According to USDA-FAS GAIN report AR2024-03 released March 14^th, Argentine will almost double production of oil seeds during the 2023-2024 market year compared to the previous year impacted by drought.

The revised projection is for a soybean crop of 49.5 million metric tons (1,819 million bushels) up to 141 percent from the previous market year.  Soybean crush will increase by 47 percent to 39.0 million metric tons representing 67 percent of available supply amounting to 57.91 million metric tons including the 2024 harvest and imports.

A bountiful harvest coupled with an improvement in the economy under the new Administration will benefit both domestic producers and through increased supply will indirectly constrain prices for soybean meal in the U.S.

Boddie-Noell, a family-owned franchisee of Hardee’s has announced an investment of over $20 million in new restaurants and upgrades for their 72 restaurants in the North Carolina, Greater Triangle region.

Concurrently, the company will be offering the Hardee’s new menu selections featuring chicken tenders.

Mike Boddie, president of the Company noted, “this is our home market, and it includes the most restaurants of any region where we operate.  We are showing our commitment by introducing the new Hand-Breaded Chicken Tenders™ Platters and fries.  Over a 62-year association with Hardee’s, Boddie-Noell has innovated Made from Scratch ™ Breakfast Biscuits, Fresh Fried Chicken and Hand-Breaded Chicken Tenders.

In a March 12^th release, Archer-Daniels-Midland Corp. (ADM) posted financial results for the 4^th quarter and FY 2023. The Company can be regarded as a bellwether for ‘Mega-Ag’ and the commodities trading and processing sector. Along with competitors Bunge, Cargill, Cofco and Dreyfus, all are subject to the risks of currency fluctuation, geopolitical events, climatic extremes, and increased cost of ingredients, labor and transport in a competitive world environment influenced by inflation, conflict and disparity in the quality of life between industrialized and developing nations.

For the 4^th Quarter of FY 2023 ending December 31^st, net income was $565 million on total revenue of $22,978 million. Comparable figures for the 4^th quarter of fiscal 2022 ending December 31^st 2022 were net income of $1,019 million on total revenue of $25,939 million. Diluted EPS fell from $1.84 for the 4^th quarter of fiscal 2022 to $1.06 for the most recent quarter.

Comparing the 4^th quarters Revenue was down 11.4 percent in FY 2023. Gross margin was up from 6.8 percent in Q4 2022 to 7.6 percent for Q4 2023 and operating margin up from 3.3 percent to 3.6 percent.

For the FY 2023 net income was $3,483 million on total revenue of $93,935 million with a diluted EPS of $6.43. Comparable figures for the 4^th quarter of fiscal 2022 were net income of $4,340 million on total revenue of $101,556 million with a diluted EPS of $7.74.

Segment operating profits combined totaled $1,399 million with respective contributions:-

• Ag Services and oilseeds           $954 million. (Crushing, $389m; Ag. Services, $214m)
• Carbohydrate solutions              $309 million.
• Nutrition                                    $ (10) million. (Human, $(25m); Animal, $15m)
• Other businesses                        $146 million

Juan Luciano Board Chair and CEO commented, “ADM’s results speak to the resiliency of our business. Supported by our unparalleled global footprint and capabilities, we delivered another solid year of execution. Our team continues to focus on delivering high-quality products and services for our customers and is driving our productivity and innovation agenda, while generating strong cash flows that allow us to accelerate the return of cash to our shareholders.”

The Company release included a comment on the Nutrition Segment: “Operating profit was negative $10 million during the fourth quarter of 2023, down 110 percent compared to the prior year period. The Human Nutrition segment operating profit was negative $25 million, approximately $112 million lower versus the prior year period, as operational challenges led to lower volumes and increased manufacturing costs. The quarter also included negative impacts of $64 million related to deconsolidation and write-down of a joint venture, and an investment valuation loss. Unplanned downtime at Decatur East was also a negative impact. Animal Nutrition operating profit of $15 million was 17 percent lower versus the prior year, driven largely by lower amino acid margins and lower sub-segment volumes overall”.

“For the full year, Nutrition segment operating profit was $427 million, 36 percent lower versus the prior year. Human Nutrition results of $417 million were 25 percent lower than the prior year, as higher pricing was more than offset by weaker volumes and increased costs. The full year also included negative impacts of $64 million related to deconsolidation and write-down of a joint venture, and an investment valuation loss. Unplanned downtime at Decatur East was also a negative impact. Animal Nutrition results of $10 million were 91 percent lower compared to the prior year primarily driven by the normalization of amino acid margins and lower volumes”.

Guidance for FY 2024 included an adjusted EPS of $5.25 to $6.25

ADM, has apparently “identified and corrected” recording of sales between the Ag. Services and Oil Seeds Segment and the Nutrition Segment.  The adjustments will have no ultimate effect on the balance sheet and statements of earnings reflecting the period January 2018 through September 2023.

ADM noted “material weakness” in internal controls over financial reporting and accounting practices relating to intersegment sales.

Juan Luciano, Chairman and CEO, stated, “We have developed a remediation plan with respect to the identified material weaknesses to enhance reliability of our financial statements with respect to the pricing and reporting of sales.”  He added, “We remain committed to strong internal controls and we look to continue our focus on execution.”

ADM experienced a 24 percent drop in share price from $68.02 following the Friday January 19^th disclosure that Vikram Luthar, the CFO, had been placed under administrative leave.

On December 31^st 2023, ADM posted assets of $36,075 million of which $6,341 million comprised goodwill and intangibles, against long-term debt of $8,260 million. The Company had an intraday market capitalization of $30,800 million on March 19^th. ADM trades with a forward P/E of 11.3 and has ranged over a 52-week period from $50.72 to $87.30 with a 50-day moving average of $57.32.  Twelve-month trailing operating margin was 3.3 percent and profit margin 3.7 percent.  Return on assets over the past twelve months was 4.3 percent and the return on equity 14.1 percent.

Jesse Gabriel, the State Assembly member representing Encino, has introduced Bill 2316 that would ban titanium dioxide and six dyes from food served to school children in California.

The bill is co-sponsored by the Environmental Working Group and Consumer Reports.  FDA has previously reviewed the six dyes having previously reaffirmed their use during the 1980s.

The Environmental Working Group maintains that the dyes are toxic without presenting specific scientific justification.

If California extends the previous ban on Red Dye to other coloring agents problems would be created for food manufacturers and candy and confectionary will become very drab in appearance.

On Friday March 15^th McDonald’s Corp. operations experienced a widespread loss of function affecting their mobile app., kiosks and digital menus. Systems failures were experienced in  Europe, Australia and Asian nations including the major markets of Japan, Taiwan and China that were impacted. The problem was self-inflicted, attributed to a “third party provider introducing a change in configuration” and was nor the result of a cyber-attack.

McDonald’s reported the outage in a release to the SEC. Previously the Company stated “We are increasingly reliant upon technology systems. Any failure or interruption of these systems could significantly impact our or our franchisees’ operations, or our customers’ experiences and perceptions.” In the precautionary statement the Company advised, "The artificial intelligence tools we are incorporating into certain aspects of our restaurant operations may not generate the intended efficiencies and may impact our business results."

In December 2023 McDonald’s Corp. entered into an agreement with Google to host computer systems involving global data storage and retrieval allowing the deployment of a generative AI system to promote service and facilitate market research.

Obviously, an investigation is in process and hopefully will yield results that will be applied to avert similar occurrences both for corporate McDonald’s and its franchisees.

The U.S. National Ocean and Atmospheric Administration (NOAA) is predicting a transition from an El Nino to a La Nina event by mid-2024.  The effect of this change will be drier and hotter weather in the Midwest affected crop yields.  The situation will become more clear in coming weeks and may be reflected in yield estimates in the May WASDE.

A description of the Southern Oscillation events may be retrieved by entering El Nino into  SEARCH

A hearing on the Federal Trade Commission (FTC) Injunction to block the planned merger between The Kroger Company and Albertson’s Corporation will commence on August 26, 2024.  The FTC will be joined in the action by the Attorneys General of eight states.

The hearing will take place before an Administrative Law Judge in Washington, DC.  There will be numerous lawsuits relating to the proposed merger including a private anti-trust lawsuit filed on behalf of consumers.  This case may be delayed until after the results of the FTC case.

It is possible that delays may scuttle the merger, although both parties would benefit through maintaining their commitment to a satisfactory conclusion even if this requires an extension into the next Administration.

Updated March 2024 USDA Projection for U.S. Egg Production and Consumption. 

On March 14^th 2024 the USDA Economic Research Service issued updated values for egg production during 2022 with a projection for 2023 and a forecast for 2024. Production, consumption and prices were only slightly revised from the previous February 14^th 2024 report.

Projected egg production for 2023 was reduced by 23 million dozen from the February 2024 Report to 7,864 million dozen This will be 0.5 percent higher than in 2022 due to progressive replacement of the 44 million hens depleted due to HPAI over the period extending from early spring through mid-December 2022. The per capita consumption of shell eggs and liquids combined for 2023 will be 0.6 percent lower than in the February report to 279.3 eggs but up two eggs (0.7 percent) from 2022. The projected average 2023 benchmark New York bulk unit price was unchanged from the February report at 192 cents per dozen. This was 31.9 percent lower than in 2022 attributed to a comparison with unseasonal high prices from the end of March through the 2^nd Quarter of 2023.

Subsequent USDA projections will provide greater clarity on the recovery in consumption in an economy that is undergoing deflation. The 2023 Midwest in-carton wholesale price peaked at $5.17 per dozen on January 3^rd 2023 but fell precipitously to a market bottom of $0.78 per dozen on May 8^th 2023. Price was restored in February 2024 but settled to $2.34 on March 8^th 2024. This was above the USDA/EIC projection of the combined nest-run February 2023 cost of 76.0 cents per dozen for caged white Large, plus a provision for processing, packaging and transport of 60 cents per dozen amounting to $1.36 cents per dozen delivered to a distribution center.

Restoration in flock size after HPAI flock depletions in 2022 progressed at a rate of approximately 0.5 million per week but was limited by the availability of pullet chicks for replacement and in some companies the rate of conversion to alternative housing systems. Restoration of the national flock was compromised by a resurgence of HPAI with 13.0 million layers depleted during the 4^th quarter of 2023 representing 4.0 percent of the nominal producing flock of 325 million hens, mainly on complexes averaging over one million hens. The cost of ingredients will influence margins and may result in cessation of production by some small-scale producers that run out of working capital since financial losses were incurred through summer up to mid-fall. Unpredictable factors affecting price will include the extent of losses during the spring of 2024 due to a predicted reemergence of avian influenza; the supply and cost of ingredients as influenced by world and national availability and the intensity and persistence of domestic consumer demand. Exports of eggs and products at approximately two percent of total production will not materially affect the domestic price.

The forecast for 2024 includes production of 7,990 million dozen, up 1.6 percent from 2023. Consumption will attain 283.3 per capita, up an optimistic four eggs or 1.4 percent above the projection for 2023. This will naturally depress prices with the NY-Large price dropping by 12 cents per dozen or 6.3 percent from the average for 2023.

In 2023 egg exports as shell and products combined attained 5,161 million dozen shell-equivalents, or 2.2 percent of production. During 2022 egg imports as a result of HPAI depopulation, some in shell form but predominantly products, attained 25.9 million dozen shell-equivalents, up 42.8 percent from 14.9 million dozen and 26.4 percent from 2021.

During 2023 shell egg exports attained 89.4 million dozen, up 28.6 percent compared to 2022 when high domestic prices prevailed. Egg products were up 18.2 percent to 20,814 metric tons compared to 2022.

March 2024 USDA data is shown in the table below:-

Source: Livestock, Dairy and Poultry Outlook released March 14^th 2024

Subscribers to EGG-NEWS are referred to the postings depicting weekly prices, volumes and trends and the monthly review of prices, exports and related industry statistics.

In a recent announcement, Aldi will expand by 800 stores nationwide by the end of 2028.  This projection includes the acquisition of Winn-Dixie and Harvey’s supermarkets some of which will be converted to the Aldi banner.

Jason Hart, CEO of Aldi stated, “With this commitment to add 800 stores in the next five years means we’ll be where our shoppers need us while positively impacting the communities we serve.”  He added, “Our growth is fueled by our customers, and they are asking for more Aldi stores in their neighborhoods nationwide.”

 Approximately 300 stores will be added in the Northeast and Midwest and the Company will also expand in Southern California, Arizonia and Nevada.

The program will involve an investment of $9 billion representing an expression of confidence in the U.S. grocery market despite competition from larger retailers including Walmart, Kroger and Amazon.  Aldi has established a significant niche market through low-cost private label brands of superior and consistent quality engendering customer loyalty, despite the limited range and occasional non-availability.

Pyxis Ocean underway

During mid-2023, Cargill initiated a test of the Pyxis Ocean a bulk carrier converted to wind assisted propulsion by WindWings®.  The vessel owned by MC Shipping has made a number of voyages since August 2023 sailing the Indian, Pacific and Atlantic Oceans. The initiative is in response to the International Maritime Organization target of a five to ten percent reduction in carbon energy sources.

Pyxis Ocean with aerofoils extended

It was determined that over the test period, the vessel saved three metric tons of bunker fuel daily  representing a value of $2,100. Over a 30-day voyage a Panamax dry bulk vessel carrying 57,000 metric tons of soybeans would save shippers $1.10 per ton. Based on the results, the area of wind capture will be increased to achieve a potential fuel savings of up to ten tons per day with favorable winds providing proportionally higher savings.

The question arises as to the return on investment and long-term financial benefits given the capital cost of an installation and the operational components including maintenance.

Dexter MO Plant to be re-puposed by Cal-Maine Foods

On March 14^th Cal-Maine Foods, Inc. announced completion of the previously announced acquisition of a complex comprising a broiler processing plant, hatchery and feed mill in Dexter, MO, closed by Tyson Foods, Inc. in 2023. The Company plans to repurpose the facilities to produce and pack shell eggs and egg products.

Sherman Miller, president and CEO stated, “We are pleased to join the Dexter community and are excited about the opportunities to expand our operations”. He added “We intend to partner with the existing strong network of local contract growers who can support our shell egg production”.

In commenting on the benefits of the transaction Miller stated “Dexter, MO. has a central geographic location and the strong work force will enhance our supply and distribution capacity for customers in Missouri and surrounding markets. Importantly, we will also benefit from closer proximity to sources for our primary feed ingredients.

He concluded “We look forward to the new production opportunities, including the potential for additional free-range capacity, in this new community and market for Cal-Maine Foods.”

Cal-Maine Foods, Inc. is the largest producer and distributor of fresh shell eggs in the United States and marketing in states across the southwestern, southeastern, mid-western and mid-Atlantic regions of the United States.

WEEKLY ECONOMY, ENERGY AND COMMODITY REPORT: March 14^th 2024.

 OVERVIEW

Prices for corn and soybean meal were relatively unchanged compared to last week. Prices were influenced by short covering arising from geopolitical concerns and revised projections for crop sizes in Brazil. Secondary factors included disruption in shipping in the Red Sea and Panama Canal, carryover from the 2023 U.S. crop, export orders and predicted ending stocks of corn and soybeans for the 2024 crop.  There was minimal response to the March WASDE that retained projections for production and ending stocks from the February report,

At 12H00 on March 14^th the CME price for corn was down 0.7 percent compared to the previous week to 423 cents per bushel for March delivery. Corn price was influenced by lower ethanol demand and the proportionally high ending stock of corn from the 2023 crop. Export orders for the current market year have increased in response to lower prices.  Volumes and prices are indirectly influenced by events in the Black and Red Seas. Orders by China resumed at the end of the 2022-2023 market-year and have extended through to March with a lower Dollar Index assisted by low FOB prices but with higher ocean freight. Total exports for the current market year are 31.5 percent higher than for the corresponding week during the 2022-2023 year.

Soybeans were up 3.4 percent from last week to 1,192 cents per bushel for March 2024 delivery. Gain was attributed to short covering and lower projections for the 2024 Brazil harvest. Total exports for the current market year are 18.9 percent lower than for the corresponding week in the 2022-2023 year.

Soybean meal was down 0.9 percent to $335 per ton for March delivery compared to $338 per ton last week. Price was influenced by demand coupled with high crush volumes for three consecutive months through December but with volume presumably restored after the impact of cold weather in January. Price will fluctuate to reflect the CME price for soybeans and the demand for biodiesel despite the adverse financial situation in this sector. The market previously responded to the increased 2023 crop and higher stocks together with projections for 2024 unchanged from February in the March WASDE Report.

 WTI was 0.3 percent higher from last week to $79.62 at 16H00 EDT on March 13^th with low world demand in relation to supply. The rise in price is inconsequential in the face of disruption of shipping in the Red Sea, turbulence in the Middle East and is countered by U.S. production of 13.3 million barrels per day with ample reserves. The small upward trajectory in price may continue if production cuts by OPEC amounting to 2 million barrels per day and extended through June actually materialize. There was little inter-day fluctuation in price during the week ($76.95 to $79.92 range) with a small upward trend. Crude oil inventory in the U.S., other than the Strategic Reserve, was down 0.7 percent to 31.5 million barrels last week following the seasonal trend.  The U.S. production is constraining domestic and international prices

Factors influencing commodity prices in either direction over the past four

 weeks included:-

• Weather conditions in areas of the World growing corn and oilseeds especially in Brazil and also Argentine with favorable rain recently under the influence of a strong El Nino event. The 2023 U.S. harvest was completed ahead of the corresponding weeks in 2022 with higher carryover (downward pressure).

• Geopolitical considerations continue to move markets, especially in the Mideast. Cancellation of the BSGI in July and ongoing attacks on Ukraine port facilities impacted prices of wheat, corn, oilseeds and vegetable oils. Loaded bulk vessels are sailing from Black Sea and Danube River ports using the ‘Humanitarian Corridor” to various destinations. This route is operational despite threats by the Russian Federation to mine the entrance to ports and deploy airborne missiles.  Exports from Ukraine are approaching 1.5 million metric tons per week with a total of 26 million metric tons market year to date, down 11 percent from the equivalent period for 2022-2023 year. Grain production in Ukraine during the current year will be lower than 2022/2023 (Downward pressure on corn and wheat and an indirect effect on soybeans)

• Macroeconomic U.S. factors:-

• Most economists in academia and the private sector are confident of a “soft landing” for the economy following the release of revised Q4 2023 GDP and recent releases of economic parameters including the CPI and anticipated PPI and a decline in bond rates. Annual inflation as measured by CPI declined from 8.9 percent in June 2022 to 3.2 percent in February 2024. This is in part a response to a series of 11 FOMC rate raises that curbed inflation and cooled the labor market but without precipitating unemployment. There is evident stability in the bank sectors in both the U.S. and Europe. Large U.S. banks passed stringent mid-year “stress tests”. There is now concern over regional banks with exposure to commercial real estate.
• The Federal Reserve held the benchmark interest rate steady at the monthly FOMC meeting on January 31^st 2024, the fourth sequential pause.  The Federal Reserve commentary indicated that the rate would be held at 5.25 percent until a pivot with possibly two to three reductions of 25 basis points each in 2024, after the June meeting at the earliest. Chairman Powell in Congressional testimony and documented in FOMC minutes has indicated that decisions would be based on data and demonstrable progress in reducing inflation to achieve an annual 2.0 percent target by mid-2025. Market optimism with projections of five reductions during 2024 is  now unrealistically optimistic, with no reduction expected before July.
• The February 28^th Bureau of Economic Affairs announcement of the advanced estimate of Q4 GDP confirmed a value of 3.2 percent, slightly below the consensus estimate of 3.3 percent. The rise was attributed to increased consumer and government sector spending and investment in inventory.
• The February 8^th 2024 S&P Manufacturing Purchasing Managers’ Index Report (PMI) rose to 51.8 in January from 51.0 in December 2023. The PMI is approximately three percent below the 10-year average preceding the COVID years. The recent upward trend suggests recovery from the effects of successive raises in the Federal Reserve benchmark interest rate.
• On February 29^th the Bureau of Economic Analysis released the January Personal Consumption and Expenditure Price Index  (excluding food and energy) that was up 0.4 percent from the previous month. This was in line with estimates. Food prices increased 0.5 percent but energy was down 1.4 percent. The Index was up 2.4 percent year-over-year also corresponding to estimates. Food prices were up 1.4 percent and energy down 4.9 percent year-over-year. The PCPI is closely followed by the Federal Reserve and confirms declining inflation.
• The March 12^th Bureau of Labor Statistics release of the February 2024 CPI confirmed a 0.4 percent increase from January, and 0.1 percent above forecast. The annual increase of 3.2 percent was up from 3.1 percent in January and higher than the anticipated value. The increase in the core value (excluding food and energy) was 0.4 percent from January and 3.8 percent for the 12-month period, in line with estimates.  Food at home was unchanged from the previous month. Food away from home was up 0.1 percent from January.  On an annual basis all food was up 2.2 percent with food at home up 1.0 percent and food away from home up 4.5 percent. Energy was up 2.3 percent in February and down 1.9 percent over 12-months, mainly due to a decline in gasoline (-3.4 percent) and fuel oils (-5.4 percent). The shelter category was up 0.4 percent for the month and 5.7 percent over the past year. The macro trend is clearly towards reduced inflation due to a fall in energy prices but this category is moving up, detracting from deflation. The CPI heavily influences FOMC rate decisions.
• The February Producer Price Index for Final Demand (PPI) released on March 14^th was up by 0.6 percent from January compared to an expectation of 0.3 percent. The PPI was up 1.6 percent over the past 12-months. This is compared to a 6.4 percent increase in 2022. The increase in February was due to a 4.4 percent rise in energy and 1.2 percent for finished goods. The core PPI value excluding volatile fuel and food, was up 0.4 percent for February and up 2.8 percent for the 12-month period. Food was up 1.0 percent compared to a 0.3 percent decrease in January.
• Retail sales in February were up 0.6 percent over January compared to an estimate of 0.8 percent and compared to a decline of 1.1 percent for the revised January value compared to December 2023.
• A Federal Reserve release on February 15^th confirmed that industrial production fell 0.5 percent in January against a projection of a 0.1 percent rise in December. Production was adversely affected by inclement weather during January 2024 with plant closures. Capacity utilization was down 0.2 percent to 78.5 percent, 1.1 percent below the 1972-2020 average.
• The February 26^th report on Durable Goods Ordered for January 2024 was unexpectedly lower by 6.1 percent against a consensus estimate of a 4.5 fall. Transportation and specifically aircraft orders were down 16.2 percent. Excluding the Transportation component, new orders decreased by 0.3 percent in January impacted by inclement weather. Shipments of durable goods decreased 0.9 percent following a fall of 0.6 percent in December 2023.
• The February 15^th release of retail sales data showed a monthly fall of 0.8 percent in January against an expected 0.1 percent decline. This value is compared to the revised 0.4 percent rise in December 2023. Core retail sales increased 0.6 percent in January. Retail sales in January were affected by harsh winter storms and a change in the basis of calculation. The Federal Reserve FOMC closely monitors this index as a measure of the trend in inflation.
• The February 1^st ISM® Manufacturing Index for January rose to 49.1 from 47.4 in December.
• The Conference Board Consumer Confidence Index released on February 27^th for January/February, declined to 106.7 points. This reading was down from a revised 110.9 for the preceding four-week period.
• The March 1^st University of Michigan Index of Consumer Sentiment fell to 76.9 for February down from a revised 79.0 in January.  The Index was up 14.9 percent from February 2023. Both the Current Economic Index (79.4 slightly down from 81.9 in January) and the Index of Consumer Expectations (75.2 down from 77.1 in January) denote a cautious increase in consumer sentiment influenced by lower interest rates and moderating inflation despite geopolitical concerns.
• Non-farm payrolls added by 275,000 for February, as documented by the Bureau of Labor Statistics on March 9^th. This was more than the anticipated 200,000, and compares to the revised January value. The increase is attributed to workers in the business, health care and government sectors. The unemployment rate rose to 3.9 percent with 15 million unemployed. Real average weekly earnings for January showed a 0.1 percent increase over January.  Average hourly earnings rose 0.1 percent to $34.57 in February up 4.3 percent over 12 months. Wage rates are closely followed by the Federal Reserve.
• The Bureau of Labor Statistics Job Openings and Labor Survey report released on March 6^th estimated 8.9 million job openings at the end of January, down 100,000 (-0.1 percent) from December 2023 and consistent with estimates. The January job openings number was the lowest value in 33 months and compares with the March 2022 value of 12.2 million during COVID.
• The seasonally adjusted initial jobless claims figure of 209,000 released on March 14^th was down 1,000 from the revised seasonally adjusted 210,000 for the week ending March 7^th but lower than the Reuters  estimate of 218,000. The four-week moving average fell 500 to 208,000 The Bureau of Labor Statistics estimated 1.81 million continuing claims for the week ending March 1^st.. There is evidence from data over the past three months that the labor market is cooling despite sporadic weekly reduction in new claims.
• The February 1^st Bureau of Labor Statistics report recorded a 3.2 percent increase in non-Farm Productivity for Q4; Unit Labor Cost was up by 0.4 percent on a normalized basis and Hours Worked was up by 0.4 percent in Q4
• The ADP® reported on March 6^th that private payrolls increased by 140,000 in February, up 29,000 from the revised 111,000 in January and compared to the Reuters estimate of 150,000 jobs. The increase in employment was mostly in the construction, transport and trade sectors. Annual pay was up 5.1 percent year-over-year compared to 5.3 recorded for January. The increase will not directly influence the probability of short-term future changes in interest rate since the ADP® is regarded by the FOMC as an unreliable statistic

FACTORS INFLUENCING COMMODITY PRICES

• The 2023 harvests of corn and soybeans were completed by late November 2023. The March 8^th WASDE provided a projection for acreage to be planted, yields, crop size and ending stocks for the 2024 crop.
• It is evident that both polarization in the closely divided chambers of Congress and intra-party conflict between and among both sides of the aisle in the House will delay adoption of appropriations bills. Passage of the 2023 Farm Bill will be contentious and is subject to a 12-month extension as a stop-gap measure. Progress on the 2023 Farm Bill has been impeded by contention over SNAP eligibility and other entitlements that collectively represent 75 percent of total expenditure. The August 2^nd downgrade of U.S. debt from AAA to AA+ by Fitch Ratings recognizes Congressional dysfunction. On November 10^th 2023 Moody’s downgraded U.S. credibility from ‘stable’ to ‘negative’ based on an inability to pass required fiscal legislation. After four Continuing Resolutions the House and Senate passed six appropriations bills including the FDA and USDA, avoiding a March 8^th partial shutdown of the Federal Government. Agreements have yet to be concluded on the remaining appropriations bills before March 22^nd
• The delayed 2023 Farm Bill is mired in conflict in both the House and Senate. There is no consensus on major issues comprising the magnitude of SNAP payments and eligibility and requested price supports for crops. The Chair of the Senate Agriculture Committee Sen. Debbie Stabenow (D-MI) is standing firm on maintaining both SNAP-WIC benefits and climate remediation funding even if the Farm Bill is delayed through to the 119^th Congress  
• The March 8^th WASDE #646 Projected both corn and soybean production parameters with a potential record corn harvest for the 2024 crop. There will be ample world availability of ingredients although inequitable distribution will result in shortages in some nations. Soybean exports will comprise 39 percent of the 2024 U.S. crop with a 12.5 percent increase in ending stock.
• There is a projection by CONAB (the Soy production association in Brazil)  that at the midpoint of the harvest the 2024 soybean crop in Brazil will attain 147 million metric tons  (5,401 million bushels) down from a previous estimate of 155 million metric tons (5,695 million bushels). Exports of 100 million metric tons (3,674 million bushels) are anticipated and Brazil will crush 56 million metric tons (2,057 million bushels). The harvest will be 7 million metric tons (269 million bushels) lower than the 2023 record crop.
• Corn production in Brazil for the 2023-2024 market year will attain 124 million metric tons (4,801 million bushels) from all three sequential harvests. But down seven percent from the previous year. Brazil is projected to export of 54 million metric tons (2,125 million bushels). Argentine will produce 56 million metric tons of corn (2,204 million bushels) up 56 percent from the previous year impacted by drought. (Lower prices in the future subject to favorable reports on crop progress and actual harvests)
• The Dollar Index (DXY) was 103.3 on March 6^th, down 0.5 point from last week but under a three-month high with fluctuation following uncertainty over future interest rates and prospects of a prolonged delay in the anticipated pivot by the Federal Reserve FOCM. The DXY has ranged from 99.0 to 107.0 over the past 52 weeks. The dollar index influences timing and volume of export orders and indirectly the price of WTI crude.

REVIEW OF FEBRUARY 2024 EGG PRODUCTION COSTS AND STATISTICS

Commencing in 2024 the EIC has justifiably separated the production costs and unit revenue values for eggs derived from caged and cage-free flocks. Accordingly EGG-NEWS will continue to summarize data but will consolidate production and export statistics for the U.S. egg industry and compare financial data for the two shell-egg categories.

FEBRUARY HIGHLIGHTS

• February 2024 USDA ex-farm blended USDA nest-run, benchmark price for conventional eggs from caged hens was 251 cents per dozen, up 45.9 percent from the January 2024 value of 172 cents per dozen. For comparison, average monthly USDA benchmark price over 2023 was 146.0 cents per dozen with a range of 323 cents per dozen in January down to a low of 57 cents in May. Stock levels and prices prior to the onset of flock depletions due to HPAI indicated a relative seasonal balance between supply and demand. Future nest-run and wholesale prices will be largely dependent on consumer demand for eggs and liquid and the rate of replacement of pullets and hens depleted due to HPAI. Other considerations include diversion to shell sales from the egg-breaking sector in an interconnected industry.
• Fluctuation in wholesale price is attributed in part to the amplification of upward and downward swings associated with the commercial benchmark price discovery system in use. Restoration of seasonal prices commenced midway through the fourth quarter of 2023 with a plateau after Christmas followed by a seasonal decline through January 2024. A substantial rise in price occurred during early through late February but with a sharp decline thereafter to mid-March. An unknown factor in future pricing will be the incidence rate and severity of highly pathogenic avian influenza in spring months with northward migration of waterfowl. Close to 13 million hens and 2.5 million pullets were depopulated during the fourth quarter of 2023 among five states with heavy losses in California.
• February 2024 USDA average nest-run production cost for generic eggs from caged flocks over four regions (excluding SW and West), applying updated inputs was down 1.6 cents per dozen to 76.0 cents per dozen compared to the January 2024 value of 77.6 cents per dozen, mainly attributable to a 4 percent lower average feed cost per dozen.  Approximately 60 cents per dozen should be added to the USDA benchmark nest-run cost to cover processing, packing material and transport to establish a realistic price as delivered to warehouses.
• February 2024 USDA benchmark nest-run margin attained a positive value of 175.0 cents per dozen for generic eggs from caged flocks compared to a positive margin of 94.4 cents per dozen for January 2024. Average nest-run monthly margin over 2023 was 64.2 cents per dozen compared to 155 cents per dozen in 2022. This differential was mainly due to higher prices following HPAI-depletion of flocks. It is emphasized that the U.S. benchmark price reflects nest-run conventional eggs.
• The February 2024 national flock in production (over 30,000 hens per farm) was stated by the USDA to be up 0.1 million hens (rounded) to 300.0 compared to the revised January 2024 value of 299.7 million. This figure apparently takes into account depletion of 4.2 million hens during December 2023 that were not recorded in the month. Approximately 3.0 million hens returned to production from molt in February together with projected maturation of 22.0 million pullets, with this number offset by depletion of spent flocks. During the fourth quarter of 2023 approximately 13 million hens and 2.5 million pullets were depopulated due to HPAI in five states.
• January 2024 pullet chick hatch of 26.1 million was up 8.6 percent or 2.1 million chicks from December 2023.
• January 2024 exports of shell eggs and products combined was down 34.8 percent from December 2023 to 394,000 case equivalents representing the theoretical production of 5.2 million hens. The decrease was attributed to depressed demand for shell eggs by importing countries.

TABLES SHOWING KEY PARAMETERS FOR FEBRUARY 2024.

Summary tables for the latest USDA February 2024 flock statistics, costs and unit prices made available by the EIC on March 13^th 2024 are arranged, summarized, tabulated and compared with values from the previous February 16^th 2024 posting reflecting January 2024 costs and production data as applicable. Monthly comparisons of production data and costs are based on revised USDA values.

VOLUMES OF PRODUCTION REFECTING THE ENTIRE INDUSTRY

 * Revised USDA/EIC

Notes 1. Texas excluded to maintain confidentiality            

PROPORTION OF U.S. TOTAL HENS BY STATE, 2023/2024¹                                                                   

Based on a nominal denominator of 300 million hens in flocks over 30,000 covering 94.6 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

1. Values rounded to 0.1% 

*USDA data is questioned based on known values for hen depopulation and pullet placements with discrepancies in stated values during the 4^th quarter of 2023

Rate of Lay, weighted hen-week (USDA)          83.3% January 2024.    82.6% February 2024

Revised per capita       egg consumption 2020:-             285.6 (down  7.8 eggs from 2019)*

Revised per capita       egg consumption 2021:-             282.5 (down  3.1 eggs from 2020)*

Revised per capita       egg consumption 2022:-             279.0 (down  3.5 eggs from 2021 due to HPAI)                          Projected per capita   egg consumption 2023:-             280.9 (up        1.9 eggs from 2022)                                                Forecast per capita     egg consumption 2024                283.7 (up        2.8 eggs from 2023 accepting HPAI losses)

*Revised, using data from USDA Livestock, Dairy and Poultry Outlook February 14^th 2023 taking into account demand from the food service sector and presumably including the effect of HPAI depopulation.

Egg Inventories at beginning of February 2024:

     Shell Eggs:        1.51 million cases down 17.5 percent from January 2024.

     Frozen Egg Products: 757,238 case equivalents down 15.7 percent from January 2024

     Dried Egg Products:  Not disclosed since March 2020 following market disruption due to

          COVID. Moderate level of inventory are assumed

Eggs broken under FSIS inspection (million cases)

 January 2024,  6.37       DECEMBER 2023,  6.31                   

Cumulative eggs broken under FSIS inspection 2023 (million cases)  78.7         JAN. to DEC.      

Cumulative 2023: number of cases produced (million)                       262.9         JAN. to DEC.

Cumulative 2023: proportion of total eggs broken                               29.9%        (30.8%  2022)

Cumulative eggs broken under FSIS inspection 2024 (million cases)   6.37         JAN.

Cumulative 2024: number of cases produced (million)                        22.17         JAN.          

Cumulative 2024: proportion of total eggs                                             28.8           JAN.

PAHO Conference on HPAI

The emergence of H5N1 strain avian influenza in Latin America during 2022 resulted in the extensive loss of migratory birds, commercial poultry and marine mammals. Accordingly the Pan American Health Organization (PAHO) organized a regional health conference in Rio de Janeiro on March 16^th to review transmissibility among mammals and to assess risk of human susceptibility.  Thirty-five nations participated in the Conference attended by world experts on the molecular biology and epidemiology of avian influenza.

During the ongoing panornitic, a large number of diverse migratory and domestic bird species died of the infection.  A more serious concern was the extensive mortality among seals and sea lions in which direct animal-to-animal transmission must have occurred to attain the magnitude of losses recorded along the coasts of Chile and Peru and recently extending into Antarctica.

HPAI Marine mammals

Molecular virologists are concerned over mutations that have occurred as confirmed by sequencing of isolates. Dr. Ralph Vanstreels of the University of California, Davis noted “We are seeing the virus doing little evolutionary steps that are on the long-term movement towards potential human infection.”  Nine mutations have been identified in South American strains of H5N1 compared to those circulating in North America.  Despite the fact that the World Health Organization regards the risk to humans from the current circulating strains of H5N1 as being ‘low’ pharmaceutical companies are developing avian influenza vaccine that can be administered to humans.

The Conference considered enhanced surveillance, whole genome sequencing of isolates from birds and mammals and protocols to respond to outbreaks including establishing databases and standardized laboratory procedures.  To date only two cases of confirmed avian influenza have been diagnosed in humans, both recording a history of contact with wild birds. The patients survived with appropriate supportive and antiviral therapy but the mortality rate among the low number of elderly patients in Asia infected with H7N9 strain exceeds 60 percent.

Dead Seals as a result of HPAI

It is self-evident that maintaining large commercial flocks exceeding one million hens represents the potential for point mutations and recombinant events to occur.  An obvious preventive measure would be vaccination of at-risk flocks in areas with a history of exposure to migratory birds disseminating avian influenza virus.

Florida has enacted House Bill 433 that prevents counties or local regulatory agencies from imposing protective measures for outdoor agricultural workers.  With increasingly higher temperatures workers are susceptible to heat prostration that can be prevented by available water, shade and rest breaks.

