Editorial
Pressure is Mounting for HPAI Vaccination
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Currently, the poultry industry is in a relatively inactive stage with respect to incident cases of highly pathogenic avian influenza (HPAI). This may change during fall months with the onset of southward migration of waterfowl and also dissemination of virus by domestic birds. In addition, 2024 witnessed the emergence of bovine influenza-H5N1 with spillover to poultry complexes in Michigan and Colorado and probably responsible for the September case on a turkey farm in Merced County, California.
Highly pathogenic avian influenza should be regarded as seasonally and regionally endemic if not by definition ‘endemic’ in the U.S. This is based on the duration of the epornitic and the geographic extent of outbreaks.
Recently, Marcus Rust, CEO of Rose Acre Farms, the second-ranked egg producer by volume, advocated for vaccination in an interview with Reuters. Rust noted, “We are farmers, and we want our animals to live.” Along with competitors his family company has suffered losses from HPAI and has relocated a farm to establish conceptual biosecurity. The USDA-APHIS should recognize that the infection is endemic at least regionally and seasonally. Since the virus can be spread over even relatively short distances by the aerogenous route, even the most intensive biosecurity is inadequate to provide absolute protection.
A number of legislators are pressing USDA to review their no-vaccination policy with respect to practicality and cost. Vaccination to protect flocks against HPAI is a bipartisan issue as denoted by the representations to USDA by Representatives Randy Feenstra (R-IA) and Jim Costa (D-CA). The Agency appears to be unresponsive, citing real or perceived concerns over export of broiler leg quarters. This is an important and valid consideration although whether absolute is subject to question. The export restraint should not be a deal-breaker to the detriment of the entire poultry industry. In calculating costs, USDA appears to ignore the effect of HPAI on consumers. It is calculated that with seven billion dozen eggs sold in 2022, and at an average increase of $2 per dozen over the year consumers paid an additional $14 billion for their eggs. The additional cost was due to disequilibrium between supply and demand with as many as 50 million hens depopulated as a result of HPAI over the year. Currently the U.S. hen population is approximately 18 million lower than the pre-HPAI level of 326 million despite routine repopulation and retention of flocks. Eggs demonstrate noteworthy price elasticity resulting in large fluctuations in either direction caused by small differences in supply. Unfortunately, this reality is fueled by the prevailing price discovery system that enables buyers to bend the market over the short term by holding back on orders, inducing a fall in price and then restocking DCs and shelves.
USDA also appears refractory to the issue of possible emergence of a pandemic of a zoonotic strain of HPAI. Mutations resulting in the emergence of the B3.13 variant capable of propagating in mammary tissue of dairy cows and resulting in mild conjunctivitis and upper respiratory infection should be an additional justification to reduce the number of susceptible commercial hens and turkeys through vaccination.
Commercially available vaccines could be purchased from multinational suppliers on an off-the shelf basis but this will require USDA approval for administration in the U.S. Claiming that additional research for development of a new or specific “U.S. vaccine” would be necessary is simply a delaying tactic to avoid making a policy decision. Accepting vaccination would effectively recognize the futility of efforts by the USDA to eradicate HPAI since the 2015 epornitic. Opposition to vaccination that appears inherent to APHIS thinking is now largely invalid given the availability of PCR assay to certify flocks free of infection and to distinguish between infected and immunized commercial flocks and regional populations.
It is hoped that reality will convince USDA administrators of the need to allow vaccination against HPAI as an adjunct to structural and operational biosecurity. It is envisaged that initially vaccination would be limited to turkeys, breeders and laying hens in high-risk areas. This would be coupled with surveillance and certification to meet the challenge of exports.
For too long, USDA-APHIS has clung to an outmoded and ineffective policy of attempting to eradicate an endemic infection. Given the reservoir comprising domestic migratory waterfowl and introduction by migratory marine species of birds, USDA is ignoring epidemiologic reality at considerable cost to producers, consumers and the national debt.
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Egg Industry News
Egg Week
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USDA Weekly Egg Price and Inventory Report, October 2nd 2024.
Market Overview
- The average wholesale unit revenue values for Midwest Extra-large and Large sizes were down 8.1 percent on average this past week. Medium size was down 9.7 percent. The 5-day rolling National wholesale price for graded loose on September 30th at $1.52 per dozen was down 17.6 percent from last week. This value was approximately $0.33 below the 3-year average of $1.85 per dozen and up $0.66 from the corresponding week in 2023 at $0.93 per dozen. This past week shell egg inventory was down 0.9 percent, following a drop of 3.7 percent during the previous week. During the past four days the NYC wholesale price has stabilized indicating a market plateau. Small fluctuations in inventory with incremental and successive weekly decreases in price entering fall suggests lower margins for producers through the 4th quarter as demand ebbs and depleted flocks are replaced. Relatively higher prices compared to 2023 are attributed to losses due to HPAI depletion in 2024 reducing the national flock by 20 million hens despite reduced seasonal demand.
- Although there are weekly transfers of mature pullet flocks to laying houses, the size of the producing flock is constrained by depopulation due to HPAI. Close to 13 million hens were lost during the 4th Quarter of 2023 that have not yet been completely replaced. During April 2024 almost 8.4 million hens were depopulated with an additional 5.7 million during May and 3.0 million in July with a current deficit of 17 million hens compared to the 2022 onset of HPAI.
- This past week, chains apparently widened the spread between delivered cost and shelf price. The cessation of incident cases of HPAI has probably provided buyers with the confidence to hold orders and run down stock to attempt to “bend” the benchmark price discovery index. Inventory levels will depend on constant re-ordering to fill the pipeline through early October. Discounters are holding prices on generics influencing mainstream retail stores. Eggs are still highly competitive in price against the comparable costs for other protein foods, but highlighted as a factor in food price inflation.
- Total industry inventory was down by 2.9 percent overall this past week at 1.57 million cases with a concurrent 10.6 percent decrease in breaking stock, following an 8.1 percent fall during the preceding week attributed to increased demand.
- It is now apparent that the inventory held by chains and other significant distributors may be more important on a weekly basis in establishing wholesale price compared to the USDA regional inventory figures. Changes in stock held by DCs and in the pipeline as determined by weekly orders are probably responsible for up to three percent cyclic fluctuation in weekly industry stock, especially into and after a holiday weekend.
- The number and extent of possible HPAI outbreaks during coming months cannot be projected but the industry has moved into a quiescent period. Close to 240 confirmed cases of bovine influenza-H5N1 in dairy herds in fourteen states and spreading in California is a cause for concern. More surveillance information should be released by USDA-APHIS as it becomes available, concerning the prevalence rate of avian carriers of H5N1 among resident domestic free-living birds together with a review of molecular and field epidemiology for the current spring and future fall waves of HPAI. The USDA has yet to identify and release specific modes of transmission for the 2022-2024 epornitic including likely airborne spread from wild birds and their excreta over short distances.
- The current relationship between producers and chain buyers based on a single commercial price discovery system constitutes an impediment to a free market. The benchmark price appears to amplify both downward and upward swings as evidenced over the past three years. A CME quotation based on Midwest Large, reflecting demand relative to supply would be more equitable. If feed cost is determined by CME ingredient prices then generic shell eggs should be subject to a Midwest Large quotation.
