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Editorial


Simplistic Claims by the National Farmers Union Refuted

The National Farmers Union (NFU) issues an annual release purporting to estimate the theoretical value that farmers receive for a traditional Thanksgiving meal in 2021. The NFU estimated that ranchers and farmers would receive approximately 14.3 cents for every dollar spent at retail  in 2021.

 

In their somewhat misleading and simplistic statement, the NFU noted, "even though consumers are paying more for food this year almost none of that is being passed on to America's family farmers and ranchers.  Multiple mergers and acquisitions during the last several decades have resulted in agriculture and food supply chains that are noncompetitive, fragile and underpay farmers". 

 

The NFU fails to recognize that farmers in large measure produce ingredients that require processing, packaging and transport before purchase.  The NFU consistently fails to recognize or acknowledge the contributions along the food chain extending from an ingredient whether it be a bushel of cranberries, a yam or a live turkey.

 

To illustrate the impact of the chain of processing and distribution the situation with regard to eggs should be considered. According to the USDA producers of generic shell eggs, during 2021 through October received a national average blended price of 80 cents per dozen for Large nest run eggs with a range of 58 to104 cents per dozen. The average cost of production over the first ten months of 2021 was estimated by the USDA at 71 cents per dozen including feed, pullet depreciation labor, housing and overhead. This implies a margin of 9 cents per dozen or 12.6 percent on a nest run basis. The cost of eggs delivered to a DC would include packing (13 cents), packaging (13 cents), transport (5 cents) and grading loss (5 cents) for a total of 107 cents per dozen. This corresponds to the 107 cents per dozen documented by the USDA as the simple average delivered to a distribution center. The average retail price for generic white eggs was calculated by the USDA to be 164 cents per dozen as a simple average for the four regions over the first nine months of 2021.  This would provide retailers with a gross margin of 57 cents per dozen or 35 percent to cover transport, merchandizing, overhead, store losses and operational expenses. Effectively egg producers received on average 65 percent of the retail price or 39 cents on the retail dollar. The complexities of the supply chain with respect to shell eggs clearly denotes the simplistic assumptions by the NFU in their calculation that evidently fails to consider processing and added value to farm-produced ingredients through the supply chain to retail.

 

The NFU points to integration and consolidation as being responsible for a lower proportion of retail unit price received by individual farmers.  Without economy of scale and processing at  high levels of throughput using capital intensive facilities and equipment, prices for food products including eggs, broilers and turkeys would be even higher given the efficiencies in producing feed, operating herds and flocks and processing animals with attention to welfare, food safety and sustainability. 

 

The NFU fail to define the term "farmer".  With two exceptions, U.S. egg producers are family-owned and operated despite large volumes of production.  In the case of broilers and turkeys, integrators provide chicks or poults, feed and technical service and harvest flocks at the end of the production cycle.  Farmers receive a fair income for providing labor and housing but do not bear the risk of inflation and feed cost or fluctuations in market price and do not make any investment in processing, marketing, overhead or distribution of product.

 

The National Farmers Union figure of 14.3 cents on the retail dollar, however it may be calculated, fails to recognize the multiple investments through the entire chain of processing, distribution and the markups imposed by retailers.  Consumers in the U.S. have the widest variety of food products available with the highest standards of food safety and spend less on food  as a proportion of total income than any other industrialized nation.


 

Egg Industry News


STOP PRESS

Government Shutdown Averted

Congress averted a shutdown of the Government on Thursday night by passing continuing resolutions to extend funding through February 18th 2022. The respective vote tallies were 221-212 in the House and 69-28 in the Senate.


 

Egg Week

USDA Weekly Egg Price and Inventory Report, December 2nd 2021.

