Shane Commentary


US POULTRY Soliciting Pre-proposals on HPAI Research

09/28/2022

In a September 26th release, US POULTRY and the US POULTRY Foundation requested research pre-proposals to conduct research on aspects of highly pathogenic avian influenza (HPAI).

 

Suggested areas of investigation included:

  • Evaluation of shedding of virus from flocks infected with HPAI and persistence of the virus in houses following depopulation.
  • Humane and effective methods to depopulate caged layer and aviary flocks.
  • Possibility of inter-farm transmission of HPAI virus on dust entrained by wind.
  • Surveillance of wild birds, presumably both domestic and migratory waterfowl and small mammals for the presence of AI virus.
  • Enhancement of biosecurity.

 

The topics enumerated in the request for pre-proposals are all relevant but omit vaccination that inevitably will be a necessary component along with biosecurity to prevent outbreaks of HPAI. These items in addition to field and molecular epidemiology should have been investigated by USDA-ARS immediately after the 2015 outbreaks and during the 2022 epornitic. 

The initiative by US POULTRY is commendable but the need for action by an industry association denotes a lack of initiative and imagination by USDA either in internal research or funding studies by academia.  The Department and its APHIS Agency appeared to be stuck in a 1985 mode of attempting to “stamp out” what they consider to be an exotic disease.  Uppermost in the epidemiologic investigations should be a realistic determination of whether HPAI is exotic, seasonally endemic or de facto endemic.  Obviously, the actual status of HPAI in the U.S. and Canada are pivotal to developing appropriate control and prevention measures.  These will rely on a more detailed knowledge of the routes of infection for egg production complexes and turkey grow-out farms. An understanding is required concerning the risk factors for infection and the respective interactions among wild migratory and domestic birds, backyard flocks and commercial operations.  An intriguing question is why broiler grow-out farms remained relatively unscathed during the 2022 epornitic.

 

It is hoped that the Research Committee, in reviewing pre-proposals, will fund projects based on their individual and collective contribution to resolving issues.  Coordination of research activities to prevent duplication and to promote a more comprehensive understanding of the dynamics of HPAI will be necessary.


 

Internal FDA Report on Shortage of Infant Formula Released

09/23/2022

The U.S. Food and Drug Administration (FDA) has issued a long-awaited internal report on the infant formula crisis.  The report was authored by a team headed by Dr. Steven Solomon, Head of the FDA Veterinary Division. The report identified a number of areas of concern involving delays in communication, obvious operational failures and “general lapses”. Recommendations by Dr. Solomon included improved information. technology, intensified training of staff and an updated emergency response system to deal with food safety issues as they arise.

 

Predictably, there will be little retribution for incompetence or dereliction of duty and the crisis will “be handled through the personnel process”. The culture of the FDA is characterized by the public statement by the Director, Dr. Robert Califf, who stated, “We are not going to spend a lot of time going back, we are going to spend our time taking into account what happened and move forward.” Dr. Califf considers that the report provides a “clear road map for the infant formula issue and provides a nice bridge to the overall food program’s evaluation”.

 

In contrast a more detailed and incisive report on the issue was published in Politico entitled, “The FDA’s Food Failure” by Helena Bottemiller Evich on April 8th to which readers are referred.

 

The shortages that emerged still persist with many stores and outlets having 20 percent out-of-stock rates. The FDA may well wish to bury failures at numerous levels leading to the crisis, including the glaring lack of response to a whistle-blower report over three months together with a de facto moratorium on plant inspections attributed to the COVID crisis. 

 

The Administration was obliged to arrange for military transport aircraft to bring in supplies of formula from overseas plants that were hastily approved.  Obvious problems identified in the internal FDA report and by media include extreme concentration of production among a few plants. The Evich exposé identified a preoccupation with achieving production goals and maximizing profit at the expense of quality and safety by Abbott Nutrition, the largest manufacturer of a range of specialty and conventional formulas.

 

Given the self-serving internal FDA report and the disinclination to hold managers within the Agency responsible for lack of response to a potential crisis and dereliction of duty, it is inevitable that a similar food-related crisis will occur in the future.

 

EGG-NEWS has consistently advocated for a dedicated U.S. food safety agency since the best interests of consumers would be served by a single entity suitably funded and staffed and provided with the authority to concentrate on the safety of domestic and imported foods.


 

Extensive International Reach Of The Chinese Communist Party

09/18/2022

Egg-NewsAttorney Dan Harris, of Harris Bricken LLP, recently published a commentary on the influence of the Chinese Communist Party (CCP) on students, citizens and defectors in the U.S.  This caution is especially important in the context of protecting intellectual property.

 

The CCP is intent on extending its influence over Chinese citizens living abroad for both political and commercial benefit.  The CCP employs commercial pressure and intimidation to coerce students and citizens to assist the government. 

 

Harris cites the significant reduction in the importation of canola oil from Canada in 2018, shortly after the arrest of Ms. Meng Wenzhou daughter of the founder of Huawei at the behest of U.S. authorities.  Pressure was placed on state-affiliated importing companies not to purchase Canadian canola oil. 