The law expresses a cynical indifference to the safety and welfare of workers and will ultimately be to the determent of productivity and the availability of H-2B workers who are in any event subject to exploitation.

The onus for protection of workers rests with the Department of Labor, Occupational Safety and Health Administration (OSHA).  In 2021 the Administration ordered the Agency to develop workplace standards that have yet to be published.

A State Representative opposed to the bill noted, “We have generations of folks who are experiencing heat stress because they are outside and also suffer kidney damage because there are no bathroom breaks.  Preempting safety requirements in a state as hot as Florida does not make sense.”

The action by the Florida Legislature was initiated by lobbying from industry groups concerned over local ordinances mandating protective measures. In 2023, Texas enacted a similar law preempting city and county governments from passing workplace safety mandates. Texas HB-2127 is now in effect but has been ruled unconstitutional.

 Irrespective of any mandated legal protection afforded agricultural field and plant workers, it is hoped that a sense of decency and compassion will encourage employers to implement measures against heat stress and fatigue.

In a March 7^th release, Vital Farms Inc. (VITL), a Certified B Corporation posted financial results for the 4^th quarter and FY 2023. This specialty egg producer competes directly with Eggland’s Best and other producers and distributors of USDA Certified Organic and pasture-raised products including Pete and Gerry’s, Hidden Valley and Egg Innovations. The Company experiences the same pressures of feed cost, contractor remuneration, labor and transport as competitors in a competitive and fluctuating market environment still restrained inflation.

For the 4^th Quarter of FY 2023 ending December 31^st 2021, net income was $7.2 million on revenue of $135.8 million with a diluted EPS of $0.17. 

Comparable figures for the 4^th quarter of FY 2022 ending December 25^th were net income of $1.9 million on revenue of $110.0 million with a diluted EPS of $0.04.

Sales increased 23.3 percent over the 4^th quarter of FY 2023. Gross margin was 33.2 percent for the most recent quarter (30.3 percent Q4 FY 2022). Operating margin was 6.7 percent compared to 3.1 percent in Q2 2022.  

For the FY 2023, net income was $25.6 million on revenue of $471.9 million with a diluted EPS of $0.59.  Comparable figures for FY 2022 were net income of $1.2 million on revenue of $362.1 million with a diluted EPS of $0.03.

The Company increased guidance for FY 2024 projecting revenue of $552 million, an adjusted EBITDA of $57 million and capital expenditure of $35 to $45 million.

On December 31^st 2023, VITL posted assets of $275.2 million, of which $3.9 million comprised intangibles against long-term debt and lease obligations of $17.3 million. The Company had an intraday market capitalization of $877.0 million on March 13^th. VITL trades with a forward P/E of 208 and has ranged over a 52-week period from $10.23 to $21.42 with a 50-day moving average of $16.16.  Twelve-month trailing operating margin was 8.3 percent and profit margin 5.4 percent.  Return on assets over the past twelve months was 9.1 percent with 14.6 percent on equity. At close of trading on March 7^th pre-release, VITL was priced at $19.87. Post-release on  March 8^th VITL opened at at $21.18.

Approximately 36 percent of VITL equity is held by insiders with 61 percent owned by institutions. As of February 29^th 6.1 percent of the float was short.

Walmart Inc. has announced a milk processing plant in Robinson, TX scheduled to open in 2026.  This plant will follow the 2018 facility in Fort Wayne, IN and will reflect the design of the previously announced plant to be located in Valdosta, GA.  Both the planned plants will cost approximately $350 million.

Bruce Heckman, Vice-president of manufacturing at Walmart stated, “This new facility continues our commitment to building a more resilient and transparent supply chain and ensuring that our customer’s needs are met for this everyday staple.  Products to be processed in the Texas facility will be distributed to approximately 750 Walmart stores in Texas, Oklahoma, Louisiana, Arkansas and Mississippi.  Milk will be marketed under the Walmart Great Value brand and for Sam’s Club under the Member’s Mark brand.

Proposed Walmart Milk Plant

 The fact Walmart has invested close to $1 billion in milk processing to stabilize their supply chain suggest that the Company might be interested in integrating backwards into egg production either through a joint venture or acquisition of an existing large producer. Establishing a series of egg complexes by Walmart is considered unlikely despite the investment by Costco in Lincoln Premium Poultry for rotisserie broiler production.

A lawsuit alleging wrongful death was filed with a U.S. District Court for the Eastern District of Texas in April 2021 by the Estate of an employee that died from COVID while working in the Mt. Pleasant, TX plant operated by Pilgrim’s Pride Corp. The Plaintiffs claimed that the company acted “with fraudulent misrepresentations, gross negligence and incorrigible willful and wanton disregard for worker safety.” 

During May 2020, COVID was prevalent in all meat and poultry processing plants with workers in close proximity and operating under conditions of low ambient temperature and high humidity that encouraged persistence of the airborne virus.  At this time, little was known of the epidemiology of COVID and the routes of infection.  Based on recommendations by the Centers for Disease Control and Prevention based on influenza, separation of workers using partitions, masking and decontamination were introduced by the industry.  According to evidence submitted, the decedent was not provided with a mask or facial shield until late May 2020 prior to his death in mid-June 2020 from COVID as confirmed by the Titus County Medical Examiner.

The court dismissed the case without prejudice, allowing the Plaintiffs 21-days to amend their complaint with specific reference to alleged negligence on the part of the employer.

Mexico has submitted a response to the USMCA Dispute Settlement Panel regarding their ban on importation of GM corn for human consumption. The situation arose following a Presidential Decree banning GM corn for human consumption and the use of glyphosate herbicide. Mexico is claiming a deleterious effect from both glyphosate and GM corn but without substantiation.

The U.S. justifiably maintains that GM corn is innocuous given consumption over four decades. The Mexican position is that the U.S. must provide scientific evidence that genetic modification is not harmful. In contradistinction, it should be up to Mexico to demonstrate the actual harm resulting from consumption of GM corn.  The U.S. maintains that in accordance with USMCA rules, decisions to restrict products must be based on sound science.

Mexico imports yellow GM corn that is to be used in animal feed although the Presidential Decree initially called for a phase-out of GM product that would place both U.S. and Mexico at a disadvantage.  The action by the Government of Mexico has placed the U.S. in the invidious position of having to prove that GM corn is not inherently harmful. This is a far more difficult alternative than actually demonstrating a deleterious effect from consumption of a food especially if the Precautionary Principle is applied.

Outgoing President Andres Manuel Lopez Obrador (“AMLO”) is ill advised. It is hoped that his most likely successor, Dr. Claudia Sheinbaum, an environmental scientist, will quietly squelch the issue for the benefit of consumers in Mexico and the Nation’s economy.

Following the example of Arkansas, the Kentucky House of Representatives voted to approve House Bill 255.  This legislation will allow minors to work up to six hours per school day and up to eight hours on non-school days with a limit of 30 hours a week during the school term.  Federal rules are more restrictive for the 16-and-17-year age group. It is possible that Kentucky legislature is enacting a law legitimizing ongoing irregularities. 

Education officials are critical of HB255 that creates the potential for children to be exposed to hazardous occupations.  The duration of work would detract from schooling and there is a potential for exploitation of children from low-income families.  The move towards more extensive employment of minors is in response to availability of workers especially in agriculture and under the prevailing economic situation. 

Education presents a pathway for upward mobility.  Depriving children of scholastic opportunities will contribute to perpetuation of a class dependent on federal support programs and may even result in elevated crime rates.

Vulto Creamery, located in upstate New York, has a history of producing cheese contaminated with Listeria. In March 2017, the facility was linked to an outbreak resulting in eight hospitalizations and two fatalities. An investigation by the FDA led to an indictment alleging “introducing adulterated food into interstate commerce”. Swabs taken by FDA have yielded Listeria monocytogenes and other Listeria spp. over the period July 2014 through February 2017. The owner of Vulto Creamery faces a $100,000 fine and a one-year suspended sentence.  The company faces a fine of $250,000 with appropriate court supervision.

U.S. Attorney Carla V. Freedman of the Northern District of New York, stated “This investigation and prosecution holds accountable the defendant who does business who through unsafe practices caused illness and death to consumers in an entirely preventable tragedy.”  She added, “The law enforcement and regulatory partners involved in this case will continue to work together to bring to justice those who endanger the public through unsafe and unsanitary products and facilities.”

During the past five years, FDA, the CDC and the Department of Justice have cooperated in prosecuting cases of foodborne infection that can be attributed to negligence or willful distribution of known contaminated products. This evidenced evidenced by the DeCoster, Peanut Corporation of America and Blue Bell Creamery cases.

Although the prevalence of SE is negligible in the commercial egg production industry, management should be aware of their responsibilities with respect to public health and should conform to the FDA Final Rule on Salmonella prevention.

In a March 11^th release, USDA announced finalization of the Rule relating to labeling meat, poultry, and eggs as “Product of the USA”.  The label claim can only be applied to foods that were derived from flocks or herds hatched or born, raised, processed and packed in the U.S. 

The Rule is intended to prevent deceptive labeling and to assure consumers of the domestic U.S. origin of products.  The label incorporating the “Product of the USA” will be applied on a voluntary basis.  Although no specific pre-approval is required from USDA, processors must maintain documentation to establish the veracity of the “Product of the USA” claim.\ that will be subject to audit.

Based on elevated levels of lead in the region of 200 ppm, the FDA is recommending a voluntary recall of ground cinnamon products.  Six products have been identified that were distributed among retail outlets in California, Missouri, Illinois, Virginia, Florida and Maryland.

The levels of lead contamination assayed are lower than the 2,000 to 5,000 ppm in cinnamon associated with the recent recall of pouches of apple puree.

The Deputy Commissioner for Human Foods at the FDA, Jim Jones stated, “Today’s actions serve as a signal to industry that more needs to be done to prevent elevated levels of contaminants from entering our food supply.”  He added, “Food growers, manufacturers, importers and retailers share a responsibility for ensuring the safety of the foods that reach store shelves.”

The FDA is cooperating with the Centers for Disease Control and Prevention to evaluate elevated lead and chromium levels in children exposed to contaminated apple cinnamon puree. 

There is a world of difference between a recommended, voluntary recall and a mandated recall.  It is questioned why the FDA has not acted more forcefully.  Is this due to lack of authority or a structural and cultural inability to make decisions and to take action?

A potential strike has been averted following agreement between the Kroger Company and UFCW Local 400 representing workers in West Virginia, Kentucky and Ohio.  The contract will include a starting wage of $13 per hour for new employees, provide raises for department leaders and cap health and welfare costs for the duration of the contract. Union members will be protected from any reduction in hours worked as a result of the Company using vendors and temporary workers.  Approximately 3,000 employees represented by the Union will now vote to approve the agreement. 

Following a denial by the Public Utilities Commission for Summit to proceed with a carbon dioxide pipeline, the South Dakota Legislature has passed bills that provide protection for landowners but will allow easements to facilitate the project.  Pipeline operators will have to pay for access to survey land and counties could collect a surcharge.  Pipeline companies would be responsible for damage and easements would be restricted to 99 years.  The final version of the legislation allows the Public Utilities Commission to overrule setbacks determined by individual counties.

Summit has proposed the $8 billion pipeline project that would collect carbon dioxide from 57 ethanol plants in South Dakota and neighboring states to be transported to North Dakota for underground sequestration.

Some funding will be provided by the federal government in form of tax credits to incentivize reduction of carbon dioxide release.  Tax credits were first introduced in 2008 and were expanded under the previous Administration.

The South Dakota Farmers Union was unhappy with the package of bills passed by the State House and Senate.  The Association commented on the domination of the legislature by “large special interest groups to the detriment of family farmers”.  It is significant that South Dakota Ethanol Producers Association supported the bill promoting the first Landowner Bill of Rights claiming that all parties would benefit.

 An obvious question is in the absence of a pipeline and sequestration, how is the ethanol industry currently disposing of carbon dioxide produced during the fermentation of corn?  It is understood that only a small proportion is disposed of by capture and sale or on-site subsoil injection.  If one-third of the corn crop is converted to ethanol then one-ninth of the mass of corn produced each year is vented. This contradicts the claim of ethanol being environmentally beneficial when added to gasoline at ten percent.

A bipartisan working group of the House Committee on Agriculture recently concluded a major review of the H-2A Visa program.  Recommendations include:

• Expanding the program from seasonal to year-round eligibility to meet the needs of specific sectors of agriculture including dairy, hogs and poultry
• Establishing standard wage rates based on duration of daily labor
• Expediting procedural improvements in the face of an urgent need to legally employ additional workers

It is now up to both the House and the Senate to modify existing laws and for Federal and State agencies involved to cooperate to provide for a legal pathway to employ eligible workers.

The Securities and Exchange Commission (SEC) has amended proposed regulations requiring public traded companies to disclose greenhouse gas emissions.  Scope 1 emissions that are directly produced and Scope 2 comprising indirect emissions associated with the use of energy in operations will have to be disclosed.  Scope 3 requirements that arise from suppliers to the company concerned were removed from the Rule. 

This would mean that a public traded company producing a packaged food product would be required to disclose Scope 1 and Scope 2 emissions of greenhouse gases arising from manufacture of products including direct use of energy. They would not have to take into account greenhouse gas emissions from agricultural operations supplying ingredients used in the manufacture and packaging of food products.

There is considerable opposition to the SEC disclosure rules that have yet been finalized.

Six members of a smuggling ring were arraigned in a New York court on March 5^th.  The Government alleges illegal importation of raw poultry from China destined for ethnic restaurants.  Huang Chen and partners organized a network to import, distribute and sell prohibited items from chickens, ducks and geese.  The ring has operated since August 2022 importing shipments incorrectly described on manifests as ‘frozen seafood’.  In raids, accompanying the arrests, the USDA and agents of the Office of the Inspector General confiscated product valued in excess of $150,000.

Illegal importation of raw ethnic delicacies from China represents both livestock and human health hazards. The extensive foot-and-mouth disease outbreak in England during 2001 was introduced through illegal importation of pork from China

As a result of environmental contamination with inadequately treated wastewater, the Missouri Department of Natural Resources withdrew the relevant permit for Missouri Prime Beef effectively closing the plant.

Representative Jim Kalberloh is cooperating with Representative Mike Stephens on a resolution to the problem to allow over 300 workers to return to the facility.  Kalberloh stated “I understand the impact of fresh water and clean water, so it’s a kind of thin line to try to walk. We are just trying to work out a deal where both can coincide and to live and come to a peaceful conclusion” The solution to the problem would be for the new owners of the plant to make the necessary investment in an effluent treatment plant to conform to state and industry standards.

If legislators strong-arm environmental regulators, over an issue of obvious contamination, the entire process of control will be eroded, with adverse consequences to the residents of the area. It is understood that a petition with 1,000 signatures was presented to the State protesting the release of incompletely treated effluent into the Pomme de Terre River adjacent to the plant. That should grab the Legislators’ attention!

The price of almonds has halved in ten years to $2 per pound.  This has impacted individual farmers and cooperatives that took on debt to establish orchards.

A major California consortium of growers, Trinitas Farming has filed for Chapter 11 bankruptcy based on illiquidity.

A number of egg producers established almond orchards on their properties to add to revenue. This is now is in question.

TekniPlex Consumer Products has developed a proprietary two-stage dried-in-mold process that compresses fibers during fabrication creating a stronger and denser carton that inhibits condensation on the shell surface.  The new manufacturing process results in a smooth finish that assists in de-nesting of cartons during packing even with high throughput. Cartons have improved shelf-appeal with either direct printing or labels. The dried-in-mold process offers strength equivalent to foam that is required for 18 and 24-count cartons. Deflection of cartons does not occur even under conditions of high humidity, minimizing shell damage during transport and handling by consumers, minimizing wastage

Fiber egg cartons are inherently more sustainable than plastic alternatives but the new process produces cartons that contribute to customer sustainability goals without sacrificing protection of eggs or detracting from shelf-appeal.

TekniPlex will commence production of the new packs at their Van Wert, OH. plant to satisfy anticipated demand by the indust

On March 8^th the United Nations Food and Agricultural Organization released the Index of Food Commodities for February 2024.  A sequential 12-month reduction in food prices is evidenced by the 10.3 percent decrease in the Index from 131.1 in February 2023 to  the most recent value of 117.3.

Component indices included:-

• The Cereal Index was down 6.1 percent from January to 113.8 points due to lower corn and wheat prices but offset by a raise in rice.
• The Vegetable Oil Index was down 1.2 percent from January to 120.9 points with lower soy and sunflower oils but higher palm oil on increased demand.
• The Dairy Index was up 1.3 percent from January to 120.0 points
• The Meat index was up 2.0 percent from January tp 112.4 points with higher poultry and beef  prices but lower prices for pork products with decreased demand from China

Boutiful crops in Brazil and Argentina with restoration of Black Sea shipping using the ‘Humanitarian Corridor’ along the eastern seaaboard have collectively reduced concern over availability of grains and oilseeds and contributed to a moderation in prices for agronomic commodities.

Following the initiative of Illinois that imposed a one percent tax on groceries, Oklahoma will eliminate their existing 4.5 percent tax.

In a signing ceremony, Governor Kevin Stitt regarded the rescission as the largest single-year tax cut in Oklahoma history. Grocery taxes are extremely regressive and place a disproportionate burden on lower-income demographics.

Grocery taxes in other states include Mississippi at 7 percent, Kansas, 6.5 percent, Idaho, 6 percent, South Dakota at 4.5 percent and seven additional states ranging from 1.5 percent to 4 percent.

The Oklahoma sales tax made it worthwhile for border residents to purchase their groceries in adjacent Texas despite the added inconvenience and cost of travel.  It is estimated that eliminating the sales tax would save an average family $700 annually.

On March 7^th Costco Wholesale Corporation (COST) posted results for Q2 FY 2024 ending February 18^th 2024. The Company exceeded the consensus estimate for earnings by 8.2 percent but was light on sales by 0.1 percent. COSTCO as the leading club chain serves as a bellwether for omni-channel warehouse in-store and on-line buying. The Company is a barometer of consumer confidence, offering groceries, clothing, household necessities in bulk in addition to discretionary appliances, recreational, luxury and electronic items.

For the most recent quarter, the Company earned $1,743 million on revenue (including fuel and membership fees) of $58,442 million with a diluted EPS of $3.92. For the corresponding Q2 of FY 2023 ending February 12^th, Costco earned $1,466 million on equivalent revenue of $55,266 million with a diluted EPS of $3.30.  Revenue was 5.8 percent higher than in Q2 FY 2023 and net earnings were up by 18.9 percent. Gross margin for Q2 FY 2024 was 10.7 percent, unchanged from the corresponding quarter in FY 2023. Operating income attained 3.4 percent also unchanged from Q2 FY 2023, despite increased freight, transport, wages and utilities.

Comparable global same-store sales for Q2 2024 (excluding fuel and foreign exchange) rose to 5.8 percent. U.S. same store sales were up 4.8 percent; Canada by 9.0 percent and the Other International category, 8.2 percent. E-Commerce was up by 18.2 percent.

Costco did not raise membership fees as expected but in the Q4 2023 investors’ call, the Company commented this is a situation of “when and not if”. There are currently 33.9 million Executive Level memberships at $120 annually representing 46 percent of the total but accounting for 73 percent of sales.

On February 18^th Costco posted total assets of $66,323 million. Long-term debt and lease obligations attained $10,875 million. Costco had an intraday market capitalization of $343,200 million on March 7^th. COST trades with a forward P/E of 49.2 and has ranged over the past fifty-two weeks from $460.80 to $787.08 with a 50-day moving average of $700.41. Costco closed pre-release at $785.59 on March 7^th but fell in after-hours trading, post-release by 3.5 percent to $756.64. Twelve-month trailing operating margin was 3.4 percent and profit margin 2.7 percent.  The Company generated a return on assets of 7.8 percent and 27.4 percent on equity.

At the end of the recent completed quarter, Costco operated 875 warehouses. There are 603 in the U.S; 109 in Canada; 40 in Mexico; 33 in Japan; 29 in the U.K. and 61others in seven other nations among the E.U., Asia and Australia. This was a net increase of ten warehouses during Q1 with nine added in the U.S.

The USDA APHIS will present an informational webinar on Tuesday, March 12^th at 15h30 EDT.  The webinar will incorporate a presentation from the Farm Service Agency on loading programs to assist producers with funding biosecurity.  For information on joining the zoom webinar, contact <katrina.e.redyj@usda.gov>.

On March 7^th The Kroger Company (KR) posted results for Q4 and FY 2023 ending February 3^rd 2024. Kroger beat substantially on earnings compared to consensus estimates but provided anemic FY 2024 same-store sales and EPS projections.

 Kroger is the second largest retailer of groceries in the U.S. and is a pure supermarket play subject to the pressures of escalation in food costs, logistics and labor and the impact of inflation in common with all national and regional competitors. Kroger has announced the intention of acquiring competitor Albertsons Cos. This would create a merged enterprise with 5,000 stores. In late February the FTC filed to block the transaction that is opposed by the Attorneys General of seven states and both major national unions representing workers. To comply with anticipated regulatory pressure Kroger and Albertsons have proposed selling 413 stores in 18 states to C&S Wholesale Grocers for $1,900 million. This strategy is in question given the history of the bankruptcy of Hagen that divested stores to facilitate the acquisition of Safeway by Albertsons. It is possible that other bidders such as Ahold-Delhaize N.V. will emerge as potential purchasers of some, all or a greater number of stores as negotiated and subsequently approved by the FTC.

 For the 4^th quarter, Kroger reported earnings of $736 million on sales of $37,064 million with a diluted EPS of $1.01. For the corresponding Q4 of FY 2022, Kroger earned $451 million on sales of $34,823 million with a diluted EPS of $0.62.  Comparing Q4 of 2023 with the corresponding quarter of FY2022, revenue was 6.4 percent higher; Gross margin increased from 21.7 percent to 22.7 percent for Q4 2023. Operating margin increased from 2.4 percent to 3.2 percent for the most recent quarter.

For FY 2023, Kroger reported earnings of $2,164 million on sales of $150,039 million with a diluted EPS of $2.96 For FY 2022, Kroger earned $2,244 million on sales of $145,258 million with a diluted EPS of $3.06. 

In commenting on 4^th quarter and FY 2023 results, Rodney McMullen CEO stated, “Kroger achieved strong 2023 results, in line with our long-term growth model and built upon three consecutive years of historic growth. As customers manage macroeconomic pressures, we are lowering prices and offering even more ways to save with personalized promotions and rewards. Our unique seamless shopping experience provides customers the products they want, when and how they want them, with zero compromise on quality, convenience and selection”. 

He added, “We respect and appreciate our associates who are delivering a full, fresh and friendly customer experience. Over the last five years, we've made historic investments in associate wages, benefits and career development opportunities, including significant investments to help stabilize associates' future pension benefits”.    

McMullin concluded, “We are increasing customer visits and growing loyal households through the strength of our retail business, which positions Kroger for more ways to drive sustainable future growth. We expect to continue our momentum in 2024 by delivering value for customers, investing in associates and generating attractive and sustainable shareholder returns."  

The Company released adjusted FY 2023 Guidance:- 

• Identical Store Sales growth of 0.25 to 1.75 percent excluding fuel,
• Adjusted EPS of $4.30 to $4.50,
• Adjusted FIFO Operating Profit of $4.6 billion to $4.8 billion,
• Capital expenditure of $3,400 to $3,600 million,
• Adjusted free cash flow of $2,500 to $2,700 million,

Comparable same-store sales for Q4 decreased by 0.8 percent (excluding fuel) compared to Q4 FY 2022; digital sales were up by 10.0 percent;

On February 3^rd 2024 Kroger posted total assets of $50,523 million of which $3,815 million comprised goodwill and intangibles. Long-term debt and lease obligations amounted to $20,882 million.  

The Kroger Company had an intraday market capitalization of $36,320 million on March 7^th 2024.  The Company has traded over the past fifty-two weeks in a range of $42.10 to $55.53 with a 50-day moving average of $46.64. KR trades with a forward P/E of 11.7. On March 6^th 2024 KR closed at $50.53 pre-release but opened on March 7^th post-release at $53.33

Twelve-month trailing operating margin was 2.0 percent and profit margin 1.3 percent.  The Company generated a return on assets of 5.8 percent and 17.8 percent on equity

At the end of FY 2022 The Kroger Company operated 2,726 stores with 2,252 pharmacies and 1,613 fuel centers, under 25 banners in 35 states and D.C. Kroger operates 34 food plants and 45 distribution centers with five Ocado fully automated fulfillment centers with as many as twenty planned

in an ongoing search for alternative store formats, Amazon has established Whole Foods Market Daily Shops.  Stores will range between 7,000 and 12,000 square feet and will be located in urban areas to provide fast and convenient service. Offerings will emphasize prepared meals, snacks and fresh produce.

Christina Minardi, Executive Vice President for Growth and Development for Whole Foods Market and Amazon stated, “We are excited to introduce a new way for our customers to quickly pick up their Whole Foods Market favorites making the early morning or after-work grocery trips more efficient and enjoyable”.

In a March 6^th 2023 release, Campbell Soup Company (CPB) released predictable financial results for the second quarter of Fiscal 2024 ending January 28^th 2023. The Company can be regarded as representative of the manufacturing and packaged food sector with competitors including Post Holdings, Conagra Brands, Treehouse Foods and Kraft-Heinz, all currently under pressure to reduce prices to the major retail and supermarket chains. In an inflationary environment consumers are turning to less expensive private brands although the trend to eat-at-home may benefit Campbell Soup and competitors.

For the second quarter of FY 2024, net income was $203 million on net revenue of $2,456 million with a diluted EPS of $0.68.  Comparable figures for the second quarter of FY 2023 ending January 29^th 2023 were net income of $232 million on net revenue of $2,485 million with a diluted EPS of $0.78

The release included results for the two operating segments:-

• Meals and Beverages: Operating profit of $247 million down one percent from Q2 2023, on revenue of $1,382 million, down two percent from Q2 2023
• Snacks: Operating profit of $161 million, up seven percent, on revenue of $1,074 million, unchanged from Q2 2023

For the second quarter of FY 2024 (with the values for the corresponding quarter of FY 2023 in parentheses) Campbell Soup achieved a gross margin of 31.6 percent (30.5) and an operating margin of 13.0 percent (14.5). Revenue was down 1.1 percent.

In commenting on Q2 results Mark Clouse CEO stated,  “We once again delivered on our commitments, with a sequential improvement in volume trends and year-over-year operating margin expansion in both our Meals & Beverages and Snacks divisions,” He added, “We are excited about the anticipated completion of the acquisition of Sovos Brands which will bring incremental growth to our Meals & Beverages division and continue the transformation of our highly advantaged portfolio."

Guidance for FY 2024 was amended indicating a trend towards the lower end of forecasts. Values included net sales growth ranging from -0.5 to 1.5 percent; an adjusted increase in EBIT of 3 to 5 percent and an adjusted EPS of between $3.09 and $3.15.  

Campbell Soup listed assets of $12,106 million, including a disproportionate  $7,071 million as goodwill and intangibles. Long-term debt and other obligations amounted to $6,119 million, up 9.3 percent from Q2 2023.

The Company had an intraday market capitalization of $12,800 million on March 6^th. CPB trades with a forward P/E of 14.0 and has ranged over a 52-week period from $37.94 to $56.04 with a 50-day moving average of $43.28. Insiders held 35.7 percent of equity with 7.0 percent of the float short on February 15^th.

Twelve-month trailing operating and profit margins were 15.6 percent and 8.6 percent respectively. The Company generated a twelve-month trailing return of 7.0 percent on assets and 22.0 percent on equity.

Legislators in predominantly agricultural states have expressed concern over the potential for foreign ownership of land by adversarial nations including China, Russia and Iran.  The USDA will now participate in the Committee on Foreign Investment in the United States that has the power to block transactions with foreign entities. 

It is estimated that 43 million acres or 3.5 percent of U.S. agricultural land is leased or owned by foreign companies with the vast majority comprising Canada with forest holdings and western E.U. nations operating cropland. 

National security is a significant consideration in the context of foreign purchases of U.S. land.  China has demonstrated an affinity for purchasing tracts of land or enterprises in close proximity to military installations with evident implications.

Dr. Maricarmen Garcia

In a recent webinar under the auspices of the American Association of Avian Pathologists, Dr. Maricarmen Garcia of the University of Georgia reviewed changes in the epidemiology of infectious laryngotracheitis (ILT).  Since the disease is caused by a herpesvirus, infected flocks remain shedders of the virus with persistence in the environment of houses after an affected flock has been depleted.

In past decades, most clinical outbreaks were attributed to the use of chick embryo origin (CEO) ILT vaccine that reverts to virulence.  More recently, the G6 field strain has emerged demonstrating increasing virulence.  According to Dr. Garcia, infection of SPF leghorn pullets with a G6 strain isolated in 2014 resulted in 30 percent mortality.  In chicken receiving G6 virus isolated in 2022, none of the infected birds survived.

EGG-NEWS previously raised the question of a possible co-pathogen involved in outbreaks of coryza characterized by high mortality.  There is evidence that the prevalent strain of coryza associated with outbreaks in the Midwest and California in recent years is similar to decades old isolates when subjected to whole genome sequencing.  It was previously suggested in CHICK-NEWS that emerging avian metapneumovirus may have been a co-factor exacerbating clinical signs including a precipitous drop in production and high mortality, not characteristic of conventional coryza.  ILT should now be considered as a possible co-factor and accordingly attempts at isolation and identification of G6 from flocks at an early stage of a coryza outbreak should be considered to determine if other than a vaccine strain of ILT was present.

Classic gasping with ILT

HVT-vectored ILT and IBD vaccines are now used extensively to immunize replace pullet flocks.  Experience has shown that clinical signs of ILT occur in flocks vaccinated either in ovo or at day-old.  Accordingly, producers are administering either a tissue culture origin or a chick embryo origin ILT vaccine at 7 to 10 weeks by the intraocular route when birds are handled for administration of epidemic tremor, pox and pasteurellosis vaccines. 

Biosecurity and vaccination are the only modalities available to producers to suppress ILT.  With multi-aged complexes, solid immunity against ILT is a necessity due to the carrier state.  Implicit in the prevention of viral disease is the unsettling realization that if small contract and organic farms cannot exclude ILT they will also not be able to prevent introduction of HPAI.

Shuttered Tetrick facility in Singapore

According to the Straits Times the cell-cultured meat project established by Josh Tetrick in Singapore has apparently ceased operation.  The facility in Bedok Food City extending over 30,000 square feet was heralded as an advance in sustainability and the future independence for the City-State from meat imports in a ceremony during late February. 

It is understood that the facility involved an investment of $60 million.  A second facility established as a subsidiary of Tetrick’s holding company to produce liquid egg products has apparently also closed.  In March 2022, Eat Just announced a plant in the Pioneer industrial district but this project will evidently not proceed.

Tetrick’s companies are mired in legal claims from suppliers of equipment including an action for $100 million from a manufacturer of bioreactors ordered to produce cell-cultured meat.

Aspirant producers of cell-cultured meat have encountered numerous problems relating to transition from laboratory-scale production using plastic roller bottles to commercial volumes using bioreactors. Substrate required to culture cells is expensive and the process is inherently energy and water intensive.

Tetrick (center) in better days

There are now questions as to the consumer acceptability of cell-cultured meat even if available at prices equivalent to the real product. The entire cell-cultured meat segment has disappointed investors in both an inability to produce saleable quantities due to technical restraints and the vast amount of money required for research and development.  Venture capital companies are also reviewing the potential sales figures for plant-based meat alternatives and their high production costs relative to the products they intend to displace. To add to problems faced by start-ups livestock-producing states in the U.S. and individual E.U. nations are enacting restrictive legislation on the sale and labeling of cell-cultured chicken and beef even before any product becomes commercially available.

Promise unfulfilled

Authorities in Singapore approved the sale of cell-cultured meat products in December 2020.  Despite investment and unsubstantiated hype, Tetrick’s companies have only produced token quantities of cell-cultured chicken sold at a gourmet restaurant principally as a curiosity.  The USDA and FDA approved the U.S. sale of cell-cultured meat from Good Meat, a Tetrick company, and Upside Foods in June 2023.  Neither company has produced commercial quantities of faux beef or chicken. 

There has always been a taint of Theranos associated with the cell-cultured meat segment that has been reinforced by allegations of deception and failure to deliver on promises and projections.

NY A/G Letitia James

Attorney General of New York State, Letitia James has filed a lawsuit against JBS USA Food Co. relating to unsupported claims relating to greenhouse gas emissions.

Ms. James stated, “As families continue to face the daily impacts of the climate crisis, they are willing to spend more of their hard-earned money on products from brands that are better for the environment.”  James bases her lawsuit on alleged false advertising expressing a commitment to sustainability that misleads consumers.

Last year JBS USA was criticized by the Better Business Bureau, National Advertising Division, Review Board.  The company was advised to discontinue claiming that the it is committed to be net zero by 2040 and claiming that animal products can be produced with net zero emissions.

In 2021 JBS Group the parent company of U.S. JBS subsidiaries reported 71 tons of global greenhouse gas emissions.

The New York lawsuit is intended to enjoin JBS from its Net-zero by 2040 advertising campaign and to subject the Company to fines for violations on misinformation.

JBS USA responded by noting disagreement with the lawsuit.  The company stated, “We take our commitment to a more sustainable future for agriculture very seriously.  JBS will continue to partner with farmers, ranchers and our food system partners around the world to help feed a growing population.”  Their statement did not directly address expressed claims or their substantiation.

Genus plc. a biotechnology company in the U.K. has successfully removed the CD163 gene applying CRISPR technology to produce pigs resistant to porcine reproductive and respiratory syndrome (PRRS).  This infection is estimated to cost the hog industry $3 billion annually.  Four commercial lines of pigs have been modified and are now available to breeders.

Genus plc. has applied to the USFDA for approval of gene-deleted pigs.  Under current FDA procedures, gene deletion applying CRISPR is regarded as a “investigational new drug” that will impose both expense and time before approval.  CRISPR does not involve any introduction of genetic material but is simply the removal of a gene.  Approval of genetically modified salmon by the FDA required decades for a decision although the Aqua Bounty product required the introduction of genes from other species.

It is hoped that the GENUS application to the FDA will be expedited since this will make possible the approval of CRISPR gene deletion that may in the future create strains of poultry that will be resistant to specific diseases including avian influenza.  It is also possible at the present time to create egg production strains that allow simple and effective gender sorting obviating the current bridge technology assaying hormones in allantoic fluid.

The outstanding question is whether consumers will accept gene deletion or even genetic modification of poultry and livestock.  Perhaps the restraint is the disinclination of breeders to adopt CRISPR and gene modification based on their perception of consumer demand.  The opposition to applying a patented and proven technology for gender determination may well be moot if China in its determination to become a world-class breeder of broiler and egg producing strains applies advanced technology. Their domestic market is large enough to support breeding programs with and without CRISPR technology and GMO. With successful implementation China will enter export markets competing with traditional breeders in the E.U. and the U.S.

Publix, a privately held, employee-owned corporation, released limited Q4 and FY 2023 financial data on March 1^st for the period ending December 30^th 2023.  Sales for Q4 2023 attained $14,700 million, down 3.9 percent from Q4 2022 at $15,300.  Net earnings were $1,178 million compared to $1,278 million in Q4 of 2022, down 7.8 percent. Earnings per share attained $0.39 compared to $0.32 in Q4 2022. Comparable same store sales were up 0.4 percent compared to Q4 2022.

Sales for FY2023 attained $57,100 million, up 4.8 percent from 2022 at $54,500.  Net earnings were $4,439 million an increase of 48.2 percent compared to $2,918 million in 2022. Earnings per share attained $1.23 compared to $1.20 in FY2022.

According to the Publix SEC Q-10 submission, total assets on December 30^th 2023 were $34,348 million with long-term debt and lease obligations of $3,404 million.

Share price was adjusted upward from $15.12 to $15.20 on March 1^st.

In commenting on results CEO Kevin Murphy stated, “I’m proud of our friendly, knowledgeable associates who help our customers create memorable meals with their families and friends. I’m so thankful to serve with them in providing Publix’s premier service in our communities.”

In 1997, an eating disorder termed orthorexia was described.  The term includes the Greek for ortho or right and orexis or appetite.  The condition that has yet to be included in the Diagnostic, Statistical Manual Of Mental Disorders (DSM) comprises an obsessional preoccupation with “pure” food and nutrition.  Orthorexia is frequently associated with other disabilities including anxiety and obsessive-compulsive disorder.  Mild forms can be characterized by excluding all but certified organic foods from the diet, avoiding gluten without evidence of intolerance or an obsession with “clean” labels.  More severe forms include a frequently progressive disinclination to exclude certain foods from the diet that ultimately progresses to malnutrition.