Market Overview

  • A 2.3 percent rise in unit revenue this past week following higher prices the previous week suggests a pause in the upward trajectory in price leading into the pre-Christmas surge. Shell-egg prices have stabilized despite the net addition of 0.3 million hens in the producing flock this past week and a 15.7 million algebraic increase over sixteen weeks. Midwest prices for generics are now above the corresponding week in 2020 after lagging through early November. Wholesale Midwest prices have now advanced slightly further into positive margins, well above breakeven taking into account the combined costs of nest-run, grading, packaging and delivery.
  • Shell inventory was predictably higher by a substantial 7.5 percent following a 13.9 percent decrease last week, denoting that the pipeline from packing plants to retail shelves is full after the Thanksgiving weekend. The weekly inventory of shell eggs held by the industry is an important determinant of price. It is now emerging that the inventory held by chains and other significant distributors may be more important in establishing wholesale price than USDA inventory in plants especially over the short term. Chains are spreading their purchases and are attempting to preempt anticipated price rises. It is possible that with a large National flock this strategy might suppress traditional pre-Christmas increases. Industry observers and participants expect buyers to adjust purchases only in response to retail demand and will attempt to hold down inventories in their DCs and stores while marking up shelf margins and pressuring suppliers for replenishment of DSD stock. Since the beginning of 2021 generic eggs have been priced, with a few exceptions, at levels to maximize store margins. This strategy noted during October and early November depressed the volume of sales of generics to the disadvantage of the industry. Market data suggests that chains have priced generic white eggs in response to prevailing demand and are infrequently featuring generic Large or Extra large.
  • Currently inventory although fluctuating in response to the action of chain buyers comprises close to five days of production. Price movement over the past ten 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 slightly higher this past week after sequential weekly increases. This suggests that prices that plateaued at the end of September and declined in October will now show a predicted seasonal increase following disposal of accumulated store and plant inventory. 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 (0.3 million hens) from the week of November 24th to 326.0 million consistent with planned seasonal molting, placement and depletion, but with about 2.5 million molted hens having resumed production during the past three weeks. The Industry demonstrated beneficial restraint in flock placement in the second and third quarters with continued depletions and non-restocking of some complexes or houses. The trend going forward through December is for a build in numbers through the third week of December based on chick placement data for July and August. Margins should continue to increase for commodity eggs due to increased demand as predicated by the pattern of seasonal wholesale prices over the past three years.
  • The USDA Midwest benchmark prices for generic Extra Large and Large were up 2.3 percent on average to 136.5 and 134.5 cents per dozen respectively. Mediums were unchanged at 101.5 cents per dozen. Third quarter prices reflected static demand, offset by increases in the U.S. flock in production during October. The trajectory of prices through the second week of November confirmed increased seasonal demand coincident with the advent of colder weather. Prices going forward will be determined by the buyers for the major chains in response to consumer demand and taking into account their inventory levels. The spike in price for all categories ebbed after Thanksgiving as the pipeline was filled. The Industry should hope that retail demand persists or is even intensified as consumers recognize the value of eggs as a source of inexpensive protein in a situation of food inflation. Production margins will be impacted by increasing feed and pullet chick prices. Higher labor and fuel costs will detract from profit especially if unit revenue fails to match expectations during pre-Christmas weeks this month.
  • 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 despite ongoing concern over COVID incidence rates and hospitalizations in many regions. There is some optimism over the rate of deployment and acceptance of the three available approved vaccines and boosters in diverse regions and demographics. Reopening of the economy and schools in areas with low population immunity has resulted in a rise in the incidence rate of COVID. This is especially the case following the introduction and dissemination of the Delta variant and the emergence of the Omicron variant of SARS-CoV-2 virus that are 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 2.3 percent lower to an average of 63.5 cents per dozen. Checks in the Midwest were up 1.0 percent to an average of 52.0 cents per dozen. It is anticipated that these prices will fluctuate in response to market trends and gradual recovery of the breaking sector.

 

The Week in Review

Prices

According to the USDA Egg Market News Reports released on November 29th, the Midwest wholesale price for Extra-large was up 2.3 percent to an average of 136.5 cents per dozen; Large was up 2.3 percent to an average of 134.5 cents per dozen; Mediums were unchanged at 101.5 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 66.3 cents per dozen in October 2021. The progression of prices during 2021 to date is depicted in the USDA chart reflecting three years of data, updated weekly.

 

The November 29th 2021 edition of the USDA Egg Market News Report (Vol. 68: No. 48) documented a USDA Combined Region value rounded to the nearest cent, of $1.42 per dozen delivered to warehouses for the week ending November 22nd 2021. This average price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $1.32 per dozen. At the high end of the range, price in the South Central Region attained $1.50 per dozen. The USDA Combined Price last week was 7 cents above the 3-year average. This past week Midwest Large was approximately 40 cents above the corresponding week in 2020 that demonstrated a typical late-Fall upturn followed by a plateau. Prices are expected to fall in the immediate term given the full pipeline until relieved by increased consumer demand moving into Christmas.


 

COMMODITY REPORT

WEEKLY COMMODITY REPORT: DECEMBER 2nd 2021.