 

There is extensive evidence that agents of the Communist Party have infiltrated nongovernmental organizations, including business and cultural groups.  Newsweek, after an extensive investigation, determined that the CCP has operated through various channels to influence decisions at the federal, state and local levels to benefit their political and economic interests.  Social media and messaging apps and organizations and academic institutions are involved in promoting activities that benefit China.

 

Agents of the Chinese Communist Party frequently coerce highly trained Chinese citizens living in North America to return to the homeland using threats of retaliation against relatives, including violations of parental custody.  China has established a secret police presence in 54 nations on five continents to extend the reach of the central government designed to intimidate expatriate nationals of China and to exert pressure through harassment, intimidation and threats of retribution with the intent of acquiring intellectual property.

 

The unfortunate corollary of the expanding policy of control exerted by the CCP is that it creates  suspicion for loyal U.S. scientists, academics, businesspeople and employees of Chinese ethnicity in the U.S.

 

The take-home message from Dan Harris is to maintain ever-increasing levels of protection over intellectual property and to be aware of the constant attempts at intrusion to obtain possession of information that could benefit the Communist Party and Nation.


 

California Department Of Food And Agriculture Belatedly Releases Proposition #12 Rules

09/11/2022

Proposition #12 was passed by ballot initiative in November 2018.  The law created by voter adoption prohibited confinement of farm animals, including egg-laying hens, veal calves and breeding sows “in a cruel manner” and prohibits the sale of products in California from farm animals so confined.  The final regulations were released in early September 2022, nine months after the proposed date of implementation of January 1, 2022.  A previous court decision extended a grace period of six months to producers after the rules with respect to Proposition #12 were issued.

 

The requirements that all producers selling livestock products in California comply with the CDFA rules was upheld by the 9th Circuit Court of Appeals that is now the subject of a scheduled hearing by the Supreme Court of the United States (SCOTUS)

 

The regulations are now due to take effect on January 1st 2023. In the interim, the National Pork Producers Council and other agricultural associations, supported by numerous states Attorneys General, have petitioned SCOTUS to rule on the constitutionality of Proposition #12 that may conflict with the Dormant Commerce Clause by interfering in interstate commerce.  The National Pork Producers Council and the American Farm Bureau Federation will present oral arguments before SCOTUS on October 11th, although a ruling is not expected until the spring of 2023.

 

At issue is the effective banning of gestation crates for sows since this system of housing conflicts with the space requirement of 24 square foot of usable floor space with unrestricted movement that can only be provided applying group housing.

 

The CDFA requirements for egg-laying hens state, “The enclosure shall allow the egg-laying hen to lie down, stand up, fully extend limbs and turn around freely.”  In addition, “The enclosure shall be an indoor or outdoor controlled environment within which hens are free to roam unrestricted.”  This provision presumes either barn housing or aviaries and effectively precludes enriched colony modules.

 

At the present time 34 percent of the national flock has transitioned to housing systems for egg-producing flocks that are compliant with Proposition #12, more than adequate to supply California. The pork industry has attained about 25 percent conversion to group housing of sows and accordingly could provide pork that satisfies California regulations. The U.S. egg industry will not be unduly affected by the outcome of the appeal to SCOTUS irrespective of the ruling. What is more important will be the policies of the major chains, food service providers and ultimately consumers who will have to pay for enhanced welfare.


 

Opposition to California a Minimum Wage Law

09/08/2022

Restaurant operators are reviewing options after Governor Gavin Newsom (D) signed the FAST Act on Labor Day, September 5th following passage by the Legislature on Monday, August 29th. The FAST Act establishes a Council that will determine wage rates that may exceed $20 per hour for QSR workers in certain regions of the state. The Council will comprise ten members with representatives of workers, unions, and employers selected by the Governor. The Bill includes a sunset provision for the Council that will take effect in 2028 unless renewed.

 

A coalition termed “Protect Neighborhood Restaurants” presumably formed from the California Restaurant Association has proposed a referendum to overturn the law. This will require collection of at least 623,000 valid signatures by December 4th to place the issue on the 2024 ballot. Restaurant interests spent over $1 million on lobbying against the Act resulting in some modifications to the final version including a $22 per hour wage cap.

 

The Act will have a disproportionately negative effect on chains that own their own locations including Chipotle and Starbucks compared to competitors operating with a franchise model.

 

If the revocation becomes a Proposition the resulting outlay on advertising to attract support by both organized labor and the restaurant industry may exceed $100 million. About $220 million was expended on Proposition #22 in 2020 involving the employment status of ride-share drivers.


 

Eggs Responsible for SE In Europe; 2015-2019

08/30/2022

A recent article in the International Journal of Food Microbiology* reviewed available data associated with the incidence of salmonellosis in Europe.  The rate remained fairly static from 2015 through 2019 at approximately 20 cases per 100,000 population. A total of 1,508 outbreaks in 34 nations were included in the survey covering the five-year period. Among the geographic regions Europe, Eastern Europe led with 48 percent of outbreaks, Southern Europe, 26 percent, Western Europe 18 percent and Northern Europe 8 percent.

