dioxide then it accumulates.  Previously models have not detected the reversal from absorption and storage of carbon dioxide to release. More precise measurements using specially designed sampling vessels deployed in aircraft detected the change that is attributed to both burning and deforestation especially during the August to October quarter.

 

The southeastern Amazon rainforest is vulnerable to elevated ambient temperature and drought and is therefore more sensitive to burning.  The southeastern rainforest is approximately 28 percent deforested. During the months of August through September 2020 the region had 24 percent less precipitation and ambient temperatures increased on by 5F compared to historical records.

These alarming results have implications extending beyond Brazil. The integrity of the Amazon rainforest is an important to countering the release of carbon dioxide worldwide by absorbing this greenhouse gas. If burning and deforestation continue the Amazon will pass a tipping point and will no longer generate the microclimate that maintains precipitation required to support the number and diversity of trees that serve as the “World’s lung.” EGG-NEWS has previously commented on the need for international action to slow the degradation of the Amazon rainforest. Deforestation by both legal and clandestine logging and burning is carried out to clear areas for cattle grazing and then subsequently for soybean production. Multinational grain buyers and meat packers are initiating programs to discriminate against illegal production but it remains to be seen if there is a decline in the rate of depredation of this valuable resource for short-term financial and political gain. 

 

Gatti, L.V.et al Amazonia as a carbon source linked to deforestation and climate change Nature. 595;388-393 (2021)


 

Egg Industry News


Crop Progress

Status of 2021 Corn and Soybean Crops

 

The USDA Crop Progress Report released on July 26th documented corn and soybean crop conditions to July 25th compared to their 5-year averages. This past week 79 percent of corn was silking. For soybeans 76 percent of the crop was blooming and 42 percent was setting pods.

 

U.S. average surface moisture levels were generally lower during the past week over the corn-belt attaining an average of 22.3 percent of area classified in the two lowest categories of dryness. The severe drought in Western states and the Dakotas continues with extensive wildfires in the Northwest. Topsoil moisture in Iowa deteriorated this past week from 33 percent to 53 percent in the “Very Short” and “Short” categories. The topsoil moisture levels in significant corn/soy-producing states in the Midwest also deteriorated as noted by the increase for the two driest topsoil categories.

 

CHICK-NEWS and EGG-NEWS will report on the progress of the two major crops as monitored by the USDA through the end of the 2021 harvest in November.

 

Reference is made to the July 12th WASDE Report #614 and the Acreage Report retrievable under the STATS tab for projected 2021 acreage and yields. This data will be updated when WASDE #615 is released in mid-August with a firmer projection of yields and ending stocks.

 

  WEEK ENDING  

Crop

July 18th

July 25th

5-Year Average

Corn Planted (%)

Corn Emerged (%)

Corn Silking (%)

Corn Dough (%)

100

100

56

8

100

100

79

18

100

100

73

17

Soybeans Planted (%)

Soybeans Emerged (%)

Soybeans Blooming (%)

Soybeans setting pods

100

100

63

23

100

100

76

42

100

100

71

36

Crop Condition

V. Poor

 Poor

Fair

Good

Excellent

Corn 2021 (%)

Corn 2020 (%) 1

1. Late planting

3

2

7

5

26

21

50

55

14

17

Soybeans 2021 (%)

Soybeans 2020 (%)1

1. Late planting

3

1

9

5

30

22

47

57

11

15

Parameter

V. Short

Short

Adequate

Surplus

Topsoil moisture %: Past Week*

18

26

50

6

Past Year

11

26

57

6

Subsoil moisture %: Past Week

18

25

52

5

Past Year

10

25

60

5

 

The major corn and soybean-producing states have an average of 22% in the “Very Short” and “Short” categories (last week 10%) with a range of 9% for IN to 53% for IA.

  • Iowa 53% (was 33%)
  • Illinois 15% (was 8%)
  • Indiana 9% (was 4%)
  • Kansas 34% (was 25%)
  • Kentucky 25% (was 6%)
  • Michigan 13% (was 10%)
  • Missouri 10% (was 2%)
  • Ohio 20% (4%)
  • Pennsylvania 22% (was 12%)

 

Egg Week

USDA Weekly Egg Price and Inventory Report, July 28th 2021.