  • Commodity prices and volumes fluctuated over a wide range over the past five trading days but settled relatively unchanged on Thursday December 2nd. The CME quotations for corn and soybeans were down 0.3 percent and 1.7 percent respectively, compared to Thursday November 24th.
  • Factors influencing prices in either direction included:-
  • Release of the November 9th WASDE with 85 percent of the harvest completed at the time of publication. The report raised corn production 0.3 percent and lowered soybean production by 0.5 percent. The November WASDE retained the projected ending stocks for corn and raised soybean ending stocks by 8.4 percent. (transitory upward pressure);
  • Increasing weekly ethanol production (transitory upward pressure on corn)
  • Projections for new-crop soybeans in Brazil indicate a potential record. (moderate downward pressure on soybeans)
  • The Central Government of China authorized a buying cycle for soybeans as crush margins improve. (upward pressure on soybeans)
  • S producers are now receiving and conversely livestock producers and ethanol refiners in the Midwest will pay above $5.80 per bushel for corn in December, down 0.3 percent and crushers will pay $12.50 per bushel for soybeans plus transport and basis during January 2022, down 1.7 percent from the November 24th quotation for current month delivery. Soybean meal was unchanged for December delivery compared to last week reflecting lower exports but higher domestic demand coupled with fluctuation in the price of soybeans during past weeks.
  • The FAS Export Report released on December 2nd for the week ending November 25th reflecting market year 2021-2022, confirmed that outstanding export orders for corn for the new market year amounted to 25.78 million metric tons (1,016 million bushels) with 9.65 million metric tons (380 million bushels) actually shipped. During the past week orders for the 2021-2022 market year amounted to 1.02 million metric tons (40 million bushels) with 0.93 million metric tons (36.7 million bushels) shipped. For market year 2022-2023 outstanding sales amounted to 0.56 million metric tons (22 million bushels) with 0.30 million metric tons (11.8 million bushels) sold this past week.
  • The FAS Export Report released on December 2nd for the week ending November 25th reflecting market year 2021-2022, recorded outstanding export orders for soybeans amounting to 16.10 million metric tons (590.9 million bushels) with 21.1 million metric tons (773.2 million bushels) actually shipped. Weekly soybean orders attained 1.06 million metric tons (38.9 million bushels) with 2.33 million metric tons (85.5 million bushels) shipped.
  • For the week ending November 25th 146,700 metric tons of soybean meal and cake were ordered for the market year 2021-2022, up 7.1 percent from the previous week. With restoration of operations covering most of the lower Mississippi terminals after damage from Hurricane Ida, 263,900 metric tons of meal and cake was shipped, down 4.9 percent from the previous week and representing 14.5 percent of the total 1,851,000 metric tons shipped during the current marketing year to date.
  • Projected harvests and ending stocks in the U.S. were incorporated in the November WASDE allowing almost complete clarity on quantities harvested and the effect of trade and domestic consumption on ending stocks, up 9.2 percent for corn and 7.2 percent for soybeans.

 

The following quotations for delivery in the months as indicated were posted by the CME at 14H00 on December 2nd 2021, compared with values posted at close of trading on November 24th 2021 (in parentheses):-

COMMODITY

Corn (cents per bushel)

Dec. 577 (579)

March ‘22. 577 (585)

Soybeans (cents per bushel)

Jan. ’22 1,244 (1,266).

March ’22. 1,250 (1,277)

Soybean meal ($ per ton)

Dec. 358 (358)

March ’22. 347 (349)

 

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

COMMODITY CHANGE FROM PAST WEEK FOR MONTH OF DELIVERY AS INDICATED

Corn: Dec. quotation down 2 cents per bushel (-0.3 percent)

Soybeans: Jan. ’22 quotation down 22 cents per bushel (-1.7 percent)

Soybean Meal: Dec. quotation unchanged ( 0 )

 

The USDA weekly wholesale feedstuffs prices per short ton, posted on November 30th (with previous week in parentheses) were:-

  • Corn: $201 ($206), Chicago
  • Soybean Meal: $356 ($369), Central Illinois
  • Meat and Bone Meal: $330 ($330 -presumed), Central Midwest
  • DDGS: $168 ($170), Eastern corn belt
  • For each $1 per ton (2.8 cents/bushel) change in corn:-

The cost of egg production would change by 0.11 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 November 30th compared with November 23rd USDA weekly quotations would decrease nest-run production cost for eggs by 1.1 cents per dozen. For broilers cost would be reduced by 0.6 cent per live pound.