Orthorexia should be differentiated from both anorexia nervosa and bulimia, both of which involve the volume of food consumed.  Those suffering from orthorexia are more concerned with the type and source of the food in their diets. With extreme manifestations of the condition, volume will be reduced. Behavioral abnormalities expressed by individuals including eating disorders may be intensified by intemperate use of social media that may exacerbate the intensity of their conditions. 

A further complication of orthorexia is the desire to extend personal choices in eating to others.  It is possible that some of the zealous vegans who oppose all forms of livestock production are not concerned with the welfare of herds and flocks. They may be responding to a compulsion to inflict their dietary proclivities on others by promoting a vegan agenda. This is evident among aggressive and proselytizing vegans who influence decisions on school and institutional meals and as elected officials and even members of Congress oppose animal agriculture.

FDA Asleep at the Switch?

California has introduced legislation banning Additives including Red dye number 3, brominated vegetable oils and potassium bromate from human food.  Similar action is contemplated by Indiana, Illinois and by both Washington and New York states.

A  patchwork approach to banning specific additives for human food although based on valid scientific criteria and potentially benefiting consumers in those states will create problems for food manufacturers in their formulation and labeling.  It would be preferable for the implicated ingredients to be designated as unacceptable by the federal government through FDA action creating a level playing field.  The FDA has been tardy in assembling data and making decisions that would be beneficial to consumers and convenient for manufacturers.  In some respects, state agencies including those in California and New York are more influenced by the European Union that employs the precautionary principle than the FDA.

The difference between approaches to food safety in Europe and the U.S. is a function of the pressure exerted by industry lobby groups by both industry and consumer advocacy organizations on U.S. federal agencies.  In many instances U.S. manufacturers have voluntarily ceased using additives and compounds that are regarded as potentially or overtly harmful without regulatory intervention.  Brominated vegetable oil has not been used in citrus-flavored beverages for many years in the U.S. despite the state restrictions.

Before registration for an anticipated IPO, Panera Bread has reverted to a previous concentration on breakfast and lunch mealtimes reversing the move towards the dinner period.  New menu items will be introduced in early April.  New menu items will include various sandwiches and salads and some items will be upgraded. Flatbreads will be dropped.

Panera is also emphasizing cost with numerous items under $10 in the “transformed menu”.

The Company announcement of menu changes “confirms that Panera is close to its customers and recognizes the need for changes to accommodate the needs and budgets of its clientele”.

Easy Bio a major nutrition company based in South Korea has announced the acquisition of Devenish Holdings Ltd. based in Northern Ireland, with subsidiary Devenish Nutrition LLC in the U.S. 

Devenish Nutrition has operated in the U.S. since 1998 producing premixes and feed additives distributed in the U.S. and Mexico.  Easy Bio has secured markets for its products directed to antibiotic-free production systems in the E.U. and Asia with representation in 50 nations.

Stevenson Hwang CEO of Easy Bio stated, “Devenish Nutrition is already a leading company in the North American market with its solid technology and various solutions and many talented people in the company including management.”

Cory Penn CEO of Devenish Nutrition stated, “With the help and support of the Easy Bio Group we will continue to expand our footprint across North America with investment in people, research and manufacturing facilities.”

It is intended that Devenish Nutrition will continue to operate with current management but with additional financial resources and access to an innovative product portfolio.

On March 5^th Target Corporation (TGT) the Nation’s 6^th-ranked retailer, posted results for Q4 and FY2023 ending February 3^rd, beating estimates for the top and bottom lines.  For the quarter, the Company earned $1,382 million on revenue of $31,919 million with a diluted EPS of $2.98.  For the corresponding Q4 FY2022, Target earned $876 million on sales of $31,395 million with a diluted EPS of $1.89. Revenue was higher by 1.6 percent and net earnings increased by 57.7 percent. Gross margin increased from 23.2 percent in Q4 FY2022 to 26.7 percent for the most recent quarter. Operating margin rose from 3.7 percent to 5.8 percent.

For FY2023 the Company earned $4,138 million on revenue of $107,402 million with a diluted EPS of $8.94.  For the corresponding FY2022, Target earned $2,750 million on sales of $109,120 million with a diluted EPS of $5.98. Inventory was down 11.9 percent from the end of FY2022 reducing markdowns.

For the fourth quarter, comparable same-store sales declined by 5.4 percent. FY2023 comparable sales were down by 3.7 percent due to a reduction of 2.4 percent in transactions offset by a 1.4 percent increase in the average value of each transaction. Digital sales were down 0.7 percent during Q4 compared to a decline of 3.6 percent recorded for Q4 2022. Store-originated sales attained 81.7 percent of total in FY2023 with digital accounting for the remaining 20.3 percent.

Effective April 1^st The Company will introduce Target Circle 360, a paid membership benefits program.

In commenting on results Brian Cornell Chairman and CEO stated, Our team’s efforts changed the momentum of our business, further improving our sales and traffic trends in the fourth quarter while driving profitability well ahead of expectations,” said Brian Cornell, chairman and chief executive officer of Target Corporation”. He added "Throughout the season, guests responded to newness, value, and the inspiration and ease of our in-store and digital shopping experience. Looking ahead, we’ll continue to invest in the strengths and differentiators that have delivered strong financial performance over time. We’ll also roll out fresh innovations, including our new Target Circle membership program, as part of our roadmap for growth aimed at meeting consumers where they are, reigniting sales, traffic and market share gains, and positioning Target for profitable growth in 2024 and beyond.”

The Company maintained guidance for fiscal 2024. Target expects a flat to two percent increase in same-store sales growth and an adjusted EPS ranging from $8.60 to $9.60.

At the end of FY2023, Target Corporation operated 1,956 stores with a total retail area of 245,939 square feet excluding offices and DCs. The company invested $4,806 million in property and equipment during FY2023.

On February 3^rd Target posted total assets of $55,356 million, up 3.8 percent from the end of FY2022. Long-term debt and lease obligations attained $20,140 million. Target Corporation had an intraday market capitalization of $69,480 million on March 5^th. The Company has traded over the past fifty-two weeks in a range of $102.93 to $171.24 with a 50-day moving average of $144.17.  TGT trades with a forward P/E of 17.0. On March 4^th,pre-release the share closed at $150.79 but after the morning release opened on March 5^th at $169.12.

Twelve-month trailing operating margin was 5.5 percent and profit margin 3.4 percent.  The Company generated a return on assets of 5.8 percent and 30.9 percent on equity.

According to the Food and Drug Administration, coatings for food packaging no longer contain per polyfluoroalkyl (PFAS) compounds.  This includes wrappers for QSR servings, microwave popcorn bags and paper-board containers.

In recent years, the potential toxicity of PFAS compounds has been documented. PFAS compounds have been extensively used as a coating for cookware, food packaging and food processing installations has been recognized.

The FDA announcement is a tribute to the voluntary commitment by manufacturers to eliminate PFAS as a grease-proofing coating on food packaging.

Kent State University has established a goal of 30 percent of meals to be plant-based by 2026.  Currently, this category comprises 15 percent of servings in residential dining halls.  Kent State University is cooperating with the Humane Society of the United States through the Forward Food program.  Sarah Korcan, RD., the Assistant Director of the University Culinary Service, stated, “With over a third of our student body embracing diverse dietary preferences, including vegan, vegetarian and flexitarian lifestyles, it is imperative to cater to their needs by offering a wide selection of meat-free alternatives”.

State Senator Linda Holmes, Chairperson of the Illinois Senate Committee on Agriculture and Economic Development, has introduced Bill S.3655 that would eliminate cages and mandate housing consistent with the UEP Animal Husbandry Guidelines.  The Bill would also restrict the sale of eggs derived from hens held in other than conforming housing.

If the Bill is enacted, a target date of January 1^st, 2026, is intended. This is clearly too soon to allow replacement of existing cages.  In the course of subsequent debate on the bill, the compliance date will most probably be extended following the lead of Utah that has delayed complete transition to 2030.

Members of the United Food and Commercial Workers (UFCW) Local 400 voted with a majority of 87 percent to reject a contract proposal offered by the Kroger Company, and authorized a strike by the same margin.  Approximately 3,000 UFCW workers are employed at 38 supermarkets spread among West Virginia, Kentucky, and Ohio.  The strike vote is intended to wring concessions from Kroger after negotiations collapsed.  Following intercession by Senator Joe Manchin (D-WV) and the Federal Mediation and Conciliation Service of the Department of Labor, contract negotiations were reconvened.

https://neqs.org/

The National Egg Quality 30^th Anniversary School will be held May 20 to 23, 2024 in Park City, UT and will continue the tradition of a curriculum that is designed for the serious-minded student who is willing to learn as much as possible about egg quality and safety in a concentrated, comprehensive four days.

The course provides a combination of lectures, individualized instruction, and hands-on laboratory experience with a written and practical exam on the fourth day. The school has proven to be successful in preparing students to be a more knowledgeable egg emissary. Do not miss the opportunity to enhance your egg quality and safety knowledge.

Back in the 1930's, quality standards were developed to establish a common language for buying and selling eggs. There was a need for both industry and government to uniformly apply the quality standards. Egg Schools began to develop on a regional basis to meet that need as well as educate industry on maintaining egg quality and safety, understanding the nutritional benefits of eggs, the latest processing information, and other topical issues. Later, as the industry consolidated, these regional Egg Schools began to consolidate and in 1993 work began to establish a National Egg Quality School. Since 1994 the National Egg Quality School has trained more than 1860 students. Today, the staff leading the school come from Industry, State & Federal agencies, and Land Grant Universities. With a National School mandate, we have crisscrossed the United States for 30 years conducting this training in more than 16 states!

The school will have Anniversary memorabilia for attendees, so don’t hesitate to secure your spot in the 2024 National Egg Quality 30^th Anniversary School by registering today; Register - The National Egg Quality School (neqs.org) (Early enrollment deadline: April 1, 2024).

Paul H. Patterson, Director, National Egg Quality School

According to a February 29^th release by the Private Label Manufacturers Association (PMLA), products in their category rose 4.7 percent in dollar value to $236 billion in 2023 compared to the previous year.  The increase can be compared to a 3.4 percent rise for national brands.

Peggy Davies, president of the PLMA, stated, “One of every five food or non-food grocery products sold in the U.S. carries a retailer’s name or own brand.”  She added, “Most of all the store brands, continue to be well positioned providing offerings are “value-right” and with strong perceived value for money and quality in categories where shoppers are targeting cutbacks.”

Unit sales for private brands dropped 0.1 percent to $58.1 billion in 2023 compared to unit sales for national brands that fell by three percent to $222.9 billion.

Following the announcement that the FTC will oppose the intended merger of the Kroger Company and Albertsons Corporation, analysts have reviewed the impact of both the present situation with a merger of the companies.

Under the present Administration, there is doubt that the transaction will be completed.  It is possible that further restrictions could be placed on the parties in the form of additional divestment of stores above the 413 offered. The FTC may designate an alternative to C&S Wholesale Grocers as the purchaser of divested stores.  This is based on the experience with Haggen filing for bankruptcy in 2015 shortly after acquiring stores from the Albertsons, Safeway transaction. 

Should the merger not take place, Walmart would be the major beneficiary maintaining a 24 percent share of the grocery market in the U.S. through a chain of 4,700 stores.  The buying power of Walmart contributes to their ability to maintain low shelf prices for packaged food from manufacturers. Campbell Soup and ConAgra Brands are heavily committed to Walmart in an asymmetric relationship.  The fact that ten chains control 60 percent of the retail grocery market  suggests that smaller producers of dairy, eggs and produce are at a disadvantage in dealing with large retailers, especially with buyers of eggs able to take advantage of the industry benchmark price-discovery system.

From recent quarterly reports released by the major chains, it would appear that Kroger, despite its size, is impacted by the deep discounters and major large competitor.  Kroger posted a 0.6 percent drop in comparable same store sales in 2023 compared to a four percent rise attained by Walmart.

On balance, a merger between Albertsons and Kroger would be to the disadvantage of both large and small suppliers and would disfavor competitors Walmart, Ahold-Delhaize and Target in addition to the three wholesale clubs.  If the merger is not concluded, both competitors of the two companies and suppliers would benefit.

On February 24^th, Dollar General opened their 20,000^th store in Alice, TX.  In commemoration of the event, Dollar General donated $20,000 to support educational and tutoring programs divided between the Alicia Salians Public Library and the Boys and Girls Club of Alice.

Steve Deckard, Executive Vice President of Store Operations and Development for Dollar General stated, “we believe each store provides a positive impact on our hometowns through convenient access to affordable essentials, providing career growth opportunities for employees and benefits for local non-profits through the Dollar General Literacy Foundation”.

In 2022 EGG-NEWS reported on unsanitary conditions at a Little Rock, AR distribution center operated by Family Dollar a subsidiary of Dollar Tree Inc.  Inspection by state and FDA officers confirmed rodent infestation and contamination of FDA-regulated products including cosmetics, food, drugs and medical devices.  Family Dollar recently entered into a plea agreement with the Department of Justice accepting a fine amounting to $41.7 million.  The plea agreement also mandates that the holding company and its subsidiaries should meet robust corporate compliance and reporting requirements for a three-year period.

Acting Associate Attorney General Benjamin C. Micer stated, “When consumers go to a store they have the right to expect that food and drugs on the shelves have been kept in clean uncontaminated conditions.”  He added, “When companies violate their trust in the laws designed to keep consumers safe the public should rest assure that the Justice Department will hold companies accountable.”

The company admitted that the Little rock, AR. distribution center that shipped to more than 400 stores in six southern states, was aware of a rodent problem in 2020 and that by the beginning of 2021 products were held under unsanitary conditions. Notwithstanding the extent of the situation the Company continued to ship products until January 2022 when the facility was closed by the FDA.  Corrective action included fumigation of the distribution center and a recall of all products shipped after January 1^st, 2021 to 404 stores.

News reports indicated that 1,200 rat and mouse remains were collected after fumigation of the closed facility. The fine works out to approximately $35,000 per rodent!

Congress has agreed to a continuing resolution to fund the Departments of Veterans Affairs, Transportation, Agriculture, Energy and other agencies and will vote today to avert a Saturday March 2^nd shutdown of Federal Agencies.

Opinion within Congress varied from the urgent need to pass appropriations bills to favoring a shutdown over narrow issues. The text of appropriations bills must be in the hands of members of Congress 72 hours in advance of a vote hence the need for a continuing resolution.

A significant point of contention has been the funding of the USDA SNAP-WIC program for which $6.3 billion was included in the Senate bill.  The minority party in the House had requested $7 billion but the leadership placed a cap of $6 billion on the program.  A second obstacle was the requirement that the Veteran’s Administration report the names of patients who require assistance with management of their benefits to a background check system used to screen potential purchasers of weapons.

 The Speaker of the House, Rep. Mike Johnson (R-LA) presided over a contentious conference call on Friday February 23^rd while Congress was in recess.  If a government shutdown does occur, it is apparent that both parties will be blamed for the inconvenience and damage to the national economy. This prospect will hopefully engender compromise that would normally be expected. 

The continuing resolution is essentially kicking the can down the road for the third time after two previous iterations. The final passage of the series of appropriations bills will be based on mutual political expediency and not the wellbeing of the Nation and our citizens. This is no way to run a democracy. We deserve maturity and wisdom in our elected representatives that rises above middle-school intransigence and adherence to narrow and parochial considerations.

Federal Shutdown Averted?

With the imminent passage of the third in a series of continuing resolutions today it is apparent that a Federal shutdown on Saturday midnight will be averted.  There is a tentative agreement between the House and Senate to pass the required series of appropriations bills to maintain government services. 

Alltech has announced the appointment of Dr. Colm Moran as Chief Regulatory Officer.  Dr. Moran is a twenty-year veteran of Alltech and most recently served as Director of European Regulatory Affairs and chairman of the Alltech Crisis Management Team. 

Dr. Moran has twenty-three years of experience in the feed industry.  He earned his Bachelor’s degree in Biotechnology from the University of Wales and subsequently three master’s degrees in Food Biotechnology, Food Regulatory Affairs and in Brewing from universities in Scotland Ireland and England.  His Doctoral degree in Fermentation Microbiology was awarded by the University of Plymouth.  Dr. Moran serves on the board of directors of the International Feed Industry Federation. 

In commenting on the appointment, Dr. Mark Lyons, president and CEO of Alltech stated, “Our regulatory strategy is moving into new strength under Colm’s leadership.  This positions Alltech firmly at the leading edge in delivering innovation to our customers.”

According to press reports, a pigeon massacre was organized at the Quail Creek Sporting Ranch in Okeechobee, FL.  Pigeons were transported to the facility and were released from boxes using an ejection device to be shot. Not very sporting despite the name of the venue.

Apart from the wanton slaughter of birds that were not gathered for food, many of the abandoned carcasses containing lead shot will be consumed by scavenging raptors and mammals resulting in lead toxicity. Moving large numbers of pigeons from numerous states to a central location also adds to the risk of disseminating avian influenza.

According to reports of the swamp shootout event, there did not appear to be any hunting skill required and the activity could easily have been replaced with clay targets that are usually offered.

Appropriate complaints have been filed with the Florida Fishing and Wildlife Conservation Commission and the State Attorney General.

In a press release dated February 26^th, Elanco Animal Health (ELAN) reported on Q4 and FY 2023 ending December 31^st.  For the period, the company posted a loss of $141 million on revenue of $1,035 million with a diluted EPS of $(0.29). Although ELAN beat on the top line against Zack’s estimate of $999.7 million, EPS was far below the $0.10 anticipated.  For the corresponding Q4 FY2022, ELAN lost $55 million on sales of $985 million with a diluted EPS of $(0.1).  Comparing Q4 2023 with Q4 2022:

• Revenue increased by 5.1 percent
• Gross margin declined from 54.5 to 50.1 percent
• Operating margin declined from 13.6 to 11.0 percent

For FY 2023 the Company lost $(1,195 million) on sales of $4,417 million with a diluted EPS of $(2.50). During FY 2023 the Company incurred a charge of $1,042 million for goodwill impairment. Comparable figures for FY 2022 were a loss of $(78) million on sales of $4,411 million with a diluted EPS of $(0.16).

During FY 2023 sales to the livestock sector attained $2,271 million, representing 51.4 percent of total company sales. Sales to the poultry sector amounted to $$765 million. Sales of companion animal products attained $2,104 million or 47.6 percent of the Company total.

The Company recently announced the divestment of their aquaculture business to Merck Animal Health for $1,300 million in cash.

Guidance for FY 20234 included revenue of $4,450 to $4,540 million but with a net loss of $(62) to $(17) million.  EPS will range from $(0.12) to $(0.03).

In commenting on results, Jeff Simmons, CEO stated, Elanco ended 2023 with momentum, returning to constant currency revenue growth for the full year and delivering 5% growth in the fourth quarter, primarily driven by our farm animal business, innovation revenue and price growth," Simmons continued, "As we look at 2024, we expect our existing portfolio to deliver constant currency revenue growth of 1% to 3%, with both pet health and farm animal expected to contribute to growth. We remain encouraged by our three late-stage pipeline products under regulatory review that have a path toward approval in the first half of 2024 and would be additive to our topline expectations in the second half of the year. Continuing our efforts to improve efficiency, today we announced a strategic restructuring to continue the shift of our investments into more significant value creation areas. We are investing to enhance our launch efforts, prioritizing cash flow improvements and meaningfully reducing leverage, from both our improving free cash flow and the expected sale of our aqua business. We believe that the investments we are making in 2024 will provide the foundation to enable sustained revenue growth over the medium and long term."

This self-adulatory statement is at variance with the reality of continued losses and shareholder disaffection.

Ancora an investment group with three percent of the equity has proposed a slate of independent candidates to the 12-person Board to replace four retiring members. Ancora has characterized the current Board and CEO as “barriers to success”.

On December 31^st ELAN posted total assets of $14,362 million including goodwill and intangibles of $$9,588 million with long-term debt of $6,147 million. On February 29^th the market capitalization attained $7,850 million The Company has traded over the past 52-weeks in a range of $7.88 to $16.20 with a 50-day moving average of $15.42.

On a twelve-month trailing basis, operating margin was 1.6 percent and profit margin -27.9 percent.  The company achieved a return on assets of 1.4 percent and -18.2 percent on equity.

After meeting with Ancora following release of FY 2023 earnings, Elanco announced a program to enhance shareholder value. This will include a shift from livestock to higher-margin companion animal products, cancellation of 420 positions with layoffs and changes in representation and distribution to reduce costs.  

Supported by the Nonhuman Rights Project, the City Council of Ojai passed the “Right to Bodily Liberty for Elephants” Ordinance.  This is the first legal recognition of animals having the rights usually extended to humans. Accordingly, elephants cannot be confined within city limits.

For four decades, the Nonhuman Rights Project has championed the release of primates and more recently, elephants.  Consistently, courts have ruled against the nonprofit refusing to grant habeas corpus rights to animals. The organization maintains that the elephants in the Fresno zoo are held captive ‘against their will for the benefit of human captors” and should be released to a sanctuary. The City of Ojai Ordinance has yet to be challenged and could be ruled unconstitutional.

The success gained by the Nonhuman Rights Project in California was muted by the announcement of the February 15^th passing of Stephen Wise,

Founder of the organization in his 73^rd year. Wise, a lawyer by profession, graduated from Boston University Law School in 1976.  A turning point in his career was the influence of Animal Liberation by Peter Singer, an Australian philosopher.  This led to the establishment of the Nonhuman Rights Project in 1995.

Recognition of other than humans as possessing bodily autonomy whether for elephants or nonhuman primates would represent a slippery slope.  It could be considered that all livestock is held against their collective will. Granting habeas corpus for a wide range of animals including poultry with courts appointing guardians.  This has the potential of destroying livestock production as we know it.  This might be acceptable to vegan environmental extremists, but it certainly does not represent the inclinations and lifestyle of the majority of our population.

The FAST Act, AB1228 applying to Quick Service Restaurants (QSRs) takes effect on April 1^st, 2024.  Fast food chains with a designated number of stores will be required to pay workers a minimum wage of $20 per hour with further 3.5 percent annual increases through 2029. Conditions of employment and wage rates would be subject to the decisions of a nine-member Council with equal worker and employer representation.

Oxford Economics conducted a study that determined that restaurants would have to raise prices by 4 to 5 percent to cover wage increases and that 6,000 workers would lose their jobs with 360 restaurants closing.  Quick service restaurants are taking preemptive action by laying off workers, increasing mechanization and in some cases, ceasing operation. The McDonald’s Restaurant Owners Association estimated that wage increases would cost each of the franchises approximately $250,000 annually.  Pizza Hut has laid off 1,200 delivery drivers in anticipation of the higher wage rate.

Some economists believe that costs claimed by QSRs are overstated with a study prepared by Michael Reich, a Professor at UC Berkeley and affiliated with the Institute for Research on Labor and Employment maintains that restaurants could cover a 10 percent increase in wages with a 0.5 percent price increase.  Observers noted that many QSRs are already paying between $17 and $20 per hour based on the availability of workers and that AB1228 will not have a material effect on earnings.

Full service restaurants are not covered by the law but if wage rates increase for QSR workers, other categories of restaurants will have to pay more to compete for the available labor pool.

In an attempt to facilitate FTC approval of the proposed merger with Albertsons, Kroger  committed to reducing shelf prices among the combined stores by $500 million following completion of the $25 billion transaction.  The question arises as to whether this was window dressing to influence the FTC towards a positive outcome? In the event the offer was unsuccessful given the action by the Agency on February 26^th. Alternatively offering to reduce prices may have represented an exercise in predation to attract clientele following the merger with subsequent ratcheting up of prices. We have seen this movie before.

Kroger Company also offered to invest $1.3 billion in upgrades of Albertsons stores. Similar promises to cut prices and improve stores were made before acquisition of the Harris Teeter chain.  At the present time, Harris Teeter, regarded as an “upmarket” banner has prices considerably higher for the same items than local North Carolina competitors including Food Lion.

Before releasing their decision the FTC had time to review the merger and consulted with the two unions, state Attorneys General and other parties involved. This suggests that they will be able to defend their decision to block the transaction given the inevitability of a hearing before an Administrative Law Judge and subsequent prolonged litigation.

Kroger continues to promote the transaction that would increase the market share of the combined companies to compete with Walmart the leader in grocery retail and on-line sales. To support their position Kroger and Albertsons have established a joint website emphasizing the potential cost savings for consumers.

Irrespective of whether shoppers would have benefitted over the short term, the proposed merger had negative implications for suppliers, especially those west of the Mississippi.

According to the proposed FY 2025 Illinois budget, Governor J.B. Pritzker will eliminate the one-percent tax on groceries. He stated, “Removing the tax will be for the good of our state’s working families.”  He added, “It is one more regressive tax we don’t need.  It reduces inflation for families from four percent to three percent even if only puts a few hundred bucks back in families’ pockets.”  Illinois is among 13 states imposing a tax on grocery purchases.  State taxes range from a high of seven percent in Mississippi to 1.2 percent in Missouri.  With the exception of Hawaii at four percent, all states imposing a tax on groceries are regarded as “red states”.

The Illinois Policy Institute noted that 70 percent of respondents to a poll were in favor of eliminating the tax that is borne disproportionately by low-income families.

Studies are now in progress to evaluate the long-term effects of COVID infection in the U.S.  According to a report in the Centers for Disease Control and Prevention Morbidity and Mortality Weekly Report, the national prevalence of long-COVID is 6.4 percent of all adults ranging from 1.9 percent in the U.S. Virgin Islands to 10.6 percent in West Virginia.  Long-COVID at 30 days was 43 percent lower in respondents that were fully vaccinated before infection.  Symptoms of long-COVID were 58 percent less evident in vaccinated individuals at 90 days after infection.  This is considered noteworthy as 17.5 percent of respondents among 4,605 surveyed in the Michigan COVID-19 recovery surveillance study reported symptoms 90 days after infection.

Individuals affected by long-COVID demonstrated high levels of interferon gamma (IFN- γ) for up to 31 months after infection.  This protein usually declines shortly after recovery from COVID.

MRI scans of patients with long-COVID and neural abnormalities showed dysfunction of the blood-brain barrier.  These changes were absent in patients recovering from COVID without self-reported symptoms including “brain fog”.

It is well established that immunization against COVID protects against the consequences of acute infection.  It now is apparent that immunization protects against the adverse effects extending beyond 90-days post infection.

Food Safety, the house website of Marler Clark points to the abysmal record since 1906  of foodborne infection associated with Organic Pastures Dairy Company and its successor Raw Farm LLC.  The dairy has been implicated in twelve recalls resulting from outbreaks of a range STEC, Listeria and Campylobacter infections, acquired from raw milk and cheese produced using non-pasteurized milk.

The latest outbreak occurred in February 2024 involving ten diagnosed cases infected with STEC in four states.  Hospitalization rates attained 50 percent with complications including hemolytic uremic syndrome. Investigations are in progress by the Centers for Disease Control and Prevention applying interviews and whole genome sequencing.

Heavy precipitation has filled California reservoirs that are at 118 percent of their average levels for late winter.  Shasta Lake (47 miles²in surface extent) is at 87 percent capacity and Lake Oroville (25 miles²) is at 82 percent.

In addition, storms have increased snowfall on the Sierra Nevada with the snow pack now at 86 percent of normal up from 28 percent a few weeks previously.  The Department of Water Resources has increased its allocation of supplies to 15 percent of full allotment, up from 10 percent in December.  The State Water Project will reassess allocations through March.

The extent of refilling aquifers that have been depleted is however important for long-term function of wells. Many egg complexes rely on subterranean water for their flocks, in addition to evaporative cooling and processing.

Migratory waterfowl are now in their winter habitat in the Gulf states.  This cohort is evidently not responsible for sporadic outbreaks of HPAI recorded during recent weeks in Idaho, Massachusetts and West Virginia.  It is also accepted that the number of diagnosed backyard flocks is considerably lower than the actual incidence rate. 

The occurrence of diagnosed HPAI suggests that domestic resident birds in specific areas have become reservoirs and disseminators of the virus.  This is a situation of concern since it presumes outbreaks in commercial farms  outside of the seasonal periods of waterfowl migration as has emerged in turkey flocks in North Carolina and Missouri.

It would be appropriate for APHIS to conduct surveillance on a wide range of domestic birds to ascertain the current prevalence of infection and to further investigate the epidemiology of avian influenza.

China, is the world’s leading egg producer responsible for 40 percent of output. In 2022 the Nation produced 49 billion dozen from a flock of 3.3 billion hens but with a corresponding 180 eggs per hen on average. This denotes inefficiency on a national scale attributed to a combination of modern complexes achieving international standards compared to more primitive production systems with disproportionally lower yield.

The rise of supermarkets in urban areas and growing disposable income among affluent demographics has created a demand for specialty eggs.  Large egg producers including Hubei Shendan, Ovodan, Dalian Hanwei, Fujian and Guangyang and Tiancheng have initiated production of cage-free eggs involving large complexes equipped with aviaries and in-line grading installations.

Liu Wen, Marketing Director in China for Big Dutchman, stated, “Globally, the number of egg-laying hens raised in our cage-free system has increased from100 million in 2019 to over 160 million today.  This rapid transition towards cage-free production is evident worldwide and China is poised to become a significant market for these eggs.”  He added, “We will expedite the localization of most components, minimize costs and offer competitive pricing to cater for the growing interest in cage-free production.”

Lever China, a Shanghai based consultancy group is promoting cage-free production systems in response to consumer and corporate demand.  It is evident that China has more cage-free hens in production than the U.S. that has the advantage of a decade lead.

Interest in cage-free production in China is evidenced by a large delegation of producers who attended the 2024 IPPE to evaluate available equipment and to review production procedures.

Wendy’s announced on Tuesday 27^th that it is considering to follow the lead set by airlines and rideshare companies in adjusting menu prices according to demand, a policy referred to as “surge pricing”.  The strategy as presented was intended to even out customer flow across the meal periods.  Based on rideshare and airline experience, the strategy could, in theory, increase sales value and hence profits. If Wendy’s would have been the first restaurant to introduce dynamic pricing, and the approach were predictably rejected by consumers, the company would have suffer severe degradation of image benefitting competitors. Extensive social media criticism of the intention to introduce surge pricing led

Wendy’s to backtrack on Wednesday 28^th. The Company clarified the earlier statement falling back on the semantics of “dynamic” and “surge” pricing. The Company explained that installation of electronic menu boards would allow the prices to be adjusted down during off-peak periods and provide value. Now the Company has created a self-inflicted problem of credibility and effectively created an undesirable web persona.

If Wendy’s were to introduce any form of variable pricing, it would be advisable to select the market and carefully analyze results before embarking on an extensive application of the strategy.  The potential to lose customers to adjacent QSR chains is a real possibility and a loss in traffic could more than offset any incremental revenue from surge pricing

On February 15^th, Wendy’s Company reported results for the fourth quarter and Fiscal 2023 ending December 31^st, 2023.  For the full year, net income was $204 million on total revenue of $2,182 million with a diluted EPS of $0.97.  For the corresponding FY2022, Wendy’s earned $177 million on total revenue of $2,1096 million with a diluted EPS of $0.82.  The increase in revenue resulted from higher sales at company-operated restaurants and franchise royalty revenue and advertising contributions.  During 2024, Wendy’s invested $55 million in advertising breakfasts.  Thirty million dollars was used to increase the number of digital menu boards that would be necessary for the company to introduce some form of variable pricing.

For 2023, systemwide sales growth attained 6.1 percent with 5.1 percent in the U.S. and 14.1 percent in the International Segment.  Same restaurant sales growth in the U.S. was 3.7 percent.

Guidance for 2024 included systemwide sales growth of 5 to 6 percent and adjusted EBITDA of $535 to $545 million with an adjusted EPS of $0.98 to $1.02.

The Company reported increased digital sales and the opening of 250 new restaurants worldwide during the fourth quarter.

Press reports suggest that many ghost kitchens established during the COVID period have closed.  Despite unjustified projections of market demand in 2020, and some participation by QSRs, patronage has withered and consumers are taking advantage of home delivery, drive-thru and even in-person dining. 

In an attempt to remain viable, Nimbus Kitchen based in New York City is diversifying into catering for functions and events.

Secretary of Agriculture Tom Vilsack characterized his five-hour testimony before the House Agriculture Committee as a “wasted opportunity”.  The 2023 Farm Bill is mired in controversy in both Chambers of Congress.  Issues in contention include the magnitude of SNAP support and eligibility for the program.  The second conflict concerns farm assistance.  The current Administration wishes to divert support to small-scale farmers at the expense of larger operations that are the most productive contributing to the bulk of grains and oilseeds required for the domestic market and for export. There is also opposition from the right on climate-related expenditure.

What ever happened to compromise and deadlines?

Consumer Reports has issued a report purporting to show high levels of bisphenols and phthalates in wide variety of food products.  It is not a question of whether these chemicals compounds are present in prepared foods, but the reality is the level in relation to acute and clinical effects.

The compounds analyzed were in the low nanogram per serving range and it is questioned whether the quantum assayed could be correlated to possible clinical effects.  This said there is now no question that bisphenols and phthalates are potentially toxic with adverse effects on metabolism and neural development, following accumulation in tissues and organs.

The Consumer Reports findings should however be a warning that food scientists and manufacturers should do everything possible to restrict the levels the accumulation of potentially toxic compounds among consumers.  This will involve evaluation of packaging materials with specific reference to polymers used to coat paper and other packaging.

Authorities in India and Taiwan have reported outbreaks of H5N1 strain highly pathogenic avian influenza to the World Organization for Animal Health. 

The case in India involved at least two egg-producing farms in the Nellore region in Andhra Pradesh. In Taiwan, a small-scale commercial farm in Pingtung County was diagnosed with HPAI. 

Appropriate control measures have been implemented although with the high density of chickens in both locations, and also ducks in the case of Taiwan, deficiencies in biosecurity will most probably lead to additional cases. Early diagnosis relies on farmers alerting regulatory officials to clinical signs and mortality to initiate control measures.

The Iowa Department of Natural Resources requires adherence to regulations governing disposal of animal waste from Concentrated Animal Feeding Operations (CAFOs).  Approved plans are based on the need for soil nutrients and the possibility of runoff given the capacity of designated fields. Iowa operates a Nutrient Reduction Strategy that presumes pre-approval of plans to dispose of waste by soil application.

Given problems relating to compliance and implementation, situations have arisen such as the Supreme Beef situation in April 2023 in which conflicts arose between the Department of Natural Resources and operators of a CAFO.

Proposed Senate Bill 3152 would effectively “water down” current procedures relating to the assessment of suitability of agricultural land to receive waste and to allow CAFOs to operate under plans that have been rejected, pending an appeal. Given considerable opposition, the Bill intended to “water down” regulation of waste will have to be amended and will then be referred to the Senate for consideration.

It is noted that Iowa with 40 million hens representing 14 percent of the nation's total produces considerable quantities of manure over and above the contribution from hog farms and feed-lots. Collectively livestock waste adds nitrates and phosphorus to waterways, aquifers and ultimately drinking water supplied from wells and by municipalities.  Accordingly large egg-production complexes should consider installation of manure drying and processing installations that would reduce the necessity for application of waste to agricultural land.

Ahold-Delhaize, the multinational food retailer operating numerous banners in the U.S. including Food-Lion, Giant Food, Hannaford and Stop & Shop, recently published results for the 4^th quarter of Fiscal 2023.  U.S. sales attained $14,854 million, representing 60 percent of total group sales including the E.U.  During the most recent quarter U.S. operating income attained $470 million, 65 percent of group operating income.  Sales were down 1.5 percent from the corresponding 4th quarter of FY2022 and operating income was 46 percent lower. 

During the quarter, Ahold divested FreshDirect. During Q4 U.S. comparable sales were lower by 1.0 percent with online sales down 3.6 percent.

Deere and Co. is regarded as a bellwether of the agricultural sector.  In their report for the first quarter of Fiscal 2024 released on February 15^th, the company reported sales of $12,185 million, down 4 percent from the corresponding first quarter of Fiscal 2023.  Net earnings were 11 percent lower at $1,750 million and the company posted a diluted EPS of $6.23 compared to $6.55 for Q1 FY 2023.  The company projects lower revenue for FY 2024 in the range of $7,500 to $7,750 million.  Sales in USA and Canada will decline by between 10 and 15 percent with sales to large agricultural operations down 5 percent and corresponding reductions in the forestry and construction markets.  Demand in Eastern Europe will be affected by ongoing hostilities in Ukraine and economic conditions in other markets.  Reduced sales to small agricultural operations is evidence that many farmers are reluctant to assume additional debt at prevailing high interest rates and are delaying replacement of high-priced equipment.

