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Editorial


Understanding Supply and Demand Factors to Enhance Profitability in the Egg Industry

The U.S. Egg Industry requires professional evaluation of available data to base decisions on flock size and placement, capital expenditure, mechanization and marketing programs. We are navigating with the aid of a rear-view mirror in a situation that demands forward-looking radar and computerized interpretation of models to correlate consumer, cost and operational inputs.

 

The weekly Egg Price And Inventory Report in each edition of EGG-NEWS documents the weekly USDA-AMS combined regional large egg price. This is compared to the previous year and the three-year average. From June through early August 2021 prices conformed closely to 2020 and the three-year average. Starting in mid-August there was a clear upward trend deviating from the corresponding weekly values for 2020 and the three-year average. The increase is attributed to reopening of the economy following COVID restrictions. During the most recent week the combined regional price was about 25 cents per dozen above the three-year average but regrettably showing a downward trend.  Current prices can be compared to the year-to-date peak recorded in April of this year.

 

As with all commodities, eggs respond to the basic laws of supply and demand. In 2021, the industry has demonstrated restraint with regard to flock size as evidenced by production data. For the first seven months of 2019, 8.21 billion table eggs were packed. In 2020 consumption declined by 2.5 percent to 8.00 billion with a fractional decrease for the first seven months of 2021 to 7.98 billion.  Given a 1.4 percent increase in average rate of lay to 81.6 percent in 2021, it is evident that flock size has been limited.  The USDA-NASS estimates that the seven-month average table egg layer flock has declined from 380 million in 2019 to 327 million in 2020 and averaged 323 million for the first seven months of the current year.

 

The supply side in the egg industry has undergone a profound change since the advent of COVID.  Traditionally the egg industry comprises two segments, respectively marketing shell eggs and egg liquid to separate defined markets.  Under unusual and extreme conditions, overlap or competition occurs between the shell egg and egg liquid segments of the egg industry.  In 2015 during the epornitic of highly pathogenic avian influenza, losses attaining approximately 40 million hens disproportionately impacted the egg liquid segment.  Until supplies of egg liquid could be imported and flocks replaced, eggs were diverted from retail shell egg sales to breaking.  Overall supply was reduced and both shell eggs and egg liquid soared in price. 

 

With the advent of COVID in 2020 the reverse situation occurred.  Demand for egg liquids plummeted as QSRs and restaurants closed in response to COVID control measures and unwillingness of consumers to patronize in-place dining.  Eggs that would have been destined for breaking were diverted to the shell channel despite the restraint represented by the availability of egg-packing material.  Prices underwent a sharp increase due to consumer fears of shortages resulting in a transitory spike to as high as $3 per dozen during April 2020. Since the apparent shortage was only a logistic restraint, market stability and hence prices were restored within weeks.

 

Despite their hard shell, eggs demonstrate price elasticity with extreme and rapid changes in wholesale price with relatively small changes in availability. The widely used price discovery system is clearly amplifying both increases and decreases in unit revenue.  The daily quotations are now used by chain buyers to effectively suppress revenue by spreading their  purchases over extended periods and preempting anticipated price rises before holiday weekends and the two major annual demand surges.

 

Demand for shell eggs is a function of family and individual dietary habits hopefully stimulated by the activities of the American Egg Board. Essentially consumers buy eggs when they run short in their refrigerators.  Reduction in price may stimulate limited incremental purchases, especially among the lower income demographic.  Regrettably stores are not featuring eggs to the extent that was evident in past years.  This is a direct effect of extreme competition among chains that post operating margins in the low single digits and with proportionately smaller profit margins.  The Kroger Company that can be regarded as a pure-play grocer posted a twelve-month trailing operating margin of 2.0 percent and a profit margin of 1.1 percent through the end of the second quarter of the current fiscal year ending August 14th.  The traditional chains have maintained high margins on eggs despite competition from the deep discounters. This has been to the disadvantage of the shell-egg segment.

 

The disturbances in the dynamics and interaction of the two major segments of the egg industry in 2015 due to HPAI and in 2020 following COVID represented extremes in pricing and supply.  The events have generated data that could be analyzed to determine the effects of extreme pressure on availability and demand of eggs in both shell and liquid form compared to the relatively cyclic seasonal fluctuations. Despite recommendations to initiate a comprehensive economic study on supply and demand considerations, funding has not been made available to the departments of agricultural economics at major Land Grant universities.  We must understand how volume of production and fluctuation in demand, albeit over a limited range, affect the production margins of the two major sectors.  Clearly we need the knowledge that could be acquired from both the extreme events and regular consumption patterns to understand the relationship of volume of supply level of demand and pricing.

 

 Traditionally the industry has operated at maximum housing capacity, manipulating flocks to anticipate periods when prices are presumed to rise and then to endure periods of negative margins. The shell industry has developed an acceptance that Easter and Christmas demand will compensate for losses during the remainder of the year.  Given that the industry is transitioning from conventional cages to alternative systems, requiring a realistic total of between $10 billion to $15 billion in new capital investment, producers and their lenders will require more information on the factors that determine price and hence profitability.  The decisions relating to investment in production, processing and distribution should be based on a clearer understanding of the effects of supply in relation to demand.  Appropriate decisions relating to capital expenditure and flock placement will be necessary in a future operating environment presenting challenges of inflation in feed, packaging, labor, transport and other costs, demands for sustainability, disease, increased regulation and industry consolidation.


 

Egg Industry News


Egg Monthly

REVIEW OF AUGUST 2021 EGG PRODUCTION COSTS AND STATISTICS.

HIGHLIGHTS

  • August 2021 USDA ex-farm blended USDA nest-run benchmark price was 93.6 cents per dozen, 28.8 percent higher than the July 2021 value of 72.7 cents per dozen. The average monthly USDA benchmark ex-farm price for 2020 was 76.5 cents per dozen with a range of 52.9 cents per dozen in January to 159.7 cents per dozen in March during COVID demand. Currently stock levels and prices indicate relative balance between supply and demand. Prevailing wholesale prices are largely dependent on retail sales despite moderate over-production, continued diversion from the egg-breaking sector and downward distortions attributed to the price discovery system.
  • August 2021 USDA average nest-run production cost was 0.8 cents per dozen lower than in July 2021 to 69.7 cents per dozen, attributable to a 1.6 percent lower feed cost.
  • August 2021 USDA benchmark nest-run margin attained a positive value of 23.9 cents per dozen compared to a positive margin of 2.2 cents per dozen for July 2021.
  • July 2021 national flock in production (over 30,000 hens/farm) was up 0.8 million hens to 302.7 million. There are approximately 3.0 million hens due to return to production from molt in September with this number to be offset by depletion of older flocks.
  • July 2021 pullet chick hatch was down 15.2 percent or 4.1 million from June 2021 to 22.8 million indicating concern over recent low prices.
  • July 2021 export of shell eggs and products combined was down 3.7 percent from June 2021 to 924,200 case equivalents representing the theoretical production of 13.4 million hens. Increased imports by South Korea will be temporary as flocks depleted by HPAI are progressively restored.

