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Food Industry to Face Mandatory Plastic Recycling

Multinational consumer brands are setting deadlines to recycle plastic packaging in response to consumer and regulatory demands.  Coca Cola has established a target of fifty percent recycled content on all packaging by 2030.  Nestle will recycle PET (polyethylene terephthalate) in all brands by the end of 2025.  Proctor and Gamble will substantially reduce the use of virgin plastic by 2025 and Unilever has a goal to recycle 25 percent of plastic by 2025 and reduce virgin plastic by half.  Unfortunately the current reality is far from the intent with most companies using up to ten percent recycled plastic with an emphasis on PET. On average ten percent of plastic is recycled in the U.S. compared to 33 percent in the E.U The two leading restraints to recycling comprise collection and processing.  


The PET segment of the recycling industry emphasizes collection as the major obstacle.  It is estimated that only 52 percent of U.S. household have access to a curbside recycling program with less than one-third of potentially recyclable plastics entering a reprocessing stream.  Collection intensity is highly variable according to location. In states or municipalities that mandate monetary deposits, collection can attain a level of seventy percent, as in California. At this time only ten states require deposits to encourage recycling.


Even with a high level of collection, segregation of potentially recyclable materials requires innovation since most municipalities and commercial companies use manual labor to reclaim specific products.  Advances in robotics coupled with application of machine vision and complemented by AI, allows installations to visually distinguish among diverse types of containers.  AMP Robotics has over 150 recycling installation in operation that can distinguish between polypropylene and polystyrene containers based on visual evaluation.



Advances in reprocessing technology resulted in the emergence of industries concentrating on specific plastic materials.  DAK Americas is the leading U.S. PET recycler.  Their process involves chopping containers in to flakes that are washed.  Flakes are then melted under a vacuum to remove volatile compounds from the molten resin.  Clarified resin is filtered before conversion to a solid state.  Although the process is expensive, potential purchasers of recycled PET are willing to pay a premium to claim recycled content that has marketing appeal.  Profitability among early recyclers was limited by narrow margins and low demand. This situation resulted in restructuring of the industry with only two remaining major competitors.  DAK has an annual current capacity of 400,000 metric tons with approximately one-quarter diverted into food and beverage containers and the remainder as carpet fibers and for other non-food applications. Following considerable investment, Indorama will have the potential to process 150,000 tons of PET by 2025.


Recycling of polystyrene has undergone advances through applying solvent extraction.  PureCycle Technologies is attempting to increase the rate of polypropylene and polystyrene recycling but the loop is limited by the apparent disinclination of municipalities to collect and separate these plastics that are widely used as packaging in the egg industry.  The PureCycle process was developed by Proctor and Gamble and uses super-critical butane for polypropylene.  Polystyvert of Canada uses p-cymene as a solvent for polystyrene.  Once in solution, the polymer undergoes filtration to remove contaminants. The clarified product is then precipitated by adding heptane.  A small commercial-scale plant is now in operation in Montreal to demonstrate technical feasibility.  The company is attracting funding to expand capacity since there is an increasing demand for recycled polystyrene.


It is evident that if the egg industry continues to use PET and polystyrene, both of which have obvious benefits as packaging material for eggs, recycling will be necessary. This will be required to satisfy the demands made by consumers and to avert restrictions that are currently in effect or are contemplated, as in Florida. In the interim manufacturers of polystyrene and PET packaging should develop collection programs based on in-store recycling bins to facilitate collection. Publix operates a convenient system that provides consumer satisfaction but more extensive collection programs are necessary to encourage processors to expand capacity and to erect new plants to balance availability of waste with demand for recycled plastic.


Egg Industry News

Crop Progress

Status of 2021 Corn and Soybean Crops

The USDA Crop Progress Report released on October 18th documented corn and soybean crop conditions to October 17th compared to 5-year averages. This past week 97 percent of the corn crop was mature, 4 percent ahead of the 5-year average. Fifty two percent has been harvested. For soybeans 95 percent of the crop was dropping leaves consistent with the 5-year average and 60 percent has been harvested, an advance of 11 percent in a week and ahead of the 5-year average of 55 percent.