Benson Hill (BHIL) has concluded the sale of the Creston, IA. soybean crushing plant for $72 million.  According to the CEO, Deanie Elsner, the company will concentrate on core activities including specialized soybean cultivars and an “expanded focus on animal feed markets”.

For the nine months of FY 2023 ending September 30^th, the company posted a net loss of $77.5 million on revenue of $356.8 million.  Over the past 52 weeks, the share price of BHIL has declined from $2.34 to $0.12.  On a trailing 12-month basis, operating margin was -21 percent and profit margin -28 percent.  The company has generated a return on assets of -13 percent and  -57 percent on equity. This suggest a downward spiral ending in acquisition or bankruptcy.

In a February 20^th release, Walmart Inc. (WMT) posted financial results for the 4^th quarter and Fiscal 2024 ending January 31^st 2024. All U.S. retailers, both brick-and-mortar and online are subject to the same pressures from increased costs for goods, transport and labor in a competitive environment with most consumer demographics and especially lower earners concerned over expenditure. As a multinational company, Walmart faces additional risks associated with currency fluctuation, geopolitical events and adverse policies by regulators in host-nations. Walmart serves as a bellwether for U.S retail combining groceries, clothing, electronics, drugs, toiletries and household necessities.

For the 4^th quarter of FY 2024 ending January 31^st 2024 net income was $5,494 million on net revenue of $173,388 million that beat consensus estimates yielding a profit margin of 3.2 percent.  Comparable figures for the 4^th quarter of fiscal 2023 ending January 31^st 2023, were  net income of $6,277 million on total revenue of $164,048 million with a profit margin of 3.8 percent. Diluted EPS declined from $2.32 for the 4^th quarter of FY 2023 to $2.03 for the most recent quarter.

Comparing the 4^th quarter of FY 2024 with the corresponding quarter of the previous year, revenue was up 5.7 percent; comparable store sales up 4.0 percent for the U.S.; gross margin rose from 22.1 percent to 23.3 percent; operating margin increased from 3.4 percent to 4.2 percent for the most recent quarter.

For FY 2024 net income was $15,511 million on net revenue of $648,124 million.  Comparable figures for FY 2023 were net income of $11,680 million on total revenue of $611,289 million. Diluted EPS increased to $5.74 in FY 2024 compared to $4.27 for FY 2023.

In commenting on Q4 results, in the Investor’s Call, Doug McMillon, CEO and president stated “We were strong in the U.S., Mexico, Canada, and India, where we had the best Big Billion Days ever, and we continued the strong performance in China with the start of Chinese New Year. Typically, we see some of our customer experience scores dip during the high-volume hours and days we experience during the holidays. During Q4, the Walmart U.S. team delivered three-year high customer scores in our stores for pickup and delivery from stores and for those orders that flow directly from our e-commerce fulfillment centers”.

McMillon concluded “I'm excited about the omnichannel net promoter score trends the team is driving. Across countries, we continue to see a customer that's resilient but looking for value. As always, we're working hard to deliver that for them, including through our rollbacks on food pricing in Walmart U.S. Those were up significantly in Q4 versus last year, following a big increase in Q3”.

Forward guidance for FY 2025 included:- A 3.0 to 4.0 percent increase in consolidated revenue; operating income over a range of 4.0 to 6.0 percent, and an adjusted EPS of $6.70 to $7.20 (pre-split). Capital expenditure will be equivalent to 3.2 percent of net sales.

For the 4^th quarter of FY 2024 segment results comprised:-

• Walmart US: Net sales of $117,600 million, up 3.4 percent over Q4 FY 2023. Operating income $5,100 million with strong gains in groceries and general merchandise. Comparable same-store sales were up 4.0 percent (excluding fuel). Transactions were up 4.3 percent but ticket was down 0.3 percent. Growth in E-commerce, was up 17 percent over the corresponding quarter of FY 2023. Inventory declined approximately 4.5 percent.
• International: Net sales of $32,400 million, up 17.6 percent. Operating income was $1,300 million. Growth in E-commerce, 44 percent over the corresponding quarter of FY 2023.
• Sam’s Club U.S.: Net sales of $21,900 million, up 2.0 percent excluding fuel. Operating income was $600 million. Comparable same-store sales were up 3.1 percent. Membership revenue grew 10.0 percent. Growth in E-commerce, increased 17 percent over the corresponding quarter of FY 2023, attributed to curbside pick-up service and delivery.

Walmart operates more than 10,500 stores worldwide of which 5,400 are in the U.S. including 600 Sam’s Club warehouses. Walmart trades under 46 banners in 19 nations and employs 2.1 million.

On January 31^st 2024, Walmart posted assets of $252,399 million including goodwill of $28,113 million. Long-term debt and lease obligations amounted to $54,784 million. The Company had an intraday market capitalization of $458,650 million on February 20^th. WMT trades with a forward P/E of 24.1 and has ranged over a 52-week period from $136.09 to $181.35 with a 50-day moving average of $160.95.  Twelve-month trailing operating margin was 3.9 percent and profit margin 2.6 percent.  Return on assets over the past twelve months was 7.3 percent with a return on equity 19.7 percent. At close of trading on February 19^th pre-release, WMT was priced at $170.39. On November 20^th WMT opened post-release at $179.97, up 5.6 percent.  

WMT will split three-for-one on February 23^rd.

A bill has been introduced into the Oklahoma Senate to provide financial support to producers to convert from gestation crates to group housing.  The Bill is sponsored by Senator George Young who evidently is responding to concerns by hog producers faced with pressure exerted by animal welfare groups.  Senate Bill 1325 would establish a $4 million fund to be administered by the Department of Commerce to provide grants to farmers to establish sow housing compliant with Proposition #12.

There is now adequate U.S. production of pork derived from group-housed sows to satisfy Proposition #12 and Question #3. Belatedly the hog industry has recognized the impact of both consumer and retailer concern over gestation crates and the groundswell for conversion.

It is interesting that the legislature of Oklahoma recognizes the need to provide financial support to farmers to transition from gestation crates.  There was no assistance requested by or offered to egg producers to comply with California Proposition #2 after 2008.  The transfer of approximately 100 million hens from conventional cages to alternative housing systems was financed entirely by producers without state or federal assistance.

Instacart has announced a seven percent reduction in employees representing 250 jobs.  Chief Operating Officer Asha Sharma will leave the company of March 1^st without a replacement.

CEO Fidji Simo stated, “Today we made the tough decision to part with approximately 250 of our talented team members, this will allow us to reshape the company and flatten the organization so we can focus on our most promising initiatives that we believe will transform our company and industry over the long term.” Projects that will receive attention include AI-powered smart carts, enhancing the retail media network and other rationalization initiatives.

For FY 2023 ending 31^st December, Maple Bear Inc. trading as Instacart posted a loss of $1,624 million on revenue of $3,042 million with a diluted EPS of $(12.43).  Comparative figures for FY 2022 were a net income of $97 million on revenue of $2,551 million with a diluted EPS of $0.96.  For the most recent fiscal year, gross margin was 74.9 percent, but operating margin was (70.4 percent) due mainly to an eye-watering research and development cost of $2,312 million representing 76 percent of revenue.  General administrative costs attained $803 million up from $339 million in FY 2022.

Maple Bear Inc. (CART) has traded over a 52 week range from $22.13 to $42.95.  On February 15^th the company had a market capitalization of $7,350 million and traded with a forward P/E of 105.3. On a trailing 12-month basis, profit margin was -53.3 percent and operating margin 5.7 percent.  The company has generated a return on assets of 32.0 percent and on equity -48.5 percent.  Nine percent of the equity is held by insiders and 53.3 percent by institutions.  Six percent of the float was short as of January 31^st, 2024.

Kentucky Senate Bill SB16 would prohibit flying drones over concentrated animal feeding operations (CAFOs) and food processing facilities, including meat and poultry packing plants.  In addition, the Bill would ban unauthorized photo and video equipment in the vicinity of agricultural operations and the distribution of recordings.

The Senate Bill is simply an extension of Ag Gag legislation that is generally ruled unconstitutional when challenged in federal courts.  Legislators in agricultural states are ever eager to frame and pass legislation that is subsequently ruled as unconstitutional.  State laws to ban intrusion and distribution of videos by animal rights organizations, while justifiable, appear unfortunately to be unenforceable.

Phil Weiser, Attorney General of Colorado has filed a lawsuit against Kroger and Albertsons alleging contravention of the Colorado State Antitrust Act.  At issue is an apparent “non-poach agreement” that was entered into after a 10-day strike by workers at King Soopers, a Kroger banner during January 2022.  Consumers were obliged to obtain pharmaceutical and other requirements from competitor, Safeway during the strike.  It is also alleged that the two companies agreed not to solicit pharmacy customers.  The State of Colorado is seeking $1 million in civil penalties as a result of the agreements that the state alleges harmed workers and “blatantly violated antitrust law”.

Attorney General Weiser is also suing to block the proposed merger between Kroger and Albertsons based on the reality that it would reduce competition and ultimately result in both inconvenience and higher prices for consumers.  Kroger operates 148 King Soopers and City Market stores in Colorado with Albertsons owning 105 Safeway and Albertsons stores.

There is considerable skepticism over the viability of the proposed spin-off of over 400 stores to C&S Wholesale Grocers. This is based on the debacle following divestment of 168 stores as a condition for the 2015 merger between Safeway and Albertsons. The acquirer, Haggen was overwhelmed and filed for bankruptcy within a year.  Albertsons then bought back the stores at a low price and many were closed.  Attorney General Wiser predicts that a similar situation will occur if C&S Wholesale Grocers that currently operates 23 stores finds itself responsible for 413 locations divested following the combination of Kroger and Albertsons.  Of the designated units, 50 Safeway and 2 Albertsons stores are located in Colorado.

In the event that the transaction is completed, and the combined company shuts either of the two banners in any small town, consumers would have no choice other than to drive considerable distances to a competing grocery chain.

Currently the Federal Trade Commission is evaluating the proposed merger but has delayed a ruling for many months while Kroger is actively planning the merger of the two companies in a $25 billion transaction.

Following a successful trial in 15 stores, SpartanNash will now extend the use of Tally Robots to 60 additional company stores.

Tom Swanson executive V-P for Corporate Retail stated, “Tally saves associates time in inventory tracking and gathering real-time data intelligence.”  He commented that the robots allow associates to spend more time on the floor serving guests and ensuring that produce is adequately stocked and is fresh.

Tally Robots using Simbe store-intelligence software, provide details on products on shelves to facilitate ordering, merchandising and fulfillment of E-commerce orders.

Dr. Brett Ramirez has been appointed Interim Director of the Egg Industry Center located on the campus of Iowa State University. Since April 2023, Dr. Ramirez has served as the Assistant Director assisting Dr. Richard Gates who sadly passed in November.

Dr. Ramirez holds appointments as an Associate Professor in the Department of Agricultural and Biosystems Engineering with research and extension responsibilities. His research relating to the egg industry includes livestock housing, ventilation, energy efficiency and environmental control.  He was a key collaborator in the review of the 2022 Environmental Protection Agency Draft Emissions Model.

Dr. Ramirez earned Bachelors’ and Masters’ degrees in agricultural and biological engineering from the University of Illinois and a Doctoral degree in agricultural engineering from Iowa State in 2017.  He received the 2021 Young Engineer of the Year award from the American Society of Agricultural and Biological Engineers.

In accepting the interim position, Dr. Ramirez stated, “My goal is to continue the great things that Dr. Rich Gates started and to add my unique style to accomplishing and furthering those goals.” He added, “I will strive to drive the EIC mission forward and ensure we achieve our goals supporting the Nation’s egg industry through evidence-based research.”

Based on the structure of the lincosamide class of antibiotics, a Harvard University team led by Dr. Andrew Myers has developed a synthetic antibiotic.  Cresomycin was synthesized using component-based technology that will allow more effective binding to bacterial ribosomes.  It is anticipated that the synthetic antibiotic will overcome the protective mechanism developed by bacteria by producing ribosomal RNA methyltransferase.

If clinical trials demonstrate the efficacy and safety of cresomycin, it will represent a new class of antibiotics effective against both Gram-positive and Gram-negative pathogens and especially against multidrug resistant strains of Staphylococcus, Escherichia and Pseudomonas. 

The Senate Business and Labor Committee of the Utah Legislature voted unanimously to advance Bill SB222 on February 14^th.  This would extend the date for housing hens as cage-free in the state to January 1^st 2030. Senator Mike McKell the sponsor stated, “We need to delay the implementation date”

The 2021 Act that mandated cage-free housing by 2025 was apparently accepted by both producers and consumers.  Utah farms are currently between 50 and 70 percent converted at considerable cost and could not be completely transitioned to alternative housing systems.  Significant issues that have emerged since passage of the 2021 measure include the status of eggs from both caged and alternative housing introduced from other states. 

If SB222 is approved by the Senate, the House of Representatives will have to enact similar legislation before adoption.  Since passage of California Proposition #2 in 2008 and the subsequent California Proposition #12, it is evident that the cage-free market is well supplied and that a large proportion of consumers who are unconcerned over welfare select the cheapest generic eggs to match their budgets. 

Perhaps with the passage of time, both economic realities and reason have prevailed and that now even states are reneging on their commitments in addition to retailers. Many on either side of the check-out counter recognize the implications of decisions that were made on the basis of emotion and sentiment without consideration of unintended consequences. The most important is the “Pacelle Tax” borne by consumers in California and similar states that mandate cage-free eggs to the detriment of many consumers who are deprived of choice.

According to an investigation by the School Nutrition Association, in 2023, Lincoln Public Schools referred 1,700 school lunch debts to Professional Choice Recovery, a collection agency.  Among the 20 largest districts in Nebraska, Kerney, Columbus and Scotts Bluff also use private collectors, according to a study conducted by Flatwater Free Press.  If parents are unable to pay the complete debt, judgement is obtained, substantial costs are added and the wages of parents are garnished.

Other school districts in Nebraska, including the largest in Omaha, do not refer debts to collection agencies.  Apart from the stress associated with dunning letters and phone calls, a judgement negatively impacts credit scores with far-reaching consequences.

As a result of the revelations, the Nebraska Legislature is considering a bill that would prevent school districts referring debts to commercial collection agencies. 

Kate Murphy, the Food Service Director for Kerney Public Schools, is apparently opposed to the proposed bill claiming that using collection agencies “Helps their meal programs stay afloat amid challenging economic circumstances and holds families responsible for the deficits they accrue”.  Murphy opined that “If the bill is passed, it will remove the incentive for parents to pay their kids’ lunch bill.”  Consistently the Lincoln Public Schools system has referred debts to collectors at a rate higher than any other school district in Nebraska.  More than a quarter of the 1,681 referrals were for debts under $50 with the public school system receiving 40 percent of the approximately 38 percent recovered from debtors. This 15 percent recovery is hardly sufficient to “keep the meal programs afloat”.

The clamor over attempts to recover overdue payments for school meals in Nebraska has played out concurrently with the December 2023 decision of Governor Pillen to refuse approximately $17 million in federal funding for summer supplementary food assistance.  This decision was reversed by the Governor during February after counseling by political advisors, strenuous opposition included a petition with 6,000 signatures and vigils outside his home.

EGG-NEWS is strongly in favor of free meals for K-12 students to provide necessary nutrition and to avoid “food shaming” of disadvantaged children. Extending school feeding programs should indirectly increase consumption of shell eggs and products.

In a February 7^th release, Costco Wholesale Corporation reported net sales of $22,100 million for January comprising five weeks ending February 4^th.  This was a 4.5 percent increase over the corresponding period in 2023 but with one less shopping day.

Over the five-week period, the comparable same store sales increase amounted to 1.6 percent for the U.S., 6.2 percent for Canada and 5.1 percent for other international warehouses, contributing to a total company increase of 2.7 percent.  E-commerce increased by 21 percent over the corresponding five-week period in 2023.

The 2024 Feed Mill Management Seminar will take place on March 7^th and 8^th at the Embassy Suites by Hilton Downtown in Nashville, TN.  The program will include an update on regulatory and FSMA aspects, an OSHA update, inventory management, transportation, energy saving and sustainability in feed production.

Additional information and registration can be obtained from the organizers by accessing <www.uspoultry.org>.

Along with a number of chicken producers and restaurants, Shake Shack has claimed that its chicken is “hormone-free”.

Label regulations imposed by USDA require an explanatory statement to the effect that administration of hormones to livestock for food production is disallowed.  It is a matter of fact that the use of stilboestrol implants was banned in the late 1940s.

The Shake Shack claim has been challenged by the Accountability Board and has called on Shake Shack to justify the claim that has apparently been condoned by both management and the Board of the Company.  In response, Shake Shack has amended a 2024 proxy statement to state, “No added hormones”.  This is a justifiable statement but is intended to create the impression that chicken served by Shake Shack is in some way superior or more healthy than chicken served by other chains.  This is clearly not the case since no U.S. raised chicken receives any “added hormones”.  The same can be said for the deceptive “cage-free” claim with respect to broilers and turkeys. This claim also implies that competitive brands of chicken might be raised in other than barns or in enclosures with access to pasture.

In a release dated February 13^th, Zoetis (ZTS) reported on results for the fourth quarter and FY 2023 ending December 31^st.  For FY 23023 revenue was in line with estimates but the Company was below consensus on EPS. Zoetis reported net income of $525 million on revenue of $2,213 million.  These values are compared with Q4 of FY 2022 with net earnings of $461 million on sales of $2,040 million.  Diluted EPS increased from $0.99 in Q4 of FY 2022 to $1.14 for the most recently completed quarter.

For Q4 2023 gross margin was 67.1 percent (68.0 percent Q4 2022); operating margin attained 24.3 percent (22.5 percent)

For FY 2023 the Company reported net income of $2,344 million on revenue of $8,544 million.  These values are compared with FY 2022 with net earnings of $2,114 million on sales of $8,080 million.  Diluted EPS increased from $4.09 in FY 2022 to $5.07 for FY 2023.

In reviewing product segments, Q4 2023 total revenue from companion animal products amounted to $1,448 million (65.4 per cent of Company sales) compared to revenue from livestock products amounting to $745 million (33.7 percent).  The remainder was derived from other products and services. 

Domestic U.S. sales of livestock products at $270 represented 22.2 percent of livestock revenue of $1,211 million, up 4.2 percent from Q4 2022.  International sales of livestock products represented 48.3 percent of non-U.S. Company revenue of $982 up 5.3 percent from Q4 2022.  Poultry products at $127 million represented 17.0 percent of livestock sales of $745, an increase of 10.4 percent from Q4 2022 and comprising 5.7 percent of total sales.

In commenting on Q2 results, Kristin Peck, CEO stated, " Zoetis delivered another strong performance in 2023 thanks to our diverse portfolio across markets and species and our dedicated colleagues,” She added “We grew revenue 7 percent operationally, driven by our innovative companion animal franchises across pain, dermatology and parasiticides. We also grew our adjusted net income 7 percent operationally, while continuing to support investments in R&D, supply chain, and commercial excellence capabilities that will drive our next phase of growth.”

Ms. Peck concluded “We are well-positioned for growth in our other key franchises, including dermatology, parasiticides and diagnostics, and will continue to invest in solutions that will shape and expand the future of animal health. We are committed to continuing our track record of innovation and growing faster than the market, even during times of global uncertainty, and are guiding to full-year operational growth of 7 to 9 percent in revenue in 2024,”

Zoetis posted guidance for fiscal 2024 including revenue ranging from $9,075 to $9,225 million, net income from $2,468 to $2,513 million and diluted EPS ranging from $5.34 to $5.44.

The Company posted total assets of $14,286 million on December 31^st 2023 of which $4,097 million represented goodwill and intangibles against long-term debt of $6,989 million. Market capitalization was $86,260 million on February 16^th. Zoetis has traded over the past 52-weeks in a range of  $151.03 to $190.33 with a 50-day moving average of $192.60. The Company achieved a trailing twelve-month operating margin of 32.1 percent and a profit margin of 27.4 percent. The return on assets attained 13.2 percent and 49.8 percent on equity.

In a February 13^th release, Restaurant Brands International Inc. (QSR) posted financial results for the 4^th quarter and fiscal 2023. Along with other QSRs and casual dining competitors, the Company and its franchisees among five operating divisions are subject to the pressures of increased costs for food, packaging and labor in a competitive environment restrained by inflation that is impacting discretionary spending by consumers.  The newly formed International Division faces geopolitical headwinds and the challenges of currency fluctuation.

For the 4^th Quarter of FY 2023 ending December 31^st 2023 the Company attained revenue consistent with consensus estimates but beat on EPS.  Net income was $726 million on total revenue of $1,820 million.  Comparable figures for the 4^th quarter of FY 2022 were net income of $336 million on total revenue of $1,689 million. Diluted EPS attained $1.60 for the most recent quarter compared to $0.74 for the corresponding quarter of FY 2022.

For the FY 2023 ending December 31^st 2023 the Company posted net income of $1,718 million on total revenue of $7,022 million. Comparable figures for FY 2022 were net income of $1,482 million on total revenue of $6,505 million. Diluted EPS attained $3.76 for FY 2023 compared to $3.25 for FY 2022.

For the 4^th quarter, system-wide sales increased by 9.6 percent compared to 11.4 percent for Q4 of FY 2022.

Comparing Q4 of FY 2023 with 2022, revenue increased by 7.8 percent and operating margin increased from 20.5 percent in Q4 2022 to 25.7 percent for the most recent quarter.

Segment results comprised:-

Tim Horton’s: Sales, $1,849 million; adjusted operating income (AOI), $231 million; Comparable store sales increase, 8.4 percent with 4,525 stores

Burger King: Sales $2,903 million; AOI, $69 million; Comparable store sales increase 6.3 percent with 7,144 stores

Popeye’s LA Kitchen: Sales,  $1,503 million; AOI, $56 million; Comparable store sales increase, 5.5 percent with 3,394 stores

Firehouse Subs: Sales, $298 million; AOI, $8 million; Comparable store sales increase, 3.5 percent with 1,265 stores.

International: Sales, $4,332 million; AOI, $145 million; Comparable store sales increase, 4.6 percent with 14,742 stores

Josh Kobza , CEO of RBI commented. "We are delivering better experiences for our guests, better profitability for our franchisees and are making the right long-term investments behind the growth of our brands. We have started 2024 with a foundation of strong operational performance and I'm thankful to all our teams, franchisees and their team members who work so hard to make us successful."

On December 31^st 2023, QSR posted assets of $23,391 million of which $16,882 million comprised goodwill, lease obligations and intangibles against long-term debt and leases of $15,221 million. The Company had an intraday market capitalization of $24,160 million on February 16^th. QSR trades with a forward P/E of 16.5 and has ranged over a 52-week period from $59.99 to $79.94 with a 50-day moving average of $76.50.  Twelve-month trailing operating margin was 27.0 percent and profit margin 17.0 percent.  Return on assets over the trailing twelve months was 5.8 percent and the return on equity 38.2 percent.

In October 2023, EGG-NEWS reported that Puris Inc. a domestic processor of pea protein had filed a petition with the U.S. Department of Commerce requesting protection against dumping by China.  The U.S. imported 144,000 tons of pea protein from China in 2022 valued at $270 million.

After investigation, the allegations by Puris were confirmed and the U.S. has imposed a tariff of 270 percent on pea protein from China that places domestic processors at a competitive disadvantage and resulted in closing of some plants.

Higher prices for pea protein will affect manufacturers of plant-based meat substitutes adversely but will benefit existing manufacturers. A level playing field for pea protein will encourage additional production capacity from major producers including Cargill to supply additional volume with Dreyfus planning a new facility in Canada.

Kroger has initiated a publicity campaign to sway regulatory approval for the proposed merger with Albertsons.  Statements by Chairman and CEO Rodney McMullen emphasize “investment” through reducing prices.

Kroger points to the “investment” of $125 million to reduce prices at Harris-Teeter, their up-market regional supermarket acquisition in 2014 that also included an additional $2.5 million actually invested in upgrades.  In point of fact, Harris Teeter operated with a Whole Foods Market price image. Kroger substituted specialty items applied their buying power to reduce the price of products sold in order to enhance revenue.

As a justification for the proposed merger with Albertsons, Kroger has indicated that it will “invest” $500 million to reduce prices.  By this commitment does Kroger intend to take a lower gross margin?  The company neglects to provide details of how customers and also suppliers would benefit from this intended $500 million “investment”.  For the first nine months of FY2023, Kroger posted a gross margin of 22 percent and an operating margin of 1.6 percent over all their banners.  Reducing gross margin may have a decidedly negative impact on operating margin and net margin. The transaction can only be beneficial to earnings over the intermediate term by reducing administrative and store headcount, applying pressure on suppliers and to exploit their dominant geographic market position to increase gross margin.

Currently transit through the Suez Canal is severely restricted as a result of hostilities around the Bab al-Mandab Strait and the severe drought reducing the rate of passage through the Panama Canal.

According to a Bank of America, Global Research Report the duration of restraint to passage will impact U.S. food producers and exporters.  Tyson Foods Inc., Hormel Foods and Pilgrim’s Pride among others will experience difficulties and increased costs to ship to markets in Asia.  Producers in Latin America including JBS and Minerva will also be impacted.

Supply chains have been disrupted by events in the Red Sea requiring diversion of vessels out and in-bound from Europe to Asia to pass around the Cape of Good Hope. This adds up to 20 days to a Europe-Asia voyage and incurs an incremental freight cost of upwards of $1 million for a large container vessel or bulk Pthe rate anamax carrier.

It is anticipated that the financial impact of disruption in shipping will become apparent in the results of companies during the first quarter of calendar 2024. Shipping experts are suggesting that the problems in both canals will not be resolved before midyear.

It is evident that Trader Joe’s is in conflict with unions that have been formed by workers.  EGG-NEWS reported previously that a Federal court in California ruled that the logo used by the Trader Joe’s union was permissible.  This is despite the contention by Trader Joe’s that use of the logo, incorporating components of the Company logo on tote bags and clothing, would confuse customers.

Instead of accepting the ruling and effectively letting sleeping dogs lie, Trader Joe’s is now appealing the decision. This is despite the comments by Judge Hernan Vera that the lawsuit filed in mid-2023 was “frivolous and improper”.

Even if Trader Joe’s is successful in an appeal, it is questioned whether the pyrrhic victory would be worth the legal costs and the negative sentiment engendered among their workforce and inevitable disaffection by consumers who sympathize with unions.

The annual meeting of the AAAP, to be held in St. Louis, MO. July 9^th through July 11^th, 2024, will feature two keynote speakers:

• Dr. Marc de Beer of Aviagen will discuss “Future perspectives for the global poultry industry”.  He will consider emerging technologies, challenges facing the industry and sustainability.
• 
  
  Dr. Holly Sellers will deliver the Lasher-Eckroade History Lecture dealing with avian reovirus infections. Dr. Sellers will discuss vaccination against tenosynovitis and arthritis and the evolution of new vaccines that will be effective against emerging variants.

Big Dutchman’s tradition of innovation spoke loudly at the International Production & Processing Expo (IPPE) show last week. The global leader had several new products on display, including the global launching of its newest true aviary product, NATURA® Visio. Big Dutchman’s patent-pending creation turned heads throughout the show for its inventive design characteristics.

The NATURA® Visio features a low profile for greater visibility and friendlier worker interaction. It includes proven concepts in cage-free equipment design, like Big Dutchman’s step concept for easier vertical bird movement and its efficient, true nest system which is highly accepted by hens. However, what sparked the visitor’s interest the most was NATURA® Visio’s patent-pending features, which include its unique double egg belt arrangement and how they interact with the nest and adjacent areas. Amongst other advantages, this allows for every egg laid in the system to roll onto one of the two belts without going through the nest, likely to be occupied by hens.

 The picture above shows NATURA® Visio’s ingenious double egg belts which run along the edges of the nest. Both tiers feature nests, drinkers, and feeders, distributed in a clean layout that does not create corners and shadows, which encourage non-nest laying and are typically seen in lower-grade products.

Rumpke Waste and Recycling has formed an alliance with Eastman Chemicals to recycle PET waste at their Kingsport, TN plant.  Rumpke will commence collecting opaque and colored PET packaging and containers in mid-2024 for recycling.  Eastman will convert “hard-to-recycle” PET into virgin quality polyester using the methanolysis process in a plant capable of recycling 110,000 metric tons annually.

Brad Lich, Executive Vice President and Chief Commercial Officer for Eastman, noted, “Rumpke and Eastman are both committed to innovative approaches to reducing plastic waste through collaboration.”  He added, “This partnership reinforces the complementary nature of molecular and mechanical recycling to keep more raw material in the circular economy enabling brands to meet their recycled content goals.”

Almost ten years ago, California passed a ban on single-use plastic grocery bags.  At the time, it was estimated that plastic waste from discarded bags added 160,000 tons of waste to the state total.  Despite legislation and attempts at providing alternatives, grocery bags now add 230,000 metric tons to the waste stream.

Part of the problem has been the widespread availability of alternative high-density polyethylene bags that are not recycled but are discarded, according to CALPIRGA, an environmental advocacy organization.

California Proposition #67 in 2016 failed to eliminate the previous law SB270 law enacted in 2014.  Accordingly, the Legislature is now considering alternatives to high-density polyethylene bags, but this will require a radical change in consumer attitudes regarding use and recycling. 

California SB54, enacted in 2022, is intended to phase out single-use plastic through the principle of Extended Producer Responsibility. This places the onus for recycling on manufacturers rather than municipalities.  By January 1^st, 2028, 30 percent of all plastic items sold in California will have to be recyclable rising to 65 percent in 2032 with a short-term goal of 25 percent for expanded polystyrene by the end of 2025.

According to Reuters, the U.S. Attorney’s Office for the Southern District of New York has initiated an investigation of accounting practices at ADM. CFO Vikram Luthar was placed on administrative leave and was replaced by Ismael Roig as the Interim CFO on January 21^st.  Luthar was previously responsible for the Nutrition Segment that appears to be the focus of investigations.

 On January 22^nd ADM closed at $68.41 but opened the following day at $53.79 following announcement of possible accounting irregularities and continues to languish at this level. ADM currently trades with a Zack’s rating of #5 corresponding to a “Strong Sell”

The focus of the investigation relates to transfer price of commodities to the nutrition business.  The Nutrition Segment produces plant-based protein, flavors, food additives, animal and pet food ingredients. The apparent problem may relate to a 2020 change in executive compensation based on operating profit of each of the Company segments.

According to the most recent Company 10-Q filing for the Quarter ended September 30^th. 2023, ADM earned $821 million on revenue of $221,695 million with a diluted EPS of $1.52. The Nutrition Segment posted revenue of $1,784 million or 8.2 percent of revenue generated by the Company for the quarter.

ADM has delayed bonuses for some senior executives until the problem is resolved, including an audit of source documents used to generate financial statements.

Gary Millerchip is leaving Kroger where he served as Senior Vice-president and CFO to assume a corresponding role at Costco Wholesale. 

In announcing his new position, Millerchip stated, “I’m proud of all we have accomplished at Kroger and I have made the decision to transition into a new chapter in my career.”  He added, “Kroger is well positioned for the future and I wish the team continued success.”

Millerchip will succeed Richard Galanti who is retiring but will continue in an advisory role through to the end of 2024.

Costco CEO Ron Vachris paying tribute to Galanti stated, “Over his 40-year tenure as CFO Richard has made innumerable and invaluable contribution to the success of the company.”

At Kroger, Todd Foley Group president and Chief Accounting Officer was named interim CFO pending selection of a permanent replacement.

Rodney McMullen of CEO of Kroger noted, “Todd is a proven leader who has served in key finance roles and has contributed meaningfully to Kroger’s growth and transformation for over 20 years. Foley joined Kroger in 2001 and has served in positions of increasing responsibility serving as a Group Vice-president, Corporate Controller and Chief Acounting Officer.  He was involved in the Leading with Fresh and the Accelerating with Digital Strategies.

The U.S. District Court of Arizona has overturned the 2020 re-approval of Dicamba by the Environmental Protection Agency.  Originally licensed in 2017, the product has been responsible for damage to a wide range of crops including soybeans on fields close to treated fields. Additional restrictions on application and reformulation to avoid drift were generally unsuccessful in preventing collateral destruction of vulnerable non-GM crops.

The Court in Arizona was critical of the EPA in allowing the 2020 re-registration citing the failure of the Agency to take into account data provided by independent researchers who documented the problem of drift. EPA did not ascertain that reformulation was ineffective and failed to conduct an appropriate risk analysis as required.

The situation was characterized by Nathan Donley, Environmental Health Science Director at the Center for Biologic Diversity who stated, “Endangered butterflies and bee populations will keep tanking if the EPA keeps twisting itself into a pretzel to approve this product just to appease the pesticide industry.”

The Court also took into account the fact that numerous stakeholders including farmers were deprived of the opportunity to comment on their financial losses attributed to damage caused by inadvertent exposure of crops to Dicamba. The USDA estimated that 15 million acres of susceptible soybeans among the acreage of other fruit, grain and vegetable crops were seriously damaged by the herbicide.

In response to the Court ruling the American Soybean Association (ASA) addressed a letter to EPA Administrator Michael Regan requesting that he appeal the decision. It is estimated that 37 million acres will be planted to soybeans compatible with Dicamba in 2024 representing 45 percent of the crop. Dicamba is an effective herbicide used to control weeds including palmer amaranth that may be resistant to glyphosate. The ASA also is requesting an exemption to apply existing stocks of “low volatility” formulations of Dicamba 

McDonald's Corporation has revealed that lower-income customers are reducing their consumption of purchases from QSRs. According to the January Consumer Price Index report, food at home rose 1.3 percent in 2023 compared to dining out at 5.2 percent.  McDonald’s CEO, Chris Kempczinski commented on the problem of “affordability” in an Investors’ call, indicating a future change in menus and pricing.

Middle- and high-income demographics are apparently not deterred by rising prices but potential customers earning less than $50,000 per year are opting for lower priced menus or eating at home.  It is evident that QSRs will have to reduce prices of some menu items and reintroduce value meals and individual items ranging from $1 to $3 per serving.

The Centers for Disease Control and Prevention has conducted investigations into outbreaks of listeriosis extending from 2014 onwards.  Epidemiologic studies in 2017 and 2021 identified Queso Fresco and other cheeses as the vehicles of infection but the source was not identified.  Intensive investigations were initiated in January 2024 after recent outbreaks the preceding month.  Based on interviews, the Don Francisco brand was implicated, and the outbreak strain was identified in the plant operated by Rizo-Lopez Foods.

Whole genome sequencing assay demonstrated commonality among samples of Listeria monocytogenes isolated from patients and recovered from the plant.  Health authorities in Hawaii isolated the same Listeria from patients and cheese produced by Rizo-Lopez Foods during January.

On February 6^th, 2024, Rizo-Lopez Foods recalled all cheese and other dairy products and has ceased production pending further investigations and decontamination of their plant and equipment.

Bill Northey Secretary of Agriculture for the State of Iowa from 2007 to 2018 passed suddenly at the age of 64.  He was the Undersecretary for Farm Production and Conservation under USDA Secretary Dr. Sonny Perdue from 2019 to 2021. 

He was celebrated as a “tireless advocate for agriculture and a beloved leader” by the entire Agribusiness Association of Iowa staff where he served as CEO.  He characterized his tenure as Iowa Secretary of Agriculture as “a job of a lifetime, serving as an advocate for Iowa and U.S. farmers and rural America.”

Bill was born and raised in Dickinson County. He earned a Baccalaureate degree in 1981 from Iowa State University followed by a Master’s degree from Southwest Minnesota State University. He farmed in Spirit Lake and was active in agricultural associations including the Iowa Corn Growers and Farm Bureau Federation.

Condolences are extended to his Widow three children and six grandchildren.

McDonald's Corporation announced that it now sources eggs only from cage-free flocks.  This is consistent with a commitment made in 2015 with an intended transition over a ten-year period.  According to industry sources, Cargill is the major supplier of egg products to the QSR chain that serves two billion eggs each year.  This represents the output of 6.8 million hens applying standard production perimeters.

The transition from conventional cages has required conversion of cage-free facilities to alternative housing including aviaries and barns involving capital expenditure by producers.  It is understood that Cargill provided financing and long-term contracts to facilitate the transition.

The additional cost for welfare has evidently been passed on to McDonald’s customers. In the recent investors’ call following release of FY 2023 financials, Chris Kempczinski, the CEO commented on the high cost of menu items was deterring purchase of meals by their low-income demographic in favor of home preparation and consumption of food. The connection is self- evident and should serve as a caution to decision makers in the food industry against responding to coercion by animal rights organizations that are adept at spending other peoples money.

