Editorial


Transparency and Honesty in Product Designation

There is no Federal standard to distinguish among cage-free, aviary, barn, free-range and pastured housing of flocks.  Welfare certification based on EU or U.K. standards can be assigned to specific categories and is presumably monitored by audit.  The difference in unit revenue between either brown or white eggs derived from cages or alternatives to cages may exceed $1.50 per dozen at retail.  The difference between eggs obtained from flocks held in barns or allowed access to pasture is even greater.  The same is true for conventional and organic eggs. Large differences in value create an incentive to cheat by upgrading the designation of an egg. Product from alternatives to cages appeal to affluent and more selective consumers although sentiment is the only attribute distinguishing a cage-free egg from a pasture-derived product.

 

There is no practical analytical procedure to differentiate between eggs derived from cages as compared to alternative systems. After the 2013 EU cage ban came into effect, a scandal occurred in the U.K. when a major supermarket chain marketed eggs from Spain as cage-free despite the fact that they were derived from caged hens.  Since eggs in the EU are not generally washed, it was possible by microscopic examination of shell surfaces to distinguish between eggs derived from cages and those on litter.  Following washing as in the U.S. this distinction is not possible.

 

The incentive to cheat is intensified under conditions of high demand.  In reviewing IRI data, a specific U.S. producer of free-range and pastured eggs was able to increase sales within a week from approximately 400,000 dozen to close to 600,000 dozen and to maintain this level through the period of high demand from mid-March through April.  It is possible to achieve an increase in sales within a week providing the producer concerned drew on a substantial inventory. To sustain output over a number of weeks presumes that flocks in production were placed at least 30-weeks previously.  No one could have predicted the COVID-19 surge in demand back in August 2019.  Producers can increase sales of a specific brand by purchasing eggs from other producers at relatively short notice, providing supplies are available.  This would not have been the situation in mid-March given demand for eggs of all categories from generic through pasture- reared.

 

Based on experience in the industry it is accepted that producers conform to an acceptable level of ethics.  Unfortunately, some unscrupulous individuals have indulged in deceptive marketing practices.  In the early 2000's, eggs from barn-housed flocks were marketed by one producer as "free roaming", an acceptable if non-defined descriptor.  The deception however related to the label that depicted hens on pasture. The combination of the “free roaming” descriptor and the visual image on the carton created the impression that hens were actually allowed extensive outside access that was not the case.

Recognized and enforced standards are required to maintain the confidence of consumers paying a premium for eggs obtained from specific types of housing. This is only fair to the producers who invest capital in facilities, labor and incur other costs to produce cage free, free range and pastured eggs priced according to housing system.

 

The certifying agencies providing logos based on standards with audits could form the basis of national standard.  Unless the industry conforms to uniform standards, a patchwork of alternatives will be a disservice to consumers and allow unscrupulous producers and packers to perpetuate scams based on misrepresentation.  Given clearly defined statutory standards with auditing and confirmation, the Federal Trade Commission should have the authority to sanction and fine producers deviating from ethical principles.


 

Egg Industry News


COMMODITY REPORT: JULY 3rd 2020.

  • The financial and economic implications of the COVID-19 pandemic continue but will gradually ease as society returns to a “new normal” despite a recent upsurge in cases.
  • Corn and soybeans were markedly higher in price this past week following release of the USDA Planting and Stocks Report on June 30th. Corn futures for July delivery were higher by a noteworthy 8.2 percent compared with the quotation on June 27th. Soybeans were up 3.0 percent compared with last week, attributed to orders placed by China.
  • Prospects for commodity exports to China are apparently still restrained. China has reduced their domestic short-term demand for soybeans as a result of continuing losses from African swine fever but chicken production has now recovered. The U.S. anticipates shipping in quantity during late summer for the 2020/2021 market year, following established seasonal patterns.

