Editorial


Effect of New SNAP Rules

In December 2019, Secretary of Agriculture Dr. Sonny Perdue announced that the Department would cease allowing waivers extended by states to unemployed able-bodied recipients between the ages of 18 and 49. It is estimated that approximately 700,000 citizens will become ineligible for SNAP benefits. These include 400,000 in California; 100,000 in Pennsylvania, and the remainder spread among states with depressed economies including Louisiana, Illinois, Michigan, and Nevada.

 

Campbell Robertson, writing in The New York Times on January 13th, cited a study in Cabell County in West Virginia where there is extreme poverty are there are few jobs to maintain eligibility.

 

Restrictions imposed during the recent past have resulted in greater demands on homeless missions and food pantries. The need for assistance will only increase despite limited resources and donations. In 1996 Federal law placed a limit on SNAP support for able-bodied adults who were restricted to benefits for three months in a three-year period if not working or in training for 20 hours per week. Many states, including California and Pennsylvania, have operated under a USDA waiver allowing relaxation of requirements in case of need. This concession will be now be withdrawn.

 

In announcing the USDA policy on SNAP, Secretary Perdue justified the decision as an effort “to restore the dignity of work”. Given the non-availability of jobs and training programs in depressed areas of the nation including Eastern Ohio, West Virginia, Nevada, New Mexico, and Colorado among others, the social experiment to be enacted by USDA will have no direct benefit on dignity, but will impose suffering on the poor and especially children. Regrettably, what may be considered beneficial within the confines of the DC Beltway, may not be practical in the mountains of Appalachia and the deserts of the far west where vulnerable populations face challenges to survival.

 

Structured studies have shown that reducing SNAP benefits has no effect on employment rates in many areas where there are no job opportunities available.

 

Removing 700,000 recipients of SNAP benefits from the USDA roll will also have an indirect impact on demand for agricultural products. This indirect consequence has been highlighted by the American Farm Bureau Federation and other commodity associations.


 

Egg Industry News


Commodity Report

COMMODITY REPORT: January 17th 2020.

 

Corn and soybean prices diverged this past week. Corn was up 0.8 percent and soybeans were down 0.6 percent. The fractional changes were despite signing of Phase-1 of the agreement with China, ratification of USMCA by the Senate and publication of the January 2020 WASDE #596.

 

Uncertainties still include:-

· The extent and timing of soybean purchases by China in 2020. The U.S and China have now signed the Phase-1 agreement including U.S. tariff rescission, promised purchases of agricultural commodities, concessions on some structural issues by China and enforcement provisions

· Exports of soybeans to China have resumed with 7.7 percent of projected shipments for 2019/2020 consigned during October and November. Notwithstanding the soybean exports, markets apparently do not sure the same optimism as expressed by the White House.

  • Fallout from uncertainty in the Middle East.

Questions still exist:-

· Traders are reviewing projected ending stocks and taking into account the relative sizes of both corn and soybean harvests in 2019. Export of soybeans to China is still uncertain.

· Brexit is now a certainty after the Conservative Party plan was approved by the House of Commons on Thursday 20th December.

· A U.S. trade agreement with the U.K. will be concluded in 2020 but trade with the U.S. will be conditioned by commitments to the E.U. by the departing nation.

· The relationship with the E.U. is tenuous especially with the threat of retaliatory tariffs by the U.S. on food products from France and auto imports from Germany.

· An unpredictable political situation is delaying ratification of the USMCA by the Senate hopefully in early 2020.

Compared with the January 10th 2020 close, the CME quotation for March corn posted at close of trading on January 17th 2020 was up 3 cents to 389 cents per bushel. Soybeans that should be the beneficiary of the Phase-1 agreement were down6cents to 929 cents per bushel. During mid-December corn rose 6.0 percent and soybeans 2.8 percent based on prospects for commodity exports to China.

The signing ceremony for the recently concluded Phase-1 agreement on January 15th in Washington was a muted affair. Vice Premier Liu He represented China.

The following quotations were posted by the CME at close of trading on January 17th 2020 compared with values for January 10 th 2020 (in parentheses).