On February 8^th, USDA Secretary Tom Vilsack conveyed the concern of his Agency to the governors of 47 states relating to deficiencies in implementation of the Supplemental Nutrition Assistance Program (SNAP).  Although SNAP is funds are derived from the USDA budget as authorized by Congress in the Farm Bill, states have the responsibility for distributing benefits.

Secretary Vilsack stated, “SNAP serves as our nation’s foundational safety net, a crucial resource for the well-being of low-income families, older adults and individuals with disabilities.  Timely and accurate SNAP processing is critical to meeting the needs of low-income families and protecting the integrity of SNAP.”

USDA is urging states to “streamline and simplify processes, to reduce paperwork and extend certification periods for households”. Currently, the Food and Nutrition Service of the USDA is taking action to assist states to ensure that recipients receive benefits.  Activities will include on-site visits, training, providing guidance and developing innovative strategies to ensure that states attain benchmarks.  The USDA will contract with national payroll data providers to facilitate verification of applicants and recertification.

It is possible that some states fail to achieve acceptable standards in the administration of the SNAP program due to understaffing or lack of competence.  Accordingly, the USDA is making available $5 million in grants to enhance efficiency and training.  It is also possible that the governments of some states are philosophically opposed to SNAP considered as “welfare” or are failing in their obligations due to political considerations as differences are evident among states More recently some states have opted out of implementing school feeding programs funded by the federal government but requiring state participation.

An outbreak involving 10,000 chickens, unspecified as to type, was confirmed in Jeollanam-Do a costal province located on the southern tip of South Korea. The January 25^th 2024 outbreak was reported subsequently to the WOAH on February 5^th.

One month previously, H5N6 HPAI was isolated from a migratory waterfowl (Northern Shoveler in Cheju-Do). 

While most previous cases of HPAI have yielded H5N1, it is possible that H5N6 may become significant in the epidemiology of highly pathogenic avian influenza in southeast Asia.

Alexis Taylor, Undersecretary of the USDA for Trade and Foreign Agricultural Affairs and Ambassador Douglas McKalip, Chief Agricultural Negotiator participated in a trade-focused program attended by over 500 at the 2024 IPPE.

McKalip addressed the successful negotiations that reduced twelve tariffs and eliminated barriers to access in 31 markets following initiation of trade promotion.

The U.S. exported animal feed, ingredients and pet food to the value of $7.5 billion in 2022.  In 2022, beef exports attained $11.6 billion, pork $7.6 billion and poultry and eggs combined $6.2 billion, despite barriers and protectionism.

During a political rally in South Carolina, the President claimed that despite a decline in inflation, the cost of grocery items is still too high, claiming “price gouging is going to stop”.

Whether valid or not, the President in his campaign for reelection must dispel the notion that the economy has not improved despite considerable economic data that demonstrates progress in reducing inflation and increased productivity and wages.  Comments such as “ripping people off, price gouging, junk fees, greedflation, shrinkflation” are pure political rhetoric. The claims of excessive margins are not supported by the relatively low gross and operating margins posted by pure-play grocery chains. For the 9-months of FY 2023 Kroger posted a gross margin of 22 percent and an operating margin of 1.6 percent.

The current policies of the Administration suggest that the FTC will disfavor the proposed merger between The Kroger Company and Albertsons.  Even if the Agency allows the transaction, it will in all probability impose extreme penalties on the parties and require divestiture of more than 400 stores and may designate a more eligible and substantial acquirer than the company selected.

Competition may play a role in grocery prices given the differences in the rate of inflation as measured by Consumer Affairs.  As of December 2023, consumers in Pennsylvania faced an 8.2 percent rise in grocery prices compared to Colorado at 2.9 percent with extreme variation among cities within states.

As part of the transaction involving acquisition of Southeastern Grocers Inc. by Aldi, the Fresco y Mas banner has been divested.  Southeastern Grocers continues to operate Harvey’s Supermarket and Winn-Dixie stores until closure when these locations will be incorporated into the Aldi portfolio.

It is possible that most of the stores will be converted to the Aldi name and format when the transaction is completed in mid-2024.

Jason Hart CEO of Aldi, quoted by Supermarket News stated, “Aldi has a strong track record of opening and remodeling stores across the country each year so we are confident that we can make this a smooth transition”.

CTB Inc has announced the appointment of David Jackson as Customer Fulfillment Representative for Chore-Time.  In his new position, Jackson will concentrate on customer interactions, filling orders and processing contracts.

Jackson is a 17-year veteran of CTB that who has coordinated transport and material handling.  Jackson served in the U.S. Marine Corps for eight years in amphibious assault and other assignments.  He is a graduate of Goshen College, IN. earning a bachelor’s degree in organizational leadership.

The possibility that H10 strains of avian influenza have zoonotic potential is under review by public health authorities.  Both human-derived and chicken isolates have a high affinity for sialic acid-alpha-2,6-galactose receptors.  It is possible that some chicken-derived strains of H10 virus may infect human contacts without necessarily undergoing mutation.  The hemagglutinin and neuraminidase genes of H10N3 are common to viruses with a Eurasian lineage.

H10N4 avian influenza virus was responsible for a clinical outbreak in mink in Sweden in 1985.  H10N7 cases occurred among human contacts of chickens during 2004 in Egypt and in 2012 among workers in a processing plant in Australia.

The WHO and the WOAH through a network of international reference laboratories are characterizing influenza viruses isolated from both avian and mammalian species to monitor for changes in that may suggest zoonotic potential in advance of a pandemic.

Tom Hensley president of Fieldale Farms was named as the 2024 USPOULTRY Workhorse of the Year.  This prestigious honor is awarded annually in recognition of dedicated service and leadership extended to the association and the poultry industry.

Jarod Morrison outgoing Chair of USPOULTRY stated, “It is truly an honor to bestow this prestigious award on Tom for his long-time service to both the U.S. poultry and egg industry and to USPOULTRY.  His contributions to the Association and the Foundation have help the organization to prosper and grow through his guidance and input.”

Hensley has been active in USPOULTRY serving as Chair of the Board of Directors in 2018 and of the Foundation in 2019.  He has served on the Board for 13 years.

Nath Morris president of USPOULTRY stated, “Tom’s commitment to service and giving to others has greatly aided USPOULTRY and the Foundation.”

The U.S. Poultry and Egg Association (USPOULTRY) elected officers for the 2024-2025 term during the recent IPPE.

• Mikell Fries of Claxton Poultry Farms was elected Chair of the Board of Directors

• Jonathan Cade of Hy-Line International was named Vice-chair.

• Bill Griffith of Pekoe Foods Inc. was named Treasurer.

• Dr. Alice Johnson of Butterball, LLC was elected Secretary.  She was previously president and CEO of the National Turkey Federation.

• Jarod Morrison CFO Farbest Foods will serve as the immediate past chair.

During the past week, MPS Farms lost two houses in their Feather Crest complex in Brazos County, TX. in addition to one house on a Daybreak Foods complex in Palo Alto County, IA.  These losses add to the ever-growing litany of fires mostly associated with electrical malfunction.

According to Brett Cohrs, Senior Vice president of Palomar Insurance, rates are rising rapidly.  This is due in part to the recognition that chicken houses are associated with a high risk of fire.  In addition, the replacement cost of houses is advancing faster than inflation.  Individual houses are now larger with capacities for multilevel aviary units in excess of 200,000 hens.  Causes of fires include:

• Under-code wiring in many older houses

• Construction using timber and other flammable materials.

• Improper maintenance of electrical equipment

• Defective alarm systems

• Lack of contingency plans in the event of a fire including an available supply of water

• Improper storage of manure that can result in spontaneous combustion.

• Building multi-level high-capacity houses on the foundations of older high-rise units resulting in close proximity of buildings. This creates a greater risk of inter-house spread of fire on a complex.

In response to the increased incidence of fires with serious financial losses, Prism Controls has developed the ThERM fire detection and suppression system.  In the event of a fire, sensors detect the presence of smoke particles and an increase in temperature. The main electrical panel and all fans are inactivated to suppress extension of fire from the source. Alarms are automatically sent to designated managers and first responders.

It is evident that apart from increasing premiums and higher deductibles, it may be difficult or even impossible to obtain fire insurance for companies with a history of loss or for specific types of houses. Replacement of a conventional cage house will be $30 per hen and for a multilevel aviary unit capital cost may be upwards of $45 per hen

The 2024 recipients of the Lamplighter Award were announced during the IPPE.  They are:

• Mike Giles, president of the Georgia Poultry Federation since 2009

• Sherman Miller, president and CEO of Cal-Maine Foods.  He has served this company since 1996 in positions of increasing responsibility.  Sherman has devoted considerable time to the industry including the United Egg Producers, USPOULTRY, Mississippi State University and others.

• Dr. Ken Opengart, Vice president for Animal Welfare and International Sustainability for Tyson Foods.  He was previously Vice-president of Global Sustainability and Animal Welfare for Keystone Foods.  He has gained experience with Eli Lilly, Elanco Animal Health and Seaboard Farms.

• Dr. David Swayne recently retired as Director of the USDA-ARS Southeast Poultry Research Laboratory.  He is a world leader in the pathobiology of avian diseases with a concentration on avian influenza and with a comprehensive publication record.  He serves on the steering committee of OFFLU, the FAO Animal Influenza Network.

• Barbara Jenkins serves as Vice-president of educational programs since 2011 and an executive director of the USPOULTRY Foundation since 2018.  She joined USPOULTRY in 2000.

The U.S. poultry industry has benefitted materially from the contribution of these recipients of the Lamplighter Award

In a February 6^th release, Chipotle Mexican Grill (CMG) reported on the 4^th quarter of fiscal 2023 ending December 31^st.

For the period, the company earned $282 million on total revenue of $2,516 million including delivery payments, with a diluted EPS of $10.21.  For comparable Q4 of fiscal 2022, Chipotle earned $224 million on total revenue of $2,181 million with a diluted EPS of $8.02.  

Total revenue increased by 15.4 percent over Q4 FY 2022 and comparative same store sales were up by 8.4 percent. Digital sales represented 38 percent of revenue in FY 2023. Gross margin for Q4 increased from 24.0 percent in Q4 FY 2023 to 25.4 percent for the most recent quarter. Operating margin increased from 13.6 percent to 14.4 percent in Q4 2023.

During the Q4, Chipotle opened 121 new stores, with 110 equipped for drive-through service. Chipotle operates 3,437 stores with average sales of $3 million and an operating margin of 26.2 percent. 

For FY 2023, the company earned $1,229 million on total revenue of $9,872 million including delivery payments with a diluted EPS of $44.34.  For comparable fiscal 2022, Chipotle earned $899 million on total revenue of $8.635 million with a diluted EPS of $32.84

In commenting on results, Brian Niccol, Chairman and CEO stated, “2023 was an outstanding year where we delivered strong transactional growth driven by throughput and menu innovation, opened a record number of new restaurants, surpassed $3 million in AUVs and formed our first international partnership," He added "I am more confident than ever that we have the right people and the right strategy to achieve our long-term growth goals of reaching 7,000 restaurants in North America, $4 million in AUVs, expanding our industry leading margins and returns and furthering our purpose of Cultivating a Better World globally."

On December 31^st Chipotle Mexican Grill posted assets of $8,044 million with long-term lease obligations of $3,832 million.  Market capitalization was $68,230 million on February 7^th.  During the past fifty-two weeks, CMG has traded over a range of $1,470 to $2,726 with a fifty-day moving average of $2,296. CMG closed pre-release on Tuesday, February 6^th at $2,491 but rose on the open on Wednesday 7^th post-release to $2,652.  On a trailing twelve-month basis, operating margin was 14.7 percent and profit margin 12.5 percent.  The Company generated returns of 13.3 percent on assets and 45.3 percent on equity.

In a release dated February 5^th 2024 McDonald’s Corporation, a bellwether for the QSR segment of the restaurant industry, reported results for the fourth quarter and FY 2023 ended December 31^st 2023. For the period, the Company earned $2,039 million on total revenue of $6,046 million with a diluted EPS of $2.80.  Comparable figures for the fourth quarter of fiscal 2022 were net income of $1,903 million on total revenue of $5,927 million with a diluted EPS of $2.59. Revenue for Q4 increased by 12.1 percent and operating margin advanced from 43.6 percent for Q4 of 2022 to 43.7 percent for the most recent quarter. Gross margin for Company-operated stores rose from 15.2 percent in the fourth quarter of 2022 to 16.9 percent for the most recent quarter attributed to lower costs for food ingredients and packaging, rationalization of menus, the Accelerating the Arches efficiency initiative, increased traffic and promotions. The Company may be benefitting from trade-down from restaurant dining in the demographic with an annual income of $100,000.

For FY 2023 the Company posted net earnings of $8,469 million on revenue of $25,494 with a diluted EPS of $11.56. Comparable values for FY 2022 were net earnings of $6,177 million on revenue of $23,183 with a diluted EPS of $8.33. Results for FY 2023 include charges of $290 million for the Accelerating the Arches program and $72 for obsolete software.

In commenting on results, Chris Kempczinski, president and CEO stated, “Our global comparable sales growth of 9 percent for the year is a testament to the tremendous dedication of the entire McDonald’s System," said McDonald's President and CEO Chris Kempczinski. "Strong execution of our Accelerating the Arches strategy has driven over 30 percent comparable sales growth since 2019 as our talented crew members, and the industry’s best franchisees and suppliers have demonstrated proven agility with a relentless focus on the customer. By evolving the way we work across the System, we remain confident in the resilience of our business amid macro challenges that will persist in 2024."

For the fourth quarter of FY 2023, McDonald’s posted comparable store sales growth in the U.S. of 4.3 percent with comparable store sales growth for the international operated markets segment of 4.4 percent and with global comparable store sales growth of 3.4 percent. Over FY 2023 global comparable store sales increased by 9.0 percent.

On November 20^th 2023 the Company announced purchase of the minority equity held by the Carlyle Group in CITIC, the McDonald’s entity operating in China. McDonald’s Corporation will now hold a minority 48 percent share in CITIC.

Projections for 2023 in the SEC 8K report included net restaurant expansion contributing 2.0 percent to system wide sales with an operating margin of 45 percent. On December 31^st 2023  there were 41,822 McDonald’s locations with 2,142 Company-owned restaurants. During 2024 the Company intends to open 1,600 new restaurants globally. According to the report most will be traditional in design but the Company will consider alternatives including a test of a small free-standing ‘CosMC’ format.

McDonald’s Corporation had a market capitalization of $215,460 million on February 5^th 2024. Total assets on December 31^st 2023 amounted to $56,146 million of which 24.0 percent comprised lease right-of-use assets.  Long-term debt and lease obligation were $50,211 million. MCD has ranged over the past 52-weeks from $245.73 to $302.39 with a 50-day moving average of $291.05. MCD trades with a forward P/E ratio of 23.8. The 12-month trailing operating margin was 47.6 percent and profit margin, 33.3 percent. Return on assets was 14.3 percent. Prior to release MCD closed on Friday February 2^nd at $297.10 but opened lower, post-release on Monday February 5^th at $288.40.

On February 1^st, Post Holdings Inc. (POST) reported on the 1^st quarter of FY 2024 ending December 31^st 2023.  The Company beat consensus estimates for both top and bottom lines, reporting a net profit of $88.1 million on sales of $1,966 million with a diluted EPS of $1.35.  Comparative values for Q1 of FY 2023 were earnings of $91.9 million on sales of $1,566 million with a diluted EPS of $1.52. Gross margin increased from 26.5 percent in Q1 2023 to 29.1 percent for the most recent quarter. Operating margin increased from 9.6 percent to 10.6 percent in Q1 2024.

Guidance for FY 2024 comprised a higher adjusted EBITDA in the range of $1,290 to $1,340 million

Capital expenditure for FY 2024 will include $100 million to complete expansion and upgrades to the Norwalk, IA. egg processing plant and Phase II conversion to cage-free housing at the Bloomfield, NE. Complex.

Post Holdings operates subsidiary, Michael Foods producing shell eggs, egg liquid and derived products that are sold through the Refrigerated Retail and Food Service Segments. Egg-related brands include Almark Foods, Henningsen’s, Abbotsford, Davidson’s, Crystal Farms and Egg Beaters.

The Refrigerated Retail Segment includes cheese, sausage products, eggs and side dishes. For Q1 FY 2024, net sales for the segment amounted to $281 million, down 4.1 percent from the corresponding Q1 in FY 2023. Operating profit attained $36 million with a profit margin of 12.7 percent. Egg volume was down 10.1 percent.

The Food Service Segment comprising egg and potato products recorded Q1 FY 2024 sales of $567 million, down 5.6 percent. The Segment generated an operating profit of $75.7 million down 4.3 percent with a profit margin of 13.3 percent.

The Post Consumer Brands and Weetbix (U.K.) Segments have no direct involvement with eggs.

The Company release and SEC 10-Q report noted the risks and consequences of HPAI infection on company-owned complexes and those of contractors.

On December 31^st 2023 Post Holdings posted assets of $12,072 million, including $7,915 million as goodwill and intangibles, against long-term debt of $6,314 million. The Company had an intraday market capitalization of $6,130 million on February 5^th. POST trades with a trailing P/E of 21.7. The share value has ranged over a 52-week period from $78.85 to $104.00 with a 50-day moving average of $89.92. POST closed at $93.82 at close of trading on Thursday February 1^st, opening post-release on Friday February 2^nd at $98.50.

 Twelve-month trailing operating margin was 10.6 percent and profit margin 4.0 percent.  Return on assets over the past twelve months attained 3.8 percent and the return on equity was 8.0 percent.

Post Holdings sold back Willamette Egg Farms effective December 1^st 2021 for $56 million taking a charge of $6.3 million.

Farmers in many E.U. nations are under extreme financial pressure as a result of proposed or enacted restrictive legislation relating to the environment, welfare, sustainability and international trade. 

During late January, organized protests and demonstrations took place near the European Parliament in Brussels in addition to major capitals in Europe.  Farmers’ protests have taken place in France, Portugal, Greece, Germany and the Netherlands.  A member of a national farmers’ association in Spain (ASAJA), stated, “We want to stop these crazy laws that come every single day from the European Commission.”

 Politicians are concerned over the protests that are fueling support for right-wing parties. The most immediate issue concerns importation of food products from nations with lower production costs and with fewer environmental and welfare regulations.  The issue of food security and ensuring support for farmers is evident and has emerged as a major political issue before upcoming elections to the European Parliament.

Having made their point, leaders of farmers’ unions in France have called on their membership to  return to their farms and to cease militancy including placing roadblocks on major highways for the past two weeks.

Having heard the message from the agricultural sector, the newly appointed Prime Minister of France, Gabriel Attal, noted that the Government will relax some regulations that are regarded as more constraining than those in place in the E.U.  Prime Minister Attal was joined by his counterpart, Leo Varadkar, of Ireland in opposing the E.U.-Mercosur Free Trade Agreement that would facilitate imports from Latin America.

In an address to the European Parliament, Emmanuel Macron, President of the French Republic stated that his nation is against the E.U.-Mercosur Free-Trade Agreement.  He called for harmonization in environmental and hygiene regulations imposed on farmers within the E.U.  Also addressing a domestic issue, President Macron called for “a joint mechanism to guarantee fair prices paid to producers by retailers and food giants”. 

Although there has been some easing in food prices in France and other E.U. nations, there is concern that consumer resistance is justifiable based on the need to spend more of their disposable income on food.

Following a petition to the Food and Drug Administration in April 2023, the Agency issued a proposed rule that would designate eggs as “healthy”.  This action was consistent with the recognition of the negligible health effects of a reasonable dietary intake of cholesterol by otherwise healthy consumers. Consideration of the designation “healthy” was initiated by the FDA in 2016, eventually resulting in a statement that the Agency would adjust guidelines.  Following the publication of the proposed rule in the Federal Register, the Agency received and reviewed responses in anticipation of a Final Rule projected for April 2024.

If, as expected, the FDA designates eggs as “healthy,” cartons would be labeled accordingly, finally dispelling the myth concerning the adverse effect of the cholesterol content of eggs on vascular integrity.

The FDA has indicated that the program of redefining the “healthy” definition is part of an overall initiative to provide consumers with realistic label information that contributes to “intelligent and appropriate food choices”.

The potential outcome of the reorganization of the food-related activities of the FDA will not have any effect on the current petition that has languished for years.  FDA functions at the pace of a melting glacier to the detriment of both the food industry and consumers. 

How about those responsible taking home the relevant literature or information to be reviewed over a weekend with a short meeting on a Monday to make a decision?  Why does the culture of government agencies and especially the FDA involve delays, inability to evaluate a petition or application and to issue a timely response?  Is it that no government apparachik has ever been fired or disciplined for saying no or nyet. Accordingly, officials will not risk their reputations and careers by being other than conformist, and rejecting innovative and progressive approaches, or simply making a decision and then moving on to the next challenge.

On February 5^th the United Nations Food and Agricultural Organization published the Index of Food Commodities for January 2024.  A sequential 12-month reduction in food prices is evidenced by the 10.0 percent decrease in the Index from 131.1 in February 2023 to  the most recent value of 118.1. The index was down 0.1 percent from December 2023.

Lower component indices were recorded:-

• The Cereal Index was down 17.9 percent from February due to lower corn and wheat prices but offset by a raise for rice,
• The Vegetable Oil Index was down 9.9 percent from February with lower soy and palm oils but higher sunflower oil on increased demand .
• The Dairy Index was down 14.3 percent from February
• The Meat index was down 3.1 percent from February with lower poultry prices and decreased demand for pork in China relative to production

Restoration of Black Sea shipping using the ‘Humanitarian Corridor’ along the eastern seaaboard reduced concern over availability of grains and oilseeds and contributed to a moderation in prices for commodities.

Targan Inc. the developer of the WingScan™ System to separate male and female broiler chicks by machine vision sensing of wing feathering and Viscon Hatchery Automation of Holland have announced a strategic alliance for distribution and service of Targan installations.

Viscon is a prominent innovator and manufacturer of hatchery automation and handling in addition to embryo gender-determination installations and in ovo vaccination systems.

The arrangement between the companies will facilitate adoption of the WingScan™ System in areas where Viscon currently maintains a presence.

The Targan WingScan™ System is capable of separating male and female chicks at a rate 100,000 per hour achieving 98 percent accuracy. Automated feather-sexing using machine vision coupled with AI, eliminates the need for manual handling thereby increasing speed and reducing cost. The Targan WingScan™ System will enable broiler producer worldwide to benefit from separate sex grow-out.

Following the International Production and Processing Expo, Henning Companies donated $5,000 to the Children’s Healthcare of Atlanta Foundation.  The donation was matched by $2,000 by USPOULTRY. Subsequently the Anderson Family matched the Henning donation and Del Farrer, VP for Agriculture at the Henning Companies added $1,000 bringing the total to $13,000.

Jason Anderson, VP of Agriculture for Henning Company stated, “We are really pleased to once again provide this donation to Children’s Healthcare of Atlanta.  We have seen first-hand how children has played an important part in helping children”.  Jared Morrison of Farbest Foods, the outgoing Chair of USPOULTRY commended the leadership of Henning Companies in contributing to Children’s Healthcare of Atlanta.

The 2024 USPOULTRY Foundation recognized Dr. Darrin Karcher with the Dr. Charles Beard    Research Excellence Award.  Dr. Karcher is an Associate Professor of Animal Sciences at Purdue University and an Adjunct Associate Professor of Animal Science at Michigan State University.  The selection of Dr. Karcher was based on exceptional research focused on nutrition, management and skeletal integrity in laying hens.

Dr. Denise Heard, Vice President of Research Programs for USPOULTRY noted, “Dr. Karcher was a standout nominee for this award because his research focusing on addressing producers’ concerns with laying hen management, bird welfare and food safety has provided a wealth of knowledge of the layer industry.

Dr. Karcher completed his BS degree at Ohio State University, received an MS in Animal Science at the University of Wisconsin and earned a Ph.D in Animal Science at Purdue University.

John Starkey, the former president of USPOULTRY was honored during the 2024 IPPE, receiving the Harold E. Ford Lifetime Achievement Award.  This honor is extended to an individual whose dedication and leadership over the years have far exceeded the ordinary and impacted both the poultry industry and USPOULTRY.  The award is presented non-annually by the Awards and Recognition Committee when unique recognition of an individual is occasioned by exceptional contributions.

Nath Morris, president of USPOULTRY stated, “John provided consistent leadership to USPOULTRY for more than 15 years with significant growth under his direction.  He offered steady guidance through some very demanding times particularly the Foundation campaign and the COVID-19 pandemic”.

John Starkey served as president of USPOULTRY from August 2007 through August 2023 after succeeding retiring president Don Dalton.  Starkey holds a degree in chemical engineering from Purdue University and a Master’s degree in sanitary engineering from Georgia Tech. His industry experience includes appointments with increasing responsibility with Hudson Foods, Gold Kist and Vaughn Coltrane and Associates, an engineering consulting firm with close ties to the poultry industry. 

In 2015, Starkey was awarded the Work Horse of the Year Award in recognition of his leadership.

Other recent Alltech appointments in the area of poultry production include:

• Steve Elliott (U.S.), Global Vice-president, Corporate Accounts. Elliott has been with Alltech for more than 29 years in a variety of roles. Most recently, he served as Global Director of the mineral management division. 

• Claire Boudwin (U.S.), Global Product-launch Marketing Manager. Boudwin, who previously served as North American species marketing manager, has worked with Alltech for nearly six years. 

• William Wallis (U.S.), Eastern U.S. Marketing Manager, will now also serve as U.S. Poultry Marketing Manager. Wallis has worked with Alltech for 12 years. 

On Wednesday, January 31^st, the House of Representatives passed a tax package that will now be considered by the Senate.  The bill was adopted by a vote of 357 to 70.  Important provisions in the tax bill are an extension of child tax credits to low-income families with collectively 16 million children. It is estimated that this provision would especially benefit close to 500,000 minors currently living in families below the poverty line.

The bill also restores business tax benefits that will ultimately stimulate the economy.

The Iowa Senate is considering a bill that would require any complaints to the Department of Natural Resources concerning potential violations to be identified by the name of the submitter.

According to Senator Tom Shipley, Senate Bill 3103 is meant to “stop frivolous anonymous complaints to the Iowa DNR.  According to the State Agency, approximately 1,400 complaints are received each year, half of which are anonymous.  According to a DNR spokesperson, the “vast majority” of complaints lead to corrective action.  Both the Iowa Environmental Council and the Iowa Farmer’s Union oppose the Bill, considering that anonymous complaints are necessary to make agencies aware of problems.

Since the intended legislation would enable the DNR to release the name of the submitter of a complaint, the Bill, if enacted, would have a “chilling effect” reducing the number of complaints.  Obviously, potential submitters of complaints would be restrained for fear of retribution or legal action.

Given the number of complaints and the high proportion that result in some form of action, the proposed Bill appears self-serving despite the reality as quoted by Senator Tom Shipley that “We know there are organizations out there who file complaints just because they don’t like that industry.  Let’s just be honest, they don’t want that industry to exist in Iowa and they’ll be happy to do anything to make it difficult for those people.”

The fact that the DNR investigates complaints and finds a high proportion to be valid suggests that the Bill is no more than a “license to pollute” and represents a retrograde approach to environmental compliance.

Assays conducted by FDA demonstrated that chromium is a co-contaminant with lead in cinnamon added to apple puree. The product responsible for toxicity in over 380 children was initially identified through lead assays of blood of symptomatic infants.  Initial quantitative assays suggest that the lead contaminant was most probably in the form of lead chromate (PbCrO4).  The FDA laboratory was unable to differentiate between trivalent chromium (III) and hexavalent chromium (VI) that differ in their toxicity.  This is a major deficiency of the FDA capability and should be rectified. 

Neither arsenic nor cadmium were detected in recalled apple puree product, consistent with assays performed by state laboratories that have determined high levels of lead and chromium in the range of 0.6 ppm with proportionately higher levels in the cinnamon additive.

A combination of aggressive naval action and cooperation from Black Sea neighboring nations is allowing Ukraine to restore export routes for commodities.  Before the February 2022 invasion of Ukraine by the Russian Federation, approximately six million tons of agriculture products were exported each month, principally using the Black Sea route. Following the collapse of the Black Sea Grain Initiative, and attacks on ports in Ukraine, the nation displaying ingenuity and resourcefulness established a coastal route that in December exported 4.8 million metric tons of grains from Black Sea and Danube ports.  Increased volume achieved lower shipping costs approximating $30 per ton. This allowed a proportional rise in the domestic price of corn and wheat, assisting farmers and the economy of the nation. 

Ukraine is considering reopening the Port of Mykolaiv and increasing shipments through the Danube Delta with a target of seven million tons of all agricultural products per month. 

Despite progress in marine transport, the situation in the southern region of the Red Sea is creating restraints with traffic through the Suez Canal down 45 percent before missile attacks commenced. The majority of exports from Ukraine to China normally pass through the Suez Canal and the Red Sea. The alternative route requiring an extended voyage through the Mediterranean and around the southern coast of Africa adds 10 days and $1 million to a Panamax bulk carrier consignment.

In one of the worst academic-conceived initiatives, University of Minnesota scientists are “exploring options for moving ‘uninfected eggs’ from farms where highly pathogenic avian  influenza (HPAI)has been diagnosed and making them available to consumers”.

In the first instance, highly pathogenic avian influenza results in a precipitous drop in egg production so only a small volume of eggs will be available after the disease presents clinically and is then identified and rapidly diagnosed.

If the public learns that even a small quantity of eggs was released for sale from a known infected farm, the entire shell egg industry would be impacted. This is the age of rapid dissemination of bad news on the internet. In addition, mainstream media and the ever-present opponents of intensive livestock and egg production would have a field day with accusations and negative publicity.

Egg consumption in many nations where HPAI outbreaks have occurred has resulted in a sharp decline in consumption mainly based on fear mongering.  The large-scale outbreak of SE in 2010 associated with the Iowa farm operated by the DeCoster family resulting in an extensive recall and consumer concern with a degradation of the image of eggs as a safe and nutritious food. The decline in egg price moving into late fall was estimated to have cost the U.S. industry as much as $100 million based on the difference between anticipated and realized unit prices.  The University of Minnesota scientists who are evaluating “various pathways that could lead to HPAI virus contaminating washed and sanitized eggs that have been segregated and safely stored on site” should confine their endeavors to an academic exercise.

Breaking and pasteurizing eggs collected from flocks during the preclinical incubation phase of avian influenza would not represent a risk to consumers but handling and transport especially to a breaking plant operated in a hybrid in-line and off-line program would represent a danger to the flock associated with the breaking plant.  Given that many of the hybrid plants have flocks of up to 4 million hens, the consequences of introducing infection far outweigh the possible reclamation value of eggs transferred from a known positive complex.

Irrespective of the scientific realities of rates of transfer of avian influenza virus to eggs and the risks and probabilities associated with lateral infection, the negative response of consumers will be the major obstacle to any salvage program other than breaking and pasteurization on site.

Knowingly distributing eggs from a complex infected with HPAI is a bad, bad, bad idea.

The City Council of Chicago is considering legislation to prohibit stores ranging from 4,000 to 17,000 square foot in extent from establishing within one mile of each other if under common ownership. Although the two leading chains, Dollar General and Dollar Tree, were not specifically cited in legislation, it is evident that the Chicago measure is directed against their business model.  Since Chicago has opened discount grocery stores in ‘food deserts”, their action in banning competition appears to be a conflict of interest.

Urban areas within the city of Chicago are underserved by grocery stores.  Despite civic-minded action by retail chains, a Walmart Supercenter, a Whole Foods store and an Aldi deep discount unit ceased operation based on theft, security issues and financial loss.

Perhaps it is time for the city of Chicago to face reality and provide security to store operators. Residents should exercise a degree of restraint in application of the “five finger discount” and conform to the norms of a well-regulated society.  It is not the fault of the grocery chains that food deserts have proliferated.

In a statement relating to intended legislation, Dollar General commented, “We believe restrictive measures harm communities by limiting customer choice, convenience and affordability, particularly in inflationary times.  Our mission of serving others and our intense customer focus differentiates Dollar General from other seemingly similar retailers.”

Public entities should not engage in retail trade.  An outstanding example is the situation with public sector liquor outlets that charge high prices, are beset with corruption and nepotism and do little to curb alcohol abuse.  This is personified by one legislator stating, “This a dry County and we have lots of alcoholics to prove it.”

Responding to increased demand for both conventional and organic Oro Glo®, Kemin has announced an expansion of production in the plant operated by AVT, a long-term supplier in India.  This company is listed as a certified manufacturer conforming to NOP standards.  Organic Oro Glo®, manufactured by AVT, will incorporate organic corn flour as the carrier replacing kelp.

Since marigold petals are the major contributor of xanthophylls in Oro Glo®, manufacturing in India will contribute to efficiency and lower costs.  Kemin will continue to source from Todd’s BBI with organic kelp as the carrier.  Both products will have a xanthophyll activity of at least 10g/kg.

Market Research Company Numerator has conducted a study of private label brands sold during 2023.  The company reported that two thirds of the 200 largest private label brands by sales expanded in 2023 and half achieved increased market growth.

The Top-10 lists of private label brands comprised:

• Smart Way by Kroger
• Sure Fresh by Dollar Tree
• Amazon Basics
• Sweet Smiles by Dollar General
• Publix Deli
• Home Line by Dollar Tree
• Favorite Day by Target
• Tuscan Garden by Aldi
• True Living by Dollar General
• Specialty Selected by Aldi

Both convenience stores and dollar stores are increasing their proportions of SKUs as private brands.

The University of Michigan School for Environment Sustainability recently concluded an evaluation of urban farming.  According to the study conducted by Dr. Jason Hawes, fruit and vegetables grown in urban locations have a carbon footprint approximately six times greater than conventional commercial farms.

Hawes noted, “Urban Agriculture offers a variety of social, nutritional and place-based environmental benefits that make it an appealing feature of future sustainable cities.” The study demonstrated that if urban farming is to be carried out, it will be necessary to select crops that can be grown in greenhouses with a low initial capital cost and to produce items of high-value relative to weight to facilitate transport.

Over a number of years high tech solutions have been applied to urban farming including capital-intensive vertical systems requiring sophisticated operations, high utility and labor costs. Many of the startups have proven to be incapable of providing a return on investment as evidenced by bankruptcy, consolidations and termination of production in many cases as venture capital funding ceased.

It is noted that USDA in their social engineering mission under the current Administration has funded urban farming projects without providing adequate technical support, feasibility studies or financial evaluation.

Robert Hostetler, President of Ziggity Systems, will assume majority ownership of the company following the retirement of his Brother Dale after a 46-year tenure with the second-generation enterprise.

Robert has served in senior management roles with co-ownership since 1994. Minority ownership is vested in Kelvin Wittmer who will serve as Vice-President of Operations and Robert Steiner, Vice-President of Sales.

Coincident with the reassignment of equity, Steve Awde will become Director of Sales for USA and Canada and Jean Roberson will continue as Controller.

In commenting on management assignments, Robert Hostetler stated, “We are looking forward to carrying on the Company legacy of designing and producing advanced poultry watering systems to make a positive impact on the industry worldwide.”

To date the Centers for Disease Control and Prevention has reported 321 cases of chronic lead toxicity in infants as a result of consuming contaminated WanaBana apple puree recalled in early November 2023.

Based on a lack of information concerning the source of lead, alleged to be from a cinnamon ingredient, members of the House Energy and Commerce Committee, the Subcommittee on Health and the Subcommittee on Oversight and Investigations have addressed a letter to the FDA commissioner Dr. Robert Califf requesting additional information.

The Committees, “urgently requested a detailed briefing on the FDA investigation of intentional lead contamination in applesauce pouches, particularly the steps undertaken and measures for future prevention.”  The Committees’ request to ascertain FDA approaches to detecting and interdicting intentional contamination, and other information was required by February 2^nd. 

The committees are requesting how the FDA determined that contamination was intentional, whether the FDA is collaborating with state and local departments of health and the history of FDA activities relating to heavy metal contamination of food products.  Information was also requested on FDA analytical capabilities and whether the agency requires additional resources.  There are a number of questions concerning the high-levels of lead and chromium in samples assayed and in fact whether the quantum of lead could have been derived from the cinnamon additive.

The FDA has yet to provide a detailed timeline and report on investigations both in Ecuador that currently is in a state of civil strife and whether any U.S. food plants were involved in processing, packing and distributing the contaminated product.

Chipotle Mexican Grill has announced that it intends hiring 19,000 workers to improve service during the March to May period of peak demand.  Chipotle is offering financial benefits for existing and potential employees including retirement savings and student debt repayment.