- On October 2nd the stated total flock of 308.5 million, was up by 0.4 million from last week, including about one million molted hens that will resume lay during coming weeks plus 4.5 to 5.0 million pullets scheduled to attain production. Given the latest figures for depopulation it is estimated that the total flock is approximately 17 million hens lower than the 326 million before the onset of HPAI in 2022.
- The ex-farm price for breaking stock (rounded to one cent) was down an insignificant 0.3 percent to $1.28 per dozen.Checks delivered to Midwest plants were down 2.6 percent to $1.13 per dozen this past week. Prices for breaking stock generally follow the wholesale price for shell eggs but with a lag of one to two weeks that may be shorter with a wide swing in price in either direction.
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USDA Data On Cage-Free Production For September 2024
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EGG-NEWS summarizes and comments on data and trends in the monthly USDA Cage-Free Report. This data is correlated and interpreted in the WeeklyEggPrice and Inventory Report posted on EGG-NEWS mailed on Fridays each week.
The USDA Cage-Free Report covering September 2024, released on October 1st 2024, documented the complement of hens producing under the Certified Organic Program to be 20.8 million (rounded to 0.1 million), up a questionable 1.2 million hens (6.5 percent) from August 2024. Depopulation was carried out in July as a result of HPAI. The number of hens classified as cage-free (but excluding Certified Organic) and comprising aviary, barn and other systems of housing apparently increased by 2.9 million hens or 2.7 percent from August 2024 to 106.9 million, despite previous flock depopulation and an unexpected high value in July. Hen numbers posted by the USDA for September are questioned as to accuracy taking into account chick placements and July depopulation figures released by APHIS.
The number of eggs collected is accepted as accurate but since the values for average hen-week production are unacceptably high this suggests that the denominator reflecting the number of hens is probably incorrect. Alternatively if conventional eggs from cages are deceptively marketed as cage-free, or if cage free eggs are packed as certified Organic, assuming an accurate number of hens over a given month, the apparent hen-week value would be disproportionally high. The respective numbers of hens claimed for organic and cage-free flocks should reflect the net contribution of chick placements 20-weeks previously, HPAI depopulation and age-related depletion and should correspond to monthly supply data and inventory extending over successive quarters. Unlike conventional cage production cage-free hens are not generally molted reducing this possible reason for error in calculating rates of production.
Average weekly production for Certified Organic eggs in September 2024 was up by 6.2 percent compared to August 2024 with a questionably high average weekly production of 83.6 percent. Average weekly flock production for cage-free flocks other than Certified Organic was up 2.5 percent in September 2024, but with a high average hen-month production of 82.4 percent, down from 82.6 percent. Seasonally, younger flocks increase the availability of cage-free and organic eggs in response to pullet chick placements 20 weeks previously especially in anticipation of periods of peak seasonal demand. Since the proportion of pullets according to housing type is not indicated in the monthly USDA Chickens and Eggs report, it is not possible to assess the relative sizes of flocks producing under the certified organic label or other categories. There is no adequate explanation for the high production rate especially if the reported number of hens is lower than actual, especially with undercounted HPAI flock depopulation.
Flock Size Average
(million hens)
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September
2024
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Average
Q3-2024
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Average
Q2- 2024
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Average
Q1 –
2024
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Average
Q4 –
2023
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Average
Q3-
2023
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Certified Organic
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20.8
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20.0
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18.8
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18.3
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18.7
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18.7
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Cage-Free Hens
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106.9
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103.9
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101.0
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105.7
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106.4
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105.4
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Total Non-Caged
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127.7
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123.9
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119.8
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124.0
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125.1
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124.1
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Average Weekly Production (cases)
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August
2024
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September
2024
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Certified Organic @ 83.6% hen/day
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319,073
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338,938 +6.2%
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Cage-Free @ 82.4% hen/day
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1,670,460
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1,712,778 +2.5%
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Total Non-Caged @ 82.6% hen/day
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1,989,533
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2,051,716 +3.1%
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Average Nest Run Contract Price Cage-Free Brown
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$1.70/doz. (Unchanged since July 2024)
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September 2024 Range:
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$1.35 to $2.35/doz. (unchanged since March 2023)
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FOB Negotiated September price, grade-ready quality, loose nest-run. Price range $1.65 to $3.15 per dozen
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Average September 2024 Value of $2.08/doz.
($4.07/doz. August 2024)
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Average September Advertised National Retail Price C-F, Large Brown
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$3.23/doz. September 2024 (6 regions)
(was $2.83/doz. in August 2024)
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USDA Based on 6 Regions, 659 stores
Excluding AK and HI.
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High: $3.99/doz. (SW. 89 stores)
Low: $2.59/doz. (MW. 161 stores)
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Negotiated nest-run grade-ready cage-free price for September 2024 averaged $2.08 per dozen, down by 49.0 percent from $4.07 per dozen in August 2024, reflecting presumably lower supply relative to demand. The September 2024 advertised U.S. retail price for cage-free eggs over six regions (excluding AK. and HI.) was $3.23 per dozen up 40 cents per dozen (14.1 percent) from August 2024 but based on only 659 stores. This compares with 4,484 stores in August confirming fewer promotions in September.
The recorded average wholesale price of $2.08 per dozen plus a provision of 60 cents per dozen for packaging, packing and transport, results in a price of $2.68 per dozen delivered to CDs. The average six-region advertised retail price of $3.23 corresponds to a theoretical average retail margin of 22.3 percent (-114 percent last month unless prices were increased) over the average wholesale delivered price. Margins are presumed higher for non-featured eggs and pastured and other specialty eggs at shelf prices reaching $9.00 per dozen in high-end supermarket chains. Retailers maximizing margins especially on Certified Organic, free-range and pastured categories restrict the volume of sales, ultimately disadvantageous to producers.
Based on the importance of cage-free production, now more than 40 percent of eggs produced, accurate and consistent figures are required. The USDA-AMS issues the Cage-Free report on volumes and prices at monthly intervals for the information of Industry stakeholders. There is obvious doubt as to the accuracy of individual monthly flock numbers in the monthly cage free reports especially with a marked change at the end of a quarter as with values for October 1st, or from the previous month without obvious cause, or alternatively when there is no change in the cage-free or organic flocks for sequential months.
It is suggested that USDA should consider a quarterly report with more accurate hen data. This would be more useful to the industry for planning and marketing decisions. Price data is available each week from other USDA reports.
Subscribers are referred to weekly USDA wholesale and retail prices posted in the Egg Price and Inventory Report in EGG-NEWS E-mailed each Friday. The previous Monthly Cage-Free Report is available under the STATISTICS Tab.
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Commodity Report
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WEEKLY ECONOMY, COMMODITY & ENERGY REPORT: October 3rd 2024.
OVERVIEW
The price for corn was moderately higher over the pat week continuing the trajectory from the previous week. Soybeans were almost unchanged. Corn and soybean prices were influenced by uncertainty over yields in Brazil and Argentine; the September 2024 WASDE Report; the August Pro Farmer Crop Tour and by farmers selling to avoid further declines and to make room for the approaching 2024 harvest beginning in strength this week. Recent warmer weather suggested lower corn and soybean yields and proportionally higher prices deviating from the September WASDE. There was some technical selling arising from geopolitical concerns and in response to revised projections for harvests in Brazil and Argentine. Contributory pricing factors included ongoing disruption in shipping in the Red Sea and Panama Canal, carryover from the 2023 U.S. crop, export orders and the predicted ending stocks of corn and soybeans from the 2024 crop. Seventy five percent of the 2024 corn crop is now mature with 21 percent harvested. Concurrently 81 percent of the soybean crop is dropping leaves and 26 percent has been harvested both in advance of the five-year average and apparently with superior crop condition as compared to 2023. The transition from a neutral phase to a La Nina event has commenced and will intensify during the fourth quarter but will not affect the 2024 harvest. The October WASDE, incorporating the September remote USDA Survey together with the Pro Farmer August field evaluations should provide updated projections of yields, with USDA updates for anticipated exports and adjusted prices for the 2024 crop.