  • Shell inventory was up by 2.5 percent, following a decline of 2.9 percent last week reflecting decreased demand relative to supply despite restoration of economic activity. Wholesale prices for generics increased over the last three weeks of June into the July 4th weekend but have stabilizing for the past two weeks. Midwest prices for generics are still below breakeven given the combined costs of nest-run, grading, packaging and delivery. Chains spread their purchases and preempted anticipated price rises before the Memorial Day Weekend and did so again before the Independence Day holiday. Industry observers and participants expect buyers to respond only to retail demand in relation to inventories in their DCs and stores. Since the beginning of 2021 generic eggs have been consistently priced at a high level by many chains to maximize margin but this strategy has depressed the volume of sales to the disadvantage of the industry. Market data suggests that chains have manipulated shelf prices for generic white eggs during the past four weeks in response to holiday demand and are not featuring generic Large and Extra large.
  • Currently inventory comprises close to five days of production. Price movement over the past ten weeks defies conventional supply to demand relationships and indicates extraneous factors affecting price. Over five consecutive weeks wholesale prices for Large and Extra-large were essentially stable with minor fluctuation in inventory over three of these weeks and with moderate increases over the past three weeks. The commercial shell-egg price discovery system is obviously used by buyers to negotiate lower prices, serving as a self-fulfilling prophecy and a de facto instrument of potential indirect, but not necessarily intentional, collusion. 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 and functions to the detriment of the industry. A CME quotation based on Midwest Large, responding to demand relative to supply would be more equitable.
  • The U.S. flock in production was up 1.3 percent (3.9 million hens) from the week of July 21st to 310.6 million despite seasonal depletions, with about 3.0 million molted hens having resumed production during the past month. The Industry previously demonstrated beneficial restraint in flock placement but continued depletions and non-restocking of some complexes or houses is anticipated as margins continue to decline to historically low ranges for commodity eggs.
  • The USDA average Midwest benchmark price for generic Extra Large, Large and Medium sizes was unchanged from the past week to 95.5, 93.5 and 69.5 cents per dozen respectively. The 2nd Quarter prices reflected static demand, offset by a noteworthy increase in the U.S. flock in production. The trajectory of prices at the end of July suggests stable to lower prices moving into August and with sharply reduced margins going forward into summer as feed, labor and fuel costs rise and unit revenue erodes.
  • There is some prospect of a return in the food service sector although both frozen and dried-egg prices are static. The economy is reopening despite a rise in COVID incidence rates and hospitalizations in many regions. There is waning optimism over the rate of deployment and acceptance of the three approved vaccines especially in rural areas and inner city zones. Reopening of the economy in areas with low population immunity will result in a surge in incidence rates of COVID especially following the introduction and dissemination of the Delta variant of SARS-CoV-2 virus that is more infectious and pathogenic than the Alpha strain among the non-immunized proportion of the population.
  • The Midwest price for breaking stock was unchanged to an average of 48.0 cents per dozen. Checks in the Midwest remained at 40.0 cents per dozen. It is anticipated that these prices will fluctuate in response to market trends and recovery of the breaking sector.

 

OVERVIEW

Prices

According to the USDA Egg Market News Reports released on July 26th, the Midwest wholesale prices for Extra-large, Large and Medium sizes were unchanged from the previous week as delivered to DCs, attaining 95.5, 93.5 and 69.5 cents per dozen respectively. Prices should be compared with the USDA benchmark average 6-Region blended nest-run, (excluding provisions for packing, packaging materials and transport) cost of 73.1 cents per dozen in June 2021 but probably now up a further 2 cents per dozen on feed cost. The progression of prices during 2021 to date is depicted in the USDA chart reflecting three years of data, updated weekly.

 

The July 26th 2021 edition of the USDA Egg Market News Report (Vol. 68: No. 30) documented a USDA Combined Region value rounded to the nearest cent, of $1.02 per dozen delivered to warehouses for the week ending July 19th 2021. This average price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $0.94 per dozen. At the high end of the range, price in the South Central Region attained $1.08 per dozen. The USDA Combined Price last week was equivalent to the 3-year average. This past week Midwest Large was approximately 22 cents above the corresponding week in 2020.

 

Flock Size

According to the USDA the number of producing hens reflecting July 28th (rounded to 0.1 million) was 3.9 million higher to 310.6 million contributing to a net decline of 7.7 million hens over thirteen weeks. If USDA data is accurate, the producing flock contains molted hens now coming back into production with approximately 4.5 million new pullets reaching maturity during the week, offset by moderate flock depletion. The hen population producing eggs is in excess relative to seasonal consumer demand. Exports are moderate to high but industrial and food service off-take has not been restored to pre-COVID levels. Any number of hens above a subjectively determined range of 303 to 308 million in production in late-July, portends lower than average prices and increased inventory, as is taking place, unless matched by proportional increases in demand. Prices are generally following seasonal trends with declines now expected from the 20 percent higher values during the weeks preceding and then after the Independence Day weekend.