 

INTRODUCTION.

Summary tables for the latest USDA August 2021 prices and flock statistics made available by the EIC on September 10th 2021 are arranged, summarized, tabulated and reviewed in comparison with values from the previous August 6th 2021 posting reflecting July 2021 cost and production data.

 

COSTS & REVENUE

Parameter

JULY 2021

AUGUST 2021

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

70.51 c/doz

69.7 c/doz

Low

68.8 c/doz (MW)

67.5 c/doz (MW)

High

73.8c/doz (N.West)

74.3c/doz (N.West)

 

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

Notes: 1. Rounded to decimal of a cent

 

JULY 2021

AUGUST 2021

Feed

42.4 c/doz

41.7c/doz

Pullet depreciation

12.1 c/doz

12.0 c/doz

Labor (estimate)

4.0 c/doz

4.0 c/doz

Housing (estimate)

5.0 c/doz

5.0 c/doz

Miscellaneous and other*

7.0 c/doz

7.0 c/doz


* Adjusted January 2021 and used as a rounding factor

Ex Farm Margin (rounded to nearest cent) according to USDA values reflecting AUGUST 2021:-

93.6 cents per dozen1- 69.7 cents per dozen = +23.9 cents per dozen

(July 2021 comparison 72.71 cents per dozen – 70.5 cents per dozen = +2.2 cents per dozen.)

Note 1: USDA Blended egg price

 

   

JULY 2021

AUGUST 2021

USDA

Ex-farm Price (Large, White)

72.7 c/doz (July)

93.6 c/doz (Aug.)

 

Cage-free to packing plant1

67.0. c/doz (June)

67.0 c/doz (July)

 

Warehouse/Dist. Center

97.0 c/doz (July)

 115.0 c/doz (Aug.)

 

Store delivered (estimate)

102.0 c/doz (July)

 120.0.0 c/doz (Aug.)

 

Dept. Commerce Retail

164.2 c/doz (June)

 164.2 c/doz (July)

  1. Value not released for July by USDA

 

 MONTH JULY AUGUST

U.S. Average Feed Cost per ton $266.69 $262.50

Low Cost Midwest $257.37 $250.43

High Cost Northwest $285.22 $287.86

Differential $ 27.85 $ 37.43

Pullet Cost

$4.52 July 2021 (19 Weeks) $4.49 AUGUST 2021

$3.92 July 2021 (16 weeks) $3.90 AUGUST 2021

 

VOLUMES OF PRODUCTION

 

PARAMETER

JULY 2021

AUGUST 2021

Table-egg strain eggs in incubators

50.9 million (July)

44.0 million (Aug)

Pullet chicks hatched

26.7 million (June)

25.2 million (July)

Pullets to be housed in 5 months

24.3 million (Nov.)1

22.7 million (Dec.)

2021 December 1st Flock Projection

325.0 million

327.0 million

National Flock in farms over 30,000 (2021)

301.2 million (June)1

302.7 million (July)

National egg-producing flock (2020)

317.6 million (June)1

319.1 million (July)

Cage-free flock

86.0 million (July)

 86.0 million (Aug)2

Proportion flock in molt or post-molt

15.5% (July)

15.2% (Aug.)

Total of hens in flocks over 30,000, 1st cycle (estimate)

 253.8 million (June)

256.7 million (July)

Notes 1. USDA Revision 2. Not Released

Total U.S. Eggs produced

7.78 billion (June)

8.10 billion (July)

Cage-Free (non-organic) hens in production

68.5 million (July)

20.3% Organic

68.5 million (July)2

20.3% Organic

“Top-5” States hen population (USDA)1

153.4 million (June)

153.3 (May)

Notes 1. Texas excluded to maintain confidentiality 2. Not Released

PROPORTION OF U.S. TOTAL HENS BY STATE, 20201

Based on a nominal denominator of 310 million hens in flocks over 30,000 covering 95.2 percent of the U.S complement.

USDA has amended inclusion of specific states in regions and eliminated Texas data to protect confidentiality of Company flock sizes

 

STATE

JUNE ‘21

JULY ‘21

 

Iowa

15.5%

15.7%

 

Indiana

11.2%

11.2%

 

Ohio

11.0%

11.0%

 

Pennsylvania

9.0%

9.2%

 

Texas (estimate)

6.5% ?

6.5% ?

 

California

4.2%

4.4%

 
  1. Values rounded to 0.1%

Rate of Lay, weighted hen-week (USDA) 81.8% (JULY) 82.0% (AUGUST)

Actual per capita egg consumption 2016:- 275.3 (up 19.8 eggs from 2015, HPAI )

Actual per capita egg consumption 2017:- 282.1 (up 6.8 eggs from 2016)

Actual per capita egg consumption 2018:- 287.8 (up 5.7 eggs from 2017)

Revised per capita egg consumption 2019:- 293.4 (up 5.6 eggs from 2018)

Revised per capita egg consumption 2020:- 286.5 (down 6.9 eggs from 2019)*

Estimated per capita egg consumption 2021:- 284.3 (down 2.2 egg from 2020)*

Projected per capita egg consumption 2022:- 287.9 (up 3.6 eggs from 2021)*

*Revised, using data from USDA Livestock, Dairy and Poultry Outlook August 18th 2021 taking into account the decreased demand from the food service sector

Egg Inventories at beginning of AUGUST 2021:

Shell Eggs: 1.84 million cases down 3.9 percent from July 2021.

Frozen Egg Products: 692,691 case equivalents down 6.0 percent from July 2021

Dried Egg Products: Not disclosed since March 2020. Assume moderate level of inventory

Eggs broken under FSIS inspection (million cases) JUNE 2021 , 6.67 JULY 2021, 6.63

Cumulative eggs broken under FSIS inspection 2020 (million cases) 74.8 JAN. to DEC.

Cumulative 2020: number of cases produced (million) 268.0 JAN. to DEC.

Cumulative 2020: proportion of total eggs broken 27.9% (30.1% 2020)

Cumulative 2021: number of cases produced (million) 155.1 through JULY.

Cumulative 2021: proportion of total eggs broken 28.1% through JULY. 

 

EXPORTS JULY 2021: (Expressed as shell-equivalent cases of 360 eggs).

 

Parameter

Quantity Exported

Exports:

 

Shell Eggs (thousand cases)

JUNE 502 JULY 519

Products (thousand case equivalents)

JUNE 457 JULY 405

TOTAL (thousand case equivalents)*

JUNE 959 JULY 924

*Representing 4.1 percent of National production in July 2021.

 

COMMENTARY ON AUGUST 2021 COSTS AND STATISTICS

AUGUST 2021 COST AND REVENUE DATA

The USDA reports data for five regions, respectively comprising the Northeast, South East (Mid-Atlantic), South Central, Midwest, and Northwest (NW and California combined in some tables).

