The U.S. Government Accountability Office recently published the High-risk List incorporating 35 government programs and activities including the Federal Food Safety System in their March 6, 2019 edition. The report calls for the Executive Office of the President to develop a national strategy for food safety that establishes sustained leadership, identifies resource requirements and describe how progress will be monitored.  This recommendation was made in the previous high risk report in January 2017 without any action from the White House.

The GAO urges the Government to implement the Performance and Results Act (GRBA) as amended in 2010 to improve strategic and performance planning an interagency food safety collaboration. The  GAO suggested that Congress should direct the Executive Office of Management and Budget to develop performance plans relating to food safety and establish legislation to enable the Food Safety Working Group to improve coordination and leadership.

It is a matter of record that the GAO has called for a single Federal food safety agency combining activities of among others, the USDA-FSIS and the FDA in a single entity consistent with an alternative to the current organizational structure.

When consolidation is mooted, bureaucrats circle the wagons and agree to cooperate and interact.  In January 2018 the USDA and FDA agreed to a formal system of coordination and collaboration with respect to biotechnology.  An obvious example was establishing jurisdictional borders for tissue-culture derived “meat”.

The GAO considers that current agencies responsible for aspects of the Federal Food Safety System are operating without a single performance plan and without clearly defined monitoring of effectiveness.

It would be difficult given resistance to change and “turf” considerations to rearrange responsibility for food safety under a unified sub-cabinet agency equivalent to the status of the EPA.  The U.K. and the E.U. have established unified food safety authorities with benefits to consumers.  It took the national tragedy of 911 to create the Department of Homeland Security consolidating the activities of agencies and bureaus within diverse departments.  It is hoped that evolution towards a unified food safety agency could occur without a serious incident and would be the result of applying mature judgment and logic to a system which currently represents bureaucratic and political expediency.

USDA-FAS data collated by USAPEEC, reflecting export volume and values for shell eggs and egg products are shown in the table below comparing 2018 with 2017:-

U.S. SHELL EGG AND EGG PRODUCT EXPORTS IN 2018 COMPARED WITH 2017

Source USDA-FAS/USAPEEC

SHELL EGGS

Shell egg exports from the U.S. during 2018 decreased by 2.6 percent in volume but increased 2.6 percent in total value compared to 2017. Unit value was higher by 3.9 percent or 4 cents per dozen for the comparison between 2017 and 2018. The top two importing nations represented 80.6 percent of volume and 76.9 percent of value.

• February 2019 USDA Ex-Farm Benchmark Price Down 10.5 Percent from January 2019, Consistent with Seasonal Trends and Moderate Oversupply.

• February 2019 USDA Average Nest-run Production Cost 0.2 Percent Higher than January 2019 at 60.0 cents per dozen.

• February 2019 USDA Benchmark Nest-run Margin Decreased 45.9 Percent from January 2019 to 9.8 cents per dozen

INTRODUCTION.

Summary tables for the latest USDA February 2019 prices made available by the EIC on March 12^th 2019 are arranged, summarized, tabulated and reviewed in comparison with values from the previous February 19^th 2019 posting reflecting January 2019 cost data.

COSTS & REVENUE

From January 2019 onwards EIC has used USDA-AMS data for regional corn, soybean and standard feed prices. The basis for corn will be cash payment except for California (10-day delivery) and Louisiana and Oregon (30-day delivery). For soybean meal a similar approach is applied with 20-days for Minnesota. It is noted that January 2019 prices are not directly comparable with December 2018. Month-to-month comparisons in 2019 will be valid.

• Hen Numbers in Production Stable from Previous Week 323.0 million .
• Shell Inventory Down 0.3 Percent from Previous Week.
• USDA Midwest Benchmark Generic Prices for Extra Large, Large Down 5.9 percent and Mediums Unchanged Compared to Past Week.
• Breaking Stock Below Cost of Production

OVERVIEW

Prices

According to the USDA Egg Market News Reports posted on March 11 ^th the Midwest wholesale prices for Extra Large and Large were down 5.9 and 5.8 percent respectively compared to the past week. Mediums were unchanged. The progression of prices during 2019 is depicted in the USDA chart reflecting three years of data, updated weekly.