 

Of the outbreaks in which a vehicle of infection could be identified, 33 percent were attributed to eggs, 14 percent to pork and other red meat and 3 percent to chicken and other poultry.  Of the isolates that were serotyped, 62 percent were Salmonella Enteritidis.  Salmonella Typhimurium represented 11 percent of all isolates from outbreaks with a known source, predominantly from pork.

 

In reviewing the reasons for the high prevalence of SE in Eastern Europe, it is noted that Poland, a large producer and exporter of table eggs, recorded seven percent of layer flocks (169/2,362) as SE positive in 2016.  Given that veterinary authorities were negligent in establishing standards for sampling and laboratory examination, the proportion of SE positive layers was probably in excess of the official value. Additional contributory factors affecting the supply chain in Europe include failure to wash eggs in a sanitizer and the absence of refrigeration from pre-packing storage through to point of sale as in the U.S.

 

It is also noted that in many nations in Europe, consumption of raw and undercooked eggs is common.  This practice, coupled with SE positive flocks, will contribute to outbreaks. Consumption of undercooked eggs was an important risk factor for outbreaks in the U.S. prior to the introduction of EQAPs and then, subsequently, the Final Rule on Salmonella Prevention issued by the FDA in 2009.

 

*Pinedo, L. C. et al, Sources and Trends of  Human Salmonellosis in Europe, 2015-2019: An Analyses of Outbreak Data, International Journal of Food and Microbiology.doi.org/10.1016/j.ijfoodmicro.2022.109850.


 

H5N8 Avian Influenza Diagnosed In Germany

08/18/2022

On Thursday, August 11th, the authorities in Germany confirmed H5N8 Avian Influenza on an egg production farm in Langwege, in the District of Vechta in the state of Lower Saxony.  A total 110,000 egg-producing hens on the farm were depopulated and control measures in accordance with WOAH recommendations were applied. 

 

The District of Vechta has a high density of chickens, apparently with 350 farms within a six-mile radius of the index unit. This represents the potential for dissemination of virus and major disruption of the supply chain from farms to packing stations and then onwards to supermarkets.

 

The H5N8 serovar differs from the H5N1 isolate predominating in previous EU outbreaks and is an indication that AI viruses are circulating in wild but non-migratory birds with serious implications for an area of high poultry density.

 

Taking an intermediate term view, with HPAI becoming endemic in many regions, non-confined poultry production will be unsustainable without effective vaccines and programs given that avian influenza infection is now the “Newcastle disease of the 2020s”.


 

JUST Egg Claim Over Egg Price Parity Refuted

08/18/2022

According to an article by Mary Emmon Shoup in the August 15th edition of FOOD Navigator, Josh Tetrick claims that his JUST synthetic vegetable-based product has reached price parity with real eggs. He does not specify the type of egg or the time period for the claimed comparison. In reality the JUST product even at a reduced selling price is three times the cost of liquid from conventional eggs at current prices.

 

According to the USDA Egg Markets Overview, the national average retail price for the week ending August 12th was $2.14 per dozen for large white-shelled eggsA dozen, large eggs will yield 22 oz. of liquid at a unit price of 9.7 cents per oz.  JUST Egg, at $3.99 for a 12-ounce container has a unit price of 33.3 cents per oz.

 

Notwithstanding the price differential JUST Egg has an inferior amino acid profile and vitamin content compared to real eggs that have pristine ‘clean’ labels.

 

Josh Tetrick claims that the reduction in price for JUST Egg substitute is the result of economies of scale and more efficient processing of the mung bean isolate.  This may be a valid explanation but previous claims by Tetrick have demonstrated his style of hyperbole. It is questioned whether in fact the lack of demand in an inflationary environment and the consequential need to move more product to offset fixed costs may be the motivation for the price reduction.

 

Reference to a national retail database shows a 21 percent year-over-year increase in sales for JUST over the past four weeks through multi-channel outlets including club stores and 16 percent for conventional supermarkets and grocery stores. These increases were based on sales of approximately $3.2 million for the four weeks preceding July 7th 2021. For 2022 it is noteworthy that sales demonstrated a plateau during the 1st quarter at $992,000 per month and showed a small decline to $986,000 for the four weeks to July 7th.  The JUST product has not demonstrated growth in 2022 and will inevitably follow the classic parabolic demand cycle of a generic product and volume will decline due to consumer fatigue and price inequality with competing alternatives. The reduction in price from $4.55 to $3.99 per 12 oz. container may have some short-term effect on sales but the actual disparity in cost in relation to real eggs will not materially increase sales. This based on the presumption that JUST has a narrow consumer base comprising the affluent who are concerned over welfare and sustainability and are willing to pay for their principles. The majority of price conscious consumers do have calculators.