COMMODITY

 

Corn (cents per bushel)

March 389 (386)

May 395 (393)

Soybeans (cents per bushel)

Jan. 929 (935)

May 942 (958)

Soybean meal ($ per ton)

Jan. 301 (299)

May 305 (308)

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

COMMODITY CHANGE FROM PAST WEEK 

Corn: March quotation up 3 cents per bushel         ( +0.8 percent)

Soybeans: Jan. quotation down 6 cent per Bushel (-0.6 percent)

Soybean Meal: Jan. quotation up $2 per ton           (+0.7 percent)

  • For each 10 cent per bushel change in corn:-

The cost of egg production would change by 0.45 cent per dozen

The cost of broiler production would change by 0.25 cent per pound live weight

· For each $10 per ton change in the price of soybean meal:-

The cost of egg production would change by 0.44 cent per dozen

The cost of broiler production would change by 0.25 cent per pound live weight

COMMENTS

Subscribers are referred to the January 10th WASDE #596 under the STATISTICS tab.

Prices of commodities are influenced by projections of ending stocks as influenced by the 2019 harvest, 2020 exports and domestic use.

Two tranches of support funding were advanced in 2018 amounting to $12 billion as "short-term" compensation for disruption in trade.

On July 25th the USDA announced an additional $16 million package to support agriculture with Market Facilitation Payment (MFP) funds to be distributed in three tranches. Funds are distributed based on the higher of 50 percent of the producer's calculated payment or $15 per acre, provided a cover crop is planted.

The second MFP payment (November 2019) was $3.6 billion. The third (January 2020) payment, presumed to be $3.6 billion, will in all probability be paid given political and trade considerations.

Regulations framed in terms of the Additional Supplementation Appropriations for Disaster Relief Act of 2019 enacted in June will determine eligibility. One million applications were received for the initial round in 2018 with 420,000 applications since July 2019. Additional request are being made by industry groups for 2020 MFP payments and will probably be justified by lower imports by China than previously announced by the White House.


 

Egg Week

USDA Weekly Egg Price and Inventory Report, January 22nd 2020.

  • Hen numbers in production up 0.1 million to 336.8 million .
  • Shell inventory down by 4.7 percent after a 7.0 percent decrease last week reflecting purchases by chains to refill depleted stock.
  • USDA Midwest benchmark generic prices for Extra large and Large unchanged at an average of 62.5 and 60.5 cents per dozen. Mediums unchanged at 54.5 cents per dozen. The market has probably bottomed.
  • Price of breaking stock up 2 percent to 25.0 cents per dozen on average. Checks down 4.0 percent to 12.0 cents per dozen reflecting shell-egg prices. Both categories are now substantially below the USDA December benchmark nest-run production cost.

OVERVIEW

Prices

According to the USDA Egg Market News Reports posted on January 20 th 2020 the Midwest wholesale prices for Extra Large and Large as delivered to DCs were unchanged at averages of 62.5 and 60.5 cents per dozen. Mediums were unchanged at 54.5 cents per dozen reflecting a restoration of the balance in sizes influenced by young flocks. Prices should be compared with the USDA benchmark average 5-Region blended nest-run cost of 59.9 cents per dozen in December 2019, (excluding provisions for packing and transport). The progression of prices during 2018-2020 is depicted in the USDA chart reflecting three years of data, updated weekly.

The January 20th 2020 USDA Egg Market News Report (Vol. 67: No. 03) documented a USDA Combined Region value rounded to the nearest cent, of $0.69 per dozen delivered to warehouses for the week ending January 14th. This average price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $0.61 per dozen. At the high end of the range, price in the South Central Region attained $0.75 per dozen. The USDA Combined Price last week was 41 cents per dozen below the three-year average of $1.10 per dozen and 27 cents per dozen below the price during the corresponding week in 2019.


 

STOP PRESS

Wuhan Coronavirus Spreads

 

Predictably the incidence rate for the Wuhan coronavirus is rising. As of January 22nd a total of 570 confirmed cases have been diagnosed with 17 fatalities. The infection has been identified in numerous Provinces in China and in individuals travelling to four Asian nations and one case to Washington State in the U.S.

The city of Wuhan with 11 million residents and three other large metro areas have been quarantined given the approach of the Lunar New Year involving extensive travel within China. Notwithstanding the rise in number of cases there is no cause for extreme concern at this time as authorities will control the infection based on experience gained from the previous SARS outbreak.