Surface moisture levels were relatively higher during the past week over the corn-belt attaining an average of 16.0 percent for areas classified in the two lowest categories of “Short” and “Very short”. The severe drought in Western states and the Dakotas continues with extensive wildfires in the Northwest and low levels in the Colorado waterway and associated dams. Topsoil moisture in Iowa this past week remained low at 42 percent compared to 43 percent last week in the two lowest moisture categories. High topsoil moisture levels consistent with rain at the time of harvest will result in higher moisture levels in corn with a propensity for mycotoxicosis.


Despite the variable levels of topsoil moisture among states, approximately 60 percent of the corn crop was classified collectively under the “Good” and “Excellent” categories by USDA. This appraisal was unchanged from last week. The corresponding figure for soybeans for the week ending October 10 th was 59 percent, up one percent from the previous week.


The ProFarmer Crop Tour completed five weeks ago, estimated corn yield to range from 175.2 to 178.8 bushels per acre with a mean value of 177.0 bushels per acre compared to the October WASDE value of 176.5 bushels per acre. The ProFarmer evaluation corresponded to a projected range for the 2021corn harvest of 14.965 to 15.265 billion bushels with a mean value of 15.116 billion bushels compared to the October WASDE value of 15.019 billion bushels.


The ProFarmer Crop Tour estimated the soybean yield to range from 50.2 to 52.2 bushels per acre with a mean value of 51.2 bushels per acre compared to the October WASDE value of 51.5 bushels per acre. The ProFarmer evaluation corresponded to a projected range for the 2021 soybean harvest of 4.347 to 4.525 billion bushels with a mean value of 4.525 billion bushels compared to the October WASDE value of 4.448 billion bushels.


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 October 12th WASDE Report #617 and the Acreage Report in this edition for projected 2021 acreage and yields. This data will be updated when WASDE #618 is released in mid-November with a final projection of yields, ending stocks and markets.







October 10th

October 17th

5-Year Average

Corn Mature (%)

Corn Harvested (%)








Soybeans Dropping leaves (%)

Soybeans Harvested (%)








Crop Condition

18 States

V. Poor





Corn 2021 (%)

Corn 2020 (%) 1

1. Late planting











October 10th 2021

Soybeans 2021 (%)

Soybeans 2020 (%)1

1. Late planting











Parameter 48 States

V. Short




Topsoil moisture %: Past Week*





Past Year





Subsoil moisture %: Past Week





Past Year






For topsoil moisture the major corn and soybean-producing states had an average of 16.0 percent in the “Very Short” and “Short” categories (last week 20.2 percent) with a range of 3 percent for MI to 42 percent for IA.

  • Iowa 42% (was 43%)
  • Illinois 7% (was 21%)
  • Indiana 8% (was 12%)
  • Kansas 37% (was 42%)
  • Kentucky 11% (was 14%)
  • Michigan 3% (was 4%)
  • Missouri 18% (was 29%)
  • Ohio 6% (was 7%)
  • Pennsylvania 12% (was 0%)


USDA Egg Projections

Updated USDA Projection for U.S. Egg Production October 2021.


The USDA Economic Research Service issued an updated forecast of egg production on October 18th 2021 revising the previous September 16th 2021 report. The September projection of production for 2021 was updated by less than 0.1 percent to 8,053 million dozen with a per capita consumption of shell eggs and liquids combined of 283.1 down 1.2 percent compared to 2020. The average 2021 benchmark New York bulk unit price was raised to 118 cents per dozen taking into account higher prices during the first quarter and again in August. The USDA provided a long-term forecast for 2022 of 8,175 million dozen produced, with a consumption of 287.2 per capita. Subsequent USDA forecasts will provide greater clarity on reopening of the economy that is still depressed with moderate unemployment attributed to COVID restrictions.


October 2021 data is shown in the table below:-












% Difference



Production (m. dozen)







Consumption (eggs per capita)







New York price (c/doz.)








Source: Livestock, Dairy and Poultry Outlook released October 18th 2021


Subscribers to EGG-NEWS are referred to the postings depicting weekly prices, volumes and trends and the monthly review of prices and related industry statistics.


Egg Week

USDA Weekly Egg Price and Inventory Report, October 21st 2021.