From March 2019 onward some state data was withheld to maintain confidentiality where a company predominates in a specific state or region. From March 2021 California costs were inexplicably excluded, representing an unjustified concealment of data. The three Pacific Coast states could be combined to maintain state confidentiality while providing representative U.S. data.

  • The USDA ex farm benchmark blended egg price in August 2021 was higher by 28.7 percent or 20.9 cents per dozen from July 2021 to 93.6 cents per dozen, contributing to a positive margin of 23.9 cents per dozen based on ‘nest-run’ eggs (delivered from the laying house) in August, compared to a positive margin of 2.2 cents per dozen in July 2021. The August 2021 USDA benchmark price of 93.6 cents per dozen should be compared to 57.6 cents per dozen for the corresponding month in 2019 and 53.7 cents per dozen in August 2020. The price rise was due to moderate flock depletion and higher demand attributed to lifting of COVID restrictions.
  • During August 2021, the feed component of production cost averaged 41.7 cents per dozen, down 1.6 percent from July 2021. For yewr-to-date average feed cost is 43.5 cents per dozen. In 2020 average feed price was 31.7 cents per dozen and for 2019, cost was 31.4 cents per dozen.
  • Combining data from the USDA and the EIC, producers recorded a positive margin of 23.9 cents per dozen at farm-level, for generic-egg flocks during August 2021. This compares with a positive margin of 2.2 cents per dozen in July 2021. For 2012 YTD the cumulative algebraic margin is 31.9 cents per dozen. For 2020 the cumulative algebraic annual margin was a positive 191.8 cents per dozen. The cumulative algebraic margin for 2019 was -33.3 cents per dozen or an average monthly loss of 2.8 cents per dozen. The cumulative margin for 2018 was a positive 424.0 cents per dozen or a monthly average of 35.3 cents per dozen against USDA benchmark ‘nest run’ values.
  • The simple average price of feed in August 2021 over 5-regions was $262.50 per ton, 1.6 percent lower (using USDA-AMS data) corresponding to $4.19 per ton compared to July 2021. Southwest data is no longer disclosed to avoid compromising a company that predominates in Texas. The highest cost among five regions was the Northwest at $287.86 per ton. This may be compared to the lowest-cost region, the Midwest at $250.43 per ton. It is stressed that the deliberate exclusion of California data distorts average U.S. values. It is suggested that the EIC combine data for California, Oregon and Washington into a single “Pacific States” region. The average cost figure for feed includes ingredients plus milling and delivery at a nominal $10 per ton.
  • The benchmark price of corn was $221.18 per ton in August 2021, down $5.97 per ton or 2.6 percent lower than the July 2021 price, taking into account the difference in basis paid by producers. A 0.2 percent decrease of $0.86 per ton in the price of soybean meal to $380.96 per ton in August 2021 complemented the decrease in corn price on feed cost. During August there was a differential of $37.48 per ton in feed price between the Midwest and the Northwest compared to a difference of $27.48 per ton between the Midwest and the Northwest (the highest priced region) in July. The differential in corn price between the Midwest and the Northwest in August 2021 was $35.62 per ton.
  • Feed price will continue to be a major factor driving production cost and hence margin. Unknown factors influencing feed cost during the third and fourth quarters of 2021 will include uncertainty over corn and soybean yields in 2021 due to weather; volume and prices of international trade and especially exports to China; diversion of corn to ethanol coupled with the remaining economic and logistic effects of coronavirus restrictions. There is obviously considerable recovery in the fuel sector with ethanol production ranging from 900,000 to 1 million barrels per day since April. Substantial exports of corn and soybeans to China, in market year 2020/2021 beginning September 2020 have increased domestic price and hence cost of production. Each $10 per ton difference in feed cost represents approximately 1.70 cents per dozen. A change of 10 cents per bushel in the price of corn is reflected in a 0.45 cent per dozen difference in production cost. A $10 per ton change in the price of soybean meal affects production cost by 0.44 cent per dozen.
  • The EIC calculated the 5-Region total nest-run production cost in August 2021 to be 69.7 cents per dozen, 0.8 cents per dozen or 1.1 percent lower than in July 2021. Production costs during August 2021 ranged from 67.6 cents per dozen in the Midwest up to 74.3 cents per dozen in the Northwest, higher than the Midwest region by 6.7 cents per dozen. Deletion of California costs is considered a substantial deficiency of the EIC Report.
  • Retail egg prices as determined by the Department of Commerce for July 2021 averaged 164.2 cents per dozen, unchanged from June 2021. During July 2019 and 2020 retail prices were respectively 124.3 and 140.1 cents per dozen. Consistently since 2016 retail prices have not declined in proportion to ex-farm prices, allowing higher margins at retail, thereby depressing demand. Retailers have recently demonstrated some restraint in pricing possibly due to competition from deep discounters and club stores, despite sustained demand.

 

AUGUST 2021 PRODUCTION DATA

 

  • According to USDA data, the estimated average complement of U.S. hens in flocks over 30,000 during July 2021 amounted to 302.7 million, reflecting seasonal adjustment in flock size. The average total U.S. flock including hens in molt on all farms counted by the USDA amounted to 319.1 million in July 2021. The average end-of-year flock sizes over the past seven years respectively were, 2014 (311 million); 2015 (291 million post-HPAI losses); 2016 (319 million); 2017 (329.6 million); 2018 (341.6 million); 2019 (341.6 million) and 2020 (325.5 million). The December 1st 2021 flock is projected to be 327.0 million, up 1.5 million from December 2020. Prevailing margins through fall will however determine flock size early in the 4th quarter of 2021.
  • The effect of COVID restrictions on the egg-breaking segment of the industry is noted in the decline in the flock size in Iowa. In January 2020 the state had 56.4 million hens with a progressive decline to 44.8 million in July. In December 2020 the Iowa flock comprised 46.3 million hens. Hen population stabilized at 46.4 million by March rising to 44.5 million in July 2021, but still 15.7 percent lower than the pre-COVID level.
  • Pullet chick hatch attained 22.8 million in July 2021, down 4.1 million or 15.2 percent from June 2021. It is evident that if relatively low seasonal prices persist with further declines through the third quarter of 2021, future flock placements will be constrained by some producers cancelling pullet-chick orders.
  • The total in-molt and post-molt population of hens in the 5-Regions monitored by the USDA attained 15.2 percent of the national flock in August 2021, down 2.2 percent from July 2021. Producers molted flocks in response to the drop in price of generic eggs following the end of the April 2020 surge in demand. Annual averages for molt and post-molt combined were 13.5 percent for 2020, 15.2 percent for 2019, 17.4 percent for 2018 and 18.0 percent in 2017. An historical high value of 23.8 percent in 2016 was due to the loss of hens during the 2015 HPAI epornitic.
  • The average monthly projection for pullets to be transferred to laying houses during the second quarter of 2021 was 22.4 million with an increase to 27.1 million in the third quarter and 24.3 million for the fourth quarter.
  • The projected hatchery supply flock (parent generation) attained 3.0 million hens in January 2021. Peak parent-flock placements of 3.1 million hens in production in June 2015, coinciding with the end of the HPAI epornitic, to a low of 2.5 million hens during the fourth quarter of 2016. Projections show a monthly average of 3.2 million parent breeder hens during the third quarter of 2021 and 3.1 million in the fourth quarter. The size of the parent flock may be revised depending on pullet chick orders as influenced by margins.
  • Average hen-week production of 82.0 percent in August 2021 compared to 81.8 percent in July 2021 reflects a slightly higher proportion of younger hens in the national flock with more first-cycle hens and early second-cycle hens in production. Currently many pullet flocks are past peak production as reflected in the availability and hence price of Medium-sized eggs. Average rate of lay in 2020 attained 80.9 percent compared to 79.2 percent during 2019. The average rate of lay during any period is a function of the proportion of pullets placed, the rate of depletion of flocks and retention of molted hens for a second cycle. Average flock production will fall as weighted flock age increases or conversely will rise due to early depletion thereby increasing the proportion of young hens in their first cycle.
  • The August 24th USDA Poultry Slaughter Report documented 3.0 million light spent-hens processed under FSIS inspection during July 2021, 0.6 million less than the previous month and down 1.4 percent from July 2020 after hens were depleted following previously high prevailing egg prices. Spent-hens are shipped live to Canada from Northern-tier U.S. states or are rendered or composted in other regions. Approximately 14 million spent hens are disposed of each month.