 


 

Quick Service Restaurants Benefited From Increased December Sales

The NPD Group reported that quick service restaurants experienced a three percent gain in transactions during December 2019 attributed to the need for convenience and speed during the holiday season.  In contrast, casual dining transactions were down two percent and mid-scale family dining restaurants reported static sales compared to December 2018. 

 

 

David Portalatin of NPD noted “family dining benefited from holiday vacations during the period from Christmas to the New Year, with their biggest boost in transactions in that week”.


 

Deployment of In-Store Robots Expanding

Walmart Stores activated the first Bossa Nova robot in 2016 to roam aisles and monitor stock levels.  NCR Corp. has worked closely with Walmart to develop self-checkout kiosks and will service the units.  The advantages of robots are self-evident as almost half of activities in stores currently carried out by workers (“associates”) can be mechanized.

 

Robots are now being used by Albertsons on an experimental basis. Schnucks, Giant Eagle and Stop and Shop with competing features.  A spokesperson for Walmart noted that robots have traveled almost 50,000 miles in a million aisles and scanned 500 million products.  Predictably supermarket workers are concerned over automation and refer to robots as “job stealers”.


 

Target Reports Disappointing Holiday Sales

On January 15th, Target announced that same store sales during November and December were up 1.4 percent compared with 5.7 percent for the pre-Christmas period in 2018. Despite the low growth rate, the company will achieve previous guidance for the last quarter of 2019.

 

In commenting on sales, Brian Cornell, CEO, stated, “We faced challenges throughout November and December in key seasonal merchandise categories.” He added, “Because of the durability of our business model, we are maintaining our guidance for our fourth quarter earnings per share.”

 

Food and beverage sales were up three percent from the period November 1st through December 24th, while home items were down one percent. Apparel and electronics were up five percent and six percent respectively.


Brian Cornell, Target CEO

 

Budd Bentley Appointed President of Poultry Management Systems Inc.

Budd Bently has been appointed as president of PMSI. He has a long and productive career in the automotive industry and is experienced in remote monitoring and telematics. Mr. Bentley earned a BS in Mechanical Engineering from Kettering University and a Master’s Degree in Engineering Management from Western Michigan University.

 

PMSI is a leader in computer controls, electrical panels, and general production automation for egg production. The company operates independently of sister companies within the Big Dutchman group.


 

Ben and Jerry’s Amend Labeling Following Lawsuit

Ben and Jerry’s is deleting a “happy cows” claim on all packaging.  This action follows a decision by the District of Columbia Superior Court to reject a motion to dismiss a lawsuit brought by the Organic Consumers Association in July 2018.  Ben and Jerry’s claimed that milk for their ice cream was from “happy cows” participating in a Caring Dairy program with high standards of welfare and environmental compliance.  In fact, only a proportion of milk used to prepare the iconic brand was derived under the program. The remainder was purchased from conventional commercial sources constituting the potential of misrepresentation in packaging.

The company finessed the change mandated by the lawsuit as a redesign of packaging to comply with FDA nutrition facts labeling.

It is obvious that organizations opposed to intensive livestock production including eggs will be constantly monitoring packaging.  Depictions of hens on pasture on packs of “cage-free” flocks confined to barns will come under scrutiny since they are misleading.  The situation could be improved if the industry would adopt a standard nomenclature for housing systems, possibly then to be approved by USDA-AMS to ensure a level playing field for all producers.


 

Food Manufacturers Commit to Reducing Plastic in Packaging

Nestle, an influential multinational food manufacturer has committed $2 billion to develop alternatives to current plastic for packaging food. Nestle hopes to reduce and eventually eliminate single-use plastic currently representing approximately 1.9 million tons annually with only two percent manufactured from recycled stock.

 

Most multinationals have pledged to recycle plastic and to use alternative materials. Proctor and Gamble has a goal of halving fossil-based plastic by 2030. Unilever plan to reduce plastic packaging from fossil fuels by half before the end of 2025.

The use of multi-layered packaging film combining aluminum and plastic, as used in the food industry, represents a challenge to recycling plants.