  • Shell inventory was up by 2.1 percent, following four successive weekly rises reflecting continued oversupply relative to demand, consistent with the net addition of 0.4 million hens in the producing flock this week and a 6.2 million increase over ten weeks. Predictably prices are falling consistent with season and flock size. Midwest prices for generics are close to breakeven taking into account the combined costs of nest-run and for grading, packaging and delivery. Chains are spreading their purchases and are preempting anticipated price rises as a trend. It is possible that with a large National flock this strategy will suppress traditional pre-Christmas increases. Industry observers and participants expect buyers to adjust purchases only in response to retail demand and will hold down inventories in their DCs and stores. Since the beginning of 2021 generic eggs have been priced, with a few exceptions, at levels to maximize margins. This strategy has depressed the volume of sales to the disadvantage of the industry. Market data suggests that chains have priced generic white eggs in response to prevailing demand and are not featuring generic Large or Extra large.


  • Currently inventory comprises close to five days of production. Price movement over the past nine months and specifically since Labor Day, defies conventional supply to demand relationships and indicates extraneous factors affecting price. Wholesale Midwest prices for Extra- large and Large were down this past week after sequential declines. This suggests that prices plateaued at the end of September and will continue to decline through October into early November. 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 0.1 percent (0.4 million hens) from the week of October 13th to 316.4 million consistent with seasonal depletions but with about 2.0 million molted hens having resumed production during the past month. The Industry previously demonstrated beneficial restraint in flock placement with continued depletions and non-restocking of some complexes or houses. The trend going forward through October is for a build in numbers in November and December based on chick placement data for July and August. Margins will continue to decline for commodity eggs unless matched by increased demand as predicated by prevailing seasonal wholesale prices over the past five weeks.


  • The USDA average Midwest benchmark prices for generic Extra Large and Large were down 6.1 and 6.2 percent respectively to averages of 92.5 and 90.5 cents per dozen. Mediums were unchanged at 77.5 cents per dozen. Second quarter prices reflected static demand, offset by decreases in the U.S. flock in production. The trajectory of prices through the first three weeks of October suggests a decline moving through the remainder of October as confirmed by the benchmark price discovery system. Margins going forward will be shaved despite stability in feed price but with higher chick, labor and fuel costs especially as unit revenue erodes.


  • There is some prospect of a return of the food service sector with both frozen and dried-egg prices marginally higher over the past month. The economy is reopening with a recent decline in COVID incidence rates and hospitalizations in many regions. There is some optimism over the rate of deployment and acceptance of the three vaccines and boosters especially in rural areas and inner city zones. Reopening of the economy and schools in specific areas with low population immunity has resulted in persistence in the incidence rate of COVID. This is especially the case following the introduction and dissemination of the Delta variant of SARS-CoV-2 virus that is more infectious and possibly with higher pathogenicity than the alpha and beta strains especially among the non-immunized proportion of the population that represent an overwhelming majority of those hospitalized.


  • The Midwest price for breaking stock was down 5.0 percent to an average of 60.5 cents per dozen. Checks in the Midwest were down 2.0 percent to an average of 49.5 cents per dozen. It is anticipated that these prices will fluctuate in response to market trends and gradual recovery of the breaking sector.




According to the USDA Egg Market News Reports released on October 18th, the Midwest wholesale prices for Extra-large were down 6.1 percent to an average of 92.5 cents per dozen; Large were down 6.2 percent to 90.5 cents per dozen; Mediums were unchanged at 77.5 cents per dozen as delivered to DCs. Prices should be compared with the USDA benchmark average 6-Region blended nest-run, (excluding provisions for packing, packaging materials and transport) cost of 66.6 cents per dozen in September 2021. The progression of prices during 2021 to date is depicted in the USDA chart reflecting three years of data, updated weekly.


The October 18th 2021 edition of the USDA Egg Market News Report (Vol. 68: No. 42) documented a USDA Combined Region value rounded to the nearest cent, of $1.08 per dozen delivered to warehouses for the week ending October 9th 2021. This average price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $0.97 per dozen. At the high end of the range, price in the South Central Region attained $1.16 per dozen. The USDA Combined Price last week was 20 cents per dozen above the 3-year average. This past week Midwest Large was approximately 5 cents below the corresponding week in 2020 that demonstrated an autumn upturn.