At 12H00 EDT on October 3rd the CME corn quotation for December delivery was up 3.6 percent to 431 cents per bushel. Corn price was influenced by acreage planted, ethanol demand and the ending stock from the 2023 crop. Farm selling has increased, given the need to make room for the new crop. USDA estimated that 44 percent of old corn stock was held on farms at the beginning of September. Export orders for the current market year have increased in response to lower prices. Volumes and price are indirectly influenced by wheat availability as influenced by weather affecting the Black Sea wheat and corn crops and events in the Red Sea. Orders by China resumed at the end of the 2022-2023 market-year and continued through August, with recent declines in the Dollar Index, albeit with increased ocean freight. Total exports for the new 2024-2025 market year were 27.5 percent above the first four weeks 2023-2024 year.
Soybeans were priced at 1,049 cents per bushel for November 2024 delivery, remaining above the 1,000-cent psychological threshold. Price was down an inconsequential 0.2 percent compared to 1,051 cents per bushel last week for November delivery. Stable prices were attributed to the projection of ending stock, despite farm selling and taking into account recent export orders and projections of availability from the 2024 U.S., Brazil and Argentine harvests. Total exports for the 2024-2025 market year are 6.1 percent lower than for the corresponding first four weeks of market year 2023-2024.
Soybean meal was priced at $334 per ton for December delivery, up $5 per ton (+1.5 percent) from last week. Price is influenced by demand coupled with an unexpectedly low crush volume in August reversing the processing trend during the first half of 2024. Price will fluctuate to reflect the CME price for soybeans and the depressed demand for biodiesel due to oversupply and the consequential adverse financial situation in this sector. The market previously responded to the increased 2023 crop and higher stocks together with projections for 2024 in the Revised September WASDE Reports updated from August.
On September 26th at 13H00 EDT the price for WTI was $71.53 up $3.53 (+5.2 percent) from last week. The current price does not reflect the aftermath of Hurricane Helene. It is estimated that 3.5 percent of Gulf crude production and one percent of natural gas recovery were “shut in” (negatively impacted) although production has been restored. Current price is enigmatically not affected by uncertainties and tensions in the Middle East including possible retaliatory action by Israel on Iranian oil installations. Over the longer term price reflects moderate world demand for crude as economies and especially that of China have retracted requiring stimulation this past week. It is evident that U.S. production is a moderating influence on World price, attaining a record average of 13.4 million barrels per day in July with ample reserves. There was a sharp upward trend in the price of WTI on October 2nd with the range during the week extending from $66.87 to $71.53 for a high on October 3rd.
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Crop Progress
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Status of 2024 Corn and Soybean Crops
The USDA Crop Progress Report released on September 30th recorded 81 percent of the soybean crop dropping leaves and 26 percent harvested. Seventy five percent of the corn crop is now mature and 21 percent has been harvested. Both crops were slightly ahead of the 5-year averages for the corresponding week.
Days suitable for field-work attained 4.7 per week for the nine states with the highest corn and soybean production (range 1.5 days for PA up to 6.7 days for MN), delaying harvest in some states or areas. This compares with 6.7 days for last week.
Consistent with seasonal temperatures and rainfall across the Midwest and Plains states, crop condition was almost unchanged during the past week. Corn and soybeans attained 64 percent each for the two highest categories of “Good” and “Excellent.” The September 30th values for corn and soybean quality were considerably higher than the 53 and 52 percent recorded for corn and soybean crops respectively for the two highest categories during the corresponding week in 2023. Prospects for high yields were reflected in lower price projections in the September WASDE despite a more recent rise in CME future prices for November and December (‘new crop’) delivery following the release of the report and questions over the size of crops in south America.
It is unlikely that the transition to a La Nina event will have any impact on crop condition through harvest. Prolonged dry and hot weather apparent at this time interspersed with rain will not depress corn and soy yields depending on timing and severity.
Heat stress that occurred during silking predisposes corn to fungal infection leading to mycotoxin contamination of kernels. Unseasonal rain during the pre-harvest period for corn will also result in elaboration of mycotoxins. The status of the 2024 crop will require monitoring at harvest in affected areas and especially if unseasonal precipitation occurs during the pre-harvest period.
Reference is made to the September 13th WASDE Report #652 and the weekly Commodity, Economy and Energy Report, both in this edition, documenting acreage to be harvested, yields, weekly prices and ending stocks.
During October the USDA-NASS intends to report on the annual remote survey to estimate yields and final production, in all probability incorporated in WASDE #653 to be reviewed in the October 18th Edition of EGG-NEWS. Pro Farmer completed their annual crop tour in mid-August. The August 23rd report estimated a corn yield of 181.1 bushels per acre with a projected crop of 14.98 billion bushels. The corresponding values for soybeans were yield of 54.9 bushels per acre contributing to a 2024 crop of 4.74 billion bushels.
EGG-NEWS will report on the progress of the two major crops as monitored by the USDA through the end of the 2024 harvest in November.
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WEEK ENDING |
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Corn Status (18 states) *
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September 22th
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September 29nd
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5-Year Average
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Corn Dented (%) |
92 |
93 |
95 |
Corn Mature (%) |
61 |
75 |
70 |
Corn Harvested (%)
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14
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21
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18
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Soybean Status (18 states) |
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Soybeans Setting Pods (%) |
100
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100
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100
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Dropping Leaves (%) |
65 |
81 |
69 |
Soybeans Harvested |
13 |
26 |
18 |
*Representing an average of 95% of U.S. 2024 acreage planted |
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Soybean Harvesting
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Crop Condition
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V. Poor |
Poor
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Fair
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Good |
Excellent |
Corn 2024 (%)
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4 |
8 |
24 |
49 |
15 |
Corn 2023 (%) |
6 |
12 |
29 |
43 |
10 |
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Soybeans 2024 (%)
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3 |
8 |
25 |
52 |
12 |
Soybeans 2023 (%) |
5 |
12 |
32 |
43 |
9 |
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Corn Harvesting
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Recent drought monitor with 'hot-spot' affecting SW PA and central OH
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USDA Grain Stocks Report
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The USDA quarterly Grain Stocks Report released on September 30th 2024, documented storage of corn and soybeans, classified according to on-site and remote facilities including elevators and commercial installations. Quantities of the two major ingredients as Prices and commentary are incorporated in the Weekly Energy, Economy and determined by USD-NASS, relevant to the cost of poultry production were:-
“Old crop corn stocks on hand as of September 1st 2024 totaled 1.76 billion bushels, up 29 percent from September 1st 2023. Of the total corn stocks, 780 million bushels (44 percent were stored on farms), up 29 percent from last year”. This was down from 61 percent three months ago indicating a sell-off despite declining prices to realize income and make room for the 2024 harvest. “Off-farm stocks, at 980 million bushels, were up 30 percent from a year ago. The June-August 2024 indicated disappearance was 3.24 billion bushels, compared with 2.74 billion bushels during the same period a year earlier”.