 

JULY 2021 EXPORT DATA.

  • According to USDA-FAS data, 519,000 cases of shell eggs were exported in July 2021, representing 2.3 percent of total production. This value should be compared to 409,700 cases in March 2015 prior to the onset of HPAI. The 3.4 percent increase compared to June 2021 is attributed to higher demand from South Korea until flocks depleted by HPAI are restocked.
  • During July 2021 the following regions were the leading importers:- North America, comprising the two neighboring USMCA nations, but predominantly Mexico (28.0 percent of exports, was 27.3 percent last month). East Asia, mainly Hong Kong, China and predominantly South Korea, (64.7 percent, was 62.5 percent). The Caribbean and Central American Region combined represented 3.4 percent of shell egg exports in July. (See monthly Egg Export Report under the STATISTICS Tab)
  • Exports of egg products in July 2021 attained 405,000 case-equivalents, representing 1.8 percent of U.S. output. The following regions were the leading importers of egg products by proportion of volume shipped:- North America, our USMCA neighbors, (3 percent of exports, was 33.9 percent last month), East Asia comprising China, Japan and S. Korea (60.7 percent, was 56.8 percent), Central America and the Caribbean were lower in July (5.7 percent was 7.6 percent). The Middle East received 1.0 percent of shipments of egg products and egg liquid shipped in July.
  • Collectively, exports of shell eggs and products in July 2021 represented the output from approximately 13.4 million hens in production during the month, attaining 924,200 case-equivalents, down 3.7 percent from June 2021. This can be compared to monthly average shipments of 960,000 case-equivalents over the first four months of 2015 prior to the advent of HPAI, indicating that a proportion of international markets have been regained. The major contributors to the July volume other than traditional importers was South Korea receiving shell eggs and egg products following flock losses due to HPAI and renewed demand from Canada as the economy of our northern neighbor is restored.

 

Maintaining export volume is attributed to cooperation between the AEB and USAPEEC, both in existing and new markets. Specific attention is directed to nations with the potential to import U.S. product based on landed price against competition. Exports of both egg-products and shell eggs in July 2021 corresponded to 4.1 percent of a nominal national flock of approximately 315 million hens in production on commercial farms holding more than 30,000 hens.

  • There is no scientifically justifiable reason why any nation should embargo pasteurized egg products from an approved plant, based on a diagnoses of avian influenza or END in a state or country.



 

Egg Week

USDA Weekly Egg Price and Inventory Report, September 15th 2021.

  • Shell inventory was up by 5.0 percent, following a rise of 2.7 percent for the previous week reflecting increasing oversupply relative to demand, consistent with addition of 0.3 million hens to the producing flock this week and 3.3 million over three weeks. Increased consumer activity prior to the Labor Day Weekend and more intense buying before Hurricane Ida moved stock from shelves but predictably prices are now falling. Midwest prices for generics are still comfortably above breakeven taking into account the combined costs of nest-run, grading, packaging and delivery. Chains spread their purchases and preempted anticipated price rises before the Labor Day weekend following a trend. It is possible that with a large National flock this strategy will suppress traditional pre-Christmas increases. Industry observers and participants expect buyers to adjust purchases only in response to retail demand and will hold down inventories in their DCs and stores. Since the beginning of 2021 generic eggs have been consistently priced, with a few exceptions, at levels to maximize margins. This strategy has depressed the volume of sales to the disadvantage of the industry. Market data suggests that chains have selected shelf prices for generic white eggs in response to holiday demand and are not featuring generic Large or Extra large.

 

  • Currently inventory comprises close to five days of production. Price movement over the past six months defies conventional supply to demand relationships and indicates extraneous factors affecting price. Wholesale Midwest prices for Extra- large and Large were down this past week after sequential rises and then stability extending over the past six weeks. This suggests that prices have plateaued and will decline extending through September. The commercial shell-egg price discovery system is obviously used by buyers to negotiate lower prices, serving as a self-fulfilling prophecy and a de facto instrument of potential indirect, but not necessarily intentional, collusion. The current relationship between producers and chain buyers based on a single price discovery system constitutes an impediment to a free market. The benchmark price amplifies both downward and upward swings and functions to the detriment of the industry. A CME quotation based on Midwest Large, responding to demand relative to supply would be more equitable.

 

  • The U.S. flock in production was up 0.1 percent (0.3 million hens) from the week of September 8th to 315.9 million despite seasonal depletions, with about 3.0 million molted hens having resumed production during the past month. The Industry previously demonstrated beneficial restraint in flock placement with continued depletions and non-restocking of some complexes or houses. The trend going forward is for a larger flock but per dozen margins will continue to decline for commodity eggs unless matched with increased demand despite prevailing seasonal wholesale price over the past four weeks.

 

  • The USDA average Midwest benchmark prices for generic Extra Large and Large were down 3.0 and 3.1 percent respectively over the past week at 128.5 and 126.5 cents per dozen. Mediums were unchanged at 80.5 cents per dozen. Second quarter prices reflected static demand, offset by decreases in the U.S. flock in production. The trajectory of prices through the second week of September suggests a decline moving through the month. Margins going forward will be shaved despite stability in feed price but with higher labor and fuel costs especially as unit revenue erodes.