 

COMMODITY REPORT

WEEKLY COMMODITY REPORT: July 29th 2021.

  • Commodity prices fluctuated this past week but corn and soybean meal ended lower continuing the trend of the previous week. Factors influencing prices in both directions included:- relief of drought in many counties in the corn belt; the July 12th WASDE. USDA Grain Stocks and Planted Acreage reports; Drought in Brazil, reduced shipments from Argentine; China tightening fiscal policy and government attempts to stabilize prices of pork and corn. Projected harvests and ending stocks in the U.S. were updated in the July 12th WASDE especially since there was greater clarity on acreage and the effects of weather and trade on ending stocks. Annual field assessment of crop condition is underway.
  • S producers are now receiving and conversely livestock producers in the Midwest will pay above $5.60 per bushel for corn and crushers will pay $13.80 per bushel for soybeans plus transport and basis in September. Corn was down 1.9 percent this week for September delivery and the price of soybeans was 0.5 percent higher compared to the previous quotation on July 21st for September delivery. Soybean meal was down 2.5 percent for September delivery compared to last week.
  • The FAS Export Report released on July 29th for the week ending July 22nd 2021, reflecting market year 2020-2021 confirmed export orders for corn for the present market year amounted to 7.5 million metric tons (296 million bushels) with 62 million metric tons (2,447 million bushels) actually shipped. During the past week orders for the 2020-2021 market year amounting to 0.12 million metric tons (4.7 million bushels) were cancelled. A total of 1.4 million tons (55.1 million bushels) of corn was shipped. For the succeeding 2021-2022 market year commencing in September, 0.53 million metric tons (21 million bushels) was ordered this past week with outstanding sales amounting to 16.7 million metric tons (658 million bushels) of new crop corn.
  • According to the USDA FAS Export Report released July 29th for the week ending July 22nd 2021, reflecting market year 2020-2021, outstanding export orders for soybeans amounted to 2.8 million metric tons (103 million bushels) with 59.1 million metric tons (2,169 million bushels) actually shipped. Weekly cancellation of soybean orders attained 0.08 million metric tons (2.9 million bushels) with 0.24 million metric tons (8.8 million bushels) shipped. For the 2021-2022 market year outstanding sales for soybeans amount to 10.2 million metric tons (374 million bushels) with 0.07 million metric tons (2.6 million bushels) sold this past week
  • During the past week 87,300 metric tons of soybean meal and cake were ordered, up 27.8 percent from the previous week. The quantity shipped amounted to 244,000 metric tons, 40 percent more than the quantity exported during the previous week. For the 2021/2022 market year 73,100 metric tons were sold and outstanding sales amounted to 1,130,000 metric tons.

 

The following quotations for delivery in the months as indicated were posted by the CME at 14H00 on July 29th 2021 compared with values posted at 14H00 on July 22nd 2021 (in parentheses) reflecting specified months for delivery.

 

COMMODITY

Corn (cents per bushel)

Sept. 557 (568)

Dec. 556 (565)

Soybeans (cents per bushel)

Sept. 1,385 (1,378)

Nov. 1,378 (1,370)

Soybean meal ($ per ton)

Sept. 357 (366)

Dec. 359 (369)

 

Changes in the price of corn, soybeans and soybean meal over five trading days this past week were:-

COMMODITY CHANGE FROM PAST WEEK FOR MONTH OF DELIVERY AS INDICATED

 

Corn: Sept. quotation down 11 cents per bushel (-1.9 percent)

Soybeans: Sept. quotation up 7 cents per bushel (+0.5 percent )

Soybean Meal: Sept. quotation down $9 per ton (-2.5 percent )

 

  • For each 10 cent 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 pound live weight

 

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

The cost of egg production would change by 0.44 cent per dozen

The cost of broiler production would change by 0.25 cent per pound live weight

The changes in the prices of corn and soybean meal from July 22nd compared with July 29th quotations for September delivery would decrease nest-run production cost for eggs by 0.9 cents per dozen and for broilers 0.5 cents per live pound extending the reduction from the previous week .