“Old crop soybeans stored in all positions on September 1st 2024 totaled 342 million bushels, up 29 percent from September 1st 2023. Soybean stocks stored on farms totaled 111 million bushels, (32 percent) up 54 percent from a year ago. Off-farm stocks, at 231 million bushels, were up 20 percent from last September. Indicated disappearance for June-August 2024 totaled 628 million bushels, up 18 percent from the same period a year earlier”.
The weekly Economy, Commodity and Energy Report posted each week and a summary of the WASDE #652 released on September 12th is retrievable under the STATISTICS tab.
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STOP PRESS
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East Coast Port Strike Suspended
The East Coast and Gulf port strike has been suspended on the third day following negotiations between the U.S. Maritime Alliance and the International Longshoreman’s Association. The strike idled 36 ports from Maine to Texas but it will take a week at least to unravel congestion and move imported and export cargo. The parties agreed to extend the contract through January 15th 2025 to allow continued negotiations on issues other than wages that have been settled. The suspension of the strike resulted in part from intense overt and behind-the scenes “jawboning” by the Administration that pressured both sides but declined to invoke the Taft-Hartley Act. Disruption of chicken, turkey and egg exports has now been averted.
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Cal-Maine Foods Reports on Q1 FY 2025
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In a release dated October 1st, Cal-Maine Foods Inc. (CALM) announced results for the 1st Quarter FY 2025 ending August 31st 2024. This post summarizes data provided in the Company release and the concurrently filed SEC 10-Q Report.
Cal-Maine Foods exceeded analysts’ estimates on revenue by 11 percent but the Company was apparently short on EPS.
It is noted that market conditions during Q1 2025 were favorable with an average unit revenue of $2.39 per dozen for all eggs, compared with Q1 2023 attaining a corresponding price of $1.59 per dozen.
Cal-Maine represents a bellwether for the shell egg sector as the only public-quoted, pure-play egg company in the industry, supplying close to 20 percent of domestic shell egg consumption. 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 $ x 1,000 except EPS)
1st Quarter Ending
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August 31st
2024
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September 2nd
2023
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Difference (%)
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Sales:
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$785,871
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$459,344
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+71.1
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Gross profit:
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$247,218
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$45,433
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+91.9
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Operating income :
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$186,957
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$(6,757)
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+2.8x103
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Pre-tax income
Net income
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$197,953
$149,976
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$733
$926
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+26.8x103
+16.1x103
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Diluted earnings per share:
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$3.06
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$0.02
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+152x103
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Gross Margin (%)
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31.5
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9.9
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+218
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Operating Margin (%)
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23.8
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-1.5
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+1.7x103
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Profit Margin (%)
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19.1
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0.2
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+9.5x103
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Non-current liabilities Aug, 31rd 2024/June 3rd 2023
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$36,854
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$17,109
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+115
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12 Months Trailing:
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|
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Return on Assets (%)
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9.5
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Return on Equity (%)
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16.2
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Operating Margin (%)
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20.9
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Profit Margin (%)
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11.9
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Total Assets Aug, 31rd 2024/June 3rd 2023
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$2,390,008
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$2,184,761
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+9.4
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Market Capitalization Oct. 1st 2024/Aug. 31st 2023
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$3,670,000
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$2,340,000
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+56.8
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Notes: $1.2 million ‘other income,’(excluding interest income). Q1 2025 compared to $0.1 million in Q1 FY2024:
$9.8 million interest income, Q1 2025 compared to $7.3 million Q1 2024
$0.4 million loss on non-controlling interest Q1 2025 compared to $0.5 million Q1 FY203.
ISE America acquisition in Q1 2025: for $111.5 million comprised 4.7 million hens, (1.2 million cage-free)
pullets, housing, packing plants and other facilities on 4,000 acres in MD., NJ., DE. and SC. representing
a unit expenditure of $25/hen with established markets
CALM Trailing P/E =13.2
52-Week Range in Share Price: $42.25 to $77.11 50-day Moving average $70.82
Market Close, Tuesday, October 1st $76.84 pre-release.
Post release, after-hours, 20H00 almost unchanged at $76.90.
In reviewing the CALM Q1 2025 report and the SEC 10-Q submission the following values represent key data for the most recent Quarter (Q1 FY 2024 and percentage differences in parentheses):-
- Shell egg sales attained $741,513 million in Q1 2025. Shell eggs comprised 94.3 percent of total shell egg revenue. ($443,961 million, in Q1 2023, based on 96.7 percent of shell egg revenue). (Sales value for shell eggs was up 7.9% reflecting higher average unit value).
- Dozen shell eggs sold (thousands): 309,979 (273,126; +13.5%)
- Average selling price of all shell eggs: $2.39 per dozen; ($1.59 per dozen; +50.3%).
- Average selling price of specialty eggs (excluding co-pack): $2.34 cents per dozen; ($2.28 per dozen; +2.6%).
- Average selling price of generic eggs: $2.42 cents per dozen; ($1.24 cents per dozen; +95.1%).
- Differential between specialty eggs and generic eggs: -$0.08 cents per dozen; (+$1.04 per dozen; -107.7%)
- Specialty eggs as a proportion of volume sold: 35.4%; (33.5%; -5.7%)
- Specialty eggs as a proportion of sales value: 34.2%; (47.7%; -28.3 %)
- Proportion of eggs sold that were produced by Cal-Maine and their contract flocks in Q1 2025: 86.1% (91.7%; -6.1%).
- Egg product sales in Q1 2025 attained $35.2 million or 4.5% of sales value at a unit price of $1.667 per lb. For Q1 2024, sales attained $22.2 million representing 4.8 percent of revenue with a unit price of $1.15 per lb.
- Cal-Maine Foods maintained a flock of 39.9 million hens on average (Capacity 48 million) during FY 2024 with 11.8 million pullets (capacity 12.7 million) plus parent breeders representing under two percent of the total flock.
The following observations relate to the comparison of Q1 2025 with the corresponding Q1 2024:-
- Cal-Maine Foods was not affected by the 2022-2023 HPAI epornitic during FY 2022 or FY 2023. During Late December 2023 (Q3 FY 2024) the Chase, KS. Complex comprising 1.5 million hens and 240,000 pullets, representing 3.3% of the total flock was depopulated as a result of HPAI. On April 1st 2024 (Q4 2024) the Farwell, TX complex was diagnosed with HPAI, requiring depopulation of 1.6 million hens and 0.34 million pullets.
- Q1 2025 represented a more favorable marketing comparison to Q1 2024 based on higher prices for shell eggs, as U.S. flocks were subjected to HPAI depletion, coupled with higher than normal seasonal consumer demand. Average shell egg price obtained by Cal-Maine was 50.3 percent lower than in Q1 2024.