 

Persistence of H5N1 in Europe

07/28/2022

ProMed reported on outbreaks of H5N1 highly pathogenic avian influenza in Poland and Germany during mid-July. The first recent outbreak was confirmed on a farm on Gizyce in the Province of Wielkopolskie in Central Poland.  Close to 40,000 birds (type not specified) were depopulated.  The case in Germany involved 13,000 geese on a farm in Beverstedt near Cuxhaven in the State of Lower Saxony.

 

The 2021-2022 epornitic now includes 2,398 confirmed outbreaks in commercial poultry resulting in the depopulation of 46 million birds.  Diagnostic laboratories have confirmed H5N1 in 2,733 cases involving wild birds in 36 European nations. 

 

It was determined that 86 percent of the outbreaks in commercial poultry were due to farm-to-farm spread. This was especially evident in France that recorded 68 percent of outbreaks and also  in Hungary with 24 percent of cases in commercial poultry.  Wild bird isolations were most frequently reported by Germany, the Netherlands and the United Kingdom.  The fact that there was a negative correlation between the number of wild bird isolates and commercial outbreaks in the same region may relate to selection bias or the intensity of surveillance of wild birds compared to the protective effect of high levels of biosecurity applied to confined commercial flocks.  All E.U. H5N1 isolates examined belong to clade 2.3.4.4b and were identical to isolates from wild mammals including foxes in Canada, the U.S. and Japan.

 

The persistence of H5 avian influenza in Europe and the most recent cases in turkeys in Utah during mid-July suggest dissemination of the virus by  domestic wild birds since there is minimal movement of migratory waterfowl at this time.  This reality presupposes an alternative to traditional methods of control given that H5 avian influenza is no longer an exotic infection in many countries with intensive poultry populations.  Persistence of infection requires a high level of biosecurity guided by evaluations of outbreaks. The application of both classical epidemiology and molecular analysis could identify routes of introduction of virus onto commercial farms.  Surveillance of wild birds should now be an ongoing exercise no longer restricted to seasonal evaluation of migratory waterfowl.  A range of birds under surveillance should be extended to domestic species.  It is evident that highly pathogenic avian influenza and specifically the H5 clade now prevalent on four continents has become the Newcastle disease of 2020’s requiring a different approach to prevention.


 

Store-Brands Gaining at the Expense of National-Brands

07/27/2022

The recent spike in inflation has increased consumer demand for store-brands according to IRI.  Prior to the onset of COVID, store-brands were growing at twice the rate of national-brands.  For the four weeks ending July 10th, store-brands represented 21.6 percent of grocery sales. This increase more than compensated for the losses that occurred during the COVID period when consumers preferred national-brands.

 

During 2020 and extending into 2021, manufacturers of national-brands were able to maintain volume by reducing the range of products and shoppers were less concerned over price than at present.  Since the advent of inflation initiated by COVID spending, subsequent supply-chain disruption and the recent invasion of Ukraine by the Russian Federation, consumer preferences have shifted in favor of lower-priced items.  Since there is little difference if any in quality attributes, many consumers will continue to buy store-brands when inflation is anticipated to moderate in the fourth quarter.

 

A wide range of lower-priced store-brands is now available, especially from the Kroger Company, Walmart, Costco and other big-box club stores and the deep discounters, including Aldi and Lidl. Availability, positioning on shelves, lower prices and equivalent quality are generating loyalty to house-brands. The recent optimistic statements by spokespersons representing major food companies predicting a return to national-brands suggest a measure of concern. 

 

The shift in consumer preference towards house-brands will further reduce the margins generated by the manufacturers of branded products. They will be obliged to cut wholesale prices while facing inflation in raw materials, labor and transport. Concurrently manufacturers of national- brands are under pressure from the major chains.  This is evidenced by recent events in the U.K. with disputes between manufacturers such as Kraft-Heinz and major supermarket chains including Tesco.  Although this specific dispute was settled, it is presumed to have been to the disadvantage of the manufacturer.


 

FDA Delaying Compliance for Proposed Pre-Harvest Water Rule for Leafy Greens

07/24/2022

It is generally accepted that irrigation water contaminated with Shiga-toxin producing E.coli (STEC) and Salmonella derived from run-off from CAFOs are responsible for outbreaks of foodborne infection of consumers eating leafy greens.

 

Notwithstanding the epidemiologic realities, FDA has failed to make appropriate changes to the pre- and post-harvest agricultural water requirements in the Produce Safety Rule.  The FDA is at fault if, as is stated in their release, that stakeholders "do not have clarity on whether FDA might propose to change the harvest and post-harvest agricultural water requirements." 

 

FDA has proposed to apply enforcement discretion over water requirements relating to the Produce Safety Rule until January 2023 for large businesses and extending to January 2025 for very small businesses.  Delay in implementing the Produce Rule with respect to irrigation and processing water perpetuates the problem of foodborne infection from leafy greens and places consumers and the industry at risk.  Requiring producers to conduct annual systems-based agricultural water assessments is self-serving and represents “make-belief “ prevention and will do little to eliminate the problems arising from contamination.