An influx of untrained workers into a company with a history of foodborne infection predicates training and the provision of resources to promote hygienic handling of salads and food ingredients. The Chipotle menu contains items with a predilection for bacterial foodborne pathogens.  Previously Chipotle has been impacted by norovirus infections and accordingly temporary workers along with permanent employees should be instructed not to report to work if ill. This will require screening of workers and offering sick-days to avoid working while while ill, thereby creating a public health hazard and a business liability.

Senator Kirsten Gillibrand (D-NY) has introducing the Healthy Food Financing Initiative Reauthorization Act.  The intent is to provide funds to establish grocery stores in areas devoid of grocery stores in so-called “food deserts.”

Senator Gillibrand stated, “An easily accessible grocery store is a basic necessity. For decades the residents of many urban areas have not had consistent access.  That means that they have to travel miles outside their neighborhood just to buy staple groceries and for residents without an automobile that can mean a multi-hour journey by foot or public transport.” 

New York State has provided financial and technical assistance to food retailers in four cities benefiting residents through convenience and improved diets.

Delaware has passed HB 263 that bans schools in the state from denying meals to students that are in arrears.  So-called shaming bills are under consideration by a number of state legislatures and many states. North Dakota, Arizona, Ohio and Louisiana currently cover the cost of reduced-priced meals in schools soon to be followed by Rhode Island, Virginia and Washington State. After an unsuccessful attempt in 2022, Virginia plans on serving free breakfast and lunch daily in schools subject to approval of the Senate Finance and Appropriations Committee.

In contrast South Dakota failed to advance a bill to provide free meals to qualified students through the House Committee on Education.  Recently EGG-NEWS reported that South Dakota had turned down federal funding to provide school districts with the resources to serve meals to needy students.

USAPEEC Mexico recently organized a technical training seminar on eggs and egg products. The objective was to communicate the benefits of using eggs and egg products as raw materials in value-added foods. Speakers demonstrated the quality and functionality of egg products and how they should be used in commercial production.

The seminar held in Monterrey, Mexico was attended by catering professionals and culinary students. The program covered egg basics and flock welfare. A two-hour workshop on applications of egg products for the retail and food service sectors was included.

The American Egg Board provided funding for the program.

ExxonMobil has filed lawsuits against two activist organizations, Arjuna Capital and Follow This.  At issue are proposed shareholder resolutions relating to the activities of the company with regard to the environment.  Traditionally boards of companies oppose shareholder resolutions on ESG, welfare that invariably are rejected based on institutional ownership of equity.

In this case, ExxonMobil has reacted aggressively and has filed a lawsuit against the activist organizations. The Company claims that the proposals would be detrimental to financial performance and would reduce shareholder value.

Although this commentator is in favor of eventually moving towards a higher proportion of renewable energy, the realities are that the U.S. and other industrialized nations have based their economies on fossil fuels. Restrictive legislation over the short term will be disruptive and in fact may prove detrimental to reducing greenhouse gas (GHG) emissions and to decarbonization.

Activists have a negative mindset and are not participating in a practical ands collaborative way with society and industry to redress the problems of GHG emissions and global warming.

In a move characterized by the adage, “Physician heal thyself” the Department of Energy will expend $104 million for “clean” energy and conservation projects at 31 federal facilities.

Approximately $250 million will be disbursed in three tranches to be drawn from the Assisting Federal Facilities with Energy Conservation Technology Program, established in 1992.  A 2021 Presidential Executive Order established targets to reduce emissions from federal operations by 65 percent in 2030 and 100 percent zero-emissions by 2035 for vehicles and net-zero for buildings by 2045. Approximately 300,000 buildings will become more energy efficient according to the White House Counsel on Environmental Quality.

Given that the Federal government is the country’s largest consumer of energy, improvements in the public sector will have benefits throughout the entire Nation.  Projects contemplated include installation of solar panels, heat pump systems, LED lights, PV film on windows and other upgrades.  It is estimated that since 2022 Federal buildings have reduced overall emissions by 40 percent compared to 2008, through reducing energy and water consumption.

Expenditure on energy conservation will transfer Federal funds to the private sector with manufacturers and contractors benefiting from expenditure on projects.

According to Market Research Company Circana, retail sales value of store brands attained 8.2 percent compared to 5.1 percent for national brands over the first half of 2023.

The Food Industry Association determined that 96 percent of grocery shoppers purchased store brands on occasions with almost half (46 percent) selecting private brands “most all of the time”.  An overwhelming majority of 90 percent of shoppers will continue purchasing private brands having established loyalty based on both price and also on value given equivalent quality to national brands.

The two leading convenience store chains, Casey’s General Stores and Circle K have included private brands in their intermediate and long-term projections of sales.  Casey’s General Stores of Iowa now markets 300 SKUs across its range representing ten percent of gross profit.  Alimentation Couche-Tard of Quebec, parent of Circle K and other convenience banners, is launching over 100 new products each year in North America, representing ten percent of their product mix.

A group of Representatives within the Republican Caucus have addressed a letter to the House Agriculture Committee opposing any increase in the reference price for commodities to be included in the 2023 Farm Bill that is still incomplete.  Rep Alex Mooney (R-WV) together with five colleagues from diverse states are justifiably concerned over the escalating National deficit.

Their action is supported by think tanks including Taxpayers for Common Sense. Joshua Sewell the Director for Research and Policy of this organization, stated, “Farm lobbyist proposals to further increase farm subsidies through higher government-enforced reference prices is not something most farmers are asking for.”  Sewell and his organization believe that taxpayers should not bear the additional costs.

The Heritage Foundation warns of “Well connected special interests successfully lobbying Washington for bigger handouts.”  Increasing the reference prices will contribute to inflation.  The Heritage Foundation also notes the disproportionate allocation of subsidies and funding to large corporate farming enterprises.  The National Taxpayers Union also opposes any increase in reference prices “at a time of massive federal budget deficits”.

Studies conducted by agricultural economists show that higher reference prices would benefit less than 6,000 farming operations in a few states and less than one percent of the two million U.S. farms would receive additional funding.  Crops that would be eligible for subsidies would include cotton, rice and peanuts that traditionally have high payment rates based on the difference between the guaranteed price and what the market will offer. It is a reality that, payments are linked to volume of production ensuring that the larger the farm the higher the share of available funding.

In 2021 ten percent of U.S. farmers received 80 percent of Price Loss Coverage (PLC) payments.

According to the Congressional Budget Office rice and peanut farmers receive three-fold more per acre compared to corn farmers and six times more than soybean farmers.

There is no direct support for egg or broiler producers who are subject to the vagaries of the market and fluctuations in commodity costs that are influenced by weather and export volume in addition to geopolitical events completely beyond their control.

Students will soon occupy the new Poultry Science building erected on the South Campus of the University of Georgia.  The 70,000-square foot facility was made possible through a $54 million public-private partnership.  Half of the funding was provided by the State Legislature for planning, initial Phase 1 construction and equipment.  Federal grants were added to complete the project.  The private component involved donations from the Luther and Susie Harrison Foundation, R. Harold and Patsy Harrison Foundation, Pilgrim’s Pride Corporation, Wayne-Sanderson’s Farms and numerous donations from poultry-related companies and individuals.

Dr. Todd Applegate, Chairman of the Poultry Science Department and Assistant Dean for ]International Programs at the College of Agriculture and Environmental Science, stated “Through our campaign we have solidified and built new partnerships with many in the private sector.  We have had conversations on how we can establish long-term relationships including working with our students.”

Features of the new building include the Abit Massey Classroom together with other teaching areas that have available space to accommodate a growing demand for programs in poultry science.  Laboratories have been reconfigured to provide clusters for researchers using specific technology and equipment deviating from the traditional allocation of a dedicated laboratory to a single facility member or group for a designated activity.

The new building will contribute to enhancing the activities of the Department including teaching, research and extension.

In July 2023, Subway embarked on a program of installing slicers in each franchise store to ensure that meat appeared fresh.  The program also shifted the cost of slicing from suppliers to individual stores.

The accompanying publicity campaign promoting freshly sliced meat had little impact on sales but increased cost to operators of stores.  Although slicers were provided at no cost to franchisees, the program involved additional labor and created a higher risk of injury when slicers were operated by relatively untrained staff, many of whom were legally restrained from using dangerous equipment.  The program involved expenditure of $80 million on slicers by Subway.

Subway has a history of offending and disaffecting franchisees. It appears that the freshly sliced initiative, that appeared to be a good idea and attractive from a promotional perspective was introduced without consideration of the practical issues involved.

Since acquisition of the company, Subway has pursued an active promotional program on cable television and social media emphasizing price and new menus but strangely without including the in-store freshness aspect.

Following a company statement announcing that CFO Vikram Luthar had been placed on administrative leave, ADM stock fell 24.2 percent on Monday, January 22^nd. The Board replaced Luthar with Ismael Roig as interim CFO.

At issue is the voluntary request for documentation issued by the Securities and Exchange Commission relating to accounting practices relevant to the Nutrition Segment of the company.

ADM is expected to miss profit expectations when the Q4 and FY2023 financials are released. The company previously projected an EPS of $7.00 but reduced the forecast to $6.90 compared to a consensus estimate of $7.27.

The Company will withdraw forward projections for the Nutrition Segment pending an investigation of accounting practices.  This segment is responsible for 10 percent of ADM operating profit.

Farmers in France, known for their aggressive readiness to organize protests have been active during the past week.  Issues of concern include environmental regulations including reduction of carbon emissions, price pressures from retailers, bureaucracy, a tax on diesel fuel and competition from cheap agricultural imports.

President Emmanuel Macron is evidently concerned over a rightward shift by his farming community in common with movements representing producers in Germany, Poland and Romania.  A farm product stabilization law is under review but will be delayed until the second half of the year following consultation with farmers to include requested modifications.

A recent report from Wales documented an extensive outbreak of salmonellosis associated with a community celebrating Eid al-Adha by consuming marara, a raw liver dish.  The North African community also consumed barbequed lamb that was presumably cross-contaminated from the organ meat.  In addition to direct infection, person-to-person transmission occurred among family members who did not attend the barbeque who demonstrating onset of symptoms eight days after the event.  There is evidence that the raw meat product was not refrigerated.

Laboratory examination demonstrated that some patients were co-infected with Shiga toxin-producing E.coli and in one case Campylobacter in addition to Salmonella Typhimurium.

Health authorities in Wales have initiated a program to educate the North African community as to appropriate handling and cooking of food during the qurbani activities associated with Eid al-Adha.

Activist organization, As You Sow has filed a second proposal concerning the use of plastic packaging to be considered by shareholders of Tyson Foods at the February 8^th annual meeting.  As You Sow is an influential nonprofit concentrating on environmental issues with a record of solid achievements in the E.U.

The Board of Tyson Foods has recommended rejection of the proposal, citing company efforts to reduce the use of plastic packaging and hence waste.  As You Sow claims that Tyson is not sufficiently aggressive in their action and has failed to provide “substantive data and is lagging other companies in the exercise of Extended Producer Responsibility.”  Although recognizing efforts made by Tyson Foods to reduce plastic waste, As You Sow is encouraging adoption of additional measures that would contribute to recycling. The Organization claims that the Company should set “quantifiable and time-bound goals for reducing the use of plastic packaging.”

Generally, shareholder resolutions from nonprofits and activists’ groups on ESG issues fail to gain traction. The fact that proposals are made should motivate boards to consider changes in policy and operations. Issues including welfare, worker wellbeing and sustainability are frequently raised. Companies now realize that stonewalling results in negative publicity that invariably impacts the ability to raise funds and ultimately contributes to a decline in image and share price.

Senators Joni Ernst (R-IA) and John Fetterman (D-PA) have introduced the Consistent Egg Labels Act that would restrict the use of the term “egg” to products derived from chickens.

This action is in response to the failure of the FDA to exercise its authority to regulate the labeling of either real egg products as opposed to plant-based alternatives. This deficiency is considered to potentially result in deception of consumers.

The proposed Consistent Egg Labels Act would “require the FDA to issue guidance for nationwide enforcement of labeling egg alternatives and to create accountability to Congress.”

Senator Ernst stated, “Our producers and farmers work hard to put high quality, nutritious eggs on consumers’ tables.  Labeling plant-based products as ‘eggs’ undermines that hard work.  I am committed to maintaining the integrity of real eggs in grocery stores on behalf of both consumers and farmers.” Chad Gregory president and CEO of United Egg Producers expressed gratitude for the leadership demonstrated by Senators Ernst and Fetterman stating, “Eggs are one of nature’s perfect foods and imitation products cannot compete with the unmatchable protein and nutrients found in eggs.”

Failure to enforce appropriate labeling is yet another deficiency of the FDA that has neglected its responsibility to regulate food.  Plant-based alternatives to real eggs have been marketed for decades without appropriate regulation.  A prime example is Just Egg and variations introduced by entrepreneur Josh Tetrick over twenty years ago without appropriate challenge and enforcement. 

Notwithstanding previous negative associations between cholesterol and eggs that ceased being a relevant consumer concern over ten years ago, there has been minimal uptake of plant-based alternatives. This is attributed to inferior organoleptic quality and above all non-competitive pricing of plant-based products. Despite the lack of competition from plant-based egg alternatives based on the lack versatility, price and inferior quality, the Consistent Egg Labels Act is a necessary protection for both farmers and consumers.

The Hong Kong Center for Health Protection announced on January 17^th that a 59-year-old woman from the Sichuan Province of China was hospitalized with H5N6 strain avian influenza.  As with previous cases, there is a history of having visited a live poultry market shortly before onset of symptoms.  This is the 8^th H5N6 case of 2023 and the 89^th in the PRC since the infection was first diagnosed in 2014.

According to the WHO, a total of 90 laboratory-confirmed cases of H5N6 have been diagnosed with 35 fatalities since 2014.

Whole genome sequencing has confirmed that HPAI viruses isolated from human cases belong to the HA clade 2.3.4.4b.  Sequencing of the virus from 11 cases confirmed avian virus lineage.  Amino acid sequences were associated with adaptation in two of the viruses involving PB2 genes and one with an HA1 substitution associated with binding to human cell-receptors.  Since the molecular markers have not been identified in poultry-derived viruses, the substitutions occurred sporadically following infection of the individual human cases.

State and local legislators and elected officials are concerned over the implications of H.R. 4288, the Agriculture Labor and Uniformity Act.  This legislation would limit the imposition of requirements over and above those established by the Environmental Protection Agency in terms of the Insecticide Fungicide and Rodenticide Act.

The Environmental Working Group (EWG) representing lawmakers in 30 states addressed a letter to the Senate and House Agriculture Committees expressing concern.  Geoff Horsfield Manager of the EWG noted, “It is imperative for state and local governments continue to have the authority to adopt more health-protective safeguards when necessary to shield their communities from exposure to toxic pesticides.”  The EWG pointed to the fact that local officials can respond to a situation faster than the federal agencies tasked with health protection. In contrast federal administrators have a broad perspective and access to a wider range of technical and legal resources than local officials. There are also local political considerations that may influence the decisions of county or state regulators that may be unjustified in either direction of intensity. 

Following the report that Dollar Tree stores is evaluating promotion of cage-free eggs, Supermarket News ran a simple single-question survey in a recent posting.  The result was that 90.9 percent of respondents replied in the affirmative to the question, “I am seeing shopper interest in cage-free eggs” with 7.8 percent in the negative and the remainder uncommitted.

At face value it would appear that there is an overwhelming “interest” in cage-free eggs but not necessarily demand.  This finding is a direct result of a simple questionnaire that provided a misleading answer.  Currently approximately one-third of the nation’s flock is housed in other than cages with the majority in aviary or barn units.  Many of these cage-free eggs are however diverted into the generic stream with estimates of up to 50 percent in some regions given prevailing retail prices.

Statistics produced by the Agricultural Marketing Services confirm a plateau in production of cage-free eggs, responding to market demand. It is axiomatic that “everyone is in favor of cage-free eggs, but few are willing to pay for the difference over conventional generic eggs.”

The most valid method of determining consumer demand for a product is to conduct a survey applying conjoint analysis incorporating price, housing system and possibly other variables in orthogonal comparisons.  This enables investigators to clearly determine the motivators for purchase of eggs with specific attributes and to accurately determine the value assigned to one or other quantifiable or intangible factors.

Simple surveys produce inexpensive, rapid and invariably misleading results.

Erik Visser, CEO of Hamlet Protein recently commented on drivers and developments that will influence the profitability of livestock production in 2024. He anticipates continued growth albeit at a slower pace for all segments of animal production in the intermediate term.

 In a post COVID era, consumers are under financial pressure as a result of central bank decisions to reduce inflation by increasing interest rates.  Although prices for animal-based foods are declining, housing expenses in industrialized nations are still elevated. This has reduced disposable income and has resulted in middle and lower income consumers to seek value in their purchases. 

Economies in Asia have yet to return to pre-COVID levels.  Producers in Europe are subject to ever more rigorous environmental restrictions and high feed and energy prices have narrowed margins. Brazil with bountiful resources and favorable weather this growing season appears to be the outlier, benefiting from strong exports.

Among livestock segments poultry appears to be showing limited growth at the expense of reduced market share from red meat that has become progressively more expensive. Poultry and especially eggs have a lower environmental impact compared to ruminants and will benefit under stricter regulations.

Visser commented on lower feed costs in many production areas.  Possible factors that may reverse the current favorable trend include the ongoing conflict in eastern Europe and more recently the Middle East with the potential to disrupt marine transport raising freight costs for bulk grain, container cargos and petroleum products.

The American Egg Board meeting will take place in San Antonio, TX March 5-7, 2024.  Registration is now open <meetingsataeb.org>.

The Spring Board Meeting will include presentations on scientific research, consumer insights, finance, external relations and marketing.  The event provides an opportunity for networking and a review of current challenges and opportunities facing the U.S. egg industry.

According to Steven Rogers, Chemistry Manager, Certified Laboratories pesticide residues should be a concern of all food producers. He summarizes the approach to establishing a surveillance program for pesticide residues on the following considerations:- 

• Maximum Residue Limits (MRLs) define allowable pesticide concentrations in food, aligned with national and international safety standards. 
• In the U.S., FDA and USDA enforce pesticide regulations in coordination with the EPA; non-compliance risks legal action and market exclusion. 
• The USDA provides a Pesticide MRL Database to check specific pesticide limits by commodity, available online with both free and premium options. 
• Pesticide residue testing labs use a combination of advanced techniques for comprehensive pesticide residue analysis, including GC-FPD, LC-MS/MS, and GC-MS/MS. FSNS/Certified Laboratories is equipped with a full range of analytical equipment.
• When choosing a testing laboratory, it is important to establish ISO17025 accreditation, and the expertise, technology, and customer service provided.

China intends investing $3.5 billion in a deep-water port at Chancay in Peru. The facility will be operated by Cosco Shipping, an enterprise controlled by the Government of the PRC.  The new port will serve as an export terminal for agricultural products from Brazil and also for vital minerals including cooper and lithium from the Andes. 

The proposed port is part of the Belt and Road initiative devised to create closer economic ties with nations with economies based on the export of commodities and to extend the geopolitical influence of China.  It is also intended on establishing an industrial hub in the vicinity of the port to process commodities for shipment to China.  Planners in both China and Peru are evaluating both an inter-oceanic highway through the Andes to Brazil and a possible rail link.

China recognizes the need to import agricultural commodities and minerals to support growth and is accordingly investing in Latin America to the disadvantage of the U.S.

Fred Steudler passed on October 19, 2023 at the age of 82.  Born in Lancaster, PA he graduated  with a bachelor’s degree in engineering from LeTourneau University.

He was a co-founder of Val-Co and as an engineer was responsible for developing feeding and drinking equipment for which he received numerous patents.  He was instrumental in designing and perfecting nipple drinkers and other labor-saving innovations from 1985 onwards.

Fred was well known both in the U.S. poultry industry and also among producers in India, China, Brazil and Holland.  He will be sadly missed.

Instacart has disappointed the market falling from the IPO price of $42 per share in September to a low of $23 in early January. Analysts have raised ratings recently to ‘outperform’ based on speculation that the company could be acquired by Uber Eats.

Informed observers placed the Instacart share of the U.S. third-party grocery delivery market at close to 75 percent compared to UberEats at below 10 percent, similar in volume to DoorDash.  Effectively, food and grocery deliveries services are less competing with each other than they are with Walmart, Amazon and Target.

For the 3^rd quarter of FY 2023 ending September 30^th  Instacart lost $(1,999 million) on revenue of $764 million with a negative EPS of $(20.86)  Quarterly operating loss was $(2,457 million) due in part to an eye watering expenditure of $1,850 million on R & D!

Congress Averts Shutdown

A short-term funding extension expiring on March 1^st and 8^th respectively for specified agencies was negotiated on January 7^th and passed by both Chambers on January 18^th.  The agreement allows for limits on the two bundles of appropriations bills. Speaker of the House, Mike Johnson (R-LA) faced opposition from his right wing flank threatening his narrow majority.  The Federal government is currently functioning under a previous series of two continuing resolutions. Funding due to expire on January 19^th has been extended to March 1^st for specific departments with the remainder set for expiry on February 2^nd now to continue to March 8^th These dates are respectively 35 and 42 days away.

Despite adverse publicity criticizing the livestock industry for methane emission by ruminants and from hog waste, the oil and gas industries are prodigious generators of methane, a potent greenhouse gas.  Emissions from wells and pipeline pumping stations are essentially preventable with investment in installations, maintenance and supervision.  For decades it has been cheaper for industry to flare gas and release methane than prevent environmental contamination. 

The 2022 Inflation Reduction Act funds the Emissions Reduction Program incorporating a proposed waste emissions charge initiative.  The proposed rule would enforce compliance with methane standards established by Congress.

The rule will apply to both new and existing operations and will be implemented using $1 billion from the Department of Energy to limit release from low-producing, conventional wells throughout the oil and gas sector.  The proposed rule would charge oil and gas facilities reporting release of more than 25,000 metric tons of carbon equivalent per year.  The sliding scale of charges should encourage remedial action reducing methane release.  The need for an EPA rule on methane emission is clearly recognition that the oil and gas industries are polluters diverting attention from beef, dairy and pork production.

Authorities in South Korea have reported three outbreaks of HPAI over the past week. Two cases were diagnosed in Kyonggi-do with 240,000 and 257,000 birds respectively and a case in Kyongsanbuk-do with a flock of 368,000 birds, all presumably laying hens.

The pattern in 2024 is following the incidence rate recorded in the 2020 – 2021 epornitic preceding the Lunar New Year requiring depletion of 20 million hens, ducks and broilers by the end of January 2022. This necessitated importation of shell eggs including airfreight consignments from the U.S. Until flocks were reestablished, South Korea imported shell eggs and egg products from suppliers including the U.S.

Coincident with the migration of waterfowl and marine birds in southeast Asia outbreaks have occurred recently in Japan, Taiwan and Laos.

Location of Kyongsangbuk-do on Korean Peninsula

Location of Kyonggi-do (province) on Korean Peninsula

ProMED-Mail recently reported on an outbreak of campylobacterosis at a school resulting in 996 cases.  The report on the outbreak which occurred in 2021 was traced to contaminated ground water from a well, in all probability exposed to raw sewage.  Students complained of water with a “turbid appearance and an unpleasant odor” preceding the event.  Substitution of piped water from a bottled source resulted in cessation of incident cases.  The water system was thoroughly decontaminated using chlorine dioxide.

It is significant that 17 of the Campylobacter coli isolates showed resistance to nalidixic acid, ciprofloxacin, streptomycin and tetracycline.  This species of Campylobacter isolated from patients is usually associated with hogs and is known to cause enteritis in humans.  The multi drug-resistant profile of the C.coli indicates widespread abuse of antibiotics possibly among hog farms in the vicinity of the school. 

As with many reports of foodborne disease outbreaks and other health events in China, reports are often delayed for years suggesting that multiple levels of approval are required before publication. There is also a disinclination to publicize disease outbreaks since this would distract from the notion that China is other than perfection. Admitting to a problem is effectively ‘loosing face’ as evidenced by the delayed recognition of COVID in 2019 with belated notification of the WHO. The same could be said of iatrogenic AIDS and more recently MPox. Will this Nation ever learn to respond appropriately to human and animal diseases in a responsible civic-oriented manner for the benefit of the World community and its own citizens?

In September 2023, over 3 million bees died at the San Diego Bee Sanctuary.  The case was investigated by the San Diego County Department of Agriculture.  Analyses determined that the bees died of fipronil poisoning.  None of the surrounding agriculture operations use fipronil and it is now suspected that the bee colonies were deliberately and maliciously poisoned.

Fipronil will come to mind as the insecticide involved in the 2017 egg contamination incident affecting producers in Holland, Belgium, France and Germany.  A company in Holland illegally used fipronil to control red mite in small egg producing operations. The insecticide was ingested by hens, stored in tissues and passed into eggs.  Subsequent detection of fipronil resulted in widescale testing and recall of eggs from affected farms.  Flocks housing facilities treated with the illegal  pesticide were depopulated and farms were cleaned at considerably expense.  The perpetrators of the disaster were eventually sentenced to relatively short prison terms in the Netherlands.

Fipronil is not registered for use as a domestic or agricultural insecticide in the U.S. but is used to control termites in crawl spaces and in areas that do not come into contact with humans or animals on a regular basis.

The leadership of the House Ways and Means Committee and the Senate Finance Committee has agreed on changes to 2014 tax legislation that should be passed by Congress before the January 29^th deadline.  Some of the 2017 tax cuts for business passed under the previous administration will be revived.  Deductions for research and development costs will be expanded and claimed in the year expended. Small businesses will benefit by expensing capital costs in the year incurred. 

Refundable child tax credits will be enhanced especially for multi-child and low-income families. This will be facilitated by raising the tax credit refundable cap and by introducing an adjustment for inflation.

Egglife Foods, manufacturers of Egglife Wraps based on egg white, will launch nationally in select Whole Foods Market stores.

David Kroll. CEO of Egglife Foods noted, “Becoming a part of the Whole Foods Market community is a major win for us.  We are excited to bring our innovative, protein-pack, low-carb Egglife egg white wraps to shoppers.”  Each wrap contains 5 grams of protein, 35 calories and less than one gram of carbohydrates.

Lauren Glancer, Principal Category Merchant for Whole Foods Market stated, “We are delighted to offer our customers Egglife Wraps that meet our standards for quality ingredients, clean label products and are convenient, nutritious solutions for a variety of customers.

Egglife Foods was founded in 2017 and has gained acceptance among health-conscious consumers.

Despite earlier predictions that the Albertsons-Kroger merger would be completed during the first quarter of 2024 it is now evident that the transaction will be delayed until the second half of this year at the earliest.  The FTC has yet to rule on the merger with a previously scheduled decision in mid-December delayed until February. The lawsuit filed by Washington State Attorney General Bob Ferguson is a further complication. This filing may be reflected by similar action in mid-Atlantic and western states by Attorneys General seeking reelection.

Kroger has offered benefits to workers and has committed to recognizing unions currently opposed to the transaction.

The merger would create a powerful force with strong leverage over suppliers that will inevitably be to their determent.

Fasteners Resource and sister company, Resource Metal Group manufacture and supply components that are unavailable from equipment manufacturers based on obsolescence.  Repairs and replacement of cage systems can frequently prolong the life of an installation and delay complete house replacement.

Fasteners Resource is actively working with both large and small-capacity egg producers to supply components with close to twenty recent conversion or upgrade projects completed.

Out-of-stock parts can be fabricated from a photograph or sample.

Fasteners Resource, a veteran-owned company, was established in 2007 and is committed to customer service. To discuss requirements extending from single houses or entire complexes, contact Todd Heimler Todd@FastenersResource.com.

As a result of distortion of facts and following a lucrative source of donations, various animal rights organizations managed to prevent slaughter of horses in the U.S. in 2007. Lobbying led to a provision preventing USDA-FSIS from providing inspection services in plants slaughtering equines to be included in the USDA Appropriations Act.  Horses are born, age and die in a continuous cycle.  Frequently it is necessary to terminate their life to alleviate suffering or at the end of their productive life.  Accordingly, U.S. horses are shipped to Mexico for slaughter with as many as 20,000 consigned from three southwestern states in 2023.  In addition, a limited number are shipped for processing to Canada from Midwest and northeastern states.

It would be far better for the horses, their owners and the environment to reestablish humane domestic slaughter of horses with use of their products as is the case with culled (“retired”) dairy cattle.

Animal activists are now lobbying for the “Safeguard American Food Exports (SAFE) Act”.  This would effectively ban exports of live horses creating a problem of disposal and waste. Wayne Pacelle stated, “If it is wrong to slaughter horses in Dallas it is wrong to slaughter them in Calgary or Matamoros”.

Pacelle, given the benefit of the doubt as to his intentions, has the situation on horse slaughter reversed in his logic.  There will always be candidates for euthanasia for slaughter.  It would be best for these animals to be shipped over short distances to a USDA-FSIS inspected plant for humane slaughter and processing.  Meat would not be used for human consumption but would be diverted to animal feed. 

It is really questioned whether the approximately 200 members of Congress co-sponsoring the SAFE Act really understand the realities of the lifespan of horses and the need for eventual disposal.  Re-introduction of horse slaughter would be a humane and practical reversal of an impractical “feel good” ban.  Allowing domestic slaughter and disposal would provide a channel for humane disposal and would avoid the need for inhumane transport and questionable treatment following export. We do not need a new law, only to reverse the previous restriction with its unintended consequences.

In a January 9^th 2024 release, Albertson’s Companies (ACI) posted financial results for the third quarter of fiscal 2023 ending December 3^rd 2023. As the second largest pure-grocery company, Albertson’s can be regarded as a bellwether for the retail food industry, subject to increased costs of foods, labor, and transport in a competitive consumer environment impacted by inflation.

Albertsons operates 2,270 stores under 21 banners including Albertson’s, Safeway, Von’s, Acme, Jewel-Osco and Shaw’s. Albertson’s Companies posted a 2.9 percent increase in same-store sales with a 21 percent increase in digital sales over the third quarter of FY 2023 compared to 2022.

For the period, net income was $361.4 million on total revenue of $18,557 million.  Comparable figures for the third quarter of fiscal 2022 ending December 3^rd 2022 were net income of $375.5 million on total revenue of $18,155 million. Diluted EPS for Class A shares for the most recent quarter was $0.62 up from $0.60 for the third quarter of FY 2022. Gross margin declined fractionally from 28.2 percent to 28.0 percent denoting minor escalation in cost of goods sold despite falling inflation. Operating income decreased from 3.2 percent for the third quarter of FY 2022 to 3.1 percent. During the most recent quarter Albertsons recorded a $23.9 million loss on property disposition and $6.7 million assigned to the ‘other income’ category.

In commenting on results CEO Vivek Sankaran stated, We delivered another solid quarter amidst a challenging economic backdrop," He added, “As we look ahead, our ambition is to create Customers for Life, in part through our focus on operational excellence in our stores, driving growth in our digital and pharmacy operations, and deepening our relationships with our customers."

Mr. Sankaran continued, "While we are benefiting from our productivity initiatives, we expect to continue to see the impacts of investments in associate wages and benefits, cycling significant prior year food inflation, customers receiving less government assistance, the resumption of student loan payments and other types of payment deferrals, inflationary cost increases and the outsized growth of our pharmacy and digital businesses as we continue to lean into increased customer engagement in our Customers for Life strategy."

On Friday October 14^th 2022 Kroger announced a bid for Albertson’s offering $34 per share and assuming $4.7 billion in debt in a $25 billion transaction. The acquisition would at the least require divestment of stores among in areas with an overlap.  Several senators, states Attorneys General and unions representing Albertson’s workers oppose the transaction and have urged the FTC to rule against the merger in an anticipated February decision. The parties to the merger have offered to spin off 440 stores to C&S Wholesalers and to invest in worker benefits and to recognize unions.

On January 15^th the parties issued a joint statement “We remain in active and ongoing dialogue with the Federal Trade Commission and individual state Attorneys General regarding our proposed merger and divestiture plan. We believe our merger with Albertsons and the comprehensive divestiture to C&S will result in the best outcomes for customers, associates and our communities”.

The statement concluded “In light of our continuing dialogue with the regulators, we are updating our anticipated closure timeline. We currently anticipate that the closing will occur in the first half of Kroger's fiscal 2024. While this is longer than we originally thought, we knew it was a possibility and our merger agreement and divestiture plan accounted for such potential timing.  We remain committed to closing the transaction and providing the meaningful and measurable benefits that we promised when we originally announced the transaction."

Albertson’s Companies posted assets of $26,497 million, against long-term debt and lease obligations of $15,320 million. The Company had an intraday market capitalization of $13,080 million on January 16^th. ACI trades with a forward P/E of 8.4 and has ranged over a 52-week period from $19.14 to $23.88 with a 50-day moving average of $22.10. Approximately 74 percent of the equity is held by institutions. The Company attained a 12-month trailing operating margin of 3.5 percent and a profit margin of 1.7 percent. Return on assets was 5.1 percent and 69.1 percent on equity

Registrations are now open for the 2024 Southeast Egg Industry Regional Conference to be held June 18-20^th, 2024 at the Omni Grove Park Inn in Asheville, NC.  The conference will represent ten states including the Carolinas, Georgia, Florida, Alabama, Tennessee, Kentucky and now Delaware and Maryland.

The Conference will provide opportunities for networking, include an educational session and a review of industry insights.

Registration is available at www.southeastegg.org.  Information regarding the conference can be directed to the NC Egg

Planning Partner Info at  info@empoweredeventsllc.com.  Empowered Events established by Laura Durbin and colleagues arranges logistics for poultry-related events including the Mid-West Poultry Federation Convention now presented as PEAK.

According to a recent presentation at a retail conference, Whitney Pegden, Vice-president and GM of Walmart InHome described a new program to track consumers’ purchases to restock items. 

Members of the Walmart + InHome service will have regular orders replenished based on their purchase patterns of frequently purchased items. The proposed upgrade to the program will be personalized and will respond to changes in needs.

The Walmart InHome program allows customers to receive deliveries at their doorstep or in a garage or even placed directly into refrigerators with appropriate security and authorization.

Walmart in conjunction with partners Wing and Zipline is providing drone delivery service in the Dallas-Ft. Worth region to 30 localities.  Both drone operators have received Federal Aviation Administration approval to operate Beyond Visual Line of Sight. This extends the potential delivery radius to ten miles.  Zipline has delivered products over 60 million autonomous miles on four continents and Wing has similar credentials established during four years of commercial service.  Walmart claims to have made 20,000 deliveries in response to established demand for the service. 

It is questioned whether drone delivery is a fad or an application looking for a justification.  The weight that can be delivered is restricted and the cost, although presumably lower than conventional home service, will still be borne by customers.

Drone delivery has obvious advantages for medical necessities, pharmaceutical products and small high-value items, especially in remote areas or following natural disasters.  Given the volume of groceries purchased by a household each week it is difficult to imagine how drones can make a substantial inroad in satisfying consumer requirements.  Adam Woodworth, CEO of Wing, claims that 2024 will be the “year of drone delivery”.  It remains to be seen whether this technology will have any meaningful impact on groceries, routine and notional purchases.

EGG-NEWS has prepared a Guide to the 2024 IPPE, listing the Booth numbers of exhibiting sponsors with links to their websites. The guide will be E-mailed again on successive Mondays, January 22^nd and 29^th.

Some recipients of the January 15^th mailing reported that the Guide was delivered to their spam boxes, based on security settings. Please check alternative boxes if not delivered to your incoming mail.

Bob Ferguson, activist Attorney General for the state of Washington, has filed a lawsuit in the State court opposing the proposed merger of Albertson’s and The Kroger Company.  Parallel action by the State of California is under consideration.

The Federal Trade Commission was expected to make a determination on the merger by December 15th, 2023, but has delayed the decision until early February 2024. Kroger and Albertsons consider that they have satisfied antitrust requirements by agreeing to sell 413 Kroger and Albertsons stores to C&S Wholesale Grocers.

If the FTC blocks the merger, extensive litigation is anticipated. This action would principally benefit competitors Walmart and Amazon.  The merger would not be in the interest of egg producers, especially in the Western states since they would be faced with a grocery chain exercising immense buying power.  Unions are predictably opposed to the merger.  Consumer advocates point to higher prices for food, pharmacy deserts and the predictable impacts of concentration.

Six lawmakers have addressed a communication to the FTC opposing the transaction claiming that the divestment of the designated stores would be insufficient to overcome the potential monopoly created in some areas of operation.  Questions have been raised as to the ability of C&S Wholesale Grocers, to successfully operate over 400 stores. The situation is reminiscent of the 2015 bankruptcy of Hagen after acquiring Safeway stores that were divested following the Albertsons acquisition.