 

Year-to-date, the algebraic escalation in the prices of major ingredients has added 5.2* cents per dozen to eggs and 3.1* cents per live-weight lb. to broiler production cost

*(rounded to 0.1cent)

 

According to the November 9thWASDE, corn harvested in calendar 2021 will attain 15,062 million bushels with ending stocks projected at 1,493 million bushels, up 0.3 percent from the 15,019 million bushels projected in the October 2021 WASDE Report. Values will be updated reflecting production, ongoing export volumes and domestic use in the December WASDE report. Close to all suitable corn and soybeans were harvested by November 28th. Total corn stocks on September 1st amounted to 1.24 billion bushels down 36 percent from September 1st 2020.

 

Compared with the November 24th value, the CME quotation for corn at 14H00 on December 2nd for December 2021 delivery was down 2 cents per bushel to 577 cents reversing the small increase from the previous week.

 

The social 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 83.0 percent of the U.S. ethanol fermentation volume was operational, based on the 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 increasing the proportion of production that is exported. According to the U.S. EIA, for the week ending November 19th the industry produced on average 1,035,000 barrels per day, down 4.1 percent from the week ending November 11th 2021, and the seventh consecutive week above one million gallons per day after thirteen successive weeks under this benchmark. On November 26th ethanol stock was up 2.0 percent from the previous week at 20.3 million barrels, representing an approximately 20-day reserve but confirming a slight decrease in demand given relatively lower production.

 

Ethanol was priced at $2.22 per gallon on December 1st unchanged from the previous eight weeks and compared with a five-year low of $0.92 per gallon on March 26th 2020 during COVID restrictions. Concurrently RBOB gasoline at $2.00 per gallon (quoted, New York Harbor) was down 32 cents per gallon (13.8 percent) from the previous week, consistent with a 16.1 percent lower WTI crude price of $65.72 per barrel. Damage caused by Hurricane Ida to offshore Gulf operations and refining in Louisiana is mostly repaired. Gasoline is now 22 cents per gallon less expensive than ethanol but with a 63 percent higher BTU rating.

 

With most plants among the 201 that were operational on January 1st 2021 now functioning, DDGS is freely available but commands a higher price than in the first half of 2021. Eastern Corn-belt DDGS was priced at $168 per ton on November 30th 2021, down $2 per ton from the previous week and $30 per ton less expensive than on November 24th 2020. Generally DDGS is currently 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 USDA projected a 2021 crop of 4,425 million bushels in the November WASDE. Ending stocks according to the projection will be 340 million bushels, up 7.2 percent from the October WASDE Report. Total soybean stock on September 1st amounted to 256 million bushels down 51 percent from September 1st 2020 indicating the extent of exports during the 2020-2021 market year.

 

The CME soybean price for January 2022 delivery at14H00 on December 2nd was lower by 22 cents per bushel to 1,244 cents compared to 1,266 cents per bushel on November 24th for current month delivery.

 

According to a release on November 15th by the National Oilseed Processors Association, 184.0 million bushels of soybeans were crushed in October compared to an expectation of 182 million bushels. Previous monthly crush values in 2021 were 153.8 million bushels in September, and 165.1 million bushels in August. October 2021 crush can be compared with 185.3 million bushels in October 2020. Lower production in recent months was attributed to extended maintenance in anticipation of the fall harvest.

 

On November 30th 2021 soybean meal quoted central Illinois was priced at $356 per ton, $13 per ton lower than the previous week and compared to $396 per ton on November 24th 2020.

 

On November 30th 2021 Meat and Bone meal was $330 per ton quoted Central U.S., unchanged from the presumed price during the previous week but compared to $340 per ton on November 24th 2020.

 

On December 2nd the conversion of CNY 1 to the BRL was 0.88 BRL, unchanged from the previous week. The conversion of US$1 to the CNY was 6.4, unchanged 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 anticipated that soybean imports by China would attain 95 million metric tons during the 2020-2021 market year but in reality only 60.3 million tons was shipped through August 2021.

 

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 USDA-FAS documented sales of U.S. corn to China through late August 2021 comprising the 2020/2021market year amounting to 73 million metric tons (2,876 million bushels) with 93 percent shipped.

 

COMMENTS

Subscribers are referred to the November 9th 2021 WASDE #618 and to the Crop Progress,Grain Stocks and Planned Acreage reports under the STATISTICS Tab.


 

Kroger Reports on Q3 of 2021

In a press release dated December 2nd The Kroger Company (KR) announced results for the 3rd Quarter ending November 6th. As a pure-play supermarket chain with 30 banners Kroger is a bellwether of the state of the grocery-pharmacy segment of the food industry.   