The March 11^th USDA Egg Market News Report (Vol. 66: No. 10) documented a USDA Combined Region value rounded to the nearest cent, of $0.96 per dozen delivered to warehouses for the week ending March 5^th and reflects the sharp downturn during the week. This price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $0.87 per dozen. At the high end of the range, price in the Southeast Region attained $1.03 per dozen. The USDA Combined Price last week was 27 cents per dozen below the three-year average and 83 cents per dozen below the corresponding week in 2018 which was exceptionally high.

Based on the importance of cage-free production, the USDA-AMS issues a monthly report on volumes and prices for the information of Industry stakeholders. There is some doubt as to the accuracy of the monthly flock numbers and the question is raised whether it would not be more desirable to post accurate quarterly data in place of unconvincing monthly figures with similar hen data for consecutive months.

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

The USDA Cage Free Report for the month of February 2019 released on March 4^th 2019 documented constant flock sizes in hens producing under the Certified Organic seal and an inconsequential increase in cage-free flocks as compared to the values for October 2018 through January 2019. 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 reduced to 75.5 percent for both categories of non-caged hens (accepting USDA data) although there were differences in placement programs and hen age among preceding months:-

Kindly refer 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.

The 3-day Expo Culinaire in Sharjah, UAE, attracted nearly 5,000 chefs and foodservice industry

professionals. The AEB sponsored a Young Chef competition participants were required to submit

entries in two of three categories using U.S. eggs and products:

• Poached eggs with Hollandaise sauce

• Omelets

• An Emirati dish incorporating eggs

Additionally, an AEB/USAPEEC booth at the expo featured egg demos by top Emirates Culinary Guild

Chefs.

A press release to Middle East media and a placement in Gulf Food Magazine emphasized the quality of U.S.

eggs and products

Sonic® Drive-In has introduced a brunch burger incorporating a pure beef patty topped with melted cheese, bacon and a fried egg.

Scott Uehlein, Vice president of Product Innovation and Development for Sonic® stated, "As traditional meal times continue to shift and change, brunch has taken on a life of its own, allowing the mixing, matching, and harmonizing of familiar flavors to create endless dishes." He added, "With our entire menu available all day long, guests are free to order breakfast anytime and our new Brunch Burger is the best of both worlds.

The Brunch Burger is available for a limited time at participating Sonic® Drive-Ins.

It is hoped that the trend towards "putting an egg on it" as promoted by the AEB will adopted by other QSRs and consequently boost egg consumption especially for Mediums.

The monthly review of egg sales confirmed that for 2018, per capita U.S. consumption will attain 278.8 eggs, +0.9 percent higher than 2017. The projection for 2019 is 279.8 eggs, a +0.4 percent increase over 2018. It is anticipated volume of retail shell egg sales suggests an increase of 1.6 percent over 2018 but with a 0.4 percent decline in dollar value.

In evaluating pack size, Nielsen calculated that during the week ending January 26^th, 18-count packs were up 2.5 percent compared to the corresponding period in 2018. Costco and other club stores are promoting 24-count packs that would account for the obvious increase in this unit of purchase.

The AEB summation of Nielsen data indicates that for January 2019, conventional eggs represented 87.6 percent of market share with cage-free 10.3 percent and organic 2.2 percent. These figures suggest that a proportion of cage-free and even USDA Certified Organic are being downgraded given the proportion of hens in the organic and cage-free categories as reported in the monthly USDA cage-free data.

A 28 to 72 percent ratio for branded to private label retail eggs sales by volume was recorded during January 2019 corresponding to a ratio of 39 percent to 61 percent based on dollar value.

Moba has introduced the MCE 20 case erector to be used in conjunction with the MR 12 case- packing robot. The new case erector will unfold a flat case and close the bottom with tape or glue. The automatic case erector can handle two different case sizes simultaneously and independently. Capacity is nine cases per minute from both case stores. The MCE 20 case erector can handle left and right-handed boxes and can change case sizes on one side without interrupting operation of the other side.

Starbucks is adding foam based on egg-white and milk in cold-served macchiato drinks. The innovation is an attempt to broaden the chain’s menu alternatives and to provide an alternative to calorie-rich sweet Frappuccinos that may be declining in popularity.