Year-to-date, escalation in the prices of major ingredients has added 6.8 cents per dozen eggs and 4.1 cents per live-weight lb. to broiler production cost

 

The USDA weekly wholesale feedstuffs prices expressed per short ton posted on July 28th (with previous week in parentheses) were:-

  • Corn: $204 ($213), Chicago
  • Soybean Meal: $364 ($372), Central Illinois
  • Meat and Bone Meal: $405 ($415), Central Midwest
  • DDGS: $180 ($162), Eastern corn belt

 

According to the July 12th WASDE, corn harvested in calendar 2021 will attain 15,165 million bushels with ending stocks projected at 1,432 million bushels, up 5.5 percent from the 1,357 million bushels in the June 2021 WASDE Report. Values will be updated reflecting production, ongoing export volumes and domestic use in the August WASDE report. Total corn stocks as at June 1st amounted to 4.11 billion bushels down 18 percent from June 1st 2020. Compared with the July 22nd value, the CME quotation for corn at 14H00 on July 29th for September delivery was down 11cents per bushel to 557 cents.

 

The restrictions imposed in the U.S. as a result of COVID-19, that are now being lifted, reduced ethanol demand by 1.5 billion gallons or 10 percent of projected 2020-2021 requirement accepting a nominal ten percent addition to gasoline. This past week 81.1 percent of the U.S. ethanol fermentation capacity was operational, based on January U.S. Energy Information Administration (U.S. EIA) capacity data. The outlook for increased production will depend on higher domestic demand in addition to approximately ten percent of production exported. The industry received an adverse ruling from SCOTUS in late June invalidating year-round sales of E-15 approved previously by the EPA. According to the U.S. EIA, for the week ending July 23rd the industry produced on average 1,014,000 barrels per day down 1.4 percent below the week ending July 16th 2021. On July 23rd ethanol stock was 0.9 percent above the previous week at 22.7 million barrels, representing an approximate 20-day reserve.

 

Ethanol was priced at $2.48 per gallon on July 29th unchanged from the previous seven weeks compared with a five-year low of $0.92 per gallon on March 26th 2020 during COVID restrictions. Concurrently RBOB gasoline at $2.32 per gallon (quoted, New York Harbor) was up 11 cents per gallon (4.9 percent) from the previous week, consistent with an increase of $2.16 in WTI crude price to $72.46 per barrel. Gasoline is 16 cents per gallon lower than ethanol but with a 63 percent higher BTU rating.

 

With most plants among the 201 that were operational on January 1st 2021 and now functioning, DDGS is freely available but commanded a higher price than in the first quarter of 2021. Eastern Corn-belt DDGS was priced at $180 per ton on July 28th 2021, $21 per ton higher than the previous week and $42 per ton more expensive than on July 22nd 2020. Generally DDGS is incorporated at low inclusion levels in egg-production formulas based on high price relative to the nutrient contribution of corn and other ingredients. This will change as corn and hence DDGS fluctuates in price.

 

Soybeans continue to be the beneficiary of export demand by China and other nations in addition to domestic livestock production. The CME price for September delivery at 14H00 on July 29th increased 7 cents per bushel to 1,385 cents per bushel compared to $1,378 on July 22nd for September delivery. The USDA documented a 2021 crop of 4,405 million bushels unchanged for 2021. Ending stocks according to the July 12th 2021 WASDE projection will be 155 million bushels, unchanged from the June Report. This quantity is however close to a seven-year low and possibly represents an over-estimate. Total soybean stock as at June 1st amounted to 767 million bushels down 44 percent from June 1st 2020 indicating the effect of exports.

 

According to a release on July 15th by the National Oilseed Processors Association, 152 million bushels of soybeans were crushed in June compared to a pre-release estimate of 159 million bushels. The June crush value was 7.3 percent lower than in May partly due to disruption caused by maintenance and a disinclination to purchase high-priced soybeans. On July 25th 2021 soybean meal quoted central Illinois attained $364 per ton, $8 per ton lower than the previous week and compared to $286 per ton on July 22nd 2020.

 

On July 25th 2021 Meat and Bone meal quoted Central U.S. was $405 per ton, down $10 from the previous week and compared to $203 per ton on July 22nd 2020 beyond the surplus caused by COVID-related disruption of packing operations.

 

On July 29th the conversion of CNY 1 to the BRL was 0.78 BRL, up CNY 0.03 from the previous week. The conversion of US$1 to the CNY was set at CNY 6.46 down CNY 0.21 from the previous week.

 

For consecutive calendar years 2017 through 2019 the U.S. supplied 34.4 percent of soybean requirements for China amounting to 95.5 million metric tons. This was followed by a decline to 16.9 percent of 88.5 million metric tons in 2018 and 16.6 percent of 88.0 million metric tons in 2019. The USDA anticipates that soybean imports by China will amount to 95 million metric tons during the 2020-2021 market year.