 

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)

 

3rd Quarter Ending

Nov. 6th 2021

Nov. 7th 2020

Difference (%)

Sales:

$31,860,000

$29,723,000

+7.2

Gross profit:

$6,901,000

$6,822,000

+1.2

Operating income:             

$868,000

$792,000

+9.6

Pre-tax Income1

Net Income

            $562,000

            $485,000

$834,000

$632,000

-32.6

-23.2

Diluted earnings per share:

$0.64

$0.80

-20.0

Gross Margin (%)

21.7

23.0

-5.6

Operating Margin (%)

2.7

2.7

0

Profit Margin (%)

1.5

2.1

-28.6

Long-term debt, leases and obligations:

$21,431,000

      $20,679,000

          +3.6

12 Months Trailing:

 

 

 

           Return on Assets    (%)

3.5

 

 

           Return on Equity    (%)

12.3

 

 

           Operating Margin   (%)

2.0

 

 

           Profit Margin          (%)

0.9

 

 

Total Assets

$49,829,000

      $48,465,000

          +2.8

Intraday Market Capitalization

$33,565,000

                    

          

Note 1. Investment loss of $94 million Q3 2021 compared to gain of $162 million in Q3 2020

 

 

52-Week Range in Share Price:  $30.35  to  $47.94        50-day Moving average  $40.73

Market Close Dec. 1st pre-release, $40.25 

                      Dec. 2nd post-release 11H00 EST, $45.23 (up 12.5 percent)

Forward P/E  12.9                  Beta 0.4

 

Kroger recorded a 3.1 percent increase in identical store sales (excluding fuel) compared to Q3 2020 and 14.0% over two years. Digital sales increased 103 percent over two years

 

In commenting on quarterly results, CEO Rodney McMullen stated, "Kroger's strategy to lead with fresh and accelerate with digital continues to connect with our customers. Our agility, and the commitment from our amazing associates, is allowing us to navigate current labor and supply chain conditions and provide the freshest food at affordable prices across our store and digital ecosystem. 

 

He added "Our focus on execution, combined with our continued discipline in balancing investments in our associates and customers with exceptional cost management, and growth in our alternative profit business allowed us to exceed internal expectations and deliver strong sales and earnings growth. 

 

McMullen concluded "Across all aspects of our business, we are innovating and executing with speed against the key initiatives that are transforming our business. Kroger is in a position of strength. We are committed to delivering for our associates, customers, and communities, and we remain confident in our ability to deliver total shareholder returns of 8% to 11% over time."


 

Dollar General Posts Q3 Financial Results

In a December 2nd release, Dollar General Corporation (DG) posted financial results for the third quarter of fiscal 2022 ending October 29th 2020. This chain can be regarded as a bellwether for the dollar-store format catering to low-income demographics in inner city and rural areas.

 

For the period, net revenue was $487.0 million on total revenue of $8,517 million.  Comparable figures for the third quarter of fiscal 2020 ending October 30th 2019 were net income of $574.3 million on total revenue of $8,200 million.  EPS declined from $2.51 for the third quarter of fiscal 2020 to $2.09 for the most recent quarter. Higher cost of goods sold and operating expenses contributed to the difference.

 

The company recorded a comparable same-store sales decline of 0.6 percent compared to the third quarter of fiscal 2020 but an increase of 11.6 percent on a 2-year stack basis. Sales gained 3.9 percent for the most recent quarter.

 

In commenting on results, Todd Vasos CEO stated, “We are pleased with our third quarter results, and I want to thank our associates for their unwavering commitment to meeting the needs of our customers, communities, and each other,” He added “During the quarter, we made meaningful progress advancing our key initiatives, while continuing to successfully deliver for our customers, despite a challenging operating environment”.

 

In reviewing future strategy Vasos noted, “We are excited today to announce our real estate growth plans for fiscal year 2022, which consist of nearly 3,000 real estate projects in total, including 1,110 new stores. These plans include the acceleration of our pOpshelf store concept, as we expect to nearly triple our store count next year. Importantly, given the sustained and positive performance of our pOpshelf concept, we plan to further accelerate the pace of new store openings as we move ahead, targeting a total of approximately 1,000 pOpshelf locations by fiscal year end 2025.

 

“We are also excited to announce our plans to expand our footprint internationally for the first time, with plans to open up to ten stores in Mexico by the end of fiscal 2022, as we continue to lay the foundation for future growth.