 

Uncertainties still include:-

  • The extent and timing of soybean purchases by China in 2020 is in question. The U.S. - China Phase-One agreement signed in mid-January incorporated U.S. tariff rescissions, promised purchases of agricultural commodities (valued at $36.5 billion in 2020 and $43.5 billion in 2021), concessions on some structural issues by China and strengthened enforcement provisions. A virtual meeting between senior officials of the U.S. and China on Friday May 8th elicited a reassurance that China would fulfill its obligations with respect to imports of U.S agricultural products. Both sides accepted the need to improve relations damaged by recent injudicious rhetoric relating to the origin of COVID-19 and legislative pressure on Hong Kong. The Phase-One Trade Agreement still appears intact despite comments by White House advisor, Dr. Peter Navarro who issued a subsequent “correction”.
  • It is anticipated that China will take advantage of low world prices for commodities to import corn and soybeans to add to reserves. The U.S. expects to supply part of this requirement. A consignment of 390,000 metric tons (14.3 million bushels) of soybeans was ordered on Monday 22nd
  • Imports of soybeans by China from Brazil were delayed by inclement weather and COVID-19 port disruptions during the first quarter of 2020, resulting in soybean stocks falling to a multiple-year low. Imported consignments increased stocks to 4.26 million tons (157 million bushels), up 28.7 percent from March 2020.
  • The market is now more accepting of the reality that future shipments of soybeans to China will not attain the quantities promised by the Administration after signing the Phase-One agreement.
  • Total world soybean shipments from the U.S. during the 2019/2020 market year amounted to 36.61 million metric tons, (1.326 million bushels), with China representing 36 percent of this quantity.
  • Total world corn shipments from the U.S. during the 2019/2020 market year amounted to 31.13 million metric tons through May with China representing 83 percent of the quantity.
  • Domestic U.S. soybean and soybean meal demand is currently constrained by cutbacks in the intensive livestock and poultry sectors as impacted by COVID-19.
  • Justifiable uncertainty exists regarding the spread of African swine fever and COVID-19 to other Asian nations, Europe and North America with the potential to create a worldwide depression as economic activity is curtailed

 

Questions still exist:-

  • The eventual sizes of corn and soybean crops will influence price going forward. According to the June 30th USDA Planting and Stocks Report, corn acreage was down approximately five percent from the March estimate. Yields of both corn and soybeans are expected to be impacted by emerging drought and heat in the corn-belt. Projections will be updated in the July WASDE to be released mid-month.
  • A U.S. trade agreement with the U.K. should be concluded in 2020 but trade with the U.S. will be conditioned by commitments to the E.U. by the departing nation. Negotiations commenced in early January between Ambassador Robert Lighthizer and his U.K. counterpart, Minister Elizabeth Truss and are continuing at appropriate levels in working groups. A bilateral agreement will have to overcome U.S objections over the use of Huawei communications equipment by the U.K. and application of chlorine and alternative antibacterial solutions in processing U.S. chicken and feeding beta agonists to livestock.

 

Corn to be harvested in calendar 2020 is expected to attain 15,000 million bushels with ending stocks influenced by yield and exports. Compared with the June 26th 2020 close, the CME quotation for July corn on July 2nd was up by 26 cents per bushel to 342 cents. The social restrictions imposed in the U.S. as a result of COVID-19 will reduce ethanol demand by 1.5 billion gallons or 10 percent of projected 2020 addition to gasoline. Forty percent of U.S. ethanol fermentation capacity is off-line at present but the outlook for increased demand is improving. Ethanol was priced at $1.25 per gallon on July 2nd up 9 cents per gallon from the previous week and compared with a five-year low of $0.92 per gallon on March 26th. Currently gasoline at $1.24 per gallon (quoted New York Harbor) is 0.8 percent less expensive than ethanol but has a 63 percent higher BTU rating than ethanol.  

 

Soybeans, expected to be the beneficiary of the Phase-One agreement, were up 26 cents per bushel to 892 cents for July delivery.  The USDA anticipates a 2020 crop of 4.125 billion bushels up 16 percent from 2019 but subject to climatic conditions. Ending stocks are projected at 395 million bushels.

 

From May 12th to June 9th the Yuan remained constant at CNY 7.08 to US$1 except for a brief spike at the end of May. During this time the Brazilian Real strengthened against the US$ from BRL 5.9 to BRL 4.9 and the BRL strengthened against the CNY  from BRL 0.83 to BRL 0.69, effectively favoring purchases of soybeans by China from the U.S. The value of the BRL then declined with an increase in the incidence rate of COVID-19 in Brazil. On July 3rd the BRL exchange with the CNY was 0.75 compared to 0.78 the previous week.

 

The USDA reported the following sales this past week:-

  • 202,000 metric tons of corn (7.95 million bushels) for delivery to China during the 2020/2021 marketing year; and
  • 126,000 metric tons of soybeans (4.63 million bushels) for delivery to China during the 2020/2021 marketing year.