 

For the 2019/2020 market year China imported 2.1 million metric tons of corn from the U.S., 4.8 percent of total exports of 43.3 million tons, but 12 percent less than in the 2018/2019 market year. The U.S. Grains Council documented sales of U.S. corn to China through December 31st 2020 during the 2020/2021 year amounting to 11.7 million metric tons (460 million bushels) with 65 percent yet to be shipped.

 

For the 2019/2020 market year China imported 16.3 million metric tons of soybeans from the U.S., 36.2 percent of total exports of 44.9 million metric tons, but 3.9 percent less than in the 2018/2019 market year.

 

COMMENTS

Subscribers are referred to the July 12th 2021 WASDE #614 and the Crop Progress, Grain Stocks and Planned Acreage reports under the STATISTICS Tab.


 

McDonald’s Corp. Reports on Q2

In a press release dated July 27th McDonald’s Corp. (MCD) announced results for the 2nd Quarter of FY 2021 ending June 30th.

 

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


Chris Kempczinski
CEO McDonald's Corp

Quarter Ending June 30th

2021

2020

Difference (%)

Revenue: (42% Company Restaurants)

$5,887,900

$3,761,500

+56.5

Gross profit Company Restaurants:

$467,700

$145,300

+221.9

Operating income:

$2,691,100

$961,100

+180.0

Pre-tax Income

Net Income

$2,376,000

$2,219,300

$648,700

$483,800

+266.3

+358.7

Diluted earnings per share:

$2.95

$0.65

+358.8

Gross Margin Company Restaurants (%)

18.8

9.1

+106.6

Operating Margin (%)

45.7

25.5

+79.2

Profit Margin (%)

37.6

12.9

+191.4

Long-term Debt and leases:

$49,572,200

$47,510,800

+4.7

12 Months Trailing:

 

 

 

Return on Assets (%)

9.2

 

 

Return on Equity (%)

N/A

 

 

Operating Margin (%)

38.1

 

 

Profit Margin (%)

26.3

 

 

Total Assets

$52,626,800

$47,510,800

+10.8

Market Capitalization

$182,540,000

 

 

 

52-Week Range in Share Price: $ 191.64 to $ 247.05: 50-day Moving average $235.12

Market Close 27th July $246.62 Open, post-release 29th July $240.25. Close $244.57

Forward P/E 28.6 Beta 0.6

Global comparative same-store sales +40.5 percent. 2-year +6.9 Percent.

U.S. comparative same-store sales +25.9 percent. 2-year +14.9 Percent

As at December 31st MCD had 39,198 Restaurants worldwide; 13,682 in the U.S.


 

Costco Wholesale Corp. Retaining Special Hours for Seniors

Costco has reversed a previous decision and will continue operating special hours for seniors and those with predisposing health conditions for COVID to shop at warehouses from 09h00 to 10h00 on Tuesday and Thursday. These hours will be available to those sixty and older and will include customers with disabilities or who are immunocompromised. 

 


Original Senior Shopping Hours

 

The recent announcement reverses the previous announcement that Costco would cease offering special hours.  The decision was prompted by the upsurge in incidence of COVID attributed to prevalence of the delta variant that is now responsible for 80 percent of infections and is present in all states. 

 

Costco operates 809 warehouses worldwide and increased sales in 2020 through online ordering and home delivery.


 

Ethylene Oxide Contamination of Food Ingredients Results in E.U. Recalls

Ethylene oxide is widely used as a fumigant to destroy insect pests in agricultural commodities.  Recently, the E.U. conducted assays and determined that 87 out of 650 analyses of sesame seeds, spices, and dried vegetables, predominately supplied by India yielded violative levels of ethylene oxide.  Currently the E.U. has a zero tolerance for the compound with a detection limit of approximately 0.02 milligrams per kilogram (20 ppb).  There are differences in approach to recall among nations in the E.U. and there is no general consensus over permitted levels or the threshold of detection for the fumigant.

 

Notwithstanding the fact that there is no evidence of harm associated with levels of 20 ppb, food activists groups including Food Watch and politicians affiliated to Green parties are requesting that the precautionary principle should be applied to ethylene oxide residues.  This would result in India and some other nations losing their markets in the E.U. since ethylene oxide fumigation is considered necessary to eliminate extensive insect infestation.


 

RFS Still in Limbo

The Renewable Fuels Standard for 2021 is more than six months late ostensibly due to COVID.  In reality, political considerations have delayed a decision as to the quantities of ethanol and vegetable oil to be added to gasoline and biodiesel respectively.  The Administration is receiving considerable pressure from legislators and lobbyists respectively representing the agricultural sector and petroleum refiners.  According to recent statements by Ron Klain, Chief of Staff at the White House, the President will now become involved in discussions given the intensity of pressure for a resolution. Even a compromise will not satisfy both parties hence the delay.