 

  • There is some prospect of a return of the food service sector with both frozen and dried-egg prices marginally higher. The economy is reopening despite a rise in COVID incidence rates and hospitalizations in many regions. There is some optimism over the rate of deployment and acceptance of the three vaccines especially in rural areas and inner city zones. Reopening of the economy and schools in areas with low population immunity has resulted in a surge in the incidence rate of COVID. This is especially the case following the introduction and dissemination of the Delta variant of SARS-CoV-2 virus that is more infectious and possibly with higher pathogenicity than the original strain especially among the non-immunized proportion of the population that represent an overwhelming majority of those hospitalized.

 

  • The Midwest price for breaking stock was down 3.6 percent to an average of 68.0 cents per dozen. Checks in the Midwest were down 8.7 percent to an average of 57.5 cents per dozen. It is anticipated that these prices will fluctuate in response to market trends and gradual recovery of the breaking sector.

 

OVERVIEW

Prices

According to the USDA Egg Market News Reports released on September 13th, the Midwest wholesale prices for Extra-large were lower by 3.1 percent to an average of 128.5 cents per dozen; Large were down 3.1 percent to 126.5 cents per dozen; Mediums were unchanged at 80.5 cents per dozen as delivered to DCs. Prices should be compared with the USDA benchmark average 6-Region blended nest-run, (excluding provisions for packing, packaging materials and transport) cost of 69.7 cents per dozen in August 2021. The progression of prices during 2021 to date is depicted in the USDA chart reflecting three years of data, updated weekly.

 

The September 13th 2021 edition of the USDA Egg Market News Report (Vol. 68: No. 37) documented a USDA Combined Region value rounded to the nearest cent, of $1.41 per dozen delivered to warehouses for the week ending September 6th 2021. This average price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $1.31 per dozen. At the high end of the range, price in the South Central Region attained $1.49 per dozen. The USDA Combined Price last week was 42 cents per dozen above the 3-year average. This past week Midwest Large was approximately 54 cents above the corresponding week in 2020.


 

COMMODITY REPORT

WEEKLY COMMODITY REPORT: SEPTEMBER 16TH 2021.

 

  • Commodity prices were mostly down this past week with corn ending substantially lower continuing the trend of the previous week. Factors influencing prices in either direction included:-
    • Part restoration of operation of shipments from lower Mississippi export terminals following Hurricane Ida. Some installations have been repaired and with power are unloading barges and preparing to load bulk carriers. (moderate upward pressure)
    • Delay in post-Ida cleanup caused by heavy precipitation from Hurricane Nicholas along the Gulf. (mild downward pressure)
    • Release of the September 10th WASDE (limited downward pressure);
    • Results of the ProFarmer crop review (downward pressure)
    • Lower than anticipated export sales especially to China (downward pressure);
    • Moderation of drought in many counties in the corn belt and especially in Iowa (moderate downward pressure);
    • Drought in Brazil causing a low Safrinha (second) crop (upward pressure);
    • Restoration of shipments from Argentina albeit at lower than normal volume (moderate downward pressure);
    • Central government of China attempting to stabilize prices of pork and corn (downward pressure).

 

Projected harvests and ending stocks in the U.S. were updated in the September 10th WASDE especially since there is greater clarity on acreage and the effects of weather and trade to date on ending stocks. Annual field assessment of crop conditions by ProFarmer scouts was released three weeks ago with yield projections similar to the September WASDE. The USDA is conducting evaluation of crop conditions..

 

  • U.S producers are now receiving and conversely livestock producers in the Midwest will pay above $5.00 per bushel for corn and crushers will pay $12.80 per bushel for soybeans plus transport and basis in September. Corn was down 2.5 percent this past week and soybeans were down <0.1 percent for September delivery. Soybean meal was up 1.2 percent for September delivery compared to last week reflecting the decline in the price of soybeans and suspension of exports from lower Mississippi terminals following Hurricane Ida.
  • The FAS Export Report released on September 16th for the week ending September 9th reflecting market year 2021-2022, confirmed that outstanding export orders for corn for the new market year amounted to 24.22 million metric tons (954 million bushels) with 0.30 million metric tons (14.2 million bushels) actually shipped. During the past week orders for the 2021-2022 market year amounted to 0.25 million metric tons (9.9 million bushels). For market year 2022-2023 outstanding sales amounted to 0.33 million metric tons (13 million bushels) with sales of 23,000 metric tons ((0.9 million bushels)
  • The FAS Export Report released on September 16th for the week ending September 9th reflecting market year 2021-2022 recorded outstanding export orders for soybeans amounting to 22.0 million metric tons (807 million bushels) with 0.26 million metric tons (9.5 million bushels) actually shipped. Weekly soybean orders attained 1.26 million metric tons (46.2 million bushels)
  • During the week ending September 9th 95,400 metric tons of soybean meal and cake were ordered for the market year 2021-2022, up 57 percent from the previous week. The quantity shipped, presumably from other than Gulf terminals amounted to 57,100 metric tons up 29 percent from the previous week.

 

The following quotations for delivery in the months as indicated were posted by the CME at 13H00 on September 16th 2021, compared with values posted at close of trading on September 9th 2021 (in parentheses):-

COMMODITY

 

Corn (cents per bushel)

Dec. 530 (516)

March ‘22. 538

Soybeans (cents per bushel)

Nov. 1,294 (1,288)

March ’22. 1,306

Soybean meal ($ per ton)

Dec. 339 (343)

March ’22. 348

 

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

 

COMMODITY CHANGE FROM PAST WEEK FOR MONTH OF DELIVERY AS INDICATED

Corn: Dec. quotation up 14 cent per bushel (+2.7 percent)

Soybeans: Nov. quotation up 6 cents per bushel (+0.5 percent)

Soybean Meal: Dec. quotation down $4 per ton (-1.2 percent )

 

The USDA weekly wholesale feedstuffs prices expressed per short ton posted on September 14th (with previous week in parentheses) were:-

  • Corn: $175 ($175), Chicago
  • Soybean Meal: $344 ($341), Central Illinois
  • Meat and Bone Meal: $385 ($390), Central Midwest
  • DDGS: $198 ($198), Eastern corn belt
  • 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

The changes in the prices of corn and soybean meal for September 14 th compared with September 9th USDA weekly quotations would increase nest-run production cost for eggs by 0.4* cents per dozen and for broilers 0.3* cents per live pound extending the decrease from the previous week .

 

Year-to-date, escalation in the prices of major ingredients has added 3.5 cents per dozen eggs and 2.1 cents per live-weight lb. to broiler production cost

*(rounded to 0.1cent)


 

Life Cycle Assessment

In partnership with the Egg Industry Center and United Egg Producers, AEB launched an Life Cycle Assessment (LCA) evaluation in July to measure the environmental footprint of U.S. egg production and to quantify how egg farmers are producing a sustainable protein offering value and balanced nutrition.