Restaurant Brands International will separate reporting segments during the fourth quarter of 2023.  Business segments will include Tim Horton’s, Burger King, Firehouse Subs, Popeye’s Louisiana Kitchen and International, an addition.  This new International segment will include the aggregated results from the operations of each brand outside the United States and Canada. Expansion of the range of reporting segments is intended to provide details concerning performance and growth compared to the two previous Tim Horton’s and Burger King segments.

Restaurant Brands International is also measuring the performance of segments by moving from adjusted EBITDA to Adjusted Operating Income.  This criterion takes into account depreciation and amortization critical to franchise agreements.

Matthew Dunnigan, CFO for Restaurant Brands International, stated “Our business leaders are prioritizing investments that would drive long-term growth and attractive returns for our shareholders.”  He added, “Our transition to Adjusted Operating Income will provide increased focus on the operating expenses associated with these investments.”

The Seventh Annual Dunnhumby Retailer Preference Index awarded top position to H-E-B for the third time with Costco and Amazon comprising the runners up among U.S. grocers for the second consecutive year.  The Dunnhumby Retailer Preference Index is based on financial results and customer perceptions.  The customer component comprises five elements ranked among price promotion and rewards linked as the first category, followed by quality, digital ordering, operations and convenience.

Companies in the top-ten included in descending order, Market Basket, Sam’s Club, Wegmans, Aldi, Shoprite, Walmart Neighborhood Market and Walmart Stores.  There is a positive correlation between the position on the Dunnhumby RPI and the compound annual growth rate (CAGR) achieved by retailers. Companies in the top quartile averaged 8.5 percent growth over five years compared to 3.6 percent for retailers in the fourth quartile. 

Matt O’Grady, Dunnhumby President for the Americas, stated “Knowing your customer and your competitive position regarding customer needs will be critical for retailers to scratch out any organic growth in 2024.”  He added, “In this year’s RPI we illuminated how the consumer views the grocery market and how different retailers are meeting the general population’s needs as well as the needs of different consumer segments.”

Dunnhumby predicts that the $1 trillion U.S. grocery market will increase by 0.5 to 1.5 percent in 2024. The market research company points to intense competition coupled with economic uncertainty.  Consumers will continue to search for value responding to low-base pricing and promotions.

Following cases of salmonellosis with trace-back to Quaker oats products the Company has expanded their previously announced December 15^th recall to include CAP’n Crunch and Quaker cereal bars.

In recent years, Salmonella contamination of flour has emerged as a problem suggesting that this pathogen may be introduced into poultry mash feeds from wheat middlings or other non- animal protein ingredients as confirmed by appropriate quality assurance assays. If present, the use of additives incorporating organic acids should be considered to suppress suppress bacterial proliferation in feed. This will reduce the level of contamination in mixing and conveying installations, holding bins, delivery trailers, farm silos and feeding systems.

The Occupational Safety and Health Administration (OSHA) has intensified inspections of food processing plants including meat facilities and presumably egg packing.  The Agency intends to “elevate worker safety through education, training and outreach.”

OSHA was less than productive during the COVID period and with apparent restraints imposed by the then Secretary of Labor Eugene Scalia. Under the Acting Secretary of Labor Julie Su recently re-nominated for the position of Secretary, OSHA has become more involved in inspections.t and is issuing citations for deviations from accepted standards of protection of workers from injury.

In past years there have been a number of reports of injury in egg packing plants. Contributory factors include lack of training, using contract crews for cleaning, operating equipment without factory-supplied protection panels in place, failure to use lock-out procedures and neglect of cleanup of egg waste resulting in trips and falls.  Many of these shortcomings also apply to live bird production and feed mixing plants where untrained workers can be injured by mechanical and electrical installations.  In the event of an injury requiring hospitalization, OSHA will conduct an investigation frequently involving on-site inspection. Identification of hazards and deficiencies in training and installation of protective equipment and providing PPE including head covers, will result in citations and penalties.  Managers of egg production and packing facilities are strongly advised to review safety, if necessary with the advice of consultants.  Establishing safety committees is beneficial as this creates a culture of safety and workers are in a position to advise management of risks and problems that may not be readily apparent.

Following the resignation of Marty Walsh as Secretary of Labor in March 2023, Julie Su, Deputy Secretary of Labor, since 2021 was appointed as Acting Secretary.  Nomination as Secretary was opposed although resulting in an 11-10 party line vote in her favor in the Senate Committee.  Some Democratic members of the Senate indicated opposition to her nomination placing it in jeopardy.

Prior to her current position Ms. Su was the Labor Secretary of California with prior direction of the Division of Labor Standard Enforcement under a previous California governor.

The renomination is occasioned by impending legislation that would limit the tenure of an Acting Secretary to 210 days or as long as a nomination is pending.  In contrast the Federal Vacancy Reform Act of 1998 allows the Deputy Labor Secretary to act as Secretary “until a successor is appointed”.

Despite an apparent agreement in principle between the leadership of the Senate and Speaker of the House, Mike Johnson (R-LA) resolution of outstanding appropriations bills by January 19th failed.  A continuing resolution iwas passed again to allow time to negotiate an amicable agreement. An alternative favored by the right flank of the Republican party was to allow a Government shutdown with respect to the departments and agencies affected on January 19th including Agriculture, Energy, Veteran’s affairs, Transportation and Housing and Urban Development. At this time, speaker Johnson is opposed to any shutdown.  There is still no finalization between the parties regarding the topline spending for fiscal 2024. Speaker Johnson was able to negotiate a justifiable claw-back of emergency spending and a rescission of unspent pandemic-area funding in negotiations with the White House.

Despite the fact that the U.S. is now in an election year, both parties should realize that they have a collective responsibility to the citizen of the U.S. to govern in a responsible manner. The extreme positions of both the left and the right are impeding responsible government and sound fiscal policy.

Latest incidence data from the Centers for Disease Control and Prevention suggests that COVID strain JN.1 is responsible for 44 percent of new cases of COVID in the U.S. since late December.  The JN.1 variant is derived from Omicron family sub-strain BA.2.86 that appeared during the summer of 2023.  The JN.1 strain has been identified in twelve E.U. nations, Canada and most recently, China.

Hospital admissions and ER diagnoses of COVID are increasing and a spike is anticipated following Christmas and New Year travel. Although JN.1 may be capable of evading immunity, it is not regarded as a major risk to public health compared to previous variants of the virus causing SARS-CoV-19.

The CDC recommends boosting COVID vaccination and applying common-sense hygienic precautions. Studies show that solid immunity from vaccination reduces hospitalization by 70 percent in the Netherlands and significantly reduced ER visits in Seattle. Three doses of vaccine reduce the risk of ‘long-COVID’  by 75 percent.

On November 16, 2023, the Ohio Department of Agriculture held a groundbreaking ceremony to mark the commencement of construction of the new Dr. Tony Forshey Animal Health Building and the Ohio Veterinary Diagnostic Laboratory. The Laboratory is named in honor of the late Ohio State Veterinarian who served from 2006 until his untimely passing in 2021. The new facility has a projected completion date in mid-2026. The Laboratory will extend over 70,000 square feet will have enhanced biosecurity installations and will cost $72 million.

The new facility will replace the existing 1961 structure that despite overcrowding is staffed by a dedicated group of professionals conducting close to 450,000 tests annually.

“Our livestock industry and agriculture community has advocated tirelessly for this much needed enhancement to the services we provide at the Ohio Department of Agriculture,” said Brian Baldridge, Director of the Ohio Department of Agriculture.  He continued “We applaud the DeWine-Husted Administration and the Ohio Legislature for supporting this cutting-edge technology as we continue to protect livestock and the citizens of this great state.”  

Walmart Stores Inc. has announced that it intends to erect a milk processing plant in Valdosta, GA. to serve close to 1,000 company stores in Georgia and adjoining states. The project will involve an investment of $350 million and should be completed by late 2025.  Walmart maintains that the project is intended to “provide high-quality milk for their customers that can be offered at everyday low prices” according to Bruce Heckman, Vice-president for Manufacturing.

Walmart will source milk from producers in Georgia, but it is self-evident that Walmart will favor larger dairy farmers with close to 100 farmers milking more than 1,000 cows in the state. This will be to the disadvantage of small producers who are under financial pressure. High costs for feed and labor and other inputs have placed small dairy farms at a disadvantage compared to their larger competitors.  This is evidenced by the seven percent decline in dairy farms in Minnesota during 2023.  Minnesota is the sixth largest dairy producing state and lost 146 dairies during the year.  During the mid-1950’s, the U.S. counted more than 5 million dairy farms that declined in number to approximately 30,000 by 2023.

The investment in a milk processing plant raises the question of whether in the future Walmart might extend the principle to eggs.  Walmart draws eggs ranging from conventional caged white through to organic and pasture-reared to provide customers with products priced according to attributes.  Walmart sources eggs from major producers including Cal-Maine Foods the nation's largest producer with 40 million hens.  This company is heavily committed to Walmart but there is obviously a synergistic relationship that benefits both supplier and customer.

The move by Walmart parallels a long-standing involvement in dairy processing by competitor The Kroger Company. In some ways investment in production facilities follows the establishment of Lincoln Premium Poultry by Costco to supply rotisserie chickens for its warehouse stores.

Given the pricing power of Walmart with respect to sourcing eggs and the biological risks associated with disease, backward integration into egg production would appear unlikely.

The second of the two Amazon Fresh, Pick-up stores in Seattle was closed in late December 2023.  Stores were established in 2017 to enable Amazon Prime Members to place orders online and pick up at the designated locations.  Obviously, the project was either nonprofitable or was nonviable as an intended complement to Amazon brick-and-mortar stores of which only 40 were established.

A spokesperson for Amazon stated, “Like any retailer, we periodically assess our portfolio and make optimization decisions around how we operate.  In this case, we decided to close our Amazon Fresh Pickup locations.” Amazon Prime customers can still order and receive deliveries at any of the remaining five Amazon Fresh stores in the Seattle area.

It is apparent from marketing decisions and the actions of Amazon in recent years that the Company is still attempting to establish a balance between brick-and-mortar and online. Emerging from Covid, Amazon has yet to establish an optimum strategy that benefits customers and generates profit for the company.

To date, there are only 40 Amazon Fresh locations in the U.S. despite a much-heralded launch in 2020. Apparently the company intends to increase order and delivery services through their existing 500 Whole Foods Market locations.  Obviously, Amazon grocery is a work in progress.

The results of a recent Cypress Research Survey predominantly directed to broiler producers showed that an overwhelming majority of respondents (88 percent) considered that their company outlook is positive for 2024 with 76 percent optimistic for the industry as a whole in the coming year.  This response is weighted by concerns over high raw material costs, lower consumer demand and difficulties in recruiting and retaining labor. 

The projection of capital spending is a measure of positive sentiment, with an estimate of 40 percent reporting higher levels over the previous year.  The ratio of capital expenditure to sales will increase from 10.9 percent in 2023 to 11.4 percent in 2024.  Most of the capital expenditure will involve new processing equipment, system integration and automation with a specific emphasis on packaging.

Labor recruitment and retention was cited as a concern by 70 percent of respondents, raw material cost increases by 61 percent but food safety was ranked sixth among concerns at a level of 40 percent.  Despite recent reports of cybercrime, security was ranked at a low level, cited by 24 percent of respondents suggesting possible misplaced optimism with regard to security.

USDA-APHIS has confirmed pseudorabies (PRV) infection in two feral hogs in Calaveras County, California.  The virus responsible for PRV will infect a range of livestock and pets.

The infection is spread by direct contact or through contaminated equipment and clothing. Herds can be contaminated through feeding uncooked swill containing infected pork.

This case confirms the danger of feral hogs that are increasing in their numbers and distribution in the U.S. and Canada. EGG-NEWS has frequently urged more intensive Federally-funded feral-hog eradication programs in advance of an outbreak of ASF, foot and mouth disease and other infections. 

In the event of introduction of African swine fever into the U.S., with extension to the feral hog population, control would be extremely challenging. Ultimately, eradication would be impossible thereby endangering domestic pork production and the export market. Fortunately for APHIS pigs do not fly as do marine birds and waterfowl that will continue to re-introduce HPAI on a seasonal and regional basis.

Following the trend of recent months, the FAO Food Price Index for December averaged 118.5 points, down 1.5 percent from November and down 10.1 percent year-over-year.

The FAO meat price dropped 1.0 percent from November mainly due to lower demand for pork from Asia.  Other components of the FAO Food Price Index included Vegetable Oil that declined by 1.4 percent from November.  The Sugar Index was down 16.6 percent from the previous month. 

In contrast, the Dairy Price Index was up by 1.6 percent although it was 16.1 percent below December 2022.  The Cereal Price Index was higher by 1.5 percent from November mainly due to disruptions in shipments from exporting nations although the index was 15.4 percent below the 2022 average.  Rice soared in price, with a 21 percent increase in the Index mainly due to export restrictions imposed by India and lower yields in Asia and Africa due to the strong El Nino event.

A recent press report noted that a duck flock in the Vendee Department in western France has yielded avian influenza virus, presumably on rtPCR surveillance assay. This is not an unexpected outcome.  Not all ducks in a vaccinated flock will have been immunized and accordingly, in the event of exposure to the virus, infection of individual birds and propagation of virus would occur. It is unknown whether the flock received the complete sequence of vaccines previously shown to be necessary to provide solid immunity.

What is important is whether the infection resulted in clinical manifestations of the disease.  It is also questioned as to how long individual ducks within the flock will shed avian influenza virus.  Cases of low-pathogenicity avian influenza in chickens suggest that the duration of shedding is in the region of two weeks in non-vaccinated flocks. 

The event in France is a valuable learning experience that will guide future policy on vaccination. Had the flock not been vaccinated, ascending mortality would have led to a diagnosis followed by obligatory depopulation.  Authorities will be conducting surveillance on adjoining farms, most of which are family-operated with minimal biosecurity and in close proximity.  The objective of the vaccination program was to determine whether immunization reduced the local spread of HPAI that has required extensive depopulation over consecutive years.

The regional experiment in progress will establish whether vaccination can contribute to a reduction in mortality, maintaining production and limiting expenditure on compensation and control, given the inevitability of seasonal exposure of commercial waterfowl.

In a January 8^th release, the USDA Foreign Agricultural Service (FAS) announced $203 million in grants to seventy organizations to expand exports of agricultural products under the Market Access Program (MAP) and the Foreign Market Development (FMD) Program.

FAS will provide $174 million for FY 2024 to approximately seventy nonprofit organizations and cooperatives.  Funding will be used to promote fruit, vegetables, nuts and consumer-related items.  Under the FMD Program, $27 million or 13 percent of the total will be assigned to twenty trade organizations, presumably including USAPEEC, focusing on promotion of commodities.

Daniel B. Whitley, administrator of the FAS noted, “For each dollar invested in export market development U.S. agricultural exports have increased by more than $24.”  The press release notes that both the MAP and FMD Programs returned $2.50 for every dollar in federal funding.  It is difficult to see how these two programs can therefore contribute to the $24 claimed for each dollar of market development as worded in the second paragraph of the release, even with matching funds. USDA should provide more transparency and an explanation of how expenditure on export promotion achieves such a high claimed numerical return.

With respect to undifferentiated commodities such as corn and soybeans, importers base their decisions on landed price and availability.  Purchase decisions are determined by need, the balance between supply and demand and obviously are influenced by shipping costs as determined by rates and geopolitical considerations.

Christmas is now over, and January is not usually a season for giving.  USDA is however intent on disbursing as much funding as possible to cooperatives and non-profits while it is still able to do so, hence the disproportionate allocation of funding.

A group of ex-growers affiliated to the Dexter, MO complex have filed suit against Tyson Foods in the Circuit Court of Stoddard County, MO. The farmers allege that Tyson contemplated closing the complex as early as November 2021 in anticipation of the late 2023 formal announcement.

The farmers had no advance notice of the intended closure and undertook to spend capital on improvements thereby incurring debt.  Given the relative isolation of the Dexter, MO complex, the growers were essentially obligated to Tyson Foods as their only practical integrator. 

Fortuitously, Cal-Maine Foods has acquired the processing plant and will extend contracts to individual farmers to produce table eggs using modified housing. This action follows a similar the arrangement between Cal-Maine Foods and the growers contracted to Omtron following the 2012 bankruptcy arising from the 2010 acquisition of the Townsend’s Complex in Siler City, NC.

In a January 4^th 2023 SEC Form Q-10 filing, Conagra Brands (CAG) released financial results for the second quarter of Fiscal 2024 ending November 26^th.2023. The Company can be regarded as representative of the manufacturing and packaged food sector with competitors including Post Holdings, Campbell Soup Company and Kraft-Heinz, all currently under pressure to reduce prices to the major retail and supermarket chains. In an inflationary environment consumers are turning to less expensive private brands although the trend to eat-at-home may benefit Conagra Brands and competitors.

For the second quarter of FY 2024, net income was $286.2 million on net revenue of $3,208 million with a diluted EPS of $0.60.  Comparable figures for the second quarter of FY 2023 ending November 27^th 2022 were net income of $311.9 million on net revenue of $3,313 million with a diluted EPS of $0.80

The release included results for the four operating segments:-

• Foodservice: Operating profit of $38 million down 12 percent from Q2 2023, on revenue of $295 million
• Refrigerated and Frozen: Operating profit of $220 million, down 12 percent, on revenue of approximately $1,339 million
• International: Operating profit of $6 million, down 84 percent on revenue of $280 million
• Groceries and Snacks: Operating profit of $279 million, down 11 percent on revenue of $1,295 million

For the second quarter of FY 2024 (with the values for the corresponding quarter of FY 2023 in parentheses) Conagra achieved a gross margin of 26.3 percent (27.8) and an operating margin of 13.9 percent (13.6). Revenue was down 3.2 percent.

Guidance for FY 2024 was downgraded, including net sales growth of 1 to 2 percent; an adjusted increase in operating margin of 15.6 percent and an EPS of between $2.60 and $2.65.  

Conagra Brands listed assets of $22,120 million, including a disproportionate  $14,274 million as goodwill and intangibles, against long-term debt and other obligations of $9,211 million. The Company had an intraday market capitalization of $13,990 million on January 4^th. CAG trades with a forward P/E of 11.0 and has ranged over a 52-week period from $25.16 to $41.30 with a 50-day moving average of $28.37. Twelve-month trailing operating and profit margins were 17.7 percent and 8.8 percent respectively. The Company generated a twelve-month trailing return of 5.6 percent on assets and 12.3 percent on equity.

In what must be regarded as an outstanding business-speak oxymoron, the casual dining chain, TGI Fridays, stated in a release that “Closing 36 restaurants as part of its ongoing growth strategy.”  In effect, the company is shedding underperforming locations with seven in New Jersey, six in Massachusetts, five in New York and individual stores in five other populous states. Eight corporate locations will be sold to former CEO Ray Blanchette, who served as CEO for five years through May 2023.

TGI Fridays owned by TriArtisan Capital Advisors, had 260 locations and based on suboptimal shareholder value is obviously undergoing a major change in management and structure. 

Major competitors Applebee’s and Chili’s have expanded in recent years but TGI Fridays has lagged, having offered a uninspiring food and cocktail menu.

According to news reports, Brazil and Mexico will establish a joint agreement to facilitate trade in the event of outbreaks of avian influenza.  The proposal follows the principle of the memorandum of agreement between the U.S. and Canada relating to regionalization. 

Brazil has diagnosed cases of H5N1 highly pathogenic avian influenza in backyard and WOAH noncommercial farms and in migratory birds that miraculously has not extended to commercial flocks.

Mexico has recorded cases of avian influenza and has applied conventional depopulation in addition to vaccination as control and] preventive measures.

A containment zone under the guidelines of the World Organization for Animal Health would facilitate export of poultry products from Brazil to Mexico. This would establish Brazil as a viable competitor to the U.S.

According to a report in Food Safety the house newsletter of Marler Clark, assays of applesauce puree packed in pouches and implicated in more than 280 diagnosed cases of lead toxicity in children in 34 states

Chromium levels in samples of the puree have yielded assays of between 500 to 1200 ppm.  Although chromium is an essential trace mineral, depending on chemical composition and especially level, the element is toxic.  The report authored by Coral Beach noted that “due to limitations in available testing methods, FDA was not able to definitively determine the form of chromium in the cinnamon-apple puree sample.”  This is a serious deficiency of the FDA capacity to analyze foods and determine risk associated with toxins.  The FDA receives bountiful funding and there should be no excuse for the Agency not to have state-of-the-art analytical equipment.

Despite the rising number of affected children, the basic question has not been answered of how lead levels exceeding 2,000 times the violative standard were present in the product. To date the cinnamon additive has received considerable scrutiny but as previously posted, the level of lead determined in the puree could not have been derived from the cinnamon alone suggesting either accidental or deliberate contamination along the chain of production and handling from Ecuador to Florida.  With the resources available to the FDA and other agencies, assuming there is interdepartmental and disciplinary cooperation, an answer to the outstanding question has relevance to both imported and domestically produced food products. The time for speculation has long since passed give that the problem emerged in October 2023.

The United States District Court for the Eastern District of Pennsylvania ruled against Eat Just Inc. and Good Meat Inc. in a civil action claiming non-payment to equipment supplier ABEC. The two companies controlled by Josh Tetrick claimed that the dispute relating to unpaid debt should be subject to arbitration. Accordingly, ABEC the supplier of equipment and services to Good Meat will proceed in civil court for payment.

Presumably as a delaying tactic, Good Meat claimed that payment to ABEC should be subject to arbitration claiming a breach of contract under Delaware law. The ruling by Judge Wendy Beetlestone supported allegations by ABEC that Good Meat Inc. and Eat Just Inc. are subject to common control by Josh Tetrick and that the two companies have comingled corporate assets.  Good Meat did not regularly prepare financial reports in accordance with generally accepted accounting principles and failed to properly administer its corporate form as separate from Eat Just.  The Court agreed with ABEC contentions that Good Meat is allegedly capitalized with assets from Eat Just and used Eat Just resources.

The Court established that Tetrick “misrepresented to ABEC the financial situation as to Good Meat.”  In their pleading, ABEC claimed “an overall element of fraud, injustice and unfairness” specifically that Eat Just avoided liability for payment by misrepresenting the true nature and financial health of Good Meat.

The result of the Court decision to deny arbitration and the piercing of the corporate veil exposes Tetrick and his various companies to legal action to obtain payment for equipment and services. These were provided in terms of both a pilot plant agreement entered into in June 2021 for $14.7 million and an August agreement to develop bioreactors to the value of $550 million.

Despite extensive investment by venture capital companies including the sovereign fund of a Middle-east nation, the various companies established and controlled by Josh Tetrick appear to be unable to meet their commitments and their demise is a forgone conclusion.

Amos Miller a consistent and serial scofflaw who has engaged in litigation with federal authorities since 2016 now operates under a strict consent decree. His operations are limited to the state of Pennsylvania unless food products are processed under USDA inspection.

His establishment was the subject of a recent inspection by the Pennsylvania Department of Agriculture investigating outbreaks of Shiga-toxin colibacillosis in Michigan and New York.  It is alleged that eggnog and other dairy products produced by Miller produced using unpasteurized milk were shipped across state lines in violation of federal law and the consent decree.

If found to be in violation of the third consecutive consent agreement signed in 2023, Miller would be subject to court sanction and penalties.

Starbucks Corporation is adding an egg sandwich to the permanent menu together with a potato and cheddar bake to provide vegetarian options high in protein. 

It is evident that to attract new customers and retain loyalty, coffee chains serving food items must refresh menus by introducing novel products that satisfy changing tastes.

Starbucks egg-bites are now available in Costco as an eat-at-home breakfast option.

In October a dead polar bear in the most Northern community in Alaska yielded a positive diagnosis of avian influenza. This case is similar to the diagnosis made in a brown bear in Canada during early December.

There is concern that avian influenza strain H5N1 is infecting marine mammals including seals and sea lions with evident animal-to-animal transmission. Terrestrial carnivores including mountain lions, coyotes, foxes and others have been infected from scavenging dead and dying birds. Evidence of intra-herd transmission of H5N1 in mink was described in Spain with demonstration of mutations facilitating infection of a non-avian host.

Polar bears normally prey on seals but due to climate change resulting in diminished sea ice, hungry bears will scavenge dead animals and birds and garbage in the proximity to human habitation.  Recently the Alaska Department of Environmental Conservation has described H5N1 mortality among marine birds native to the North Slope.

An in-store test differentiating between cage-free and conventional eggs was recently concluded in 63 Family Dollar locations.  Signage was installed in the refrigerated display coolers of the stores clearly identifying cage-free eggs.  The trial also included supplemental in-store messaging relating to the differences between cage-free and conventional cage-derived eggs.

In 2016 Dollar Tree committed to offer only cage-free eggs by 2025, subject to available supply, affordability and shopper demand.  It is apparent, as with many retail chains, especially those catering to lower income demographics that compliance dates have been either extended indefinitely or chains have committed to selling both categories of eggs.

Dollar General, a major competitor of Dollar Tree will not transition to cage-free eggs but will offer only conventional eggs.  In their statement, Dollar General noted “while we are hopeful with the passage of time the price of cage-free in-shell eggs will decline so that cage-free eggs become a viable equally affordable option, our responsibility remains oriented towards our customers and shareholders.”

In a press release on January 4^th USPOULTRY announced that recently completed projects funded by the USPOULTRY Foundation will be publicized at the 2024 IPPE.  The Let’s Talk Research – Current Poultry Research and Findings program will take place on Thursday February 1^st in the TECHTalk Theater in B Hall at Booth B48027 from 09H30 to noon.  Projects to be discussed will include:-

• Competitive inhibition of pathogenic Enterococcus cecorum by avirulent strains - Dr. Mitsu Suyemogo, College of Veterinary Medicine, North Carolina State University

• Enhancing immunogenicity and protective efficacy of recombinant infectious laryngotracheitis vaccines in broiler chickens - Dr. Ravi Kulkarni, College of Veterinary Medicine, North Carolina State University

• Automatize tracking of laying hens in cage-free aviary environment using affordable RFID chips - Dr. Prafulla Regmi, University of Georgia

• Evaluation of egg wash sanitizers to reduce Salmonella contamination on and in turkey eggs - Ted Brown, Cargill Food Safety and Scientific Services

• Identification of genetic determinants facilitate Campylobacter jejuni survival during processing – Dr. Jeremiah Johnson, University of Tennessee

• Investigation into the cause and prevention of false layer syndrome – Dr. Brian Jordan, University of Georgia

USPOULTRY has extended $36 million in grants for broiler, turkey and commercial egg research.  Grants often serve as seed money to establish a program in an institution or university that subsequently attracts public sector funding. The USPOULTRY program contributes to resolution of current and emerging problems in the poultry industry.

Associated Grocers has partnered with ReposiTrak to deploy traceability technology to support independent supermarkets in five southern states.  The objective is to assist their customers to comply with traceability requirements under the Food Safety and Modernization Act. (FSMA)

Associated Grocers achieved compliance under FSMA Section 204 during 2021 with the recognition of their responsibility to assist independent supermarkets to comply with record- keeping in advance of the January 2026 deadline.  At this time in the event of a recall it will be necessary for retailers to remove potentially contaminated food from their stores requiring a comprehensive chain of traceability.

David Politc, senior vice president and CIO for Associated Grocers noted, “Food traceability adds a new layer of complexity to day-to-day operations for many of our members and it was important for us to tackle this problem and find a solution that works for these retailers.”

The need for a system is indicated by the fact that at least one month after the recall of pouches of applesauce puree contaminated with lead, the affected product was still on shelves at two dollar-chains exposing infants and children to a potentially toxic product. This product is responsible for over 300 confirmed cases and many as yet undiagnosed.

Carrefour has decided to suspend marketing products supplied by PepsiCo.  The decision will affect 9,000 stores in four nations.  Carrefour operated 14,400 stores worldwide at the end of 2022.

In France it is customary for retail chains to negotiate prices with suppliers during January of each  year.  The process is subject to oversight by the Departments of Agriculture and finance to restrain inflation. Discussions between major suppliers and retail chains determine both wholesale and retail prices. The process is also intended to extend preferences to farmers and producers in France. 

The impact of COVID restrictions in 2020 through 2021with disruption of supply chains led to severe food inflation in France that was reflected at the checkout counter.  The political fallout resulted in the Government “suggesting” that negotiations should be advanced to fourth quarter of 2023.  Obviously supermarket chains have actively pressured suppliers for a rollback to pre-COVID prices.

The decision by Carrefour will probably be reflected in negotiations with other suppliers and it is anticipated that the suspension of PepsiCo may lead to similar action by other chains.

Ramon Laguarta, Chairman and CEO of PepsiCo responded to questions concerning pricing in an October 10th 2023 investor call.  He stated, “We have been making decisions around affordability making sure that our brands continue to be within affordable price points to consumers.”  He added, “We have been reducing portion size of our products and making sure that we are still affordable.”

Pressure by supermarket chains in the U.S. has resulted in an upsurge in private brands that compete favorably on price with consumer recognition of equivalent quality.  The situation facing packaged food manufacturers is illustrated by the recent results of ConAgra Brands.  In their published figures for Q2 fiscal 2024 ending November 26th 2023, the International Segment reported a decline in operating profit from $24 million to $6 million on revenue of $280 million compared to $260 million, compared to the corresponding second quarter of fiscal 2023. Buying pressure by retail chains has reduced margins with the benefit passed on to consumers in a competitive environment.

The Ohio State University College of Veterinary Medicine has recognized Dr. Dennis Summers as the 2023 Distinguished Alumnus. Dr. Summers is Chief of the Division of Animal Health responsible for protecting and promoting the health of Ohio livestock and poultry.

Dr. Summers was born and raised in Muskingum County and earned a bachelor's degree in animal science at The Ohio State University followed by the Doctor of Veterinary Medicine degree in 2006.  In 2019, Dr. Summers was certified as a member of the American College of Veterinary Preventive Medicine.

Dr. Summers serves as a Captain in the United States Army Reserve as an Army Medical Officer.

Following graduation, Dr. Summers practiced in Vermont and Pennsylvania with a concentration on dairy medicine before joining the Ohio Department of Agriculture.

On his appointment as State Veterinarian, Dr. Summers commented that one of his responsibilities would be to support the poultry industry and protect it from disease.  The Ohio Animal Diagnostic Laboratory has functioned at a high level of efficiency in past weeks following numerous outbreaks of HPAI with six large commercial farms impacted requiring depopulation of close to 4 million birds.

Following a recent announcement that Danone would undertake a review of brands and explore divestment of the Horizon Organic and Wallaby businesses, sale of the two enterprises to Platinum Equity was announced at the beginning of January.

Horizon Organic is a certified organic U.S. dairy producer with a range including eggs, milk, yogurt and butter.  Wallaby is based in Australia and manufactures and distributes yogurt.

Adam Cooper, Managing Director at Platinum Equity noted, “We are excited about Horizon Organic’s potential as an independent business with a renewed sense of focus and we have a commitment to investing in its success.”  He added, “We look forward to partnering with the Horizon Organic management team to ensure a seamless transition and to chart a path for continued growth and expansion.”

Antoine de Saint-Affrique, CEO of Danone, commented on the divestment, stating, “As part of our renewed Danone strategy, we committed to a portfolio review and asset rotation for businesses that fell outside our priority growth areas to focus on value creation.  Today marks an important milestone in delivering this commitment while giving Horizon Organic and Wallaby businesses the opportunity to thrive.”

The Purdue University/CME Group Ag. Economy Barometer fell by 1 point from  November to 114 in December.  The two components of the Barometer also fell 1 point each from November.  The Current Conditions Index for December attained 112 and the Futures Expectation Index was 115.  These components were respectively 17 percent and 6 percent lower than in December 2022. The Purdue/CME Barometer is based on responses from approximately 400 producers contacted by telephone during the period December 4^th through 8^th, 2023.

U.S. farmers anticipate lower inflation and a reduction in interest rates in 2024 contributing to a 2-point increase in the Farm Financial Performance Index to 97. Almost half of the farmers surveyed considered that interest rates in 2024 would fall between 2 and 4 percent.

Farmers expressed concern over potentially lower crop and livestock prices in 2024 coupled with higher input costs that will constrain income.

Following an attack on December 30^th, shipping company Maersk of Denmark has announced the suspension of marine operations in the Red Sea and Gulf of Aden.  At approximately 18H00 CET, the Maersk Hangzhou was attacked by a missile and then by four fast boats in an attempt to board the vessel.  The security team issued a distress call and defended the vessel. Three of the boats presumably manned by Houthi terrorists were sunk by a helicopter deployed by a U.S. responding naval vessel.

The combined naval forces of a number of western nations led by the U.S. are maintaining passage through the Bab al-Mandab Strait despite the presence of an Iranian destroyer. This vessel has been presumably stationed to protect Iran’s surrogate Houthi terrorists supplied by Iran and using resources captured from the armed forces of Yemen.

Interference in passage of merchant vessels carrying containers and liquid cargos through the Red Sea, north and southbound from the Suez Canal represents an obstruction to international shipping and will require vigorous suppressive action by international labor forces including interdiction along the coast of Yemen.

Freight rates are spiking as a result of interference in passage through the Red Sea. The Shanghai Containerized Freight Index is up 40 percent over the past week since vessels will now have to transit the Cape of Good Hope. Platts Indexes have increased from 100 to 150 percent from north Asia to the Mediterranean and northern European ports.

The co-sponsors of the International Production and Processing Expo (IPPE) have scheduled the annual 2024 Animal Agriculture Sustainability Summit in Room B 405/406 on Tuesday, January 30^th from 09h00 to noon. 

The keynote speaker will be Dr. Frank Mitloehner, Professor and Air Quality Specialist in Cooperative Extension at the University of California-Davis.

 Presenters at the Summit will include:

• Ryan Bennett, Executive Director of the U.S. Roundtable for Sustainable Poultry and Eggs
   
• Laura Moody, Executive Director Institute for Feed Education and Research at the American Feed Industry Association
   
• Eric Mittenthal, Chief Strategy Officer, The Protein Pact
   
• Dr. Heather Fowler, Director of Producer and Public Health, the Pork Board
   

Nestle has recalled some batches of EXPERT Pro infant formula as a result of contamination with Cronobacter sakazakii.  The formula was marketed in twelve E.U. nations.

Press reports did not indicate when the contamination was detected whether at routine in-plant quality control or by food safety agencies in nations where the product was sold.

In a related action, Mead Johnson Nutrition of Canada is recalling some batches of Enfamil brand Nutramigen A+ infant formula due to possible Cronobacter sakazakii contamination. 

There have been no reported illnesses associated with the consumption of these products, but given recent history, manufacturers of infant formula are exercising a high degree of caution. Manufacturers of infant formula are now aware of the dangers of Cronobacter contamination following reports of mortality in the E.U. and the U.S.  The potential pathogen can be present in the environment of a production plant resulting in intermittent contamination of product.  This requires specific sampling and quality control protocols for each production unit.

In November, AgriStats petitioned for a change in venue of the case filed by the Department of Justice to a Federal Court in the District of Indiana where the Company is domiciled.  Attorneys General representing six states are opposing the request and are demanding that the case should be heard in a Federal Court in the District of Minnesota.  This is based on AgriStats having used a Minnesota address to invoice subscribers in addition to alleged collusion with four meat processors in the state and ongoing litigation relating to antitrust allegations.  It is noted that Agri Stats was previously released as a defendant in a civil case heard in the Northern District of Illinois.

Effective January 1^st 2024, only Proposition#12 compliant pork can be sold in California.  This reality follows prolonged litigation all the way to the Supreme Court, opposing the restrictions on products derived from sows held in gestation crates.

Requirements under Proposition#12 relating to calves and laying hens were resolved years ago with the egg-industry making necessary investment in modifying cage housing and erecting new buildings and complexes compliant with California regulations.

Satisfying the requirements for Proposition#2 in 2008 and the subsequent Proposition#12 have increased the cost of eggs to consumers in California. This is based on higher fixed and variable production costs and also westward transport from producing states in the Midwest, Arizonia and Utah.

Currently there is a wide differential in both wholesale and retail prices between Midwest and California attributed to the loss of more than 4.5 million hens in the state this past quarter as a result of HPAI.