The selection of egg-white confirms the inherent functional qualities of the ingredient but will not appreciably move the consumption needle.

Senator Chuck Grassley (R-IA) recently commented on future challenges to the economy in an interview with Yahoo Finance.

It appears that a significant priority for Grassley will be to work across the aisle to ratify USMCA. Grassley noted, "The House will consider the deal first but I will need to work with democratic lawmakers on the three main areas of enforcement, environment and labor." Grassley noted that retaliatory tariffs are hurting farmers in his state and will discourage legislators in Canada or Mexico to ratify the deal. Grassley stated, "So whether it's Mexico or Canada or the U.S. all three countries are saying to the President of the U.S., you have to get rid of these tariffs and I am of the same opinion."

The AEB and USAPEEC cooperated to promote the functional benefits and versatility of U.S. egg products at the Bakery and Confectionary Exhibition held in Tokyo during late February. A local chef demonstrated the use of dried egg products in bakery applications. According to the March 1 ^st edition of AEB highlights 40,000 attended the exhibition generating interest in U.S. egg products. For the first 11 months of 2018, the U.S. exported 9,781 metric tons of egg products to Japan representing 33.6 percent of export volume and 40.5 percent of value at $41.2 million.

The National Oilseed Processors Association reported in mid-February that 4.671million metric tons of soybeans were crushed in January representing a new record for the month compared to 4.439 million metric tons in January 2018. January output of soybean meal attained 3.63 million tons of soybean meal.

The National Agricultural Statistics Service reports that output of DDGS during the first ten months of 2018 fell 12.1 percent to 3.515 million metric tons compared to the corresponding period in 2017. The lower availability of DDGS is attributed directly to a proportional decline in output of ethanol since DDGS is a byproduct of corn fermentation.

Exports of ethanol representing a surplus of availability over domestic requirements has fallen partly due to cessation of U.S. imports by China.

Demand for DDGS is determined by inclusion rates in hog and poultry diets as determined by unit values for energy and to a lesser extent by amino acids compared to alternative ingredients. Diminishing the quantity of feedstock diverted from feed to produce ethanol makes available more corn to livestock producers at a cost which is more competitive with DDGS as an ingredient to be incorporated into least-cost formulations.

The EPA has referred a proposal for year-round E15 to the Office and Management and Budget for review. Despite the haste with which the RFA proposal was reviewed by the EPA, the reality is that there is not the distribution infrastructure to allow for sale of more than standard E10 (10 percent dilution of gasoline with ethanol).

The ethanol industry hit the blend wall in 2017 with E10 and is having to export excess production. A number of ethanol refineries have been mothballed as denoted by a decline in the availability of DDGS. As we pass into the second quarter of 2019, economic realities are now shaping the future of the ethanol industry. There would be no ethanol production without mandates and the RFS.

In a release dated March 5^th, 2019, Commissioner of the FDA, Dr. Scott Gottlieb noted that the U.S. has one of the safest food supplies in the world but it is recognized that foods can be vulnerable - "not just from unintended contamination, but from those who would do us harm."

In 2016 the FDA issued a rule outlining risk-based procedures to be adopted by food production facilities to protect from acts of intentional adulteration. Additional directives are contained in the document Mitigation Strategies to Protect Food against Intentional Adulteration: A Guidance for Industry. This revised draft guidance is issued in compliance with the Intentional Adulteration (IA) Rule incorporated in the Food Safety Modernization Act. Both domestic plants and foreign facilities that export to the U.S. must develop and implement food defense plans to assess potential vulnerability to acts of deliberate contamination.

According to a posting on ProMED on March 4^th, an organic egg-production flock comprising 7,000 hens near Terndrup was diagnosed with H5 avian influenza of low pathogenicity. The diagnosis was confirmed by PCR assay carried out by the Danish National Veterinary Institute.

The flock was depleted and a 1 km quarantine zone imposed. The origin of the infection is unknown but was most likely associated with migratory birds as the flock was not confined.

The previous diagnosis of H5 influenza in Denmark involved a flock of game birds in June 2018.

The AEB Eggs in Schools Program marked National School Breakfast Week (March 4-8)

with special promotions through E-news and social media, providing school nutrition directors menu ideas,

recipes and egg nutrition information.