  • Commodity prices fluctuated over the past week but the Thursday October 21st CME quotations for corn and soybeans ended up 2.9 and 1.5 percent respectively compared to Thursday October 14 th.
  • Factors influencing prices in either direction included:-
    • Restoration of operation of most terminals on the lower Mississippi following Hurricane Ida. Installations have been repaired and are unloading barges and loading bulk carriers. (moderate upward pressure)
    • Release of the October 8th WASDE that raised projected ending stocks of corn by 6.5 percent and by 73.0 percent for soybeans. (significant downward pressure);
    • Lower than anticipated export sales, especially to China (downward pressure);
    • Harvest advanced to almost half of the 2021 corn and soybean crops with higher yields consistent with forecasts by USDA and ProFarmer field evaluations. (moderate downward pressure);
    • Projections for new crop soybeans in Brazil indicate a potential record. (moderate downward pressure)
    • Restoration of shipments from Argentina albeit at lower than normal volume (moderate downward pressure);
    • Central Government of China authorizes buying cycle for soybeans as crush margins improve. (upward pressure)


Projected harvests and ending stocks in the U.S. will be finalized in the November WASDE since there will be almost complete clarity on quantities harvested the effect of trade on ending stocks.


  • U.S producers are now receiving and conversely livestock producers in the Midwest will pay above $5.30 per bushel for corn and crushers will pay $12.20 per bushel for soybeans plus transport and basis during the fourth week of October. Corn was up 2.9 percent this past week for December delivery. Soybeans were up 1.5 percent for November delivery. Soybean meal was up 3.2 percent for December delivery compared to last week reflecting the rise in the price of soybeans.
  • The FAS Export Report released on October 21st for the week ending October 14th reflecting market year 2021-2022, confirmed that outstanding export orders for corn for the new market year amounted to 24.4 million metric tons (961 million bushels) with 1.0 million metric tons (39 million bushels) actually shipped. During the past week orders for the 2021-2022 market year amounted to 1.27 million metric tons (50 million bushels). For market year 2022-2023 outstanding sales amounted to 0.34 million metric tons (13 million bushels) with negligible sales recorded this past week.
  • The FAS Export Report released on October 21st for the week ending October 14th reflecting market year 2021-2022 recorded outstanding export orders for soybeans amounting to 23.4 million metric tons (859 million bushels) with 2.2 million metric tons (81 million bushels) actually shipped. Weekly soybean orders attained 2.9 million metric tons (106 million bushels).
  • For the week ending October 14th 240,400 metric tons of soybean meal and cake were ordered for the market year 2021-2022, down 34.3 percent from the previous week. With restoration of operation of most lower Mississippi terminals after damage from Hurricane Ida, 216,500 metric tons of meal and cake was shipped this week representing the total for the marketing year to date.


The following quotations for delivery in the months as indicated were posted by the CME at 15H00 on October 24th 2021, compared with values posted at 14H00 on October 14th 2021 (in parentheses):-



Corn (cents per bushel)

Dec. 532 (517)

March ‘22. 541 (526)

Soybeans (cents per bushel)

Nov. 1,223 (1,205)

March ’22. 1,242 (1,223)

Soybean meal ($ per ton)

Dec. 324 (314)

March ’22. 323 (317)


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


Corn: Dec. quotation up 15 cents per bushel (+2.9 percent)
Soybeans: Nov. quotation up 18 cents per bushel (+1.5 percent)
Soybean Meal: Dec. quotation up $10 per ton (+3.2 percent )


The USDA weekly wholesale feedstuffs prices per short ton, posted on October 13th (with previous week in parentheses) were:-

  • Corn: $185 ($181), Chicago
  • Soybean Meal: $318 ($326), Central Illinois
  • Meat and Bone Meal: $355 ($360), Central Midwest
  • DDGS: $184 ($195), Eastern corn belt

NOTE: USDA did not post wholesale feedstuffs prices for October 20th. Updated values will be included in the October 27 th edition of CHICK-NEWS subject to availability.

  • For each $1 per ton (2.5 cents/bushel) change in corn:-
    • The cost of egg production would change by 0.011 cent per dozen
    • The cost of broiler production would change by 0.06 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 respective changes in the prices of corn and soybean meal for October 12th compared with October 7th USDA weekly quotations would decrease nest-run production cost for eggs by 0.3 cents per dozen. For broilers cost would be lowered by <0.1 cents per live pound.