In a press release dated January 3^rd Cal-Maine Foods Inc. (CALM) announced results for the 2^nd Quarter of FY 2024 ending December 2^nd 2023. This report summarizes data provided in the Company release and the concurrently filed Q-10 Report

Cal-Maine represents a bellwether for the shell egg sector as the only public-quoted pure-play company in the industry, supplying 21 percent of domestic shell egg consumption. The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as $ x 1,000 except EPS)

Notes: $0.5 million ‘other income,’ Q2 2024 compared to $1.1 million in Q2 FY2023:

$ 0.30 million royalty Income, Q2 2024 compared to $0.34 million Q2 FY2023

$7.0 million interest income, Q2 FY2024 compared to $9.9 million Q2 FY2023

$0.4 million loss on non-controlling interest Q2 2024 compared to $0.3 million Q2 FY2023

Fassio Farms acquisition in Q2 2024: 1.2 million hens, housing, packing plant and feed mill etc.

for $53.7 million representing $44.80/hen

Trailing P/E 4.4

52-Week Range in Share Price: $42.25 to $61.91 50-day Moving average $50.28

Market Close, Wednesday, January 3^rd $54.86 pre-release.

Post release, after-hours 18H15, down 7.6 percent to $50.69.

In reviewing the CALM Q2 2024 quarterly report and the SEC Q-10 submission the following calculated values represent key data for the most recent Quarter of FY 2024. (Q2 for FY 2023 and percentage differences in parentheses):-

• Shell egg sales attained $498,504 million in Q2 2024 based on shell eggs comprising 95.3 percent of total revenue. ($769,695 million, in Q2 2023, based on 96.0 percent of revenue). (Sales value for shell eggs down 35.2% reflecting lower average unit value).

• Dozen shell eggs sold (thousands): 288,173 (284,086; +1.4%)
• Average selling price of all shell eggs: $1.73 per dozen; ($2.71 per dozen; -36.2%).
• Average selling price of specialty eggs (excluding co-pack): $2.28 cents per dozen; ($2.37 per dozen; -3.8%).
• Average selling price of generic eggs: $1.46 cents per dozen; ($2.89 cents per dozen; -49.5%).
• Differential between specialty eggs and generic eggs: +$0.82 cents per dozen; (-$0.52 per dozen; +257.7%)
• Specialty eggs as a proportion of volume sold: 33.2%; (33.8%; -1.8%)
• Specialty eggs as a proportion of sales value: 43.3%; (29.4%; +47.2%)
• Proportion of eggs sold that were produced by Cal-Maine and their contract flocks in Q2 FY2024 : 92.0% (92.0%; no change).
• Farm feed cost: 55.4 cents per dozen, (68.5 cents per dozen, -19.1%) Includes specialty and breeder diets.
• Other farm costs attained 43.11 cents per dozen (38.6 cents per dozen; +11.6%) due to higher labor, facility and flock amortization costs
• Egg product sales in Q2 FY 2024 attained $20.0 million or 6.1% of sales value at a unit price of $1.18 per lb. For Q2 2023, sales of $28.1 million represented 3.5% of sales, down 28.8% with a unit price of $1.79 per lb. down 34.0% in unit value.
• Cal-Maine Foods maintained a flock of 41.2 million hens on average during FY 2023 with 10.8 million pullets plus parent breeders representing less than two percent of the total flock. 

The following observations relate to the comparison of Q2 2024 with the corresponding Q2 FY2023:-

• Cal-Maine Foods was not affected by the 2022-2023 HPAI epornitic during FY 2022 or FY 2023. During Late December 2023 (Q3 FY 2024) the Chase, KS. Complex comprising 1.5 million hens and 240,000 pullets, representing 3.3% of the total flock was depopulated as a result of HPAI.
• Q2 of FY 2024 represented a less favorable marketing comparison to Q2 FY 2023 based on lower prices for shell eggs as flocks were re-populated, coupled with restoration of normal consumer demand.
• Comparing Q2 FY 2024 with Q2 FY 2023 gross profit was impacted negatively by lower unit revenue for generic eggs although with a benefit from specialty eggs. The 19.1 percent lower feed cost to 55.4 cents per dozen was partly offset by 11.6 percent higher farm production costs attaining 43.1 cents per dozen, Comparable farm production costs were $0.99 and $1.07 per dozen respectively for Q2 2024 and Q2 2023.
• In a market characterized by low unit prices, the relative contribution of specialty eggs is more important to net earnings in contrast to an up-market for conventional eggs. Normality was restored in Q2 FY 2024 with generic eggs at a lower unit price and presumably margin compared to specialty eggs.
• The Family-trust and other insider shareholding amounted to 10.9 percent of equity, with institutions holding 98.5 percent. Shares short on December 15^th comprised 14.2 percent of float.

In commenting on Q2 results Sherman Miller, president and CEO stated, “Cal-Maine Foods delivered solid financial and operating performance for the second quarter of fiscal 2024 in the face of dynamic market conditions. Our sales reflect a different market environment from a year ago, with significantly lower average selling prices. However, our total volumes sold were up slightly over a year ago, as consumer demand for shell eggs continued to be favorable in the quarter, especially leading up to the Thanksgiving holiday. As always, we strive to offer consumers a wide range of quality choices in shell eggs as well as enhanced egg products offerings. Our ability to meet changing demand trends with a favorable product mix has been an important differentiator for Cal-Maine Foods. With solid execution, we continued to meet the needs of our customers. We commend our managers and employees across our production facilities who continued to efficiently manage our operations and keep pace with changing demand”.

In relation to expansion Miller stated “During the second quarter, we completed the acquisition of the assets of Fassio Egg Farms, Inc. a shell egg production and processing business located in Erda, Utah, outside of Salt Lake City. The additional production capacity, especially for cage-free eggs, will enhance our ability to serve our valued customers in this important market area. Following the end of the second quarter, we announced a definitive agreement to acquire from Tyson Foods, Inc. a recently closed broiler processing plant, hatchery and feed mill located in Dexter, Missouri. We expect to complete the acquisition in our third fiscal quarter and to repurpose the assets for use in egg and egg products production”.

The Q-10 Report documented approved capital investment of $201 million for cage-free conversions and additional upgrades to processing for FY 2024 through FY 2027. Of this total $127 million has been committed with $73 million to be expended.

During late 2022 Cal-Maine Foods joined in the formation of ProEgg, Inc. a Capper-Volstead Act Farmers’ Cooperative to distribute eggs in 13 western states. The objective is to enhance service to customers in the region by ensuring a secure supply chain.

A previous edition of EGG-NEWS confirmed widespread salmonellosis attributed to cantaloupes imported into both U.S. and Canada from Mexico.  According to FDA import alert #22-1 dated December 20^th, cantaloupes will be detained without physical examination unless supplied by a company appearing on an approved Green List.

Mexico has history of supplying cantaloupes with Salmonella contamination including multi- state outbreaks associated with S. Poona and S. Anatum.

Cantaloupes can be contaminated with Salmonella by contact with irrigation water containing either sewage or runoff from CAFOs, using contaminated water in cleaning and cooling, from insect and rodent pests, deficiencies in personal hygiene and cleaning of plants and equipment.

Field investigations by FDA in Mexico disclosed deviations from acceptable hygienic practices in cultivation, processing and packaging.  In addition, cantaloupes from different areas are comingled complicating the process of traceback in the event of a foodborne outbreak.

In 2005 the FDA entered into a memorandum of understanding with SENASICA, the Federal agency responsible for food safety in Mexico. The objective was to identify and authorize suppliers capable of delivering a non-contaminated product.  Companies were evaluated according to their irrigation practices, packing and cooling, worker health and hygiene, sanitary facilities in field and packing houses and transportation.

Companies not currently approved under the Green List are required to demonstrate five shipments to be free of Salmonella and to comply with acceptable standards throughout the production chain.

Based on the incidence rate of salmonellosis in both the U.S. and Canada and the severity of infection that emerged in October 2023, the action by FDA, although belated, FDA action is justified by 302 confirmed cases in the U.S. in 42 states and 153 cases in Canada with a total of 11 fatalities through mid-December 2023.

In a December 29^th announcement, Cal-Maine Foods announced that it will acquire the redundant broiler processing plant in Dexter, MO. from Tyson Foods.  Cal-Maine intends converting the plant to an egg grading facility that presumably will include manufacture of egg products.  Tyson will also enter into agreements with some of the displaced Tyson contract farmers to convert broiler growing facilities to produce cage-free and pasture-raised eggs. 

Previously Cal-Maine Foods extended production contracts to growers for Townsend’s in North Carolina following the bankruptcy of the family-owned enterprise.

Sherman Miller, president and CEO of Cal-Maine Foods stated, “We are pleased to announce the proposed acquisition of the assets of Tyson former broiler processing facility in Dexter, MO.  This transaction is consistent with our growth strategy to expand our business through selective acquisitions in addition to our organic growth initiatives.”  Miller added, “We look forward to cooperating with the Tyson team to close the transaction and to working with contract growers who will support our shell-egg production capability.  As we extend our market reach, we remain focused on the efficient and sustainable management of our existing and acquired operations and meeting the demands of our customers.”

Assembly Bill 1228 introduced by Chris Holden (D-Pasadena) and enacted on Labor Day 2023 by Governor Gavin Newson will impact 550,000 fast food workers.  The minimum wage for workers will now be $20 per hour and will be subject to escalation in accordance with the decisions of the Fast-Food Council.

The first casualties of the minimum wage law are 1,200 delivery drivers employed by Pizza Hut in Los Angeles, Orange and Riverside counties.  Franchises of Pizza Hut will make use of delivery services including DoorDash, Grubhub and Uber Eats adding to the cost of products to consumers.  Would it not have been more convenient and beneficial to the workers and consumers for Pizza Hut to have simply passed on the additional wage? 

By using a third-party delivery company, consumers will obviously pay more for their doorbell ring.  It is possible that many of the displaced Pizza Hut delivery drivers will be employed by the third-party companies who apparently are not obligated to pay the higher rates as mandated by Assembly Bill 1228.  California can therefore expect a new Assembly bill to close any possible workaround of the minimum wage for QSR workers.

During the January 2024 IPPE Chore-Time will present informational seminars of relevance to the egg industry by company experts on Booth B16 017.

• Frank Luttels will describe improvements in floor, feeding and aviary systems on Tuesday January 30^th at 13H00, repeated on Wednesday January 31^st at 11H00.

• Bob Christenson will discuss environmental control with reference to emerging technologies to improve house management.  The presentation will take place on Tuesday January 30^th at 14H00, repeated on Wednesday January 31^st at 13H00.

The Chore-Time product range includes Valego™ Nests and Vike™ Aviary Systems.  Ventilation products include the Chore-Tronics® Catalyst™ Controller used with Endura Max™ direct-drive fans.

A recent article in Science* identified the mutations that have occurred in Marek’s disease virus leading to increased virulence.  The study applied paleogenomics, allowing investigators to sequence the MDV genomes from archaeologic specimens of chickens with a comparison to more recent viral isolates from clinical cases. 

It was determined that Marek’s disease virus has circulated in Eurasia for at least a thousand years.  Archaic viruses and those dating to the turn of the 20^th century were essentially mild in their pathogenicity and did not cause tumors according to the original descriptions by Professor Josef Marek in1907.

Increased virulence is associated with changes in the Meq gene as a result of point mutations that most probably occurred during the early 1920s.  It was also determined that Eurasian and North American lineages developed independently in their virulence. Meq is directly associated with oncogenicity and has acquired enhanced ability to transactivate target genes resulting in tumor generation.

The research team postulated that intensification of chicken production with concentration of birds in large flocks commencing approximately 100 years ago facilitated the mutation in the Meq gene encoding viral glycoproteins including gEgI responsible for enhanced virulence.  These glycoproteins are targets for an immune response modulated by the major histocompatibility complex (MHC) class II.

In addition to concentration of chickens in large flocks, breeding for traits of commercial significance may have concurrently altered the MHC driving Marek’s disease virus to undergo mutations in the direction of oncogenesis as evidenced by the emergence of vvND strains.

The conclusions from the study have relevance to both breeding and development of vaccines.

*Fiddaman, S.R. et al.  Ancient Chicken Remains Reveal the Origins of Virulence in Marek’s Disease Virus Science 382:1276-1281 (2023)

The Food Standards Agency of the U.K. has warned consumers against purchase of Mrs. Kirkham’s Lancashire Cheese products.  Widely distributed, the gourmet cheese line was manufactured with unpasteurized milk.  The E.coli O145 strain producing Shiga toxin resulted in 30 diagnosed cases of which 11 were hospitalized, one with hemolytic uremic syndrome and with one fatality. 

No commercial dairy food should be produced using un-pasteurized milk given the risk of infection from a wide range of pathogens including E.coli, Salmonella and Listeria among others.

The move in many states to permit sale and distribution of raw milk is inexplicable other than some form of defiance against science and regulation. These “Freedom to Infect” laws will take their toll on consumers and especially children.

The carcass of a dead spoonbill in Taiwan yielded H5N1 HPAI on December 11^th.  The area in which the bird was found was placed under quarantine with surveillance initiated over a 1.8 square mile area to be continued for three months.

Japan isolated H5N6 avian influenza virus from a dead peregrine falcon in mid-December in the Saga prefecture.  This follows the first outbreak of HPAI in a chicken farm during late November.

Raptors are frequently infected through consuming dead or moribund avian prey including pigeons. Death of this falcon presumes the presence of infection among wild birds presaging outbreaks in commercial flocks repeating the seasonal waves of HPAI in recent years.

Outbreaks of HPAI in backyard and commercial flocks in many regions of the world are preceded by mortality or isolation of the virus on surveillance over migratory waterfowl and marine birds.  This has been the pattern in Japan, South Korea, nations of South America, Canada and the U.S. and the E.U. in recent years.

The Competition Commission of Malaysia has sanctioned and fined the Nation’s five major feed producers for price fixing.  The implicated companies were fined a total of $90 million for establishing a cartel in 2021.  Investigations confirmed that the group engaged in communications to unjustly raise feed prices that were attributed to “escalation in the cost of ingredients”.  According to the Competition Commission, “There was a correlation between communications and pricing decisions, suggesting a deliberate effort to synchronize actions and to compromise competition within the chicken poultry feed market.”

The Competition Commission pointed to the “identical quantum increases in prices simultaneously, although unique formulations should have resulted in distinct cost structures for each enterprise in the determination of price.  The deliberate collective alignment in price increment considering the differences in raw material composition raised further concerns about the concerted practices by the five enterprises”.

In Malaysia, independent farmers purchase feed for broiler flocks that are sold to processors.  In some cases, there is a measure of integration with feed companies supplying chicks and undertaking to repurchase live broilers.

In addition to fines, the implicated companies were ordered to cease participation in any cartel, submit monthly feed price increases or decreases for review and to comply with competition law.

The CEO of the Competition Commission stated, “We have been tasked by the Government to eradicate cartels and we will continue to do so without fear or favor.  As we have intimated before, we are still monitoring the chicken industry since the recent Government decision to discontinue subsidies and price control on chicken.”

The USPOULTRY Foundation and the Poultry Science Association Foundation have scheduled a Career Fair for veterinary and doctoral students at the International Production and Processing Expo.  The event will be held in Room B309 Georgia World Congress Center from 08H00 to 11H30 on January 30^th through February 1^st, 2024.

The event will assist member companies of USPOULTRY to make contact with post-doctoral, early Ph.D. and veterinary students.

The Doctoral Career Fair was established three years ago following the success of the College Student Career Program held during the IPPE.

Mike Levengood of Perdue Farms and Chairman of the USPOULTRY Foundation noted, “This is a great service to our two organizations in providing the poultry and allied industries with a need for trained personnel in genetics, health, pharmaceuticals and nutrition.”

For additional information and sign-up access, contact Barbara Jenkins <BJenkins@USPOULTRY.org>

After a successful market trial, Nestle will reintroduce Voie Gras, a plant-based alternative to   foie gras, under the Garden Gourmet™ brand.

The product comprises a soy-protein base with a  miso paste and spices.  The product has a similar texture and flavor to foie gras but is produced without the inherent cruelty associated with force-feeding of waterfowl.

The product was developed at the Nestle R&D center in Singen, Germany by a team of culinary experts. Voie Gras is packed in a glass jar and will be displayed in deli refrigerators.

Torsten Pohl, Global Head of  R&D for Nestle, stated, “Our teams worked hard to improve the recipe, taste and shelf-life bringing us even closer to animal-base foie gras.  He added, “We are now capable of producing it on a larger scale enabling us to conduct a second seasonal launch.”

On Friday, December 22nd, the Department of Homeland Security authorized reopening of the rail crossings at Eagle Pass and El Paso, Texas.  The bridges were closed to rail traffic on Monday, December 18th as a result of an upsurge in migrants that overwhelmed U.S. Customs and Border Protection. 

The precipitous action had a severe impact on the rail industry and U.S. producers.  It is estimated that exports of up to one million bushels of grain were lost each day as a result of the closure.  Manufacturers in the U.S. were deprived of critical components from affiliate factories in Mexico, threatening jobs and productivity. 

The resumption of rail traffic was welcomed by agricultural and industry sources on both sides of the border. Ian Jefferies, CEO of the Association of American Railroads, stated, “These ill-advised closures were a blunt-forced tool that did nothing to bolster law enforcement capacity.”

The Foreign Ministry of Mexico noted, “It was necessary to reopen border crossings as soon as possible to guarantee dynamic trade flows and enhance the economic relationship between the U.S. and Mexico.”  The poultry industry in Mexico was extremely vulnerable due to the low storage levels of yellow corn and soybeans.  The major farm lobby, CNA, analogous to the American Farm Bureau Federation, stated, “The lack of supplies in Mexico caused by the closures was affecting food production, raising costs and putting food security at risk in the country.”

The decision to close the Eagle Pass and El Paso, TX. rail crossings was somewhat analogous to the injudicious action of George Fotheringay, the major character in the 1898 novel by H.G. Wells, The Man Who Could Work Miracles. In the futuristic novel he stopped the rotation of the earth to buy time to solve his problem with disastrous results.  The moral of the story is to be careful what you wish for.  Closing the rail bridges was clearly a knee-jerk reaction without consideration of the consequences and should not be repeated.

Cargill announced that it will intensify efforts to eliminate deforestation and to support land conservation in both direct and indirect supply chains. This has specific reference to South American countries including Brazil. The initiative will be completed within five years. 

Cargill is a frequent target of environmentalists for making promises that are not consistently fulfilled. The latest commitment does appear to be significant given the influence of the company and its importance in world markets—but five years?

Cabana Avicola Feller of the Argentine was recently honored by Hy-Line International in recognition of a 25-year association.

It is noted that recently the company attained 141 saleable day-old pullets from two W-80 flocks depleted at 74 weeks of age.  The two parent-level flocks averaging 13,200 hens produced 141 saleable pullet chicks per cycle representing a 42 percent pullet hatch.

On December 22^nd, the Center for Health Protection of the People’s Republic of China belatedly reported on a case of H5N6 avian influenza.  The patient was a 33-year-old woman living in Bazhong City in Sichuan Province.  Symptoms were apparent on October 20^th, following a visit to a live poultry market with hospitalization two days later and with death on November 14^th.  Since 2014, eighty-eight human cases of H5N6 avian influenza have been diagnosed suggesting a low rate of infection given the duration and the potential number of susceptible individuals exposed.

Since November, public health authorities in the U.S. and Canada have been tracking cases of salmonellosis among consumers of both whole and portioned cantaloupe.  The pathogen responsible is Salmonella Sundsvall isolated from both product and patients.  Effective December 17^th, Canada has recorded 164 confirmed cases with seven fatalities.  Thirty-six percent of the cases investigated were in patients under five years of age and 45 percent were above 65 years old.  In the U.S. 302 cases have been confirmed in 42 states with four fatalities and a hospitalization rate of approximately 30 percent.

Implicated cantaloupes were grown in Mexico and distributed under the Malichita or Rudy brands. Both whole and portioned cantaloupes were distributed widely in the U.S. by retail chains.

Since the affected product has been recalled and in any event is now beyond expiration date, incident cases will decline sharply. The implicated packing plant was closed by authorities in Mexico.

The factors contributing to infection are currently under investigation but unless there is some resolution on causation reoccurence will be a constant threat.

Paramyxovirus infection of pigeons is extending to commercial poultry in the E.U. that have not been adequately vaccinated against Newcastle disease.  Currently, there are outbreaks in Austria where both feral and domestic pigeons are infected with clinical signs apparent in affeced backyardchickens.  Avian paramyxovirus-1 strains responsible for Newcastle disease can be distinguished from pigeon paramyxovirus type-1 that emerged in 1981 and spread widely through Asia Minor and the E.U.

When pigeon paramyxovirus infection became apparent in the U.S., from 2014 onwards it was restricted to racing pigeons and did not affect commercial poultry due to the high level of protective immunity in egg-production and breeder flocks stimulated by routine vaccination.  Spread within racing pigeon coops was suppressed as owners learned to vaccinate their birds with both live and inactivated commercial vaccines.

The Environmental Protection Agency has announced that $600 million will be awarded to eleven selected “Grant Makers” under the Environmental Justice Thriving Communities Grant Making Program.  This initiative will be funded through the Inflation Reduction Act.

The intent is for the eleven selected Grant Makers to disperse funds within each of the ten EPA regions to support disadvantaged communities and community-based nonprofit organizations.  The Grant Makers will receive $50 million each or $100 million in the case of the Research Triangle Institute.  It is anticipated that the sub-grants will be awarded over a three-year period.  Sub-grants will award $150,000 for assessment, the second tier will provide $250,000 for planning and the third tier will be $350,000 for project development.

In commenting on the program, Michael S. Regan, EPA Administrator, stated, “We are removing barriers that have traditionally held communities and applicants back from accessing historic investments in America.  Together in partnership with these Grant Makers, we are taking a giant step forward to a future where every person in America has equal opportunity to breathe clean air, drinking water and live a healthy, productive life.”

The funding if applied will obviously be applied to oppose intensive livestock production through placing restrictions on CAFOs in addition to opposing aspects of power generation and other smoke stack industries.  Inevitably this vast government giveaway will contribute to higher prices for food and energy leading to inflation.

It is evident from USDA and EPA announcements that the current administration is intent on distributing as much of the unspent COVID-related funding under the Inflation Reduction Act and other legislation before the 2024 General election. Congress should claw-back unspent funds to reduce the national debt or find uses for funding that benefit the broad economy and taxpayers.

Bröring Technologies located in Lohne in Germany wishes to establish sales representation in the U.S. for the Bröring range of electronic poultry scales and egg quality testing instruments.  The Company offers attractive margins, a unique and innovative product range and technical support. Contact Thomas Bramlage, <bramlage@broeringtech.com> Sales Manager of Bröring Technology, GmbH. to arrange a discussion during the IPPE.

The Animal Health Directorate in the Department of Agriculture, Land Reform and Rural Development of the Republic of South Africa (RSA) is concerned that since April 2023, approximately one third of the RSA egg production flock has either died or been depopulated as a result of HPAI.  In a recent FAS-GAIN Report, it was noted that 22 outbreaks of H5 avian influenza and 15 attributed to H7 strain of HPAI principally in egg-production flocks, were recently reported to the World Organization for Animal Health.  Egg prices have risen sharply and following in the pattern in other nations have almost doubled due to inadequate supply.  To rebuild the flock, the South African Government has issued permits to import close to a million day old chicks.  To assist the broiler industry, 9 million hatching eggs will be imported over the immediate future together with an additional 31,000 metric tons of poultry meat.

The International Trade Administration Commission of the Republic of South Africa is considering a tariff rebate on imported poultry products.  This concession to reduce the price of both poultry meat and eggs is predictably criticized by the South African Poultry Association. Their myopic and self-concerned response is notwithstanding the evident hardships, especially among the lower income consumer demographic.

Highly Pathogenic Avian Influenza should be regarded as endemic in the Republic of South Africa given the large number of undiagnosed cases in backyard and village flocks and the inability of regulatory authorities and the poultry industry to control the infection.  South Africa is obviously a candidate for wide-scale vaccination since it is now and possibly for the intermediate future, an importing nation invalidating any objection based on “exports”.

According to the Statesman Journal, Linn County in Oregon has introduced rules relating to the location of CAFOs. The County ordinance was motivated by landowners opposed to siting an 11-house broiler unit with a capacity of 580,000 birds.  The new Linn County ordinance mandates a one-mile setback from neighboring properties with residential structures, reducing potential sites for a CAFO in the county from 386 to 89.  Senate Bill 85 considered by the Oregon Legislature would also restrict any CAFO including egg, broiler or livestock production through restraints on handling waste, ground water use and setbacks.

Clearly, the proposal to erect the broiler farm elicited a strong, negative response from residents and landowners. If a Not in my Back Yard approach is extended in Oregon and other states, efficient food production will be constrained leading to higher prices and lower availability. 

CAFOs if appropriately designed and operated are more sustainable and efficient than a large number of small units that ultimately create the same quantity of waste, require possibly more water and produce food at a higher cost.  This problem does not only exist in blue states, the Lincoln Premium Poultry Subsidiary of Costco was forced to relocate the intended location of their complex in Nebraska when initially proposed. Sanderson Farms had to relocate a proposed location in North Carolina for a new processing plant to allow expansion.

In 2017, J&F the holding company for JBS SA., agreed to pay a fine of $2.1 billion as a result of alleged corruption implicating the controlling shareholders Joesley and Wesley Batista, sons of the founder.  Subsequently, the company requested the Supreme Court to rescind the fine based on “prosecutorial actions prejudicial to the claimants”.  The fine was suspended by Supreme Court Justice Dias Toffoli in September although the decision was not made public until late December. Justice Toffoli noted, “There is at the very least reasonable doubt as to whether the company adhered to the agreement and that justifies the suspension of payments.”  According to Reuters, Justice Toffoli has also allowed a leniency agreement for Odebrecht, a construction firm, based on evidence of possible collusion between prosecutors and judges.

The ruling now allows J&F to renegotiate any penalties and to “correct any abuses”.

Judge Toffoli will obviously have a comfortable retirement.

In Brazil, anything is possible!

Based on the Avian Academy that provides educational material for schoolteachers, the College of Agricultural and Environmental Sciences of the University of Georgia has developed a curriculum for middle and high school students.  The courses are intended to encourage school students to consider careers in poultry production.

The point person for the CAES Department of Poultry Science, Jessica Fife, worked with her counterparts in the State Department of Education to establish curriculums in avian science and biotechnology.  The Georgia Agricultural Education Program now promotes education and supports classroom instruction to encourage student involvement.  The success of the avian science curriculum is now extending beyond Georgia as the program has been adopted by other states with significant poultry production.

Dr. Brian Jordan of the University of Georgia Departments of Poultry Science and Population Health will present a seminar entitled “Evaluating IB vaccine take by real-time PCR”.  The role of infectious bronchitis in depressing growth and increasing plant condemnation and a reducing egg production is well established.  Despite the availability of a broad range of live attenuated IB vaccines, clinical problems occur in the field attributed to defective vaccination.  The presentation by Dr. Jordan will demonstrate the role of PCR in evaluating immunity after administration of IB vaccines at day of hatch.  The program will stress sample size, timing of sampling and interpretation of results.

The event will take place from 12H00 to 13H00 EST on Wednesday January 31st, 2024, in meeting room TBA at the Georgia World Congress Center.

For registration access www.eventbrite.com/e/ippe-luncheon-evaluating-ib-vaccine-take

As we transition from a turbulent 2023 we wish our Subscribers and sponsors a productive and more peaceful coming year

Our hopes for 2024 are:

• An end to the current wave of HPAI and a more rational approach to protection of flocks in high-risk areas by adoption of vaccination to supplement biosecurity.
• A reversal of USDA and EPA policies to place intensive livestock production at a disadvantage. Proposed new rules under the Packers and Stockyards act and limiting pollution from waste discharges should be reconsidered with respect to objectives, economic impact and implementation
• Continued improvement in the economy with an anticipated ‘soft landing”
• Resolution of Congressional deadlock through bipartisanship, allowing passage of appropriations bills, evolution of a practical immigration and border entry policy and reducing unnecessary and wasteful spending.
• Restoration of peace in conflict areas to alleviate suffering

The EGG-NEWS Team wishes you a successful and profitable 2024.

Barbara and I look forward to renewing our friendship at the IPPE

Dr. Michael Watson, currently Associate Administrator of the Animal and Plant Health Inspection Service (APHIS) since 2018, has been promoted to the position of Administrator responsible for operation of the Agency.

Over his career, Dr. Watson has served as an Associate Deputy Administrator for the Marketing and Regulatory Programs, Business Service and as Director of the Human Resources Division.  He previously worked with the U.S. Food and Drug Administration and the Environmental Protection Agency.  Dr. Watson earned a bachelor’s degree in microbiology from the University of Maryland and a doctorate in plant pathology from the University of California, Davis.

Kevin Shea, previously administrator of APHIS, has been reassigned as Senior Advisor in the Office of the Deputy Secretary.  Shea is a 40-year veteran of APHIS and served as Acting Secretary of Agriculture during the 2021 transition. Shea holds a bachelor's degree from the University of Maryland and a law degree from the University of Baltimore.

It is perhaps an advance to have a scientist as head of APHIS.  Although a plant pathologist by training, Dr. Watson obviously has a knowledge base involving microbiology, epidemiology, and virology that will stand him in good stead in facing challenges represented by diseases of livestock. He is confronted with an ongoing epornitic of avian influenza and the potential introduction of African swine fever and other exotic infections that have the ability to devastate livestock production. 

EGG-NEWS and CHICK-NEWS wish him well in his new position and trust that he will effect changes that will represent a more rational approach to the prevention and control of avian influenza. To this end he will have to reconcile the needs of disparate segments of the poultry industry with respect to vaccination given that eradication is a distant and unobtainable aspiration.

According to the Australian Packaging Covenant Organization an Australian nonprofit that establishes national targets for recycling and packaging, there is “no viable alternative” for expanded polystyrene in packaging.  Molded expanded polystyrene is critical for both precision and high-value items in addition to appliances.  Given the reality that expanded polystyrene is required in many applications, programs of collection and recycling must be developed to accommodate accumulation of polystyrene waste.  At present, Australia recycles approximately 30 percent of available material.  A national program entitled Styrocycle has been introduced to encourage consumers to collect and responsibly dispose of polystyrene.

In the U.S. there is considerable use of polystyrene for egg packs. These are inexpensive, effective but not biodegradable.  Since technology is available for recycling, manufacturers and retailers should develop coordinated programs for collection and transport to recycling facilities.

A recent report in Food Safety documents concern in the Republic of Slovakia over their system of food safety.  An audit by a government organization (analogous to the U.S. Government Accountability Office) found that control over the food chain was fragmented with overlap among agency jurisdictions and defects in law relating to the control of food safety.  There is apparently no cohesive system for sharing information relating to violations.

The Vice-president of the Supreme Audit Office commented that the “lack of a comprehensive view of safety in the entire supply chain could harm the targeting effectiveness of official food controls.”  The official with blinding insight noted, “The final effect of the integrated system of official food control should be a more systematic transparent and comprehensive performance of official controls throughout the food chain minimizing the space of so-called gray zones.”

We have seen this movie before.  If the Supreme Audit Office evaluated the U.S. system they would find similar fragmentation, overlap between the USDA, and the Department of Health and Human Services and their subsidiary agencies the FSIS, FDA, CDC among others. This is characterized by the so-called pizza enigma. FSIS has jurisdiction if the pizza has a meat topping, but with only cheese the FDA calls the shots.

The conclusion of the audit conducted in Slovakia was that “the current division of competencies was not sustainable, and the country should look into having one body overseeing food control.”

EGG-NEWS has consistently advocated for a single food safety and nutrition agency incorporating the current responsibilities assigned to the FDA and the USDA.

As a result of closing two major rail crossings on December 18^th  the  CNA, a major agricultural organization in Mexico analogous to our Farm Bureau Federation warned that supplies of soybean meal and yellow corn would run short.  Because of a surge in illegal migrants, the Department of Homeland Security closed the two border bridges. The first connects El Paso, TX with Ciudad Juarez, Mexico and the second is the bridge from Eagle Pass, TX to Piedras Negras, Mexico.  Collectively these crossings account for 45 percent of cross-border shipments.

Union Pacific Corporation noted that the closure had an economic impact exceeding $200 million per day.  The CNA was supported by the Poultry Producers Association of Mexico noting that soybean meal inventory would last less than a week and yellow corn between eight and twenty days.

On our side of the Southwest border, forty agriculture organizations urged the Department of Homeland Security to reopen the rail bridges that are vital to shipping U.S. agricultural products including ethanol. Produce importers and distributors were running short of perishable stock from Mexico.

In a letter to the Secretary of the Department of Homeland Security the RFA stated “It is our firm belief that if food insecurity in Mexico increases, the migrant crisis could actually worsen with more attempts to cross the U.S. border.  The letter added, “A supply chain and potential food security crisis in Mexico can be avoid by reopening the international crossings”.

Fortunately reason prevailed and rail traffic was restored on Friday 22nd.

Following extensive illegal deforestation the state of Rondônia is suing JBS SA and three other packers for illegal purchase of cattle raised on protected areas.  The Jaci-Parana Reserve was established as a nature sanctuary from land subjected to illegal deforestation.  The Reserve was set aside for indigenous people who have been effectively displaced by coercive tactics including murder.  Ranchers have illegally entered the reserve and are producing cattle allegedly sold to JBS and three other packers.  The state of Rondônia is claiming an initial $3.4 million for “invading, occupying, exploiting, environmental damage for economic advantage on protected land”. The lawsuit places damage to the reserve at $1 billion due mainly to illegal logging and raising of cattle. The extent of deforestation and the areas affected are regularly documented using satellite mapping and surveillance.

The Jaci-Parana Reserve was in part funded by the World Bank during the 1990’s after inappropriately funding a highway that encouraged settlers to move to the area. This resulted ultimately in the loss of 40 percent of the State rainforest through the activity of miners, loggers and ranchers.  The reserve extends over 580 square miles and represents an almost irreversible transition of rainforest to grassland.  Illegal possession of previous rainforest acreage was legitimized during the tenure of Jair Bolsonaro the previous President, assisted by a political crony Marcos Rocha, then governor of Rondônia.  In this initiative over 750 land-grabbers gained title to deforested land.

JBS SA claims that 94 percent of their cattle purchases comprise legal animals although the Federal Prosecution Service of Brazil maintains that 12 percent of cattle raised in Rondônia come from restricted areas. Ranchers and packers have become adept at deception through transfer of cattle across State lines and presenting spurious documentation.

As in previous years, a free bus service for field personnel will be available for the 2024 International Production and Processing Expo.  The Members to Atlanta Program will provide complimentary registration and transport from designated location to and from the Expo within a 3-hour drive from Atlanta.

The 2024 IPPE will be held from January 30th through February 1st and will have an expanded trade show floor extending over 615,000 square feet, TECHtalks, a New Product Showcase and an extensive educational program.

To arrange transport using the program, contact Benjamin Starkey at bstarkey@uspoultry.org.

As in previous years, a free bus service for field personnel will be available for the 2024 International Production and Processing Expo.  The Members to Atlanta Program will provide complimentary registration and transport from designated location to and from the Expo within a 3-hour drive from Atlanta.

The 2024 IPPE will be held from January 30th through February 1st and will have an expanded trade show floor extending over 615,000 square feet, TECHtalks, a New Product Showcase and an extensive educational program.

To arrange transport using the program, contact Benjamin Starkey at bstarkey@uspoultry.org.

Nebraska trader, James Clayton Wolf, who pleaded guilty to wire fraud, was sentenced to three years in a Federal prison on Monday, December 18^th by the U.S. District Court for the District of Minnesota.  Wolf sold in excess of $45 million in spurious non-GMO corn and soybeans as certified organic.  In addition to the sentence, Wolf was obliged to forfeit property and other assets valued at $20 million.  Adam Clifford Olson, a nephew of Wolf, was sentenced to time served and supervised release for two years with restitution of $70,000 as a participant in the scheme.

The fact that the misrepresentation could proceed for a prolonged period suggests deficiencies in the system of audits based on documentation and the unwarranted trust placed on pieces of paper. Apparently there was no testing of the commodities handled by Wolf or any other supplier to ascertain GMO-free status. In addition auditors failed to reconcile the magnitude of sales with his supply farms.

Since there was no adverse effect among livestock fed GMO ingredients or among consumers of their products one might question the real-world value of the twofold differential in price between certified organic and conventional ingredients. By extension the USDA Certified Organic program appears to be based on a series of onerous and unnecessary requirements lacking in scientific justification to market food products devoid of quantifiable advantages and appealing to an affluent and misinformed mindset.

Since there is no mandatory testing of commodities for pesticide residues or GM status the large differential in price from conventional products will encourage deception and falsification of documentation, especially with imported ingredients. Wolf was not the first and will certainly not be the last scammer to perpetrate fraud over organic certification.

On Saturday December 16^th a fire at Puglisi Egg Farm in Middletown, DE. destroyed a two-level cage-free house together with the flock of 200,000 hens.

An investigation is in progress to determine the source of the conflagration.