 

Dollar General posted assets of $25,925 million against long-term debt and lease obligations of $12,935 million and the Company has an intraday market capitalization of $50,954 million. DG trades with a forward P/E of 20.4 and has ranged over a 52-week period from $173.50 to $239.35 with a 50-day moving average of $218.57.  Twelve-month trailing operating margin was 10.1 percent and profit margin 7.5 percent.  Return on assets over the past twelve months was 8.3 percent and the return on equity 37.5 percent. At 12H30 December 2nd post-release, DG traded at at $216.30 down 2.9 percent.


 

U.S. Investors Acquires Equity in Hendrix Genetics

In a November 22nd release, Hendrix Genetics announced that Paine Schwartz Partners has acquired fifty percent of the equity of Hendrix Genetics.  The remaining shareholding will be held by Thijs Hendrix and Antoon van den Berg who will continue as partners with the U.S. investor.  NPM a shareholder since 2015 will divest their minority interest.

 

Hendrix Genetics was founded in 2005 and is headquartered in Boxmeer, the Netherlands.  The company operates breeding programs in turkeys, egg production, swine, salmon, trout and shrimp under 15 brands.  Egg production breeds include ISA, DeKalb, Bovans, Shaver, Babcock with traditional strains marketed as SASSO . Turkeys are bred and distributed under the Hybrid brand.  Hendrix Genetics operates in 25 nations and employs 3,500.

 

The management team will continue to be led by Jolanda van Haarlem, the CEO with the support of the co-founders and the Supervisory Board.  Thijs Hendrix noted, “We are excited to partner with the Paine Schwartz team to build on our strong foundation and further grow by continuing to develop innovative solutions for the animal protein sector that meet the challenges of food production.”  He added, “This new investment from Paine Schwartz will help us to further accelerate growth through expansion into new markets and sustain our leadership in technology and R & D.

 

Kevin Schwartz, CEO of Paine Schwartz stated, “This strategic investment in Hendrix Genetics is directly aligned with our long-term thesis of identifying companies that sustainably increase productivity in the production of agriculture commodities required to feed an ever-growing global population.”

 


 

Walmart Testing Pallet Labels for Produce

Ovotrack of the Netherlands is participating with a major egg producer to introduce a traceback system currently used by Walmart for produce.  The Ovotrack Pallet Label solution offers the capability to include an order number and a Walmart location ID in addition to a serial number.

 

Egg producers will in the future be required to conform to customer identification and transparency requirements.  It is hoped that there will be a high degree of standardization to achieve the intended purpose without disrupting plant operations or adding to expense.

 


 

Produce Market CEO Sentenced

Previously EGG-NEWS reported on the malfeasance of Caesar DiCrecchio, previously CEO of the Philadelphia Wholesale Produce Market.  During his tenure, he defrauded the organization of more than $8 million in a series of internal scams including skimming parking fees, kickbacks and using a company credit card for personal use.  After pleading guilty to nine counts including conspiracy to commit wire fraud and tax evasion, he was sentenced to ten years in federal prison and ordered to pay $8 million in restitution.


Sonny D in happier times

 

USDA Assigns $90 Million to Local Food Businesses

On November 23rd the U.S. Department of Agriculture (USDA) announced that 203 projects would collectively receive $90 million under either of the Local Agriculture Marketing Program, the Farmers Market and Local Food Promotion program and the Regional Food System Partnerships.

 

The Farmers and Local Food Promotion Program will award $75 million to 172 projects in 41 states.  The purpose will be to develop and expand direct producer to consumer marketing and to encourage regional food business enterprises.  The program comprises the Farmer Market Promotion Program and the Local Food Promotion Program. 

 

The Regional Food System Partnerships will receive $14.8 million for 30 projects in 24 states to connect public and private resources to plan and develop local or regional food systems.

 

In announcing the grants, Secretary of Agriculture Tom Vilsack stated, “The grants under the Regional Food System Partnerships will help build a fairer, more transparent food system routed in local and regional production were businesses can compete fairly because a greater share of the profit will go to those growing, harvesting and preparing our food.”

 

While use of public funds for project to encourage production and distribution of food are justified, the USDA must insist on accountability and the return on public funds must be quantified.  $90 million is a considerable sum and accountability extending downwards from the Agricultural Marketing Service through to recipients should be a cornerstone of the Local Agriculture Marketing Program incorporated into the 2018 Farm Bill.