Year-to-date, escalation in the prices of major ingredients has added 1.9* cents per dozen eggs and 1.1* cents per live-weight lb. to broiler production cost

*(rounded to 0.1cent)


FDA Updates Food Industry Guidance with an Emphasis on Sodium

An October 15th release by the Food and Drug Administration recommends that food manufacturers, QSRs, and food service providers reduce sodium content in foods consumed in the U.S.  The FDA now advises a maximum sodium intake of 3 grams per day, a 12 percent reduction from 3.4 grams.  This action follows a 2016 FDA draft guidance proposing a redction in sodium in foods. The Dietary Guidelines for Americans’ recommends a maximum of 2.3 grams per day for those over 14 years of age. 


Lowering sodium intake should contribute to a lower prevalence of hypertension, renal and cardiovascular disease. The FDA is now intent on persuading the food industry to reduce salt content in foods and will issue revised targets and will monitor the sodium content of food.


OPIE Opens Drive-Through Grocery Facility

OPIE Drive-Thru Grocery has opened in Mount Pleasant, SC. a community near Charleston.  The facility is drive-through only and will operate 24/7. Customers can order using an app or submit a large order for scheduled pickup. OPIE will not impose minimum orders or fees.


According to a company spokesperson the facility will conserve water and energy and will recycle almost all cardboard and reduce plastic packaging.  OPIE has partnered with the Low Country Food Bank to preserve unsold produce for those experiencing food insecurity.


U.S. Glyphosate Production Restored After Ida

Bayer has announced that their plant in Luling, LA. is now back in production after damage caused by Hurricane Ida in time to meet demand for the new season. 


The Luling plant produces all of the glyphosate used in the U.S. A shortage of the herbicide is evident since the Bayer plant in China that exports 80 percent of output is on a reduced schedule due to power restrictions. 


Irrespective of lawsuits claiming that glyphosate is responsible for non-Hodgkin Lymphoma, there is no evidence that application according to label instructions has any deleterious effect and RoundUp™ and generic versions are in demand worldwide.


Manure Application to Crop Land Under Scrutiny

On October 13th a circular addressed to farmers in Ohio confirmed that the State Department of Agriculture is extending the 2021 H2Ohio Program relating to overwintering cover crops and application of manure.  Manure spreading must conform to the Nutrient Management Standard NRS 590 that is designed to prevent runoff from wet soil.


The Ohio H2Ohio Program, established in 2019, will be a long-term, water quality plan based on field data to limit algal blooms in rivers and dams.  The collaborative program involves the Ohio Department of Agriculture, the Ohio Department of Natural Resources, the Ohio Environmental Protection Agency and the Lake Erie Commission.


It is anticipated that additional states will impose restrictions on application of raw manure, predicating the need for drying or additional treatment before application. For additionalinformation on commercially available manure drying equipment enter “Uzelac” into the SEARCH block.



Blue Apron Holdings Seeking Capital Infusion

Blue Apron Holdings has filed Form 8-K with the SEC to raise $45.0 million as part of a $78.0 million capital requirement.  Proceeds will be used for working capital, for general corporate purposes and to implement an enhanced growth strategy.  For the most recent quarter, total debt amounted to $66.5 million and the company posted a debt to equity ratio of 117.8.  The company now has intentions of developing an ESG program and is obligated to increase wages and benefits.


Blue Apron Holdings has a market capitalization of $219.6 million and has traded over the past 52-weeks in a range of $3.52 to $12.35 with a 50-day moving average of $5.58.   On a 12-month trailing basis, operating margin was -10.1 percent and profit margin -12.8 percent.  The company generated a 12-month trailing return on assets of -14.3 percent and -111.3 percent on equity.


As of September 30th, 9.2 percent of the float was short.  At the present time 19 percent of equity is held by insiders and 31 percent by institutions. Given performance since the IPO, Blue Apron is a money pit. If it could not break even during COVID restrictions it will certainly not show a positive return going forward with a re-opening of the economy, fatigue in home cooking and concern over personal finances.


Colorado State University Monitoring Eggs for West Nile Virus Antibody

Colorado State University, One Health Institute has initiated a project to examine eggs from diverse backyard flocks in Northern Colorado for the presence of antibodies against West Nile disease.