 

The first LCA demonstrated how genetics, supported by improved nutrition, housing, management and disease control in the egg industry reduced the environmental footprint over a 50 year period from 1960 to 2010. The update of the LCA now in progress will reflect the changes in egg production during the past ten years. Producers are urged to cooperate in providing information to assist the compilers of the LCA.


 

Yum! Brands Acquires Technology Company

In a September 7th announcement, Yum! Brands Inc announced acquisition of Dragon Tail Systems Limited in an al-cash transaction valued at $68 million.

Dragon Tail has developed software to optimize and manage food preparation from order through delivery applying AI-based solutions.  The software provides optimal delivery routes and consolidates orders by location to minimize costs.

 

David Gibbs, CEO of Yum! Brands, stated “A key growth driver for our business and our teams is a continued acceleration of our digital and technology strategy, including how we leverage our global scale with investments in technology initiatives that enhance the customer and employee experience and strengthen restaurant economics providing a competitive advantage for our franchisees.” 

 

The Dragon Tail kitchen order management and delivery technology is currently deployed across 1,500 Pizza Hut restaurants in over ten nations.  Favorable experience with the system influenced the decision to purchase the supplier and apply the technology to 39,000 restaurants worldwide. 

 

Managing Director of Dragon Tail, Ido Levanon, commented “This transaction is a positive one for Dragon Tail shareholders and it provides Yum! Brands with even more innovative technology.” Earlier this year, Yum! Brands purchased Kvantum applying AI-based technology to guide marketing.  The second 2021 acquisition was Tic Tuk Technologies that provided ordering and marketing software.  Dragon Tail employees will be located in the U.S., Australia, and Israel and will be managed by Ido Levanon.

 


 

USDA to Provide Grants for COVID Relief

USDA has announced that $700 million will be available for meat-processing and farm workers as compensation for losses sustained as a result of COVID infection.  Initially, $20 million will be assigned to a pilot program for grocery store employees.  The bulk of the $700 million grant will be for farm and meat-processing workers.

 

The USDA release stated, "this relief is intended to defray costs for reasonable and necessary personal, family or living expenses related to the COVID pandemic including costs for personal protective equipment, dependent care and expenses associated with quarantine and testing". 

 

The request for applications will be announced in October and additional information will be provided at an appropriate time.


 

Sad Passing of Dr. James Stanley Guy

Dr. ‘Jim’ Guy passed on September 6th in Durham N.C. after a courageous battle with cancer. He was born in 1950 in Cleveland TN. And was raised in Michigan.  Jim earned the DVM degree in 1980 followed by a PhD in 1984, both from the University of Tennessee.  He was double boarded as a Diplomate of the American College of Veterinary Microbiologist and the American College of Poultry Veterinarians.  His entire 37-year professional career was at North Carolina State University as a Professor of poultry health management.

 

His work involved investigation of the molecular biology and epidemiology of viral diseases including laryngotracheitis, turkey coronaviral enteritis and reovirus.

 

During his career he was a recipient of the Phibro Lifetime Achievement Award in 2017 and the Charles Beard Research Excellence Award from the American Association of Avian Pathologists in 2013.

 

Jim was always willing to help colleagues with advice and guidance. The students he mentored have added to his considerable contribution to an understanding of viral diseases of poultry.

 

A memorial ceremony celebrating his life and achievements will take place at the College of Veterinary Medicine, North Carolina State University on October 7th.

 

EGG-NEWS extends condolences to his widow, Wilma and family.  He will be missed by his many colleagues, friends and students.


 

Wegmans Launches Sustainable Egg Packaging

Wegmans will introduce a paper-pulp carton for eggs that is recyclable, biodegradable, and compostable.  Cartons are fabricated from post-consumer recycled newsprint and paper products.  Wegmans estimates that the change will eliminate 300 tons of foam-equivalent cartons annually.  Ron Indovina, merchandiser for dairy and frozen products, noted “We decided to make the switch to paper pulp cartons because we heard from customers they wanted a fiber option.”

The new paper pulp cartons were trialed in Massachusetts over an eight week period in April in cooperation with New York state egg supplier Kreher Family Farms. 

 

Wegmans operates 106 stores in seven states and is ranked 35 on the Progressive Grocer 2021 list of the Top 100 Grocers in the U.S.


 

Food Crisis in Afghanistan Following Taliban Take Over

According to a September 13th Reuters report, the U.N. Secretary-General Antonio Guterres is attempting to raise $606 million for hunger relief in Afghanistan.  The Secretary-General stated that food supplies could run out by the end of September resulting in 14 million facing starvation.  With the Taliban take-over, aid flows from western nations and the U.S. have ceased, leaving the nation vulnerable to famine.

 

Michelle Bachelet, U.N. Human Rights Administrator noted, "a lack of enthusiasm among western nations to donate to Afghanistan based on the policies of the new Taliban Administration over the past four weeks".  The U.S. has pledged $64 million for humanitarian assistance and with Norway pledging an additional $12 million. Attempting to capitalize on the situation, Chen Xu, Ambassador to the United Nations from the Peoples Republic of China stated, "the U.S. and its allies have an obligation to extend economic humanitarian and livelihood assistance".

 

Apart from social disruption caused by political disturbance, drought has destroyed 40 percent of the 2021 wheat crop in Afghanistan and most people have inadequate funds to buy cooking oil and other necessities.  Progress made in eradicating polio and vaccinating against COVID will obviously be reversed given political instability and reversion to an 18th Century theocracy.


 

China Implacable Over ASF in Germany

Despite ongoing negotiations, China has refused to accept the World Organization for Animal Health (OIE) principle of regionalization.  At issue is the presence of African swine fever (ASF) among wild boar that migrated westward from Poland and are now confined to limited designated regions in the states of Brandenburg and Saxony.  Three small farms were infected but were depleted in accordance with OIE recommendations concerning quarantine and surveillance. 

 

The continued embargo by China is scientifically unjustified given that the infection is contained in Germany and also ASF is endemic and ongoing in China. Deputy Agriculture Minister in the German Federal Government, Uwe Feiler stated, "negotiations with China are continuing, but are proving difficult".

 

The issue with ASF in a restricted area in Germany demonstrates the selective approach by China to international agreements and conventions. The Nation makes decisions on trade issues including disease based on self-interest, conformity to government policy and support of domestic production. This has implications for exports of U.S. poultry, eggs and products to China.


 

HPAI in Pakistan

According to ProMED, Authorities in Pakistan have reported on an outbreak of highly pathogenic H5N8 in a commercial egg production flock of 3,000 hens housed near Multan in the Punjab.  Studies conducted in 2017 based on sequencing of clade 2.3.4.4b viruses demonstrated a number of mutations with increased haemagglutinin affinity for human alpha-2,6 receptors. 