 

For consecutive 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 following extracts from the June 30th 2020 edition of the Quarterly USDA Grain Stocks Report indicate the levels of storage on farms and in fields and off-farm for corn and soybeans. The data will be updated at the end of September.

  • Corn stocks in all positions on June 1st 2020 totaled 5.22 billion bushels, up less than one percent from June 1st Of the total stocks, 3.03 billion bushels are stored on farms, up three percent from a year earlier. Off-farm stocks, at 2.20 billion bushels, are down two percent from a year ago. The March - May 2020 indicated disappearance is 2.73 billion bushels, compared with 3.41 billion bushels during the same period last year.

 

  • Soybeans stored in all positions on June 1st 2020 totaled 1.39 billion bushels, down 22 percent from June 1st On-farm stocks totaled 633 million bushels, down 13 percent from a year ago. Off-farm stocks, at 753 million bushels, are down 28 percent from a year ago. Indicated disappearance for the March - May 2020 quarter totaled 869 million bushels, down 8 percent from the same period a year earlier. The June 11th WASDE projected the 2020 harvest for corn from 89.6 million acres and from 82.8 million acres for soybeans. These values were lower than the projections developed before the advent of COVID-19.

 

The following quotations for July delivery were posted by the CME at close of trading on July 2nd (closed on July 3rd) compared with values posted on June 26th  (in parentheses) reflecting specified months for delivery.

COMMODITY

 

Corn (cents per bushel)

  July  342  (316)        

Sept.  343  (318)

Soybeans (cents per bushel)

  July  892  (866)

Sept.  891  (860)

Soybean meal ($ per ton)

  July  293  (282)

Sept.  298  (285)

 

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

 COMMODITY            CHANGE FROM PAST WEEK

Corn:                  July quotation up 26 cents per bushel                  (+8.2 percent)               

Soybeans:         July quotation up 26 cents per bushel                  (+3.0 percent)

Soybean Meal: July quotation up $11 per ton                                 (+3.9 percent)

 

The shortage of meat and bone meal in May and June due to reduced processing of pork and beef has ended. Prices for this ingredient for Minneapolis delivery settled at $170 per ton on June 30th unchanged from June 23rd. On July 2nd 2019 Meat and bone meal was priced at $210 per ton. The production of meat and bone meal from euthanized whole hogs will require adjustment of ingredient matrices for meat and bone meal depending on source.

 

With more plants producing ethanol, DDGS is now more available at a lower price. Eastern Corn-belt product was priced at $142 per ton on June 30th, $7 per ton lower than on June 25th 2019.

 

  • 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

 

 COMMENTS

 Subscribers are referred to the June 11th WASDE #601 under the Statistics TAB.

 

Dr. Joe Glauber of the International Food Research Institute and formerly a USDA economist for 30 years, expressed the view that China would not be able to comply with obligations under the Phase One Agreement. Imports of U.S. commodities amounted to $5 billion in the first quarter of 2020, comprising pork, cotton, corn and wheat. The volume of commodities delivered would have to increase to $10 billion for each of the succeeding quarters to attain the promised $36.5 billion for the current year. Dr. Glauber anticipates that China will even fail to meet the 2017 baseline of $24 billion. Escalating tensions with China over COVID-19 and pressure on Hong Kong will not benefit exports to that Nation.

 

During 2018 and 2019 a total of $28 billion was disbursed to the agricultural sector in Market Facilitation Program (MFP) payments. Additional requests are being made by industry groups for 2020 MFP relief and these may be justified by delayed or anticipated lower imports by China. President Donald Trump stated in late February 2020 that the Federal Government would “provide additional aid to U.S. farmers as needed until recently negotiated trade deals with China, Mexico, Canada and other countries fully kick in”. At least one round of 2020 MFP payments was anticipated. Approximately $16 billion will be disbursed under the Coronavirus Food Assistance Program (CFAP). As of June 3rd, $540 million has been distributed. This effectively represents a transfer of funds from taxpayers and their grandchildren to the agricultural sector.


 

USDA DATA ON JUNE CAGE-FREE PRODUCTION

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

The USDA Cage Free Report for the month of June 2020 released on July 7th 2020 documented a 0.6 percent increase in the population of hens producing under the Certified Organic seal to 15.8 million, unchanged from the average in Q2 2019. In contrast cage free flocks increased by 2.5 percent in June to 62.6 million representing an 11.2 percent increase from the average during the first quarter of 2020. The respective numbers of hens in organic and cage-free flocks should reflect the realities of supply and demand in the market over successive quarters.