 

The inaction and indecision by FDA is yet another example of why the U.S. needs a dedicated food safety agency.


 

Administration Vacillating Over China Tariffs

07/14/2022

The Administration has been sending smoke signals regarding rescission of tariffs imposed by the previous Administration on imports from China.  There is pressure to lower tariffs on many items to reduce the negative effects of inflation that now have both economic and political repercussions leading into the midterms.  Policy advisors within the White House, including the U.S. Trade Representative, wish to retain tariffs as leverage against China in future trade negotiations.

 

Even if tariffs were lowered, this action would have little effect on U.S. exports of agricultural commodities. Grains and soybeans imported by state-owned trading companies in China benefit through exemptions from duty.

 

The agricultural community might experience some relief following a reduction in tariffs through lower prices for imported raw materials used to manufacture crop protection products and components of agricultural machinery.

 

It would be in the interest of all consumers and the agricultural sector if the Administration could develop and implement a coherent policy on mutually destructive tariffs on goods from China. This would be necessary to provide certainty to facilitate planning and execution of new projects and ongoing operations.


 

SCOTUS Consideration of the Appeal by Pork Producers

07/05/2022

Following the EGG-NEWS Editorial on July 1st concerning the agreement by SCOTUS to hear the petition by the National Pork Producers Council, Drs. Richard J. Sexton and Daniel A. Sumner, at the University of California, Davis provided a copy of their amicus curiae brief. EGG-NEWS is indebted for their submission that was prepared to inform the Court of the economic aspects and implications of Proposition #12, with regard to group housing of sows as mandated by Proposition #12. 

 

Dr. Sexton is a Distinguished Professor of Agricultural and Resource Economics and a Fellow and Past-president of the Agricultural and Applied Economics Association.  Dr. Sumner served as a Senior Economist for the President’s Council of Economic Advisors from 1987 to 1988 and was Deputy Assistant Secretary of the USDA from 1990 to 1992.  Their research focuses on national and international agricultural economics and policy, and they are well positioned to comment on the costs relating to Proposition #12.  A summary of their research on the topic was included in a comprehensive article* that concluded: -

 

  • The additional cost of compliance with Proposition #12 will be insignificant to U.S. pork producers, given that California requires nine percent of U.S. pork with 99 percent supplied by other states. This conclusion is based on the reality that at least 20 percent of sows are group-housed and will be able to supply California without extensive additional capital installations.  The authors of both the article and the amicus brief note that California Proposition #12 imposes housing systems for sows that produce a commercial generation supplying pork to the state of California. The regulations do not apply to sows indirectly producing pork supplied to other states.
  • It was calculated that the additional cost to comply with California Proposition #12 including increased mortality, lower litter size and both fixed and variable costs would amount to $5 per weanling pig, representing an additional retail value of 3 cents per lb.
  • Consumers in California will pay an additional 7.7 percent for pork at retail, amounting to $320 million, annually.  The increase in unit price of pork will reduce consumption in California by approximately six percent.

 

Drs. Sexton and Sumner note that the analysis submitted by the National Pork Producers Council and the American Farm Bureau Federation, “rests on the unsupported and plainly incorrect assumption that all pork producers nationwide will be forced to comply with Proposition #12 and that the cost of complying with Proposition #12, accordingly, will be passed onto all pork consumers nationwide”.

 

Accordingly Drs. Sexton and Sumner consider that Petitioners’ arguments are flawed and factually implausible, since Proposition #12 will affect only “a discrete subset participants in the North American pork value chain”.  The brief by the amici maintains that Proposition #12 does not compel “any actor within the supply chain to convert operations to comply with Proposition #12.  The amici concluded that since California will continue to consume pork, “The supply chain must be incentivized through higher prices to supply compliant pork products to the state.”

 

The amicus brief considers only suppliers to California and consumers in that state.  Effectively, passage of Proposition #12 and its implementation has resulted in a number of restaurant chains and retailers requiring suppliers of pork to conform to the requirements of Proposition #12, extending the economic burden of group-housing of sows.  This is an aspect of California Proposition #12 that should be evaluated in relation to the claims made by the Petitioners.

 

In many respects, the situation faced by hog farmers is similar to egg producers with hens confined in conventional cages.  Following the passage of Proposition #2 in 2008, investment in conversion to alternative systems, including aviaries and floor units were implemented. As of June 2022 close to a third of hens are now compliant with Proposition #12.  Individual states have enacted legislation to ban cages and New England states have passed ballot initiatives similar to California Proposition #12 extending the need to transition from conventional cages. In addition almost all restaurant and retail chains and independents provided assurances in 2020 that all eggs would be sourced from hens held in housing other than conventional cages by 2025. The commitments made under coercion by animal welfare associations appear to be fraying. The obvious implication is that by 2025 a substantial proportion of the U.S. nominal complement of 325 million hens will still be housed in cages allowing choice by consumers based on price in relation to housing.