 

It is evident that consumers are demanding recycling and alternatives to fossil-derived plastic. This has had an impact on legislators worldwide characterized by banning single-use plastic bags. The entire recycling industry in the EU and the U.S. was thrown into disarray in 2018 when China altered its policy on importation of scrap plastic to be recycled in plants that generated environmental contamination and became economically infeasible.


 

Munters Welcomed As a Sponsor

Munters Corporation has joined major manufacturers and suppliers of North American and International poultry equipment and services as a co-sponsor of CHICK-NEWS and EGG-NEWS.

The Company designs, develops and manufactures equipment for climate control, dehumidification, heating and abatement of pollution for a wide range of industries and agricultural applications. Munters can provide turnkey ventilation installations and components for retrofits compatible with a wide range of house configurations and flock densities.  

The ventilation range includes exhaust and turbulence fans up to 51 inches in diameter together with cones, louvers, air inlets, light baffles, controllers and evaporative cooling. Munters systems are supplied with sensors and warning systems all with user-friendly and practical features.

Munters supplies installations and components for pharmaceutical plants, supermarkets, the electronic, defense and aerospace industries, healthcare locations and chemical plants in addition to agricultural and livestock housing.

The Company provides assistance in the design and installation of systems and deploys a comprehensive service capability. Munters maintains an inventory of spare parts and provides kits for on-farm maintenance and repair.

Munters Celdek ® has received Green Guard Certification and VariMax ® fans carry USDA Equipment Acceptance Certification.

Munters is an established leader in designing ventilation equipment that contributes to optimal performance and to sustainability through efficient displacement of air relative to energy input.

Additional information on specific components of ventilation systems for broiler and egg-production installations can be obtained from the company website that can be accessed by clicking on the Munters logo on the right side of the welcome page.


 

OVO-Vision Introduces Software Integrating On-Farm Scanning, Records and Logistics

OVO-Vision has upgraded software to allow on-farm scanning of consignments of eggs to be transported to packing plants and distribution centers. The software accommodates split- deliveries and integrates flock records, traceability and invoicing.

OVO-Vision software creates a “paperless office” for drivers collecting eggs to be transferred to various destinations. The new software permits eggs collected from a specific farm to be delivered to either packing or breaking plants with complete records relating to pricing, invoicing, return of pallets and trays.

Trace-back information is maintained on specific lots, flocks of origin, egg-classification, production date and any additional required data. Advantages associated with the system include direct delivery to distribution centers, to retail or breaking plants in a single farm collection. This avoids handling at the packing station representing a biosecurity risk. Integration in planning and execution of transport contributes to lower cost and sustainability. Software supplied by OVO-Vision ensures correct invoicing and pricing of product, retention of quality data and automatic adjustment of inventory.

Additional information on the OVO-Vision upgrade is available by clicking onto the OVO-Vision logo on the right side of the welcome page or accessing www.OVO-Vision.com.


 

Incredible Branding Rolls Out on Sauder's Trucks

Sauder’s Eggs of Lititz, PA. is taking The Incredible Egg “How Do You Like Your Eggs?” campaign on the road with gorgeous new truck graphics. The graphics create moving billboards that attract attention.

 

Information on obtaining truck graphics is available from Sue Coyle  scoyle@aeb.org.


 

China Experiencing Slump in Egg Prices

According to Dow Jones, egg futures on the Dalian Commodity Exchange have fallen by half to 31 cents per dozen.  Egg futures in China are highly volatile, moving by as much as 80 percent in a year.

Analysts attribute the drop in price to a level below the cost of production to a marked increase in availability. It is claimed that farmers have replaced hogs with laying hens.  This explanation appears unlikely given the inability of hatcheries to supply a sharp increase in commercial day-old pullet chicks, a lack of equipment to produce eggs and the biological cycle required to materially raise production. These factors would mitigate against Chinese farmers switching from raising hogs to producing a significant number of eggs sufficient to tank the market. A more likely explanation is that breakers responsible for a high proportion of production ceased operation in the week preceding the Lunar New Year beginning January 25th displacing eggs to the shell market.

Industry observers note that egg prices follow pork.  Although hog prices increased by as much as 150 percent during the last quarter of 2019, the last few weeks of December saw a decline, possibly attributed to imports and release of available frozen pork inventory. 