Eggs are delivered to the laboratory of Dr. Angela Bosco-Lauth of the Colorado State University Department of Biomedical Sciences who has studied West Nile viruses since 2005.  The yolks of eggs are harvested and are assayed for the presence of specific West Nile disease antibodies.  As of early October, seven eggs demonstrated antibodies out of 100 eggs examined.


Conventionally public health and mosquito control agencies place sentinel chickens to detect the presence of Eastern and Western equine encephalitis virus in and area.  Chickens are refractory to clinical effects following infection with a wide range of arborviruses but develop antibodies following bites by infected mosquitos.  As a variation on the placement of sentinel hens that require maintenance and protection from predators and the environment, backyard chickens should serve as a reliable system to detect the presence of virus.


Consumers Facing Food Price Inflation

According to a report issued by the Bureau of Labor Statistics on Wednesday, October 13th, consumer prices rose 5.4 percent in September 2021 compared to the corresponding month in 2020.  Food purchased for home consumption rose 4.5 percent over the twelve-month period mainly due to the rise in center-of-plate protein.  Beef and veal increased by 17.8 percent, pork by 12.7 percent and chicken showed a more moderate 7.6 percent increase year-over-year. Inflation in food prices was reflected in fast food and fast casual menu prices. Full-service restaurant prices were up 5.2 percent with QSRs up 6.7 percent year-over-year in September.


Although the escalation in protein products was notable, increases in cost attributed to production, labor and transport added to increased shelf prices.  Fruits and vegetables were up three percent, fats and oils 6.9 percent and prepared salads, 6.8 percent.  In contrast, dairy products only rose 0.6 percent.  The velocity of the increase was noticeable in September with higher prices compared to July and August of 2021.


The retail price of eggs was up 12.6 percent in September. Weekly reports on egg statistics in EGG-NEWS have commented on the divergence between wholesale prices for eggs based on a national price discovery system and corresponding retail shelf prices. Traditional supermarket chains consistently maintain high margins that disfavor volumes of purchase to the detriment of the industry. 


Prospects for Fast Casual Restaurants are Improving

According to a recent report by the NPD Group, for the year ending August 2021, visits to fast casual restaurants were eight percent higher than for the corresponding 12-months ending August 2020.  Fast casual restaurants were seriously impacted by COVID with a 23 percent reduction in visits during the second quarter of 2020. As opposed to quick service restaurants, fast casual operations generally lacked drive-thru capability and were slow in developing take-away sales and home delivery.


David Portalatin of the NPD Group stated, “Fast casual restaurants have capitalized on the lessons they learned during the pandemic.”  He added, “Their customers are happy to return because so many fast casual restaurants have built a strong clientele based on their innovation and ability to deliver a quality customer experience.”


Ahold Delhaize USA Moving Banners to Self-Managed Distribution

Commencing in 2019, Ahold Delhaize USA initiated a program of developing distribution centers with an associated logistics capability to support 65 percent of center store volume by 2021.  The company plans to expand the U.S. distribution network to incorporate 85 percent of items required by the end of 2022. 


In September, the company commissioned a one million square foot distribution center in Manchester, CT. mainly to supply the Stop & Shop chain.  The Carlyle PA. distribution center serves 187 Giant, Martin’s and other Ahold Delhaize banners in Pennsylvania, Maryland, Virginia and West Virginia.  Additional distribution centers will be established in Bethlehem and York, PA; Chester, NY with two fully automated frozen warehouses in Mountville, PA. and Plainville, CT. respectively. The Ahold Delhaize USA supply chain group includes procurement, transportation and distribution to serve 2,044 stores and operations on the East coast.



Waukesha School Board now a Defendant in COVID Lawsuit

In early September, EGG-NEWS reported on the Waukesha School Board reversing a decision made previously to deprive children of the benefits of a USDA feeding program.  Following a public outcry, the Board reversed on free school lunches by a 5 to 4 vote.  One board member stated that the free program “made it easy or families to become spoiled”.  In opposition a board member noted, “These are stressful times and it is well known that hunger directly impacts our students behavior and their ability to learn.”


The Waukesha School Board is now the defendant in a lawsuit filed by a parent claiming relaxed policies on masking, quarantining and contact tracing led to her child contracting COVID within two weeks after commencement of the school term.  The boards of education for the school district voted not to enforce COVID prevention policies including a universal mask requirement.  The lawsuit claims that the actions of the board were contrary to recommendations by the Centers for Disease Control and Prevention and the Wisconsin Department of Public Instruction.