 

Live-bird markets are a source of virus for workers and consumers and ultimately contribute to persistence of infection. The live bird market system is responsible for perpetuation of infection with circulation of virus back to production farms carried on coops and through traders’ vehicles.  The implications relating to the emergence of an epidemic or even pandemic influenza strain is self-evident.


 

The Kroger Companies Posts Q2 Results with Higher Sales but Lower Earnings

On September 10th the Kroger Companies (KR) posted results for the second quarter of fiscal 2021 ending August 14th.  For the period, sales increased 3.9 percent over the second quarter of fiscal 2020 to attain $31.682 billion.  Net earnings declined by 43 percent to $467 million with a corresponding 40.4 percent reduction in EPS to $0.62. For the period, identical store sales decreased by 0.6 percent but on a two-year stacked basis were 14.0 percent higher. For full FY 2021 The Company provided guidance including an adjusted identical-store sales loss of 1.0 to 1.5 percent and an operating profit of $3.9 to $4.0 billion.

 

In commenting on the quarter, Rodney McMullen, Chairman and CEO stated, “Our strategic focus on leading with fresh and accelerating with digital continues to build momentum across our business. The Kroger seamless ecosystem is working.  This was evident during the quarter as we saw customers shift between channels and we continue to see strong digital engagement.” 

 

Kroger Companies posted total assets of $48.46 billion and carries long-term debt, lease and other obligation of $21.58 billion.  The Kroger Company has a market capitalization of $31.89 billion.  Over the past 52-weeks share price ranged from $30.35 to $47.99 with a 50-day moving average of $43.82.  On a 12-month trailing basis, operating margin was 2.0 percent and profit margin 1.1 percent.  The company attained a 3.5 percent return on assets and 16.4 percent on equity.  The company closed at $46.14 on Thursday September 9th prior to the Q2 release but fell sharply to close at $42.65 on Friday September 10th down 7.5 percent.

 


 

Avian Influenza in France

A case of avian influenza strain H5N8 was diagnosed in a backyard flock in France near the border with Belgium. This event followed cases of H5N8 avian influenza in this neighboring nation and in adjacent Luxembourg.

 

The Ministry of Agriculture has increased the avian influenza risk from negligible to moderate. This determination will result in confinement of hens in areas considered to be vulnerable to introduction and dissemination of infection. As in previous years the most recent outbreaks are attributed to introduction by migratory waterfowl and additional cases are most likely.


 

Whole Foods Market to Install Just Walk Out Technology

Just Walk Out a checkout-free technology developed by Amazon will be progressively extended to Whole Foods Market locations in 2022.  The Just Walk Out system uses overhead cameras, weight sensors and AI to track purchases by consumers and to calculate payment.  Customers can select the Just Walk Out option when entering the store or use the traditional checkout lane.  The Just Walk Out method of payment will require scanning a QR code on an app, scanning their palm on an Amazon One signature device and inserting a credit card linked to an Amazon account.  On exiting the store, Just Walk Out debits an Amazon account and sends a digital receipt to the app.

 

John Mackey, CEO stated, “By collaborating with Amazon to introduce Just Walk Out shopping customers will be able to purchase fresh products and receive exceptional services throughout their shipping trip and save time by skipping the checkout line.”

 

Just Walk Out is used in Amazon Go stores in Washington State, home of the parent company.  Amazon Go has 17 locations in operation all undergoing transition to the Amazon Fresh banner.  The Whole Foods Market subsidiary of Amazon operates 506 stores in the U.S., 14 locations in Canada with an additional six in the U.K.


 

Secretary Vilsack Urges Patience for the Biofuels Industry

USDA Secretary Tom Vilsack has assured the biofuels industry that the $700 million package announced in June will be forthcoming.  He ascribes the delay to a review by the Office of Management and Budget that has final authority for approval.

 

It is a matter of record that COVID resulted in reduced demand for vehicle fuel severely impacting the ethanol industry. 

 

In a statement on Thursday September 9th Secretary Vilsack commented, “We are doing the best we can to try to move things forward and hopefully we will get to announce the resources and structure in which we are going to allocate those resources in the very near future.”


 

Cindy Long Appointed as Administrator of the USDA Food and Nutrition Service

Cindy Long, Acting Administrator of the Food and Nutrition Service has been confirmed as the Permanent Administrator.  She has extensive experience with the USDA including Deputy Administrator for the Child and Nutrition Program. This position involved management of the Healthy, Hunger-Free Kids Act and other initiatives implemented by the Food and Nutrition Service.

 

Ms. Long earned a BA in economics from the University of Notre Dame and an MPA in public policy and economics from the Princeton University School of Public and International Affairs.

 

 


 

California Provides Formal Notice of Rulemaking Relating to Proposition #12

In terms of rulemaking arising from the adoption of Proposition #12, Farm Animal Confinement, the California Department of Food and Agriculture is preparing regulations in accordance with Chapter 10 of the California Code of Regulations. And specifically the Health and Safety Code, Sections 25990 through 25994, relating to farm animal confinement standards.

 

The public written comment period ran from May 28th to July 12th, 2021.  The department then conducted a remote public hearing for the regulatory proposal on Friday, August 27th. 

 

 

Details relating to the proposed regulations relating to Proposition #12 are available on the department website www.cdfa.ca.gov/AHFSS/regulations.  The website includes the proposed regulatory text, the standardized Regulatory Impact Assessment. Transcripts of the public hearing of August 27th 202, will be posted in due course.

 

Proposition #12 relates to welfare; however, the legal justification is based on egg safety and quality management, effectively a legal manipulation to overcome a prohibition on interstate commerce.  Table-egg flocks irrespective of whether housed in conventional cages, enriched colony cages or alternative non-confined systems should not represent any danger of producing eggs contaminated with Salmonella Enteritidis. This contention is however subject to compliance with the FDA Final Rule on the prevention of Salmonella or even more strict EQAPs or the standard operating procedures of a specific nationally distributed brand.

 


 

Kroger Partners with Instacart on Kroger Delivery Now

The new Kroger Delivery Now service will be available in 2,750 stores in 35 states under a wide range of Kroger banners serving a potential 50 million households in the U.S.  Rodney McMullen CEO commented, "This is a differentiated solution in the E-commerce industry, not just the grocery sector.  Our new service provides customers with one more way to shop with us and address the importance of convenience and immediacy". Consumers will access the service using a convenience hub, listing essentials that can be delivered by Instacart Express with 30-minute delivery on orders of $10.

 

Fidji Simo, the newly appointed CEO of Instacart commented, "we are proud to expand our long-time strategic partnership with Kroger and together as we unveil Kroger Delivery Now  to access convenience delivery nationwide". Ms. Simo continued, "Instacart has become a powerful retail enablement platform and today's expansion of our Kroger partnership is another example of our commitment to develop new solutions that help retailers grow and meet the involving needs of their businesses and customers".