 

Retail Chains Closed on Thanksgiving Day

Following closure during Thanksgiving in 2020 due to COVID restrictions, a number of chains have recognized the value of a day-off for their workers.  Target announced that it will permanently close on Thanksgiving Day along with Trader Joe’s, Walmart and Aldi.  Stores all reopened early on Black Friday.

 

Brian Cornell, CEO of Target stated, “What started as a temporary measure driven by the pandemic is now our new standard.”


 

Concern over Discovery of Frozen Vials Labeled ‘Smallpox’

ProMED-Mail reported on a discovery of vials labeled Smallpox in a Montgomery County, PA vaccine facility operated by Merck on November 17.  Fifteen vials were located in a freezer that was undergoing cleanout.  Five of the vials were labeled “Vaccinia” and the remainder as “Smallpox”. 

 

The discovery led to an immediate lockdown of the facility.  Following assay showing that all vials contained vaccinia virus and not the variola strain virus capable of causing smallpox, the lockdown was lifted.  Authorities are still investigating the origin of the vials.  Currently only two designated World Health Organization sites hold stocks of variola virus.  In the U.S. the Centers for Disease Control in Atlanta is a repository of presumably to develop diagnostic reagents in the event of bioterrorism.  The second site is the State Research Center for Virology and Biotechnology located in Novosibirsk in the Russian Federation. 

 

In July 2014, FDA employees discovered six vials containing variola virus during a move from the Bethesda, MD facility.  The FDA had previously received the vials from NIH in 1972 and were stored for 29 years.  There was no evidence that any of the vials were opened and there was no exposure of laboratory workers.

 

Smallpox could be used as a biological weapon since a high proportion of the world’s population is susceptible to variola virus other than the elderly who were vaccinated as infants and juveniles and military personnel who have received the vaccine.  The discovery demonstrates the risk of laboratory accidents from negligence or deviation from established procedures. Specific gain of function experiments especially if conducted by inexperienced personnel or in facilities inadequately equipped to sequester pathogens represent a serious threat to world health.

 


 

Cost of Thanksgiving Higher in 2021

With the relaxation of COVID restrictions and more general protection through vaccination, U.S. families are returned to traditional Thanksgiving gatherings. This was evidenced by heavy road and air travel over the weekend.

 

Lending Tree commissioned Qualtrics, a market research company to conduct an online survey of 2,000 U.S. consumers to determine plans for serving a Thanksgiving dinner.  Predictably 47 percent of those surveyed who were hosting a Thanksgiving dinner expected an increase in the number of guests. Thanksgiving gatherings cost $391 on average in 2021for the traditional meal.  Millennials will pay the most at $461, consistent with larger family groups.  It would appear that Thanksgiving gatherings added to household debt with higher prices for foods mainly due to disruption in supply chains.  Nearly half of hosts planned to increase household debt, up from 38 percent in 2020 and only 27 percent will apply a strict budget to their events.

 

Link to the Lending Tree study: https://www.lendingtree.com/credit-cards/study/thanksgiving-spending-survey/

 


 

Contrast in COVID Between 2020 and 2021

During the Thanksgiving week in 2020, COVID cases were on the rise in forty-six states but holding steady in three and decreasing in Hawaii with 11.5 million cases of COVID recorded.  During the third week of November 2021, cases were rising in thirty-seven and decreasing in thirteen states.

 

In 2020, peak hospitalization amounted to 79,000 individuals on November 18th.  In contrast on November 23rd 2021, the seven-day national daily hospitalization average peaked at 52,073 cases.

 

By November 18th 2020, 250,579 deaths had been reported.  On the same day in 2021 the death total had risen to 774,580.

 

There were no vaccinations against COVID administered in 2020.  Effective November 23rd, 69.5 percent of Americans, amounting to 230.7 million have received at least one vaccine with 59 percent fully vaccinated and 36.6 million have received a booster dose.

 

The EU is experiencing a “fourth wave" of COVID creating a demand for booster vaccinations coupled with intense efforts to persuade unvaccinated people to receive protection.  CDC data confirmed that unvaccinated people were ten times more likely to be admitted to a hospital and five times more likely to be infected than vaccinated adults in thirteen states and cities for which data was available.  Unvaccinated Americans have died at eleven times the rate of those fully vaccinated as a result of the dominance of the Delta variant of SARS-CoV-2.  The Moderna mRNA vaccine was 92 percent effective of preventing hospitalization followed by the similar Pfizer-BioNTech product at 84 percent prevention.