 

Although SCOTUS may take into account the economic impact of Proposition #12, the major issue facing the Justices is whether California can impose standards on other states that clearly impede interstate commerce, without any clear justification based on public interest, including but not limited to avian or human health.

 

*Lee, H., L., Sexton, R. J. and Sumner, D. A. (2021) Vote-approved Proposition to Raise California Pork Prices. ARE Update 24:5-8. University of California, Giannini Foundation of Agricultural Economics.


 

House of Representatives Passes Lower Food and Fuel Cost Act

06/20/2022

On Thursday, June 16th, the U.S. House of Representatives passed the Lower Food and Fuel Cost Act (PRICISE) by a vote of 221 to 204. This bill includes the Meat and Poultry Special Investigator Act that is intended to create a mechanism to review and possibly manipulate prices paid to farmers for cattle. The creation of an office headed by a political appointee obviously duplicates provisions of the Stockyards and Packers Act.  The PRECISE Act is intended to enhance precision agriculture and support row crop farmers facing high prices for fertilizer.  The Year-Round Fuel Choice Act will expand sales of E-15 gasoline blend through funding required infrastructure including storage tanks and mixer-dispensers at gas stations.

 

The Legislation as passed by the House has limited support in the Senate and is intended primarily as a showpiece to create the illusion that the House is addressing problems of inflation.  Recent increases in the price of crude oil and natural gas are mainly responsible for inflation in food and all items that have a large cost component of energy. This reality is affecting all nations of the world and is not restricted to the U.S.

 

Inflation is endemic in many nations in Latin America due to fiscal mismanagement.  The advent of COVID introduced disruptions in supply chains adding to the cost of imports to industrialized nations.  The situation is now exacerbated following the invasion of Ukraine by the Russian Federation causing sharp increases in the cost of energy and grains.

 

There are no "quick-fixes" to a problem that is not the responsibility of any specific political party or their legislative agenda.  The question that faces the U.S. is whether the action by the Federal Reserve Board can reduce inflation without precipitating a recession, as predicted by some economists.

 

The House voted on the package of measures based on party affiliation in addition to narrow parochial issues. These included the environment and the need to support production and uptake of biofuels at the expense of all those using either fuel or food. Both ethanol and biodiesel are inherently inflationary without direct benefits to the economy or the environment.  

 

The biofuels program has long since exceeded the reason for its existence as the U.S. is no longer reliant on unfriendly nations for either gas or crude oil.  The biofuels program now supports row crop farmers, the ethanol industry, soybean crushers and corn-state legislators to the detriment of consumers. “Feel-good” legislation such as the PRECISE Act will do little to alleviate inflation in fuel, food and other goods and in the doubtful event of passage in the Senate will have unintended consequences. Prices will decline as the current high cost of energy results in lower demand and increased output restoring equilibrium.


 

Senators Encouraged Solicitor General To Advocate Before The U.S. Supreme Court Over Proposition #12.

06/10/2022

The United States Supreme Court will hear an appeal based on California Proposition #12 at some time in Ocober.  Lower courts have ruled that Proposition #12 is constitutional, despite the fact that there is concern that it conflicts with the Dormant Commerce Clause. Proposition #12 is opposed by twenty state governments and the majority of associations representing agriculture.

 

Senators Diane Feinstein (D-CA); Alex Padilla (D-CA) and Corey Booker (D-NJ) with 13 other members of the Senate requested that Solicitor General Elizabeth Prelogar support California Proposition #12 by submitting a brief and presenting oral testimony. Other senators supporting the request for the Solicitor General to advance the constitutionality of Proposition #12 represent states that have enacted laws paralleling California statutes, including Michigan, Illinois, and New England states.

 

The senators urged the Solicitor General in their communication “to support California Proposition #12 that is intended to prevent animal cruelty, protect the health and safety of California consumers and decrease the risk of foodborne illness”.  The letter continued, “We believe that the previous Administration’s position on Proposition #12 was based on a misconception of the law.” In the event the Solicitor General will present  the Government case supporting Proposition #12.

 

The Supreme Court will not consider the justification for the ballot initiative and should exclude any considerations of welfare or foodborne disease.  Their consideration will be confined to constitutional issues.  The overriding question is whether California can impose state standards of management on producers in other states thereby impeding interstate commerce.

 

The claims regarding stocking density for poultry, breeding sows and veal calves have no direct or scientifically supportable association with foodborne infection. The Proposition and subsequent legislation can be regarded as a contrived justification to protect producers in California from competition. California consumes 13 percent of the nation’s domestic pork but houses 0.2 percent of breeding sows, suggesting an extremely one-sided approach to imposing welfare standards.

 

 Proponents of Proposition #12 and the resulting restrictive legislation are relying on the original invalid contention by the HSUS, advanced to sway voters in 2008 that confined herds or flocks are more liable to be infected with foodborne pathogens than animals allowed space requirements consistent with Propositions #2 and #12.