- Comparing Q1 2025 with Q1 2024 gross profit was positively influenced by higher unit revenue for generic eggs but with no benefit from specialty eggs. The 17.3 percent lower feed cost to 49.4 cents per dozen was complemented by a 4.1 percent lower farm production costs attaining 42.0 cents per dozen,
- In a market characterized by high unit prices for generics, the relative contribution of specialty eggs is less important to net earnings in contrast to a down-market for conventional eggs. Normality will be restored in Q2 with generic eggs at a lower unit price and margin compared to specialty eggs as flocks are replaced. This is subject to the non-return of HPAI, anticipated during late fall months
In commenting on Q1 results Sherman Miller, president and CEO of Cal-Maine Foods, stated, “Our financial and operating results for the first quarter mark a strong start to fiscal 2025 for Cal-Maine Foods. These results reflect favorable demand for shell eggs during most of the quarter and significantly higher market prices compared with the first quarter last year. At the same time, the national egg supply has declined due to the recent outbreaks of highly pathogenic avian influenza (“HPAI”). As of September 1, 2024, the total U.S. hen population fell approximately 4.5% below the five-year average to 307.6 million layers. We have worked hard to increase our production and purchase more eggs from outside suppliers, and our team did an outstanding job bringing more eggs to the market despite this low-supply environment. Our higher volumes and sales were supported by the additional production capacity from recent acquisitions as well as consistent organic growth. Our operations ran well as we continued to extend our market reach and supply the demands of our valued customers.
Miller continued “We believe that today’s consumers are looking for affordable and nutritious protein options and that our shell eggs and egg products meet that need. In addition, our ability to offer a diverse product mix has been a distinct competitive advantage for Cal-Maine Foods. We strive to meet evolving consumer demand and provide choices that include conventional, cage-free, organic, brown, free-range, pasture- raised and nutritionally enhanced eggs. We have also expanded our product portfolio to include value- added egg products through our previous investment in Meadowcreek Foods, LLC for hard-cooked eggs and our recent strategic investment in Crepini Foods LLC (“Crepini”), a new venture offering egg products and prepared foods. We have a unique opportunity to leverage the established Crepini brand of quality products, including egg wraps, protein pancakes, crepes and wrap-ups, and extend our market reach to major retailers across the country. We believe there are significant opportunities to use our scale and offer additional choices through value-added egg products to our established customer base.
Miller concluded, “We are proud of our ability to consistently execute our growth strategy in a dynamic environment with favorable results. As the largest producer and distributor of fresh shell eggs in the U.S., we are mindful of our critical role in supporting the nation’s food supply with a differentiated product mix. As such, we continue to expand our capacity, including cage-free and other specialty egg production, through investments in innovative, scale-driven products and facilities. We have also identified opportunities to enhance our product portfolio through strategic acquisitions and joint ventures. We are fortunate to have a strong balance sheet and a disciplined capital allocation strategy that supports our growth objectives. Above all, we are focused on meeting the needs of our valued customers with quality products and outstanding support and service. We look forward to the opportunities ahead for Cal-Maine Foods.”
The 10-Q Report documented approved capital investment of $135.9 million for cage-free conversions, in FY 2025 through FY 2026 Of this total $115.4 million has been committed with $20.5 million to be expended.
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Impact of Hurricane Helene
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Along with the entire poultry industry EGG-NEWS recognizes the unfortunate disruption of life and the sad loss of at least 160 residents of affected states with the death toll expected to rise as first responders gain access to remote regions of West Virginia and North Carolina. Condolences are extended to the families of those lost in the floods that accompanied the catastrophic event.
The egg industry appears to have been mildly impacted by Hurricane Helene with Cal-Maine Foods the major producer in the southeast reporting minor damage. Large complexes near Gainesville were largely unaffected other than by power failures and inconvenience relating to access.
The Hurricane disrupted the broiler industry in the region mainly through plant closures as a result of disruption of grid power and in a few cases, loss of municipal water required to allow processing. All the major integrators in the region were affected including Pilgrim’s Pride, Wayne-Sanderson, Case Farms, House of Raeford and Amick among others. The Pilgrim’s Pride plant in Douglasville, GA. sustained severe damage that has closed the plant.
Across the industry, individual growers sustained wind damage to buildings and some have reported flooding. Most operations managed to preserve flocks using emergency generators to power ventilation. As with the aftermath of Hurricane Katrina, the major problem related to adequate storage of fuel to power generators. Other than in a few cases, road access permitted refueling until power was restored.
Road in many parts of western North Carolina were severely affected by landslides and subsidence and it will take many months before damaged bridges and roads are repaired. This will require reduced loads and deviations with rerouting for feed delivery and flock transport.
Hurricane Helene and the deluge that followed affected cotton and other row crops, but the affected states are not major producers of corn and soybeans as compared to the top ten states in the Midwest that were unscathed.
Flooding with damage to railroad tracks affected Florida and western North Carolina although critical connections between Tennessee and Georgia were running after temporary repairs including removal of downed trees and repair of power lines lines and track after washaways. Norfolk Southern warned of extensive delays as a result of damage in West Virginia and South Carolina.
The impact from Helene was more attributed to torrential rain and flooding rather than to wind damage. Meteorologists and climate experts attribute the power of the storm and extensive rainfall to the effects of global warming. The rapidity with which Helene gained force while transiting the Gulf of Mexico is directly related to the temperature of surface water, fueling the intensity of the Hurricane. ClimaMeter a consortium of scientists in the E.U. estimated that over a decade, hurricanes have resulted in approximately 25 percent more rainfall and are up to 10 percent more intense in terms of wind speed than in previous years. Although Hurricane Helene is regarded as a rare and unique event, federal agencies and state governments together with the agricultural community can expect more frequent and more devastating storms in the future. This is based on the reality of elevated ocean temperatures, attributed to release of carbon dioxide and other greenhouse gases from burning fossil fuels and emissions from industry over many decades. These conclusions are based on the application of rapid attribution analyses that allows meteorologists to compare data collected during and after storms and to quantify the effect of global warming on intensity and severity of weather events.
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Observers See Likelihood of Injunction Against Kroger-Albertsons Merger
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It will be some time before U.S. District Judge, Adrienne Nelson, renders a decision on whether the merger will proceed, based on the extent of testimony offered by the Federal Trade Commission (FTC) and rebuttal by attorneys for Kroger.
Knowledgeable observers maintain that the FTC made a strong case that the proposed merger would eliminate competition in many areas. In many markets, especially in western states, the combination of Kroger and Albertson’s would dominate to the potential disadvantage of both suppliers and consumers. The FTC may have convinced the Court that brick-and-mortar chains such as Aldi and the dollar stores and also Amazon as an on-line retailer were not in direct competition in many markets with the large pure-play grocers such as Albertsons and Kroger.
The demise of Haggen in 2015 following acquisition of divested stores from the Albertsons-Safeway merger raised the question of the viability of C&S Wholesalers operating 579 stores and DCs. Failure of the proposed alternative would effectively eliminate competition.
Even with an adverse decision, Kroger has so much invested in the proposed merger that an appeal against the preliminary injunction will be inevitable. Kroger is facing an ongoing legal action in Washington State to be followed by a similar request for an injunction banning the proposed merger in Colorado filed by the Attorneys General of those states.
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American Egg Board Initiates Meant to be Broken Promotional Campaign
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In a press release replete with Madison Avenue jargon and buzz-words but short on specifics, Emily Metz, president and CEO of the American Egg Board announced the Meant to be Broken promotional campaign. She stated, “We see it as the first step in a multi-year journey – a movement and a call to action to rediscover eggs and their potential to support the goals and lifestyles of a complex consumer.”