Proposed RFS. Cellulosic and advaced biofuels are myths

 

Kenneth McGrath Appointed Deputy Chairman of Lidl

Kenneth McGrath who was the first leader of Lidl in the U.S. will return to the company to fill the position of Deputy Chairman effective October 1st.  McGrath will assume the role held by Gerd Chrzanowski who in turn replaced Klaus Gehrig who left the company last month.  McGrath will oversee 11,000 Lidl stores in 32 nations.  Until he takes up his new position, McGrath will ensure a smooth transition of responsibilities as President of Save-A-Lot to his successor.  Under his management, Save-A-Lot repackaged private brands, cut prices and operated according to the policies of a German hard discounter.

 

Lidl is noted for turnover of senior management under the leadership of owner Dieter Schwarz.


 

Shoppers Returning to Brick and Mortar After Covid

According to data gathered by the Feedback Group, more shoppers intend purchasing items from brick-and-mortar stores than using alternative channels.  Thirty-four percent of Walmart shoppers will use stores compared to 11 percent that will reduce visits to stores.  For Costco the ratio is 33 percent more to 16 percent less and for conventional grocery stores, 28 percent more to 11 percent less. 

 

Rural residents and the elderly are more inclined to in-store shopping.  In contrast, urban residents will shop more on-line along with Millennials.  Whole Foods and Amazon Fresh will experience the highest expected on-line grocery shopping support followed by Walmart.com and Target. Rural consumers will favor Walmart and Aldi.


 

Mexico Monitors Temperature of Imported Shell Eggs

According to the July 26th edition of MondayLine, the Federal Commission for the Protection Against Sanitary Risk is evaluating as many as nineteen formal complaints against defective refrigeration of imported table eggs.  Current regulations require eggs to be refrigerated from origin until point of sale. The Mexican Association of Poultry Producers is urging compliance and is using observers as an anti-competitive action. 

Mexico was the leading importer of table eggs for the first five months of 2021 receiving 25.3 million dozen valued at $20.5.  The volume of eggs imported by Mexico increased 42 percent over the corresponding five months in 2020.


 

Unilever Experiences Cost Inflation

Unilever, the food multinational posted a five percent rise in sales for the first half of 2021 to $30.3 billion.  Food and refreshment products rose eight percent to $12 billion.  Due to inflation and increased promotional expenses, operating margin fell to 18.8 percent.  The decline in margin was partly offset by increased prices and savings. 


Alan Jope CEO Unilever

 

Products that have undergone inflation include soybean oil that advanced by 20 percent in the last quarter and was up over 80 percent year-on -year.  Concurrently, palm oil and soybean oil rose in unison. 

 

COVID has impacted volume of sales and channels, through a shift from food service to home cooking.  CEO Alan Jope stated, "we continue to see strong growth for Unilever ahead and we do not see this trend reversing as we exit the pandemic.  Unilever uses cage-free eggs for Hellman's mayonnaise and for their ice cream portfolio.


 

Restaurants Posts Increased Sales in June

According to the National Restaurant Association, June revenue for food and beverages amounted to $70.6 billion, up 2.3 percent from May.  This compares to the pre-COVID February 2020 sales of $66.2 billion.  Sales during the period March through May 2020 amounted to $115.7 billion.  With partial recovery from COVID, the three months from March through May 2021 amounted to $310.5 billion a 168.4 percent increase.


 

BrightFarms Recalls Packaged Salad Greens

According to a FDA release on July 21st, BrightFarms is recalling packaged salad greens as a result of potential Salmonella contamination.  The product was processed at a plant in Rochelle, IL. and distributed in five Midwest states under a variety of brands sold in Mariano’s Fresh Markets and Walmart stores.


 

Possible Disruptions in School Feeding for Upcoming Fall Semester

COVID related impacts on the food distribution chain coupled with reintroduction of school feeding in the fall may result in shortages.  Distributors and managers of school cafeterias are planning for the new semester.  Hiring experienced workers will be a restraint including cooks and cafeteria workers who have left the workforce or obtained alternative employment. Suppliers are facing non-availability of delivery drivers. Food manufacturing and processing plants are experiencing difficulty in recruiting and training new workers. US Foods Holding Corp, Sodexo and J.M. Smucker Company are bracing for orders in the face of rising labor and transportation costs.

 

Possible adaptations to the situation include reducing menu items, stockpiling available non-perishable foods in anticipation of the fall semester and school systems combining to form purchasing cooperatives.
 