 

The restrictions imposed by Proposition #12 when enacted will obviously impact the hog industry, since the practice of confining sows to relatively small crates, hardly larger than the animal, during gestation will require investment in alternative facilities to allow 24 square feet of floor area. At the present time, approximately 25 percent of sows are managed under group housing, demonstrating that it is possible, albeit with greater care and capital expenditure to operate the system. 

 

With respect to egg production, the requirements for California are currently satisfied by domestic producers who have invested in non-confinement following Proposition #2 in 2008.  If the Supreme Court rules that Proposition #12 is unconstitutional, further conversion to other than conventional cages or enriched modules will cease and laws similar to Proposition #12 in the New England states will also be invalid wsith respect to eggs introduced from other states.  In specific states where confinement laws were enacted producers will be obliged to conform but will be vulnerable to the introduction of eggs from non-compliant states. It is doubtful whether revocation of confinement laws will take place in states where legislation has been passed banning conventional cages.

 

There is concern that if Proposition #12 is declared unconstitutional, there will be unintended consequences affecting interstate trade and the ability of states to effectively control interstate transmission of the diseases of plants and animals.

 

Irrespective of the outcome, Proposition #2 and its successor, Proposition #12 represented an indirect tax on consumers based on the higher price of eggs and animal protein.


 

USDA To Top Up HPAI Funding By $400 Million

06/03/2022

On May 31st, the USDA announced that it would assign an additional $400 million to pay for control of Highly Pathogenic Avian Influenza (HPAI), including compensation for owners of close to 39 million birds depleted during the 2022 epornitic.  Funding will be derived from the Commodity Credit Corporation and will represent the third tranche following $393 million in the second allocation.

 

During February and March EGG-NEWS advocated for APHIS to provide poultry producers with preliminary guidance based on an initial epidemiologic evaluation of outbreaks.  It is evident to poultry health professionals that the epidemiology of the 2022 epornitic including shedding by wild birds, timing and distribution of outbreaks along the four flyways, the occurrence of the infection in backyard flocks differed from 2015.  A preliminary opinion in early April may well have prevented some outbreaks, especially among the more expensive and cases involving egg production complexes. Information on the mode of spread would have been beneficial to producers of commercial turkeys in Minnesota, Iowa and the Dakotas.

 

Advice on prevention, provided by APHIS, was no different from the basic biosecurity recommendations developed during and subsequent to the 1984 and 2015 epornitics.  Surely, initial evaluation based on real-time assessment of risks of introduction of the 2022 H5N1 strain and application of molecular epidemiology could have indicated specific changes required to enhance biosecurity and reduce the number of outbreaks.  If APHIS lacked epidemiologists and qualified poultry health professionals, then they should have outsourced investigations to the faculty at Land Grant universities in the affected states.

 

Requests were made to the USDA-APHIS during mid-April for an opinion on the mode of introduction onto farms. This should have resulted in relevant guidance as a realistic response.  An interim report would have been more valuable at the time than a more comprehensive document in 2023.

 

It is apparent that Highly Pathogenic Avian Influenza can be regarded as seasonally endemic given the role of migratory birds. Eradication based on the incorrect presumption that HPAI is an exotic infection will only lead to a repetition of the mass depopulations of 2015 and 2022.

 

The industry urgently requires epidemiologic evaluation of the 2022 epornitic with comparisons to the 2015 outbreak. The Industry deserves an analysis of any deficiencies in biosecurity based on molecular biology and traditional case-controlled studies.  This will allow the U.S. industry to be more prepared for a subsequent inevitable outbreak.


 

Abbott Nutrition Executives Should Face Criminal Penalties Over Contamination of Infant Formula

05/24/2022

Following a preliminary investigation following the inspection of the Abbott nutrition plant in Sturgis, MI., the U.S. Department of Justice has filed a complaint on behalf of the Food and Drug Administration alleging that products were adulterated. The legal definition of "adulterated" includes the presence of any poisonous or deleterious substance which may render injurious to health or a product prepared, packed or held under insanitary conditions whereby it may have become contaminated or rendered injurious to health".

 

Based on a review by William Marler, a prominent plaintiff's attorney specializing in foodborne infection, Abbott in agreeing to a Consent Decree has effectively admitted liability. On his law- firm website, Marler posted the 2021 inspection report, the document prepared by the Whistleblower as submitted to the FDA in October 2021, the Department of Justice Complaint and the Consent Decree.

 

To support a felony violation, the Department of Justice would have to demonstrate that the adulteration occurred with intent to defraud or mislead by placing a food product in interstate commerce.  A misdemeanor violation would involve negligence through failure to prevent adulteration but does not require proof of fraudulent intent or willful conduct.

 

Marler makes the case that any producer of food should face penalties for marketing adulterated food whether willfully or not, a position endorsed by EGG-NEWS.  Penalties for both misdemeanors and felonies include substantial fines and the possibility of incarceration.