She added, “It’s also a rallying cry for an industry that has seen its share of recent challenges. We have been on a journey on behalf of America’s egg farmers, to break out of our own status quo and explore the opportunities brought forward through risk-taking. The American Egg Board regards the campaign as a “novel message and a fresh approach to create real excitement about the valuable ways eggs can help redefine a love of food.”
Edward Hoffman, Vice-president of marketing, communications at the AEB stated, “Leveraging this knowledge, we repositioned eggs from an often overlooked and underappreciated kitchen staple with specific uses to an indispensable food or ingredient with unlimited potential to support their active, often hectic lives.”
The campaign will include “video spots, custom messaging to targeted audiences across TV, online, video and cross-screen display. A user-generated content challenge with influencers on TikTok (if it survives) is intended to generate recipes with new ideas and methods of preparation.
Metz correctly states, “Our success will be marked by people reaching for eggs more often and with more joy and excitement.” The ultimate measure of success will be a quantitative increase in domestic egg consumption at prices that offer positive margins. Specific figures will determine the success of the Meant to Be Broken campaign as an attempt to stimulate consumption. The industry will be more interested in actual increases in consumption at prices offering both producers and retailers favorable margins than the number of views on social media, self-serving accolades, awards or other advertising metrics.
At the end of the day, most consumers regard eggs as eggs, and basically they purchase eggs when the household refrigerator runs low. Some demographics do however display brand loyalty based on attributes including organic, cage-free status or nutritional enhancement. The value of national brands is being eroded by the proliferation of widely promoted private brands based on availability, competitive pricing and shelf positioning.
If the AEB campaign increases consumption by stimulating demand then it will be successful and expended check-off dollars will be justified. The effect will be difficult to measure but let us hope.
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FDA to Establish Veterinary Innovation Centers
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In a September 20th announcement, the Center for Veterinary Medicine of the Food and Drug Administration, announced the establishment of four Animal and Veterinary Innovation Centers. The areas of concentration that have been identified relate to the interface of animal and human health including: -
- Deletion or insertion of genes in animals relating to health or agricultural production with specific reference to regulatory issues.
- Highly Pathogenic Avian Influenza in the context of One Health together with other emerging zoonotic diseases.
- Opportunity areas for the diagnosis and control of animal diseases with the potential for public health challenges.
EGG-NEWS supports the transfer of responsibility for GM activities relating to food animals to to the USDA. FDA should not be involved with aspects of the epidemiology of zoonotic diseases. Research should be conducted at USDA facilities with appropriate personnel and facilities. The CDC is the obvious agency to monitor and develop countermeasures for zoonotic diseases with the NIAID of the NIH conducting basic and applied research.
Given that the FDA is incapable of successfully managing mandated activities involving regulation of pharmaceuticals and food, attempts at mission creep appear to be inappropriate
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USPOULTRY Grants
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The USPOULTRY Foundation has approved $570,000 for five research grants at four institutions for research relating to current topics challenging the poultry industry.
- South Dakota State University received a grant to develop both live attenuated and inactivated vaccines for avian metapneumovirus subgroup B.
- The USDA Agricultural Research Service received was funded to develop multivalent vaccines to protect against avian metapneumovirus: -
- Georgia Southern University will investigate carbonized feathers to control poultry odor emanating from plants.
- Texas Tech University will evaluate statistical approaches and biomapping in secondary processing.
- North Carolina University will evaluate the possible effects and synergy between dietary phytase and acidic tuff to support extended laying cycles for commercial egg-producing flocks.
Given the availability of funds through USDA appropriations it is questioned why USDA-ARS laboratories are eligible for USPOULTRY Foundation research grants. Personnel at these institutions and their operating budgets are supported by public funds. Grants to USDA and possibly commercial entities deprive universities and academic institutions of valuable seed funding to initiate research projects.
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The California School Food Safety Act Bans Coloring Agents
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Governor Gavin Newsom is expected to sign the California School Food Safety Act into law, following the unanimous passage of the bill. This legislation sponsored by Assembly-member Jesse Gabriel, (D-Encino) will ban inclusion of six designated dyes for inclusion in school meals served in California.
The Bill is essentially based on emotion and has little scientific justification. The Food and Drug Administration has not banned the additives that are widely used in confectionary, candies and a wide range of foods. The six synthetic dyes are available in Europe, although some countries require label disclosure if included in foods.
The precipitous action by the California legislature establishes a dangerous precedent since the process of risk assessment and chemical and biological assay to establish safety has been bypassed. The California law also creates a situation in which a federal agency that has ruled the additives innocuous is overruled by a state legislature. Ultimately, the law will add to cost and limit the sourcing on many ingredients for schools.
On September 25th, the FDA organized a public meeting to explain the procedures used to assess chemical food additives and to receive public and industry comments. The FDA appears to be committed to a transparent process “for identifying and prioritizing food chemicals currently in the market for safety review”. Traditionally the FDA has demonstrated a lack of leadership, indecision and inordinate delays in establishing safety or otherwise for additives.
There is concern that states including California pass “feel good” laws that appeared a good idea at the time but have unintended consequences and wide ranging practical and cost implications.
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Botulism Impacts Wild Birds at the OR. Tule Lake National Wildlife Refuge
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Biologists at the Klamath Basin National Wildlife Refuge Complex in Oregon are currently combating an outbreak of avian botulism affecting a wide range of migratory species including stilts, pintails and wigeons.
Botulism occurs in populations of birds on lakes and water systems that have been stressed by drought resulting in the concentration of birds, lowered water levels and exposure of rotting vegetation. Birds that ingest botulinum toxin are themselves responsible for perpetuation of outbreaks since other birds feed on maggots on rotting carcasses that contain lethal quantities of toxin. Volunteers are gathering dead birds for safe disposal. Mildly affected birds showing paresis are been transported to rehabilitation centers to receive supportive care.
Outbreaks of avian botulism occur frequently along the Mississippi and Pacific Flyways following disturbances in water level in habitats as a result of drought or inappropriate management of water systems.
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Retailers Implement Proactive Strategies for East Cost and Gulf Port Strike
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Retail chains, importers and distributors serving a wide range of stores implemented proactive measures to minimize the impact of the anticipated East and Gulf coast port strike. The International Longshoremen’s Association (ILA) that called the strike represents 45,000 members in 36 ports handling almost half of U.S. imports and a high proportion of exports.
In an earnings call on September 26th, Ron Vachris, CEO of Costco Wholesale described advanced shipping of products for the holiday season. He stated, “We cleared the ports and we have done several things that we could to get holiday goods in ahead of this timeframe. We looked at alternative plans that we could execute by moving goods to different ports and coming across the country if needed.” It is of concern that even a strike of short duration would result in disruption. It would take weeks to clear accumulated cargo containers and move them to their destinations.
Shipments of eggs and poultry meat to Caribbean markets would have been affectedl , benefiting competitors including Brazil. Shortages of imported foods would havel occurred with a prolonged strike and at the very least, disruption would have added to cost and represented an inflationary factor in an economy that has managed to attain a 2.5 percent level, down from approximately 9 percent over 12 months, due to appropriate management by the Federal Reserve.
The Administration announced that it would not invoke the Taft-Hartley Act and force port workers to strike. This would have been be politically unacceptable to unions some of which appear to be wavering in their traditional support for the Democratic ticket.
The White House intervened by sending the Acting Secretary of Labor and the Secretary of Transport to participate in negotiations and serve as go-betweens to engender an agreement between the ILA and the United States Maritime Alliance (USMX) resulting in a suspension through January 15th 2025.