China is the world’s largest producer of shell eggs estimated to attain 47 billion dozen in 2018 valued at $230 billion or an average price approaching $0.50 on a nest-run basis.

Wide range in production systems to produce eggs in China


 

Avian Influenza Diagnosed on a Goose Farm in Poland

A spokesperson for veterinary regulators in the Wielkopolska Region of Poland with a high population of diverse poultry confirmed that 6,000 geese on a farm will be depopulated as result of exposure to H5N8 avian influenza.  Geese in Eastern Europe are traditionally free-ranged and if this is the case on the affected farm, it may be presumed that contact with migratory waterfowl was responsible for the outbreak.  There have been six cases of H5N8 avian influenza diagnosed in Poland since December 1, 2019. Eight Eastern European nations have reported H5N8 infection in backyard and commercial flocks and spread westwards is anticipated based on a seasonal outbreak in 2016/2017.


 

FSNS To Conduct Auditor Workshop At IPPE

FSNS will present an “Ask the Auditor Workshop” at the IPPE on Tuesday, January 28th from 09h30 to 10h30 in room A304 at the GWCC. The free event will discuss audit preparation and provide details on FSNS criteria.

 

Attendees are invited to visit the FSNS booth B7427 for additional details regarding the workshop and services provided by FSNS.


 

Beijing Clamps Down on Plastic Use

Following the 2018 ban on importation of plastic waste for recycling, authorities in China have introduced strict measures to reduce the use of plastic, especially in food distribution.

 

By the end of 2020, non-biodegradable plastic bags will be banned from major cities. Plastic utensils and containers for take-out food will be replaced by biodegradable alternatives with a target of 30 percent elimination of all plastics by 2025.

 

The National Bureau of Statistics documented  production of 60.4 million metric tons of plastic in 2018 requiring a commensurate program for either recycling or disposal of plastic waste.

 

According to the report by Stephanie Yang, in the January 21st edition of The Wall Street Journal, fines will be levied against restaurants and companies contravening regulations. More important, in the context of Chinese society, naming and shaming will do more to reduce single-use plastic containers.


 

Wuhan Coronavirus Spreads Within Asia

Predictably the number of cases using a diagnostic procedure, presumably a molecular biological procedure such as PCR, has identified additional cases of what is now referred to as Wuhan Coronavirus infection. Authorities have emphasized that although the virus responsible for the 2020 infection is distinct from the 2003 SARS outbreak, there are commonalities in epidemiology.

 

Previously it was announced that the virus was transmissible from animals to humans by direct contact. Subsequently Dr. Zhong Nanshan, an experienced infectious disease specialist, has stated that the virus has possibly undergone mutation and can be transmitted between humans. This is based on cases in Guangdong Province where family members were in contact with infected relatives who had visited Wuhan. Among the 570 patients as of January 22nd, are 15 health-care providers further reinforcing the reality of human-to-human transmission of the virus.

 

As with any emerging viral disease, air transport provides a means of dissemination. This past week, two cases were diagnosed in Bangkok, Thailand, one in Japan, and a single case in South Korea all involving passengers. One case was diagnosed in a patient travelling from China to Seattle, WA.

 

Initial investigations suggest that the Wuhan Coronavirus is not as pathogenic as SARS, which was responsible for 774 fatalities. To date seventeen patients have died, all presumably with predisposing health problems.

 

The possible impact of the Wuhan virus will become apparent after the January 25th Lunar weekend holiday season commences. Traditionally up to a quarter of the population in China travels by train, bus, or airplane within the nation. Most countries have introduced screening for passengers arriving from China to detect fever or respiratory symptoms. 


 

BioChek Lunch Seminar

BioChek has arranged a luncheon seminar on Wednesday, January 29th noon -13h30 in Room C201 of the GWCC. 

Dr. Jantina De Vylder, Business Unit Manager for poultry at BioChek will discuss the BioChek App with specific reference to monitoring of flock health.

The second speaker will be Rogier van Otterlo, Business Unit Manager for food safety at BioChek  who will discuss rapid microbiologic testing in relation to poultry products and food safety. 

For further information and reservations contact Tim Goode <timgoode.@biochek.com> or meet with him at the Biochek booth C9542.