Examples of innovative servings are illustrated:-

Pictured above:

• Breakfast Pinwheels - Brantley County School

• Breakfast Burrito - CCSD school

• Scrambled Eggs - Sandusky City Schools

Breakfast Taco - Cypress Park HS

Perhaps I was too hasty in commenting adversely on the recent promotional event organized by the USAPEEC and the AEB in India posted on Friday March 8^th. The item elicited a response from Jim Sumner justifying the event. In fairness to Jim, a stalwart and tireless promoter of exporting U.S. poultry products the reasoning behind the program is presented in his own words.

"India is emerging as the fastest growing egg market, with consumption crossing over 88 billion in 2016 and 2017. The per capita consumption of eggs has increased from 30 eggs per annum to 69 eggs per annum in the last two decades. However, The Indian Council of Medical Research (ICMR) recommends a minimum of 180 eggs per annum. Even after the significant increase in consumption, the Indian population is still more than 100 eggs below the annual recommendation.

The focus of these seminars was on processed eggs for the foodservice industry, and currently only five percent of eggs produced in India are processed. These seminars highlighted the use and functionality of processed U.S. eggs - dried whole egg powder was used for demonstration purposes at these seminars. The seminars also talked about the nutritional benefits of eggs. The increasing demand for processed egg products in QSR chains, large food retail chains, and bakeries (which need standardization and consistency), as well as in the pharmaceutical industry coupled with a limited domestic production the U.S. has potential to capture a significant market share in India with limited competition.

And again, their food service industry is certainly not accustomed to the high quality eggs available from countries such as the U.S. We feel that once exposed to our eggs, they will come to the realization that they can improve the level of their food service products".

I am indebted to Jim for the explanation and his wise counsel. The U.S. Industry receives a disproportionately high return from expenditure on promotion by the USAPEEC that produces benefits for producers in our Nation but also for the consumers in importing countries.

Kemin Animal Nutrition and Health has introduced a certified organic form of  KEM GLO™ as a feed additive to supply red pigment.  The active ingredient is derived from organic paprika peppers and is standardized to yielded one gram of xanthophyll activity per pound of  commercial product.

The active ingredient is standardized after manufacture to ensure potency.  The product contains stabilized paprika extract and dried kelp.  If used as a single additive, KEM GLO™ will produce an orange yolk. Suggested use is in combination with Kemin Organic ORO GLO® to attain a desired level of pigmentation ranging from deep yellow to orange. Both KEM GLO™ and    ORO GLO™ are stabilized but should be used within 60 days of opening the 44-pound bags.

For further information contact Roger Myers at 515-240-5559 or roger.myers@kemin.com.  Further information is available on the company website www.kemin.com/carodenoids

Opponents of genetic engineering fail to appreciate the advantages associated with modification of plant genomes to produce strains with benefits to farmers, especially those in under-developed nations. Collaborators in a project involving Iowa State University, the University of California - Davis and INRA in France have developed a strain of rice that can reproduce without fertilization. This type of reproduction is referred to as "synthetic apomixis". This is the first commercial crop which expresses this characteristic, although as many as 500 wild plants are capable of producing seeds without fertilization.

The modification was achieved by identifying genes that regulate reproduction with specific reference to fertilization. Progeny of modified plants capable of apomixis are clones but are still capable of reproducing.

The rice plant which has been developed relieves farmers from having to purchase hybrid seed each planting season. The system will however require further development since the efficiency of asexual reproduction is currently only at 30 percent. Continuing work applying genome editing will eventually yield a rice plant which incorporates acceptable commercial attributes at minimal cost.

Opponents of GE should consider the benefits such as yield, resistance to drought, pests and enhanced nutrient content. It is clear that GM strains of cotton, corn, and soybeans can be produced with lower levels of pesticide and herbicide application and specific strains of bananas and rice with enhanced carotene levels have the potential to reduce blindness in the nations where GMO cultivars would have the most impact.

Zimbabwe has recently lifted a ban imposed on importation of GM seeds and commodities. It is expected that additional nations in sub-Saharan Africa will follow based on need and education.

FSNS will present the following series of practical courses taught by acknowledged experts:-