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Wisconsin Feed Mill Cited for Excessive Dust
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Strauss Feeds located in Watertown, WI. was cited by the U.S. Department of Labor, Occupational, Safety and Health Administration (OSHA) for excessive airborne dust in the environment of their feed mill. Following an inspection during February 2024, the Agency identified 24 safety and health violations essentially attributed to poor housekeeping and maintenance. The feed mill failed to evaluate workspaces for dust hazards and allowed accumulation of combustible dust representing a health hazard.
OSHA area director Chad Greenwood noted, “Unsafe levels of airborne dust can ignite suddenly causing explosions and fires that jeopardize the safety of workers. Left unchecked, these same dust hazards can cause workers long-term health issues.”
In addition to the problem of dust, the inspection revealed additional hazards relating to unsafe walking and working surfaces and operation of forklifts within spaces with accumulation of combustible dust.
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BioChek Software II Version 24.2 Released
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BioChek has released updated Software to provide laboratories with greater flexibility. The new software package developed in consultation with users includes a wide range of improvements and enhancements.
The latest version calculates pathogen loads in liquid samples by comparison with a standard.
For further information access the BioChek website by clicking on to the company logo on the right side of the welcome page.
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USAPEEC Participates in 2024 America’s Food and Beverage Show
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Twenty-three members of USAPEEC participated in the September 16-18th, America’s Food and Beverage Show held in Miami. Members with booths within the pavilion interacted with trade missions from the Caribbean region and Central America that represent a significant export market for U.S. poultry products.
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Evidence of Gross Negligence Emerging in Boar’s Head Listeria Outbreak
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EGG-NEWS and CHICK-NEWS have documented obvious operational and hygiene problems in the Boar’s Head, Jarratt, VA. plant producing liverwurst and possibly other products that have contributed to a major outbreak of listeriosis claiming ten fatalities and hospitalizing over 60 patients.
The inaction of USDA-FSIS in failing to respond to obvious deficiencies in the structure and operation of the plant over an extended period will be the subject of Congressional investigation. Legislators are questioning as to how many other Jarratts are in operation, overlooked by USDA-FSIS. The Department of Justice will become involved to determine whether criminal indictments are justified. At this time public release of documentation in the possession of Federal agencies has ceased due to ongoing criminal investigations.
Recently, an industry publication reported on the revelations of Terrence Boyce who it is claimed worked at the Boar’s Head Jarratt plant for seven months commencing in January 2023. According to Boyce, the Company fell short of industry standards with respect to cleaning and decontamination, previously and subsequently verified by USDA. Boyce claims that there were apparently no responsible managers with either training or authority to ensure that hygienic standards were maintained and who allegedly knowingly condoned inadequate decontamination procedures. Boyce although not a ‘whistleblower’ in the legal sense maintains that he was terminated for advocating effective procedures that were contrary to the dictates of plant management. Given that Boyce has displayed a somewhat limited history of tenure at previous positions in industry his assertions and complaints should be under oath and verified.
It is evident that investigators will review the testimony of workers and will subpoena managers in the extreme probability of a criminal prosecution. At the very least, Boar’s Head will face a number of civil actions with the process of discovery disclosing the absence or otherwise of acceptable standard operating procedures and deviations from industry sanitation practices.
Of significance will be whether the Company conducted routine microbiological examinations of the plant environment, equipment and products. The results of assays for Listeria, Salmonella, E. coli or other pathogens, if conducted, will be informative and whether there was concealment of positive results. Documentation should also be available detailing action in the event of any isolation of bacteria of human health significance.
Boar’s Head will be facing a formidable plaintiff’s attorney in the form of William Marler and his team. Given that the outcome of the cases involving the Blue Bell Creamery and the Peanut Corporation of America, not only is the survival of the company and its brand in question but also the future liberty of senior management of the family-owned enterprise.
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FDA Center for Veterinary Medicine to be Re-structured
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The Food and Drug Administration has announced that the Office of New Animal Drug Evaluation within the Center for Veterinary Medicine will reorganize the into two separate groups. These will comprise the Office of New Animal Product Evaluation and the Office of Generic Animal Drugs. The reorganization is intended to expedite review and approval of drugs and is consistent with changes at the Food and Drug Administration to improve efficiency and service.
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Human H9N2 Avian Influenza Diagnosis in Ghana
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On August 26th, public health authorities in Ghana reported a single, spontaneous case of H9N2 avian influenza in a 5-year-old child to the World Health Organization. The May 2024 case recovered following supportive and antiviral therapy. Avian influenza H9N2 virus of low pathogenicity is endemic in poultry in the upper-east region of Ghana, although in this case, there was apparently no evident contact with chickens.
The isolated virus was characterized as an avian H9N2 strain by the U.S. Centers for Disease Control and Prevention following examination and subsequent whole genome sequencing by an international reference laboratory in the U.K.
This case and the recent H5N1 event in Missouri indicate the need to follow up on cases yielding non-seasonal influenza A isolates. Both viruses with mutations to increase human susceptibility may be more widespread than currently recognized. Isolation and characterization are necessary to identify potentially epidemic strains to facilitate preemptive measures.
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Environmental and Welfare Groups Promote Legislation Allowing Transition from Contract Animal Production
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The Industrial Agriculture Conversion Act is proposed as a mechanism for farmers to be compensated for converting from animal production to alternative farming systems. The legislation was sponsored by Representatives Alma Adams (D-NC) and Senator Cory Booker (D-NJ). Supporters of the bill include a broad range of environmental and animal welfare activist organizations.
The proposed legislation would compensate farmers under the Environmental Quality Incentives Program to convert from concentrated animal feeding operations to other forms of agriculture including crop production. The organizations opposing intensive livestock production cite disaffected contractors who claim exploitation by integrators processing hogs and broilers. In reality, contract farmers enjoy a fair return for their labor and their investment in facilities and they function independently of the vagaries of markets and the fluctuation in cost of ingredients with risks borne by integrators who own flocks and herds.
Attempting to restructure the U.S. intensive livestock sector will not contribute to removal of the environmental aspects of animal production but will most certainly raise prices given that efficiencies of scale will be sacrificed. Large integrators are more capable of applying technology to reduce greenhouse gas emission and promote sustainability than numerous individual small-scale producers.
The approach is somewhat reminiscent of the reply offered by then Presidential candidate, the late Governor Michael Dukakis (D-MA) who when asked by an Iowa farmer what he should grow other than low-priced corn suggested after quiet reflection “Belgian endives.” This was an example of a characteristic coastal mindset, ignorant of the realities of food production.
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CDC Conducting Serologic Survey for Exposure to Bovine Influenza-H5N1
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Epidemiologists affiliated with the U.S. Centers for Disease Control and Prevention (CDC) in cooperation with the Ohio Department of Health have collected serum specimens from veterinarians and technicians attending the annual conference of the American Association of Bovine Practitioners. The study will ascertain the prevalence of antibodies against H5N1 in this specific cohort having direct contact with dairy cattle. The study will also evaluate exposure, use of personal protective equipment, seasonal influenza vaccine or any history of respiratory illness.