 

Philippines Approves GM Golden Rice

The Government of the Philippines has approved commercial production and distribution of ‘Golden Rice’ genetically modified to contain high levels of vitamin A.  It is estimated by the World Health Organization that vitamin A deficiency is the cause of up to 500,000 cases of childhood blindness worldwide.  Almost 20 percent of children under the age of five in the Philippines are deficient in vitamin A according to the International Rice Research Institute that developed the GM Golden Rice cultivar.  Substitution of Golden Rice for conventional varieties in the diets of children will provide 15 percent of estimated average daily requirement for vitamin A provided in the form of beta-carotene.

 

Golden Rice was available for a number of years after independent development in the EU and has been approved by international organizations and safety regulators in Australia, U.S. and Canada.  Opposition to GM technology has deprived needy children of vitamin A for over a decade due the intransigence of regulatory officials in nations such as India and Indonesia.


 

FAO and Republic of Korea to Cooperate on Antibiotic Resistance Project

The Food and Agriculture Organization of the United Nations (FAO) and the Ministry of Food and Drug Safety of the Republic of Korea have signed a framework arrangement to conduct investigations into foodborne antimicrobial resistance from livestock.

The Republic of Korea will provide $10 million to conduct investigations and to monitor Codex Alimentarius international food standards.  The first project will focus on food standards and zoonotic diseases with specific reference to antimicrobial resistance in Cambodia, Mongolia, Pakistan, Nepal, Bolivia, and Columbia.

 

The Deputy Director-General of the FAO, Beth Bechdol commented “The COVID-19 pandemic has shown us how important it is to boost international food safety standards to ensure our food keeps traveling safely across borders, safeguarding food and nutritional security.”

 

Jinseok Kim, Deputy Minister of the Ministry of Food and Drug Safety, stated “Without global collaboration we cannot overcome the difficulties due to the pandemic and I believe that is why we are here today to work together.”  He added, “It is our responsibility to support other countries and the most effective way to do this is through the FAO, the key player in food safety.”


 

Crafty Counter Produces Vegetable-Based Hard Cooked Egg Substitute

Crafty Counter has developed Wunder Eggs™ simulating hard-cooked peeled eggs.  The  ‘white’ comprises agar and an extract from nuts. The simulated yolk is based on plant material colored with turmeric.  The company claims that the product has a shelf life of 90-days.  The ingredient list includes cashews, almonds, coconut milk, nutritional yeast, organic turmeric extract, agar, black salt, and probiotics.  The product does not have the nutritional value of eggs with negligible quantities of coline, lutein, minerals, and both fat and water-soluble vitamins.  The company believes it can market the simulated egg at a price of $5 for a two-pack. This would be noncompetitive compared to conventional hard cooked peeled eggs. 

 


Hemma Reddy developer of an egg substitute

Crafty Counter cannot simply sell this egg by deprecating the production of conventional eggs invoking welfare and sustainability. Based on price Wunder Egg™ is a commercial non-starter.


 

China Impacted by Floods

Severe flooding of central China has impacted supply chains and will result in considerable damage to the economy.  Henan Province with a population approximately one third that of the entire U.S. was at a standstill last week with rail traffic through Zhengzhou, the Capital stalled.  Power plants are short of coal and highways are congested with stranded semis and other vehicles carrying food and supplies. Inability to convey hogs to slaughter is creating difficulties for both farmers and packers.

 

Heavy rains that disrupted livestock farming during July 2020 apparently resulted in dissemination of African swine fever.  Given the fact that the infection is endemic in many parts of the country, recent floods could result in an upsurge of infection.


 

McDonald's Corp Centralizing Data Analytics

McDonald's Corp. is centralizing data analytics, restaurant development, marketing and operations into a single entity. Manu Steijaert, has been appointed to the newly created position of Global Chief Customer Officer effective August 1st reporting to CEO Chris Kempczinski.  On July 8th, the company unveiled the My McDonald's Rewards Program with specific emphasis on younger customers. 

 

McDonald's has more than 40 million active app users in the largest six markets and offers delivery for more than 30,000 locations.  The action was taken to consolidate different digital marketing and operational activities and "remove some internal barriers that ultimately lead to a fragmented customer experience", according to Kempczinski.


 

Texas HB1480 Protects Farms from Vandalism

A recent session of the Texas Legislature passed HB1480.  According to this proposed legislation, it will be a criminal offence to cause harm valued at more than $500 to any animal facility or crop.  This will include “intentionally stealing, releasing, destroying or otherwise causing the loss of animals or crops, damaging, vandalizing or stealing any property from an animal or crop facility or breaking and entering an animal or crop facility with the intention to destroy or alter records”.