 

The responsibility of owners or executive management involved in foodborne outbreaks is exemplified by long prison terms handed down to the Parnell Brothers following the extensive outbreak of salmonellosis in 2009. Their company, The Peanut Corporation of America was responsible for 714 cases, 172 hospitalizations and nine fatalities. Paul Kruse then the CEO and majority shareholder of Blue Bell Creameries is under indictment for his actions in an outbreak of listeriosis in 2017. In both instances there were allegations of concealment of results of assays and falsification of records. Despite a self-exculpatory article in the Washington Post, Abbott Laboratories Chairman and CEO, Robert Ford will be subject to DOJ investigation with the inevitable questions of “what did he know and when did he know it”

 

The bar for CEOs and senior management of food companies is much higher since passage of the FDA Food Safety Modernization Act. In addition to civil penalties imposed by the DOJ and civil lawsuits executive officers now face criminal action with even misdemeanor violations carrying the threat of incarceration.


 

Inflation is Changing Purchasing Patterns of Consumers

05/11/2022

As the Nation emerges from COVID restrictions consumers are unable to revert to previous purchase patterns. The emergence of inflation has changed the allocation of family budgets and is creating a new concern for value and restraint of indulgence.

 

First Insight a market evaluation enterprise recently published The State of Consumer Spending: Inflation Impacting Consumer Confidence.  Close to 75 percent of shoppers surveyed were less inclined to spend money without carefully evaluating their intended expenditure.  Almost half now actively seek sales or deals.  Forty percent are conforming to budgets and a quarter of respondents are shopping in bulk stores or warehouse clubs.  The report showed that 80 percent of consumers are seeking less-expensive products to stretch budgets.

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Egg-News

Those surveyed consider groceries their most important priority with a 53 percent weighting. Nearly half of respondents were concerned over the cost of vehicle fuel followed by housing at 30 percent and healthcare at 20 percent.  Consumers are reducing expenditure on home décor, gym memberships, both popular during COVID restrictions although there is pent-up demand for travel among the affluent. 

 

Egg-NewsApproximately half of consumers surveyed indicated that they would reduce expenditure on dining out and a third will restrict entertainment and travel.  National brands will be displaced by lower priced alternatives.  Industry observers make reference to trends seen during the Great Recession with a downward move in protein from beef to pork and then to chicken with eggs emerging as an inexpensive source of balanced protein served at home over more mealtimes.

 

Egg-NewsDeep discount grocery chains and club stores will benefit from emerging frugality among consumers. Increased sales of lower priced house brands will be at the expense of nationally advertised products. Traditional supermarkets will have to reduce SKUs and offer more private label and generic products to retain price-conscious consumers. Even if the economy does not spiral into a recession, consumers in a post-COVID environment will develop a level of thrift, reevaluating their respective needs and wants and will exercise greater concern for their future financial well-being.


 

Misperceptions and Myths Motivating Control of COVID in China Have Implications for the U.S.

05/05/2022

Egg-NewsIt is evident that China, the origin of COVID in 2019, despite initial claims, has been unsuccessful in suppressing and certainly not eradicating COVID.  Currently, central government policy appears to run counter to approaches adopted in the E.U. and the U.S.   Myths that pervade policy include:-

 

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  • COVID is introduced into the nation on packaging material on food products.  The World Health Organization has presented evidence to show that there is no risk associated with contamination of either outer or inner packaging material for imported food.  It is evident that authorities in China have used this unsubstantiated route of introduction as an excuse for emerging incident cases. This has implications for exporters of poultry and red meat products to China.
  • Mass disinfection of streets, buildings and even air is effective in destroying virus.  Since the advent of COVID, China has deployed armies of Tyvek™-clad workers brandishing disinfectant sprayers and has deployed trucks with atomizers.  The Center for Disease Control and Prevention estimate that a contact surface contaminated with SARS-COV-2 virus has less than a 1-in-10,000 probability of causing an infection.  The actions by authorities in China are simply an exercise in disease-theater, devoid of any practical benefit.
  • Mass testing and home detention will reduce incidence rate of COVID to zero. Draconian restrictions have featured during the past two months, especially in major cities.  These measures designed to achieve an unattainably low incidence are futile.  Clearly, confining populations to apartments and locking down entire neighborhoods is not achieving any positive result but has led to misery, lack of productivity and is clearly impacting the economy of China.

 

China deployed a decidedly ineffective vaccine and failed to promote immunization of the elderly in an orderly and systematic way. This has led to a dangerous level of susceptibility in the population that is now confronted with highly infectious Omicron variants of SARS-COV-2 virus.

 

Egg-NewsImplications are self-evident.  Supply chain problems in the U.S. and the E.U. will intensify as ports  in China work at less than optimal level.  Food consumption in China will fall, reducing imports of corn, soybeans and pork. Factory output, especially of critical components, will affect all industrialized nations trading with China.

 

Most of the policy aimed at either controlling COVID or the oft-imposed alternative of suppression of fact and distortion of statistics is designed to create a false sense of stability and prosperity, adding to a sense of national pride. This approach is considered necessary as a prerequisite for the unprecedented election of President Xi Jinping to a third term at the National Conference of the Communist Party of China to be held during the second quarter of 2022.


 

Adverse and Erroneous Publicity Over Single Alle