A spokesperson for the CDC stated, “Veterinary professionals have a key role in the response to H5 bird flu. The goal of the this sero-survey is to better understand the extent of prior influenza A (H5) infections among people who work closely with cattle and the current risk of infection associated with occupational exposures in the bovine veterinary practitioner community.” It is noted that there have been 242 diagnosed dairy herds in 14 states over the past seven months with incident cases reported each week.
This program should be extended to poultry health professionals, farm managers and those coming into contact with egg-production pullet and layer flocks in anticipation of a fall reoccurrence of HPAI.
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Recall of Raw Pet Food
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The case involving Darwin’s Natural Pet Food was reviewed last week. The company concerned is headed by a scofflaw and serial denier of the consequences of bacterial contamination. Despite a warning letter from the FDA the Company refused to recall adulterated pet food. This week a second company Lysnt, LLC was forced to recall Answers™ brand products. This action was taken after an initial refusal to recall product following evidence of adulteration with Listeria and Salmonella in unopened packages at retail. The FDA investigation followed reports of illness in dogs consuming the food that is sold nationwide in stores and online.
The FDA has warned consumers to thoroughly decontaminate all pet feeding dishes and to destroy any unused raw beef or raw chicken formula produced by both companies.
Contaminated pet food may cause illness and in the case of Salmonella, pets may become chronic carriers and intermittent disseminators of the pathogen. This represents a risk to the household and especially to children.
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GRAS Under Academic and Legislative Review
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Representative Rosa DeLauro (D-CT) has introduced the Toxic-Free Food Act. This proposed Legislation would require the Food and Drug Administration to reevaluate the Generally Regarded as Safe (GRAS) classification with respect to chemical food additives. The proposed law would also require post-approval assessment and would obligate applicants to provide scientific evidence to support an application for GRAS status.
Rep. DeLauro stated, “When Americans are shopping at the grocery store they should be confident that the food they are purchasing is safe for consumption and do not contain any harmful chemical additives that could result in illness or death.”
The action by Rep. DeLauro is supported by a recent article authored jointly by a physician and lawyer affiliated with Harvard University. They maintain that GRAS status should be based on scientific evidence. The article proposed an FDA expert advisory committee to conduct a pre-market review and to ensure the safety of GRAS compounds based on risk-assessement.
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Agri Advanced Technologies Receives German Agricultural Society Awards
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Agri Advanced Technologies Gmbh (AAT) has received two awards for innovations from the German Agricultural Society (DLG) before the Eurotier Exhibition in November. The DLG reviewed 250 products from 2,100 exhibitors representing 55 nations. The Innovation Commission announced the medal winners on September 24th.
Vaccybot, an automatic vaccination robot to automate vaccination of pullets received a gold medal. Vaccybot incorporates 3-D stereoscopic cameras and intelligent algorithms and can deliver multiple inactivated vaccines into pectoral muscle at a rate of 2,800 birds per hour.
The Eggytizer disinfection system received a silver medal. The hatchery installation destroys pathogens using low-energy electron radiation, eliminating the use of chemicals including fumigation with formalin.
In commenting on the awards, Jorg Hurlin, Managing Director of AAT, stated, “We are very proud to have been honored by the DLG. This recognizes the team effort and high level of innovation that we put into research and development of our products”. He added “Our goal at AAT is to create practical automation technology that increases animal welfare and health for the poultry industry.”
AAT produces the Cheggy photo-optic system for in ovo gender determination of brown-feathered strains, to be introduced into the U.S. during the fourth quarter.
For additional information, access <agri-AT.com>.
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Purdue University Agricultural Economy Index Falls in August
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The October 1st release of the Purdue University-CME Group Economy Barometer Index for row-crop production fell in September by a substantial 12 points to 88 points. The Index of Current Conditions was down 7 points from August to 76. The Future Expectations Index was down 14 points to 94. The Index is derived from the responses of 400 U.S. farmers and was conducted from September 9th to 13th.
Evident conclusions from the survey is that farmers have profound concerns over the prices for their commodities by despite (but due to) bountiful yields in 2024 declining inflation, lower interest rates. The outstanding concerns were:-
- A sharp drop in prices for corn and soybeans reflecting disparity between supply and demand
- Declining prospects for exports with competition from South American producers and declining demand by China
- High prices for seed, fertilizer and other inputs
- The prospect of higher energy costs with turbulence in the Middle East
- The outcome of the 2024 national election creating uncertainty over farm policy and support
- Failure of Congress to pass a Farm Bill
- Decreased demand for biofuels
Many respondents indicated that they would carry higher debt burdens through 2024 and into 2025 mainly due to increased costs of inputs including seed, fuel and fertilizer for the current season.
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Outbreak of H5N1 in the State of Saxony
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Authorities in Germany have reported an outbreak of highly pathogenic avian influenza H5N1 on a farm in eastern Saxony close to the border with the Czech Republic. The case was diagnosed in Muldenhammer affecting a small flock of less than 200 birds, presumably multispecies and free range.
Last week, EGG-NEWS reported on an outbreak of H5N1 in a flock of 20,000 birds in Lubusz Province in Western Poland adjoining the common border with Germany. In addition, a case of H5N1 was diagnosed in Breznice in Central Bohemia in the Czech Republic.
It is apparent that wild birds are now disseminating H5N1 in Europe with implications for both backyard and commercial egg and poultry meat production with free-range flocks susceptible.
Given that vaccination is an acceptable WOAH adjunct to biosecurity as a method of preventing infection, and the intention of the Netherlands to vaccinate laying hens in high risk areas, it is possible that vaccination will be adopted by other nations especially in eastern Europe.
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Third Kroger Case Commences in Colorado
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The Federal District Court in Denver, Colorado is reviewing the petition by Attorney General Phil Weiser to block the proposed merger of the Kroger Company with Albertson’s Corporation.
The State of Colorado maintains that competition would be adversely impacted by the transaction. They also hold that the divestment of stores to C&S Wholesale will not be a viable strategy. The State predicts that the acquirer will dispose of or will close stores despite the appointment of the Albertsons COO as the CEO of the proposed holding company for the acquired stores and DCs.
Colorado also accuses Kroger and Albertsons of collusion through a “no poach” agreement in 2022. A/G Weiser is requesting the Court to award the state $1 million from each of the defendants for violating state law.
Judge Adrienne Nelson has yet to render a verdict in the first of the three trials in Oregon. Both parties had until September 27th to submit briefs supporting their respective positions.
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Appeal on Massachusetts Question #3 Rule
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The Attorney General of Iowa, Brenna Bird was joined by the Attorneys General of 21 other states in appealing the District Court ruling upholding the Massachusetts Question #3 Rule on the production of pork. Question #3 bans sale of pork or transport through the state of product not produced in accordance with housing requirements, specifically banning gestation crates for sows.
Attorney General Bird claims that Massachusetts Question #3 would impose severe costs on Iowa pork producers. This contention is questioned given that there is adequate pork available derived from sows held in group housing. The second claim that prices would escalate is more valid given post Proposition #12 prices for pork products in California.
The appeal will be based on the reality that Massachusetts Question #3 contravenes the Import-Export Clause prohibiting states from restricting interstate transport. The plaintiffs will invoke the Dormant Commerce Clause that vests authority to regulate interstate commerce in the federal government. This claim was rejected by the Supreme Court with respect to Proposition #12. The third component of the appeal will be recognition of the Full Faith and Credit Clause that was upheld by SCOTUS in considering the Proposition #12 appeal.
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Commentary
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