 

Hendrix-Genetics Emphasizes Behavior in Breeding Programs

A recent article by Marcel Huijsmans of Hendrix Genetics, emphasizes the social behavior of hens and the need to incorporate a response to environmental variables into pure line selection programs.  Hendrix Genetics has studied social behavior for many generations and lines have all been selected without beak treatment.  Hendrix-Genetics claims that this approach has reduced cannibalism and feather picking.  The company is evaluating dietary variables, lighting programs, and housing systems in selection programs.  Pure lines have been selected in cage-free housing at a number of locations around the world to assess interaction between environment and climate for non-caged flocks. 

 

As with other primary breeders, Hendrix Genetics uses trap nests and RFD technology to gather data that is incorporated into index selection.  The company has entered into technical agreements with research institutes and universities to evaluate specific aspects of welfare and behavior.


Marcel Huijsmans

 

The rapid transition from caged housing to alternative systems has gathered support since the turn of the century. This has created new challenges for primary breeders to ensure that their commercial products achieve optimal egg production, liveability and hence cumulative eggs per extended cycles using non-confined housing and management.


 

Welcome to AG Property Solutions as a Sponsor

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AG Property Solutions functions as a general contractor applying extensive experience in livestock buildings to diverse poultry projects. The Company has a unique ability to evaluate and satisfy individual customer requirements with respect to swine, dairy and poultry operations. 

 

Design and construction engineers and production specialists are capable of diagnosing housing and equipment problems and providing remedial services including corrective maintenance and upgrades. 

 

The supply component of the company is supported by a fully-stocked warehouse providing major brands including L.B. White™ heaters; Munters™ ventilation components; Schuld/Bushnell™ and AP™ feed bins and delivery systems; Dosatron™ medicators; Space-Ray™ radiant gas-tube heaters; Multifan™ ventilation, inlets and shutters; Cool Cell™ evaporative cooling systems and AGRI™ Ventilation controls.  In addition to major capital items, the company offers a complete range of disinfectants and equipment to maintain biosecurity.

 

For further information contact Brian Nobis, Director of Poultry Accounts <bnobis@agpropertysolutions.com> or by clicking onto the AG Property Solutions logo on the right side of the welcome page.



 

Commentary


Dichotomy over COVID in Canadian Mink

The Province of British Columbia has decided to initiate a phase-out of mink production in April 2023 with complete closure of the industry within two years.  The decision was based on public health concerns and will affect nine farms in the Fraser Valley with a collective population of 320,000 mink.

 

In contrast, Nova Scotia is allowing COVID vaccination on a restricted emergency-use basis under supervision of Veterinarians.  The Province of Nova Scotia is offering funding to 24 licensed producers with twelve having received U.S. $650,000 in support, despite the fact that profitability of mink production is declining with only China serving as a market for pelts. This demand could evaporate at the snap of President Xi’s finger if wearing mink is regarded as ‘unpatriotic’.

 

There is considerable opposition to mink farming in Canada that has 70 licensed units.  Dr. Scott Weese, a veterinarian specializing in infectious diseases, affiliated to the Ontario Veterinary College at the University of Guelph, supported the decision of health authorities in British Columbia.  Dr. Weese maintains that mink that are susceptible to respiratory infections including COVID hav a high probability of developing new strains as has occurred in the EU.  He clearly summarizes the situation as “we have a plausible risk and we have pretty minimal benefits apart from a small number of farmers.”

 

Although the National Mink Association has raised a number of fatuous arguments to support continued mink farming, science is on the side of eliminating this public health risk.  The Mink Association pointed to the fact that a number of domestic cats have been diagnosed with COVID and it is well documented that felines in zoos have contracted SARS-CoV-2 from staff.  The difference between individual and mostly solitary felines and mink lies in the large number, close proximity, and concentration on a commercial farm.  These are conditions that can lead to the emergence of new strains, irrespective of vaccination.  There is sufficient clinical and epidemiologic evidence that vaccinated humans can be reinfected, although they do not suffer the extreme clinical effects, such as requiring hospitalization and even death compared to non- vaccinated individuals.  Vaccination may well suppress clinical signs in mink housed on farms, but virus will continue to circulate with the potential of mutation and the possibility of a more virulent strain emerging. There are a lot more Greek letters after Omicron!

 

Clearly the Canadian Mink Breeders’ Association is fighting a rearguard action with lower demand and falling prices for pelts.  This is clearly a time to eliminate commercial multiplication of mink and eliminate a potential human health hazard since the product is essentially an unnecessary luxury with few producers involved.

 


 

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