Conagra Brands Inc. Posts Q1 Results

Conagra Brands (CAG) posted results for the first quarter of fiscal 2022 on October 7th.  For the period ending August 29th, 2021 the company earned $235.4 million on net revenue of $2,653 million.  Comparable values for the first quarter of fiscal 2021 ending August 30th, 2020 comprised net income of $329 million on net sales of $2,679 million.  Earnings per share fell 26.9 percent to $0.49 for the most recent quarter.


Conagra posted total assets of $22.5 billion of which $15.4 billion comprised goodwill and intangibles.  The company carries $10.813billion in long-term debt. Conagra Brands has a market capitalization of $15.95 billion.  The share has traded in a 52-week range of $32.25 to $39.09 with a 50-day moving average of $33.50.  On a trailing 12-month basis, operating margin was 16.7 percent and profit margin 10.8 percent.  The Company generated a return on assets of 5.2 percent and 14.3 percent on equity.


Charles River Laboratories Divests Operations in Japan and Sweden

Charles River Laboratories, the parent company of SPAFAS, a supplier of specific pathogen free eggs and diagnostic reagents, has divested operations in Japan and Sweden.  On October 12th the company completed sale of their RMS operations in Japan to the Jackson Laboratory for $63 million in cash.  RMS generated revenue of $46 million in 2020 and distributed “research models” (research animals) to laboratories in Japan.


On the same day, Charles River completed sale of its gene therapy subsidiary CDMO in Sweden to a private investor group for $52 million in cash.  This facility was acquired as part of the purchase of Cognate BioServices during the first quarter of 2021.  The company produces DNA for gene therapy and generated $10 million in revenue in 2020.


Charles River Laboratories intends to provide research animals, services and DNA to global clients from existing facilities in the U.S. and the EU.


Dr. Robert Califf Considered as FDA Commissioner

The tenure of current Acting Commissioner of the FDA, Dr. Janet Woodcock will end at the beginning of November.  It is understood that the White House will nominated Dr. Robert Califf a cardiologist and previously a Commissioner of the Agency during the last year of the Obama Administration to the position.  He was confirmed overwhelmingly in the Senate in 2016 and he is considered the most likely of potential candidates to be confirmed.  Former Commissioner Dr. Mark McClellan noted that Dr. Califf has experience in leading the FDA and will be able to initiate action on a number of critical issues including COVID vaccination of children, the continuing opioid crisis, approval of drugs for Alzheimer disease and E-cigarettes.


Since the FDA works closely with NIH, replacement of Dr. Francis Collins who will retire at the end of the year is an important consideration in selecting the next Commissioner. The leader of the FDA, Director of the CDC and the Director of the NIH must cooperate and be mutually compatible to formulate and implement programs advancing public health.


Trade Imbalance with China Deteriorates in September

China’s trade surplus with the U.S. attained a record level of $42 billion in September.  Exports to the U.S. were 30 percent higher than in September 2020.  Imports from the U.S. rose by 17 percent with 30 percent less soybeans imported albeit at higher total value based on unit price. 


China is currently experiencing an energy crisis. Imports of coal and gas by China increased in September but crude oil declined.  China imported 22 percent more natural gas in September compared to the corresponding month in 2020 with a value of $5.2 billion. Coal imports increased by 76 percent from September 2020 to 32.9 million tons representing a three-fold increase in value to $3.9 billion.  Due to the sharp increase in the cost of thermal coal, utilities either shut down or reduced output of power resulting in brown-outs and black-outs. The Government exercising control over all aspects of the economy in China allowed the cost of electricity to increase in proportion to the cost of generation, restoring supply.  Mismanagement of energy policy has impacted production and added to the disruption in supply chains adversely affecting the U.S. and international markets.  Notwithstanding domestic problems from the consequences of interruption in power, China exported goods to the value of $305 billion in September representing a 28 percent increase over the corresponding month in 2020 and exceeding estimates.


United Nations Names Eggs a “Star Ingredient”

World Food Day is Saturday, October 16th and the United Nations (UN) following the first-ever UN Food Systems Summit, has just named eggs and beans as “star ingredients” because of their ability to bring people together, nourish us, and “fuel our futures.” To highlight the extraordinary power of these two everyday ingredients, the UN created videos showcasing the amazing power of eggs and beans.  “When is an egg not just an egg?” video, created by the UN with support from the International Egg Commission (IEC), explains why eggs are incredible in so many ways.