 

HPAI Spreading in Eastern Europe

During the past week, the Czech Republic confirmed the presence of a highly pathogenic strain of  H5N8 avian influenza in a backyard flock in Vysocina.  This follows recent diagnoses in Poland, Slovakia, Hungary, Romania and possibly Bulgaria.

 

The strain involved is 99 percent homologous with H5N8 strain clade 2.3.4.4b prevalent in Northern Africa during 2018 and 2019.

 

Strain H5N8 HPAI first appeared in Europe in 2016 and within a few months, infections occurred in 30 out of 43 nations on the continent. Migratory waterfowl were apparently responsible for introduction and spread of the causal virus. The role of migratory birds in dissemination of HPAI is confirmed by seasonality and isolations from both dead and live- sampled geese and ducks.  Federal officials in Germany confirmed H5N8 in a wild goose in Brandenburg close to the border with Poland during the past week.  In early January 2020, an H5 strain was isolated from hens in Northern Ireland although at this time, the neuraminidase component has not been revealed but is presumed to be N8.

Based on experience in 2016/2017 it appears that 2020 will be a replay of previous seasons.  Clearly free-range egg-production flocks are at high risk especially if located on farms in the vicinity of expanses of water that attract migratory waterfowl.


 

Southeast Egg Industry Regional Conference

Advance notice is provided regarding the Southeast Egg Industry Regional Conference to take place June 16th-18th 2020 at Wild Dunes Resort, Isle of Palms, SC.  Registration and hotel information is available from the Executive Director of the NC Egg Association, Amanda Bowen at <abowen@nstephens.com>.


 

Craig England Appointed President of MOBA USA

A release from MOBA Corporate Office in Barneveld the Netherlands announced the appointment of Craig England as president of MOBA USA.

 

Craig served previously in numerous managerial positions with Diamond Automation the preceder of MOBA USA from 1984 through 2006. He has devoted his career to the egg-production industry including periods as Vice-president of Big Dutchman US and as president of PMSI.

 

In commenting on his appointment Craig stated “With the changes made over the years I feel my past tenure as well as my experience in customer service, engineering, sales and management are suited perfectly to provide direction for MOBA USA”.

 

MOBA USA operates in North America from their headquarters in Farmington Hills, MI. with offices in Moreno Valley, CA. and in Weston, FL., serving Latin America. MOBA operates facilities in Japan, China, Malaysia, Dubai, U.K., Germany and France. Sales and service through company facilities and distributors contribute to a worldwide throughput of close to one billion eggs per day.


Craig England

 

Commentary


Georgia Appeals Court Supports OSHA on Injury Citation

The U.S. Court of Appeals in Atlanta denied a petition by Packers Sanitation Services, a cleaning contractor in a case involving injury of a worker in a broiler processing plant.  An employee of the company contracted to perform cleaning services was injured in the course of duties.  The Occupational Safety and Health Administration [OSHA] cited the contractor for two violations involving safe walking-working space and inadequate guards on machinery.

The decision in this case has relevance to egg packing operations:- 

  • Equipment should be locked-out before cleaning commences. 
  • Workers should be appropriately trained and supervised in their cleaning activities.
  •  Equipment should never be operated without protective covers. 
  • Appropriate personal protective gear must be issued and worn by cleaners including bump caps. 
  • Supervisors and managers should consistently review equipment and operations to preempt accidents. 
  • Worker committees are often helpful in maintaining awareness of safety and identifying defects and hazards that are frequently evident to those performing cleaning tasks. 
  • Any injury or accident must be documented in conformity with OSHA requirements.

The OSHA will investigate injuries resulting in referral to medical facilities. Irrespective of whether a victim of an accident involved in cleaning is employed by the company or a contractor negative publicity could accrue to the egg-packer and lawsuits will be an inevitable consequence of an incident.


 

Sponsored Announcements


ACCUPRINTER on Demonstration at IPPE

The versatile cartridge-based jet printer for eggs will be demonstrated at the 2020 IPPE on the Diversified Ag. Booth C9925.

Information on the ACCUPRINTER is available by clicking on to the link below-


Download the PDF attachment

 

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Dr. Simon M. Shane
Simon M. Shane
Contact     C. V.