Average flock production was raised to 78.5 percent for both categories of non-caged hens reflecting the depletion of older flocks and higher relative production from chicks placed during late December 2019 and in January 2020.

 

Flock size June Av. Q2 (million hens) 2020 2020

 

Av. Q1 2020

 

 

Av. Q3 2019

 

 

Av. Q2 2019

 

 

 

Certified Organic 15.8 15.7

15.7

16.2

15.8

 

 

Cage-free hens 62.6 61.5

56.3

54.5

52.0

 

 

Total non-caged 78.4 77.2

72.0

70.7

67.8

 

 

 

Average weekly production (cases). May June

Certified Organic

236,899 241,360; +1.9%

Cage-free

920,155 955,367; +3.8%

Total non-caged

1,157,054 1,196,727; +3.4%

 

Average Wholesale Contract Price Cage-Free Brown

$1.53/doz. ($1.53 Sept.’19 through May‘20)

Range:

$1.15 to $2.10/doz. (unchanged)

FOB Negotiated price, grade quality, nest-run, loose

Price range $0.65 to $1.05 per dozen

Average Value of $0.78/doz. (was $1.71 May.)

 

 

Average Advertised National Retail Price C-F, L, Brown

$2.32/doz. (was $3.08 May 2020)

USDA 6-Regions

High: NE

$2.91/doz. $3.38 (NE.)

 

Low: SE

$1.99/doz. $3.11 (MW.)

 

Based on the importance of cage-free production, the USDA-AMS issues their report on volumes and prices at monthly intervals for the information of Industry stakeholders. There is some doubt as to the accuracy of the individual monthly flock numbers especially when reports show either no change in the cage-free flock for sequential months or a large difference for the preceding month after the end of a quarter. It is suggested that USDA consider a quarterly report with more accurate and consistent data to be more useful to the industry.

 

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


 

Status of 2019 Corn and Soybean Crops

The USDA Crop Progress Report released on July 6th documented soybean and corn emergence as complete but corn silking is behind the 5-year average. The condition of both corn and soybean crops are superior to 2019.

Subsoil and surface moisture levels were lower than the corresponding weeks in 2019 creating concern in some states over drought. Topsoil moisture was partly restored by rains this past week. 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 2020 harvest in October.

Reference is made to the June 11th WASDE Report #601 accessible under the STATISTICS tab for projected 2020 acreage and yields to be updated next week.

WEEK ENDING

Crop

June 28th

July 5th

5-Year Average

Corn Planted (%)

Corn Emerged (%)

Corn Silking (%)

100

100

4

100

100

10

100

100

16

Soybeans Planted (%)

Soybeans Emerged (%)

Soybeans Blooming (%)

Soybeans setting pods (%)

100

100

14

-

100

100

21

2

100

100

34

4

 

Crop Condition

V. Poor

 Poor

Fair

Good

Excellent

Corn 2020 (%)

Corn 2019 (%) *

* late planting

1

3

 

5

9

23

31

54

47

17

10

Soybeans 2020 (%)

Soybeans 2019 (%)*

 * late planting N/A

1

3

4

9

24

35

57

46

14

7

 

Parameter

V. Short

Short

Adequate

Surplus

Topsoil moisture: Past Week

10

26

57

7

Past Year

3

12

70

15

Subsoil moisture: Past Week

8

24

62

6

Past Year

3

10

70

17


 

Egg Monthly

REVIEW OF JUNE 2020 EGG PRODUCTION COSTS AND STATISTICS.

 

HIGHLIGHTS

  • June 2020 USDA ex-farm blended nest-run benchmark price was 50.7 cents per dozen, 20.1 percent lower than in May and 60.5 percent lower than the high April value of 128.5 cents per dozen. The downward price trend during May and June is attributed to restoration of normal consumer purchasing patterns. This followed COVID-19 panic buying during late March into early April. The supply pipeline was re-filled in April and consumption declined thereafter.
  • June 2020 USDA average nest-run production cost was 0.3 cents per dozen lower than in April 2020 at 58.2 cents per dozen.
  • June 2020 USDA benchmark nest-run margin attained a negative value of 7.5 cents per dozen compared to a positive margin of 3.0 cents per dozen in May 2020.
  • May 2020 national flock in production (over 30,000 hens/farm) was down 5.7 million hens or 1.8 percent to 305.9 million. There are still 14.1 million hens in or returning from molt.
  • May 2020 pullet chick hatch was down 13.7 percent from April 2020 to 26.4 million.
  • May 2020 export of shell eggs and products combined was down 14.3 percent from April 2020 to710,000 case equivalents representing the theoretical production of 10.3 million hens.