Kroger Expanding Number of Ocado Fulfillment Centers

Since establishing a partnership with Ocado, Kroger has commissioned two fulfillment centers in Monroe and Groveland, FL. The company has announced ten Ocado centers ranging from 135,000 to 375,000 square feet in extent to be erected in Georgia, Maryland, Wisconsin and Michigan in addition to two in the Pacific Northwest.  Further in the future, fulfillment centers will be established in southern states with six to be opened between 2022 and 2023. 


Rodney McMullen, chairman and CEO stated, “We feel great about the momentum we are experiencing with Kroger Delivery and our partnership with Ocado and are strategically leveraging our assets to expand our operations in existing regions as well as entering new geographies on the East coast.” 


On October 12th, Kroger announced an additional fulfillment center for Florida and the introduction of micro-fulfillment sites receiving stock from existing and proposed Ocado installations. Shoppers will place orders using a Kroger mobile app or by accessing  Existing and proposed fulfillment centers will cover a delivery radius of up to 100 miles.  Each fulfillment center can match the sales of about 20 stores.  Kroger will make use of hub and spoke configurations to extend the range of fulfillment centers. 


During fiscal 2021 Kroger acquired 340,000 new digital customers and now operates 2,239 pick-up sites and 2,546 delivery locations.  Digital sales advanced 114 percent on a two-year basis through the end of Fiscal 2021.



Supply Chain Remediation

On Wednesday October 13th, the White House convened a meeting of business leaders, directors of major ports and union representatives. The purpose was to review the deteriorating situation in U.S. ports resulting in disruption in supply chains that has now assumed serious proportions with political implications for the Administration.


Following extensive discussions, the White House announced both public and private commitments including 24/7 operation at the ports of Los Angeles and Long Beach.  These facilities represent the points of entry for 40 percent of containers to the U.S.  Despite moving an additional 25 percent of containers above the volume handled in September 2020, West-coast port facilities are overwhelmed and ships are waiting at anchorage to be berthed.  The International Longshore and Warehouse Union has agreed that its membership will work extra shifts to clear backlogs.  Major companies will expand hours over which their shipments can be received.  Night transport from docks and into distribution centers is invariably more efficient than during daylight hours.


Individual company commitments include Walmart that has accepted night-time operation for distribution centers with UPS committing to 24/7 operation and data sharing. FedEx will increase their night-time operations. Home Depot will move an additional 10 percent of containers using off-peak hours and Target is moving half of its containers at night to enhance delivery rates.  It is anticipated that the combined efforts of these companies will move an additional 3,500 containers per week with the initiative extending through the remainder of 2021.


Walmart, Home Depot Inc., Costco Wholesale Corporation and Target Corp have each chartered smaller vessels carrying up to 10,000 containers at prices frequently double that for a large container carrier. In 2012 individual companies including Walmart last used chartered vessels during West-coast port strikes. Large companies have the ability to make alternative shipping arrangements but small and intermediate-scale retailers will be deprived of goods for the holiday season.


During the past month freight rates from China to West-coast ports have dropped by almost 50 percent partly due to reduced production attributed to power shortages and cancellation of orders which has taken immediate pressure off shipping companies.  The problem of available containers to consign agriculture products including fruit to Asia still exists as shipping companies are retuning empty containers to ports in China and Vietnam. China continues to delay operations in their ports based on the unnecessary requirement to test crew members for COVID before allowing vessels to dock causing delays of up to seven days.


The 30 percent increase in demand in the U.S. for manufactured products from Asia coupled with inherent inefficiencies exacerbated by COVID has created the supply chain problem. For similar reasons Europe has also experienced congestion in ports and shortages on store shelves.


Over the intermediate term the U.S. will have to address inefficiencies in port operations, many of which relate to extortionist union demands. Complementary considerations include the availability of long-distance drivers and vehicles, enhancing coordination and logistics and reducing dependence on just-in-time management of inventory. With higher costs for ocean shipping and land-transport and with the financial consequences of disruptions in supply, it is time for U.S. manufacturers to reconsider on-shoring where possible with greater use of automation and robotics to offset labor costs.


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