Opposition to HB 1480

 

Violation of the statute constitutes a Class B misdemeanor if loses are between $500 to $2,500,   and a Class A misdemeanor if loses are over $2,500. The violators will also be required to pay restitution, court cost and attorney's fees.Facility owners may seek injunctive relief against any person or organization that engages in or threatens to engage in activities prohibited by the statute.

 

 This legislation should be ruled constitutional as opposed to many state “Ag Gag” laws that apparently restrict the First Amendment right of free speech since it expressly addresses damage, vandalism and acts of commission.


 

Senate Agriculture Committee Advances Jennifer Moffitt as USDA Undersecretary for Marketing

Jennifer Moffitt has obtained approval of the Senate Agriculture Committee as USDA Undersecretary for Marketing.  In this position she will be responsible for agricultural marketing, regulatory activities and check-off programs.  As the Administrator responsible for Agricultural Marketing Services, GIPSA would also fall under her purview. 

 

 

In her confirmation hearing, Ms. Moffitt stated support for Administration policy regarding competition and would implement modified rules under GIPSA to the benefit of farmers.  Moffitt received the support of Senator John Boozman (R-AR) who recognized her understanding of agriculture, as a practicing farmer in California and Undersecretary of the California Department of Food and Agriculture.


Jennifer Moffitt USDA Undersecretary Nominee for AMS

 


 

Salmonella Infection from Backyard Chickens Continues

According to a CDC release, posted on July 23rd, a total of 672 cases of salmonellosis have been diagnosed in 47 states. Patients ranged from 1 to 97 years in age with 181 cases in children aged under 5 years.  The ongoing outbreak has resulted in 157 hospitalizations and two fatalities.

 

It is reasonable to assume that the number of diagnosed cases is far lower than the actual incidence since not all affected people seek medical attention or if they do, not all are subjected to fecal culture. 

 

Of 423 patients interviewed, 292 reported direct contact with backyard poultry within a week of onset of symptoms.  In some cases, common Salmonella serovars have been isolated from chickens and patients applying whole genome sequences.  Of 554 samples evaluated, 38 percent were predicted to be resistant to one or more antibacterials used in human therapy.

 

The CDC issued a series of suggestions to prevent infection including washing of hands, supervising children in the vicinity of chickens and thorough cooking of eggs derived from backyard flocks.  From the incidence rate, it would appear that these precautions do not provide adequate protection. As with turtles in the 1970s, backyard chicks and ducklings are inappropriate pets for children.


 

White House Supports H.R.4502 Funding the USDA

The Bill introduced by Rep. Rosa DeLauro (D-CT) would also fund the FDA, for the fiscal year ending September 30th 2022.  Among other provisions, Division D in the bill made provision for agricultural research; rural development; a special supplemental nutrition appropriation for women, infants and children; community outreach; rural broadband services and housing programs.

Rep. Rosa DeLauro

 


 

Commentary


U.S. in Danger of Foreign Animal Diseases and Plant Pests

According to a Department of Homeland Security report, agricultural specialists assigned to the U.S. Customs and Border Protection Service (US CBPS) have identified numerous attempts to illegally import consignments of plants and animals that could potentially introduce foreign animal diseases and pests.

 

Among the 18,500 pounds of smuggled products intercepted in containers at International Falls, MN, were balut eggs.  This Asiatic specialty effectively comprises 15 to 18-day incubated eggs that could potentially transmit avian influenza, exotic Newcastle disease or other pathogens to domestic flocks. Prohibited pork product destined for Asian food markets were also interdicted.

 

According to U.S. Customs and Border Protection, an attempt was made to import prohibited pork products through the Pembina point of entry in North Dakota.

 


Balut emryos.
A Philippine delicacy

The issue of concern is the number of illegal importations of poultry and pork products that are not detected. Given statistic and projections of the discrepancy between apprehended and non-detected drug shipments, one can assume that despite vigilance, the sheer volume of imports will permit a high proportion of illegal items to enter the U.S.  Since many of the items are destined for food distribution and consumption through Asian food markets, retail surveillance may be an important adjunct to border inspection. Operators of establishments should be required to provide proof that suspicious food products were in fact imported or acquired legally.

And now the Dominican Republic has cases of African Swine Fever and inevitably Haiti will follow given the long and porous border between the two countries. Will Cuba, 50 miles from Haiti at the nearest point be far behind?


 

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Dr. Simon M. Shane
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