 

INTRODUCTION.

Summary tables for the latest USDA June 2020 prices and flock statistics made available by the EIC on July 8th 2020 are arranged, summarized, tabulated and reviewed in comparison with values from the previous June 5th 2019 posting reflecting May 2020 cost and production data.

 

COSTS & REVENUE

Parameter

MAY 2020

JUNE 2020

5-Region Cost of Production ex farm (1st Cycle)

57.9 c/doz

58.2 c/doz

Low

54.6 c/doz (MW)

55.0c/doz (MW)

High

83.7 c/doz (CA)

84.4c/doz (CA)

Components of USDA 6-Region 1stCycle nest-run Cost of Production:-

 

 

MAY 2020

JUNE 2020

Feed

28.9 c/doz

29.2c/doz

Pullet depreciation

10.7 c/doz

10.8 c/doz

Labor (estimate)

4.0 c/doz

4.0 c/doz

Housing (estimate)

5.0 c/doz

5.0 c/doz

Miscellaneous and other*

9.3 c/doz

9.2 c/doz


* Adjusted January 2020 and used as a rounding factor

 

Ex Farm Margin (rounded to nearest cent) according to USDA values reflecting JUNE 2020:-

50.7 cents per dozen1- 58.2 cents per dozen = -7.5

(May 2020 comparison 60.91 cents per dozen – 57.9 cents per dozen = +3.0 cents per dozen.)

Note 1: USDA Blended egg price


 

Egg Week

USDA Weekly Egg Price and Inventory Report, July 9th 2020.

  • The U.S. flock in production was 304.9 million, unchanged from the previous week.
  • Shell inventory was up 1.5 percent after a 0.2 percent increase last week indicating a small but growing imbalance between supply and demand despite a rise in price. There is evidence of a return in the food service sector as the economy reopens.
  • USDA Midwest benchmark generic prices for Extra large and Large were 14.1 percent (10 cents per dozen) higher to averages of 81.5 and 79.5 cents per dozen respectively. Mediums were up 3.7 percent to an average of 54.5 cents per dozen. The market gained for the second consecutive week after stabilizing for two weeks and following a declining trend. Prices may deteriorate as molted hens resume production in the absence of an increase in demand.
  • The price of breaking stock in the Midwest was unchanged to an average of 35.5 cents per dozen. Checks were unchanged at 24.5 cents per dozen.

 


 

AEB School Outreach Program

The American Egg Board has prepared the first of three videos in the new “How-To” series describing egg preparation for school nutrition professionals. The first video features an overview of egg products along with handling and storage requirements. The second and third videos will demonstrate hard-boiled egg and liquid egg recipes that highlight the versatility of eggs. The series of videos is scheduled to premiere this fall with additional promotions in 2021.


 

Rabobank Evaluates Post-COVID On-line Grocery Business

Bourcard Nesin, beverage analyst at Rabobank recently reported on a model to project online grocery sales through the remainder of 2020. Immediately following adoption of COVID restrictions and home confinement, major grocery chains experienced two to four-fold increases in on-line sales. Many banners reported substantial sales during the first quarter of 2020 compared to the corresponding quarter in 2019.  Nesin predicts that on-line sales will eventually revert to the pre-COVID level following restoration of what is expected to be "new normality".

 

Nesin stated, "even if overall on-line sales revert to the baseline scenario retailers that took assertive action during the height of the pandemic will not only benefit from much larger peak growth then the industry at large, but they will be able to deliver the kind of user experience that will help them retain those customers over the long term".

 

It is apparent that the COVID crisis resulted in an unprecedented demand for on-line ordering and delivery of groceries that boosted the channel and should provide competitive advantages even with restoration of in-store purchasing.


 

Consolidation in Food Delivery

During June, Just Eat-Takeaway.com NV of the Netherlands intervened in ongoing negotiations between UberEats and Grubhub to acquire the U.S. company in a $7 billion transaction. This provided Just Eat-Takeaway.com with a foothold in the U.S. to attain a scale of operations offering profitability. 
 

It is apparent that operating delivery networks for food is unprofitable, so the emerging business model applied by Just Eat-Takeaway.com is to provide the ordering platform including apps, allowing restaurants to effect local delivery using their own delivery resources.  This model is contrary to UberEats, DoorDash and Postmates who employ their own delivery personnel. 