 

The relationship between Kroger and Instacart was initiated in 2017 in California and has undergone a series of modifications and improvements including a 2019 service to deliver alcohol, where permitted by state rules. The current Kroger Delivery Now service was refined in mid-2019 and complemented other Kroger E-commerce initiatives including Kroger Delivery, Kroger Shipt, and Kroger Pick-up.


 

Rose Acre Farms Divests Soybean Plant

In a September 13th release, Benson Hill Inc. announced acquisition of a soybean crushing plant from Rose Acre Farms.  The transaction will be funded by Western Technology Investment.

 

Bruce Bennett, President, for Ingredients at Benson Hill stated, "the acquisition of the Rose Acre Farm soybean crushing facility represents an important next step in the execution of our playbook for growth".  He added, "this targeted investment can ultimately provide the production capacity to deliver on our integrated business model for commercialization and scaling of our innovative soybean products including ultra-high protein soybean ingredients.  Benson Hill is promoting ultra-high protein soybeans and has contracted to extend acreage for the 2022- growing season. 

 

Tony Wesner, COO of Rose Acre Farms stated, "we look forward to continuing our partnership with Benson Hill and believe they will be a valuable member of our community.  We expect this transaction will result in value to our local farmers, particularly as opportunities for the Benson Hill network of farmer partners continues to expand".


 

USDA-APHIS Webinar on Preventing HPAI

The USDA-APHIS will present a program on Prevention of HPAI on September 23rd 2021, at 14H30 ETD.  Speakers will include:

  • Dr. Julie Gauthier, Assistant Director for Poultry Health USDA-APHIS.  Dr. Gauthier holds MPH and DVM degrees and is a Diplomate of the American College of Veterinary Preventive Medicine.
  • Dr. Carol Cardona, Holder of the Ben Pomeroy Chair in Avian Health, College of Veterinary Medicine, University of Minnesota.  Dr. Cardona serves as co-Director and co-co-Principal Investigator at the Minnesota Center of Excellence for Influenza Research and Surveillance.
  • Dr. Tim Boyer, a scientist with the Center for Epidemiology and Animal Health in the USDA-APHIS.  Dr. Boyer has evaluated the epidemiology of END and HPAI including emergency preparation and control measures.  Dr. Boyer holds MPH and Ph.D degrees.


 

Egg Industry in Saudi Arabia

According to a USDA-FAS GAIN Report SA2021-0010 released on September 10th the table egg industry in Saudi Arabia is more than self-sufficient and has been exporting to neighboring countries for more than 15 years.  Production in 2020 attained 483 million dozen eggs, 11 percent more than in 2019. Assuming 80 percent hen-week production this places the national flock at 20 million hens in production. Domestic consumption is estimated at 157 eggs per capita assuming a population of 35 million.

 

 Factors that contributed to expansion included liberal government subsidies.  On January 1st, 2020, the Government of Saudi Arabia transitioned from a subsidy on animal feed to a production-based value equivalent to $4 per case of 360 eggs. Expansion was also stimulated by indirect subsidies and interest-free loans and rebates on duty for imported equipment.  The Ministry of the Environment, Water Affairs and Agriculture has actively encouraged the establishment of new egg production units and expansion of existing farms.  This is in accordance with the Vision 2030 framework, establishing national goals including self-sufficiency in food and diversification from an oil economy.

 

During 2020 producers in Saudi Arabia exported 25 million dozen shell eggs representing 5.5 percent of production. Destinations included 73.4 percent to neighboring Bahrain, 12.4 percent to Oman, 8.6 percent to the UAE and lesser quantities to other nations in the Middle East.  It is however anticipated that currently importing nations will also adopt policies of self-sufficiency limiting future export potential.


 

U.S. Department of Energy Anticipates Increased Solar Supply

In a recent Department of Energy release entitled “Solar Futures Study” prepared by the Office of Energy Efficiency and Renewable Energy, the Agency predicted that 35 percent of the U.S. requirement for electricity could be provided by solar in 2035.  Further investment could increase the proportion to 45 percent by 2050.  These optimistic predictions are however based on government investment, technological advances and willingness to invest in solar energy.  To achieve the DOE targets, capacity would have to increase by 30 gigawatts each year through 2025 and double to 60 gigawatts annually through to 2030.  In 2020 solar capacity increased by 20 gigawatts representing a 40 percent increase compared to 2019.

 

Although capital investment in solar and other environmentally acceptable generation may attain $560 billion, this will be offset by the cost of environmental degradation attributed to climate change caused by fossil fuels. Expenditure on repair of infrastructure after hurricanes, floods, polar vortices and droughts must be considered in relation to any investment in alternative sources of energy.

 

Apart from the technical issues, socioeconomic factors must be taken into account.  Workers involved in fossil fuel generation will be displaced and compensatory resources must be allocated in an equitable way. 

 

Progressive companies such as family-owned and operated Herbruck’s Poultry Ranch Inc. have installed solar panels adjacent to their new Pennsylvania complex.  Greater use should be made of the potential to generate on-farm power that will in the short term require increased government subsidies.


 

Commentary


Would COVID Vaccine Deniers Refuse a Smallpox Vaccine When Faced with an Outbreak?

In attempting to understand the reluctance of approximately 20 percent of our population over the age of 12 to receive an FDA-approved COVID vaccine, one is tempted to consider alternative diseases.  Notwithstanding the fact that smallpox has been eradicated, repositories of the virus are present in a number of laboratories including in the U.S.  Assuming there was a laboratory error and a limited outbreak of the dreaded disease occurred, would citizens in the affected area be as ready to reject a smallpox vaccine as they are to resist a protective dose of COVID vaccine?

 

Evidence shows that vaccination effectively prevents hospitalization and certainly death after exposure to the Delta variant of SARS-CoV-2 virus.  It is a matter of record that in excess of 90 percent of patients in hospital, and virtually all in ICU wards, were not vaccinated.  Those that were have one or more predisposing conditions including age, diabetes, immunosuppression, or other medical circumstances.

 

What is the difference between COVID and smallpox?  COVID has unfortunately become politicized and strongly associated with the nebulous concept of ‘freedom’ or ‘personal choice’.  Obviously with smallpox, self-preservation would be the major motivation to be protected against the disease which at best will produce hideous permanent skin disfigurement and at worse a painful death.  For those doubting the effect of COVID, one can point to the 660,000 of our fellow citizens that have succumbed to the disease. We should consider the suffering and cost of those that survived clinical infection and face possibly long-term effects on their renal, respiratory, circulatory, and nervous systems. 

 

Without question all reasonable people would regard smallpox as a public health issue and readily receive a federally-approved vaccine.  So why the reluctance with COVID?  Vaccine rejection has nothing to do with science nor a reasonable assessment of risks and consequences.  The sooner the reluctant minority are vaccinated the more likely they are to survive but more important, not to pass the disease on to their families and the community. So take the shot and let us restore our pre-COVID economy and lifestyle.


 

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