 

Jitse Groen, the founder of Takeaway.com in 2000 bases company profitability on gathering orders and taking a slice of the proceeds as a commission.  He stated, "as long as we send messages, we make money".  Currently the Just Eat division in the UK delivers only a quarter of the orders placed on its platform.  Grubhub in the U.S. delivers half of the orders placed. 


Jitse Groen

Despite apparent efficiency from consolidation among food ordering and delivery companies they are encountering growing opposition from restaurants. This is based on a variable level of service and a disproportionate expense with up to a 30 percent commission imposed on orders.

 

Groen favors operation in high-density areas many of which have established distribution networks.  His business model is based on ordering and commissions.  The delivery component is downplayed with Groen stating, "with logistics you can't make any money".  Since Just Eat Takeaway.com went public in 2016 it has acquired competitors to the value of $17.4 billion including the recently announced Grubhub transaction.

 

Further consolidation among services is inevitable but the trend towards restaurants arranging their own delivery will persist after COVID-19 home confinement ends. This is due to an anticipated disinclination among consumers to visit restaurants.


 

Sales of Specialty Foods to Diminish Post-COVID-19

According to the Specialty Food Association growth in purchase of specialty foods will diminish after home confinement is lifted.  This is attributed to decreased disposal income related to prevailing and future economic conditions.  Specialty foods include refrigerated plant-based meat alternatives, shelf-stable and refrigerated creamers, frozen breakfast foods, refrigerated meat, poultry and seafood and baked goods.

 

In 2019 specialty foods and beverages accounted for $159 billion in sales through brick and mortar stores. On-line sales attained $5.4 billion in 2019, up 50 percent from 2018.

 

Post COVID-19, retailers and distributors will cull low-volume items and will concentrate on essentials to the detriment of specialty foods.  Bill Lynch, Interim president of the Specialty Food Association stated, "food retailers are an essential business channel and while that has been beneficial to sales for our members the overall landscape is uncertain".


 

Colorado to Become Cage Free

A law to establish Colorado as a cage-free production state has been enacted.  By 2025, the hen population in Colorado will be housed cage-free joining Pacific states Washington, Oregon and California, in addition to Michigan in the Midwest and a New England consortium.  The regulations mandate one square foot of usable floor space per hen in aviary systems and 1.5 square foot of usable floor space per hen in cage-free housing that does not permit access to vertical space, referring to slatted, all-litter or combination floor systems.


Gov. Polis Announcing Colorado Egg Bill

 

Kroger Company to Introduce COVID-19 Home Collection Test Kit

Kroger Health, a division of the Kroger Company has received FDA ‘emergency use authorization’ for a home collection test kit for COVID-19.  Patients and Kroger workers will be provided access to a dedicated Kroger website to answer screening questions and to register a unique code.  Qualified patients requesting a test will be supplied with the nasal swab, transport vial, an instruction sheet and prepaid shipping label.  Patients will be provided with tele-health guidance to ensure that samples are obtained correctly.  Patients will ship the swab to Gravity Diagnostics clinical laboratory in Covington, KY.  The laboratory will conduct a molecular diagnostic test indicating active infection with SARS-CoV-2 the causal virus responsible for COVID-19.  Negative results will be remitted to an electronic medical record portal.  Patients with positive results will be contacted by a healthcare professional.  Test results will only be accessible to a patient and shared with their organization according to authorization.

Kroger has conducted more than 100,000 tests across nineteen states and anticipates processing 60,000 tests per week by the end of July. Given the structure of the program those wishing to be tested for antigen will be subject to a delay of at least four days from the time of initiating the request to receiving results. This is too long a period to enable quarantine to be effected. The program and technology will soon be rendered obsolete by sensitive lateral flow immunoassay kits that will provide a suitable home-screening assay similar to a pregnancy test within 30 minutes. Presumptive positive results can then be confirmed by more specific molecular assay.


 

Chr. Hansen Posts Q3 Earnings

In a press release dated July 2nd, Chr. Hansen posted results for the third quarter of fiscal 2020 ending May 31st, 2020.  Revenue increased by four percent from the corresponding third quarter of fiscal 2019 to $349 million.  Net profit was higher by five percent to $78 million.  The company generated a gross margin of 54.9 percent and the return on invested capital was 35 percent. Guidance for fiscal 2020 was reconfirmed and the company indicated it will announce the results of an ongoing strategy review on August 25th. Chr. Hansen has an asset value of $2.5 billion and carries $1.0 billion in long-term debt. 

 

In commenting on results, Mauricio Graber, CEO stated, "our business demonstrated resilience during the first volatile month since the outbreak of COVID-19, thanks to our essential natural ingredient solutions for the food, nutritional and agricultural industries".  He added "Animal Health continues to perform strongly driven by dairy products. Human Health also delivered strong growth supported by consumers' interest in probiotics with indications for immune benefits". 


Mauricio Graber CEO

 

California Recalls Raw Milk

California State Veterinarian, Dr. Annette Jones has announced a recall of raw milk produced by Valley Milk Simply Bottled.  The recall was based on the presence of Campylobacter jejuni confirmed on routine surveillance.  Individual states including California permit sale of raw (non-pasteurized) milk but interstate transport and trade is forbidden.

 

The California recall involved milk produced from June 19th to June 30th and encompassed an expiry date of July 9th.


 

Only Moderate Concern Over Emergence of G4 EA H1N1 Influenza in Swine in China

Cooperative Research conducted in the U.K. and China on emerging G4 EA H1N1 influenza in swine has demonstrated that the pathogen is unlikely to be transmitted between humans.   Infection with the emerging swine strain of H1N1 influenza was confirmed from the presence of specific antibodies to the G4 EA virus in hog farmers and packing plant workers in China.  Because the infection involved an H1N1 variant, scientists recognize a possible pandemic potential given that the 2009 “swine flu” outbreak and the 1918-1920 “Spanish flu” were both caused by H1N1 influenza virus. The H1N1 Influenza A virus responsible for the 2009 pandemic contained a unique combination of genes derived from both mammalian and avian species.

 

 Studies have shown that the virus has circulated in hogs since 2016 without extensive infection of humans.  Molecular biologists maintain that numerous mutations would have to occur for the virus to become widespread in human populations. 

 

The reports of studies conducted in China and published in the Proceedings of the National Academy of Sciences stress the need for surveillance and control measures for this variant.  The level of biosecurity on commercial hog farms in China has been intensified following the emergence of African swine fever (ASF).  Precautions to prevent the introduction of the highly pathogenic ASF will reduce the possibly of dissemination of the H1N1 variant. 

 

Vaccination of hogs against H1N1 and incorporation of the variant into seasonal human influenza vaccines may be required should more extensive infection occur among those connected with the hog industry in China.


 

Uber to Acquire Postmates

Spurned by Grubhub after negotiating a deal with Just Eat Takeaway of the Netherlands, Uber has agreed to buy Postmates for $2.7 billion in an all-stock transaction. Postmates holds a 10 percent share of the home delivery segment, ranked 4th after DoorDash (44 percent); Uber Eats and GrubHub.

 

It is questionable whether any delivery service is currently profitable and with competition in the segment and complaints from restaurants that commissions are too high, there does not appear to be much benefit from consolidation.  In contrast to Uber and Postmates that are essentially delivery services, the Just Eat Takeaway combination concentrates on ordering using apps and unique software integrated with restaurant kitchens, leaving the decidedly non-profitable delivery function to individual collaborating QSRs and take-out stores.

 

Financial analysts are divided on the justification for the transaction and whether the combination of Uber and Postmates will engender synergy. UBER closed at $30.68 on Monday 6th July but rose 7.0 percent post-announcement to close on Tuesday in a down market at $32.82.


 

Walmart to Introduce Amazon-Like Subscription Program

Walmart Stores is apparently close to launching a subscription-based service called Walmart +.  According to informed sources, the membership program will cost slightly under $100 per year and will provide same-day delivery of groceries and will suppy other benefits.  The launch was intended for the second quarter, but has been delayed due to the impact of COVID-19.  Amazon Prime has 150 million members and has a twelve-year headstart on Walmart +. The chain has made considerable progress in increasing online sales with a 37 percent growth rate in 2019 and an understandably higher 75 percent for the quarter ending April 30th. This is attributed to home confinement and pandemic buying.  The advent of Walmart + will represent competition for Amazon and could be characterized as a Clash of the Titans.


 

Iowa Senators Opposing Retroactive Waivers

Senator Joni Ernst (R-IA) has announced her intention to block the nomination of Doug Benevento to the position of Deputy Administrator of the EPA.  Without her vote, the nomination will not be forwarded to the Senate for confirmation.  At issue is the proposed pending decision on approval of 52 petitions calling for retroactive waivers on blending ethanol into gasoline.

 

Senator Chuck Grassley supports Senator Ernst and both legislators are putting pressure on the EPA and the Department of Energy to reject the principle of retroactive waivers.


Sen. Joni Ernst (R-IA)

 

 


 

Rural Counties in Southeast Contributing to New COVID Cases

According to the Daily Yonder 138 rural counties representing 7 percent of the nation’s total, recorded 50 percent of incident cases of COVID-19.  These counties represented 61 percent of the 18,400 new cases over the period of review.  Almost 60 percent of the counties regarded as “hot spots” are located in seven states in the southeast and southern mid-Atlantic with North Carolina leading with 1,372 new cases during the third week of June.  It is significant that many of the hotspot counties have a large packing or poultry processing plant that monitors workers.

 

 

 


 

Cargill and Nestle Appeal to Supreme Court over Decision Based on 18th Century Law

The 9th U.S. Circuit Court of Appeals in 2018 ruled that business practices involved in acquiring cocoa in West Africa contravened the Alien Tort Act enacted in 1789.  The case involves a claim alleging that child labor was used to produced cocoa and that workers were forced to labor on farms against their will.

 

The Alien Tort Statute allows non-U.S. citizens to seek damages in American courts.

 

A Federal district court in Los Angeles dismissed the lawsuit in 2017 but it was revived by the 9th Circuit in 2018 ruling that payments made to farmers for cocoa was in fact dependent on child slave labor.

 

Previously the Supreme Court ruled that plaintiffs were ineligible to claim under the Alien Tort Statue for human rights violations.


 

Moba Robotics Improves Plant Efficiency

Moba recently installed MR12 packers an MR50 de-palletizer and an Endoline case erector in a Missouri off-line plant.  According to the manager, the MR50 de-palletizer reduces labor input and is ergonomically beneficial.  Installation of MR12 packers has reduced head count and improved plant throughput.  The packer is permits changing product without sacrificing speed.  The combination of the robotic packer with the case erector allows flexibility with regard to assignment of line workers.

For further information on Moba robotic packers, de-palletizers and case erectors access the company website by clicking onto the Moba logo on the right side of the Welcome page.


 

Commentary


Obligations of Employers with Regard to COVID-19

It is highly probable that individuals employed on farms or in packing plants will contract COVID-19.  Employers are obliged in terms of the Occupational Safety and Health Administration (OSHA) General Duty Clause to maintain a safe environment to take action to suppress infection.  Employers are also enjoined from releasing the identity of infected employees in terms of the American with Disabilities Act.  Results of screening or other diagnostic procedures must be held as confidential medical information.

 

The supervisor of an employee learning of a positive COVID-19 diagnosis is obligated to report the diagnosis to the company Human Resources Director or designated manager.

It is incumbent on the employer to take immediate action to determine the extent of infection in the workplace.  The following information can be requested from the employee:

 

  • A list of co-workers with close contact during the 14-day incubation period prior to establishing the diagnosis.
  • The affected employee should describe areas visited in the plant including workstation, breakroom and change rooms during the 14-day incubation period preceding the diagnosis.

 

Co-workers should be informed of the diagnosis without identifying the individual other than to authorize HR personnel to obtain epidemiologic information.  Affected workers or those in direct contact should be quarantined and contact should monitor for clinical symptoms and submit to testing in the event that they are concerned or develop symptoms.

 

A general notice to the effect that an employee has tested positive for COVID is permissible without identifying the worker. `Businesses are not obligated to disclose the existence of COVID-19 within the workforce but in the event of contact between the affected employee and third parties, it would be prudent to discuss preventive measures and subsequent monitoring of contacts.  Contractors assigning employees to a complex can be informed of the diagnosis on an affected employee noting the date which the diagnosis was confirmed.

 

HR departments in large companies should be familiar with requirements of the Americans with Disabilities Act and OSHA regulations.  Legal advice can be obtained in advance of a possible outbreak.

 

Companies should take preemptive measures to prevent introduction of COVID-19 into farms and packing plants including:

  • Health screening each day
  • Encouraging the use of masks
  • Intensive decontamination at the end of the working shift
  • Insulation of dry hydrogen generators in breakrooms, offices and change rooms
  • Regular education sessions concerning protection from COVID-19 both in the community and the workplace

 

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Dr. Simon M. Shane
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