Editorial


ESG is in Our Future

The concept of applying Environmental, Social and Governance (ESG) in corporate culture and execution will progressively drive the relationship between producers and customers over the next ten years.  An interview with Kathleen McLaughlin, Executive Vice President and Chief Sustainability Officer for Walmart provides a road map of what lies ahead.

 


Kathleen McLaughlin. EVP Walmart

Walmart as with many multinationals and U.S.-focused companies has developed their "ESG investment theses".  It is now held that not only does a company have to provide a satisfactory return on investment but it should do so sustainably with concern for social issues and demonstrate strong ethical values.  Based on trends in the E.U., investors recognize that the long-term growth and continuity of dividends will be dependent on adherence to the principles of ESG especially as governments are demanding compliance in environmental and worker issues.  McLaughlin notes that "customers, investors, employees, community leaders all expect businesses to be part of the solution - to bring their particular capabilities to bear on the social and environmental issues most relevant to them and their stakeholders". 

 

Walmart is committed to reduce emissions through a program of investment, supplier engagement and innovation in product supply chains.  This approach implies that success achieved by Walmart will be linked to the achievements of suppliers.  Accordingly, greater pressure will be placed on broiler and turkey producers to conform to the principles of ESG. 

 

Walmart intends to apply a science-based approach to environmental stewardship and will set an example that will of necessity be followed by suppliers.  Conservation of energy, improved efficiency throughout the chain of production from brooding, grow-out, processing and delivery will all be scrutinized. The use of renewable power will be first encouraged and then mandated requiring the use of wind generators and solar panels.  There will be significant changes in packaging, emphasizing conservation and recycling capability.  Greater cooperation between supplier and customer will be evident with increasing consultation and participation in joint projects to conserve resources.  Companies applying ESG will have to develop quantitative goals and measure progress.  A review of corporate reports issued by EU-based companies demonstrates the extent to which ESG data is presented along with traditional financial performance.

 

The social component of ESG presumes development of human capital.  Producers will have to demonstrate equity in recruitment, employment, promotion, education and health services.  Walmart has established programs to create opportunities for employees and will expect similar initiatives from their suppliers.  Philanthropy will also be regarded as a positive expression of social responsibility and will become more structured, assuming a greater role in interaction with communities where companies operate.

 

Walmart established the Center for Racial Equity in 2020 with a commitment of $100 million through 2025.  Large customers practicing ESG will expect comparable efforts by their suppliers and will provide guidance on relevant activities contributing to social equity.

 

Based on the inevitability of compliance with customer ESG requirements, the following areas should be considered by suppliers who will compete over the next decade:-

 

  • Improved management of land holdings to promote sustainability
  • Reduction in energy demands and converting from power generated by fossil fuels
  • Enhanced feed efficiency through precision nutrition, more advanced equipment and management
  • Conservation of water and greater attention to processing and recycling of animal waste  and plant effluent
  • Programs to advance the knowledge and capabilities of employees
  • Evaluation of wage rates, fringe benefits, health, worker accommodation and social support systems
  • Rationalization of product delivery to reduce energy consumption
  • Concentration on recycling of water, packaging and other resources

 

ESG is not a fad or a concept that can be faked.  ESG will determine the relationship between suppliers and customers and will represent a new competitive component in the chain extending from producer to consumer.  Companies that fail to recognize the importance of ESG will be at a disadvantage with respect to their more progressive peers.  Producers are advised to become acquainted with the Sustainability Accounting Standards Board, the Task Force on Climate-Related Financial Disclosures and the intended requirements of their major customers in order to plan compliance.  Failure to recognize the importance of ESG and to implement programs will represent a major strategic deficiency, threatening the growth of an enterprise, brand image and long-term survival.


 

Egg Industry News


COMMODITY REPORT

WEEKLY COMMODITY REPORT: FEBRUARY 26th 2021.

 

  • The financial and economic policies of the Biden-Harris Administration are emerging with a focus on passage of a $1.9 Trillion COVID Stimulus Package and intensifying the vaccination campaign to reduce the impact of the COVID-19 pandemic in order to restore the economy.
  • The commodity market this past week was higher continuing the trend last week and following the sharp upturn three weeks ago responding to export orders and lower ending stocks as forecast in the February 9th WASDE Report and subsequent planting intentions.
  • The direction of agricultural and trade policy to be implemented in 2021 will be more clear following the confirmation of Tom Vilsack as USDA Secretary. He has emphasized sustainability and addressing climate change consistent with pre-election comments by then Candidate Biden. Michael Regan and Kathleen Tai have completed their confirmatory hearings as the Administrator of the EPA and U.S. Trade Representative respectively and are awaiting a Senate vote
  • S producers are now receiving and conversely livestock producers in the Midwest are paying close to $5.50 per bushel for corn and $14.00 per bushel for soybeans plus transport and basis.
  • Corn and soybeans were both 2.3 percent higher than the previous week and still at notably high levels. Soybean meal was unchanged.
  • According to the USDA FAS Export Report for the week ending February 18th 2021 reflecting market year 2020-2021, cumulative placed export orders for corn amounted to 34.9 million metric tons (1,375 million bushels) with 24.2 million metric tons (952 million bushels) actually shipped. During the past week 0.45 million metric tons (18 million bushels) of corn were ordered by China and other nations, sharply down from the previous week, with 1.19 million tons (47 million bushels) shipped.
  • Cumulative export orders for soybeans for the 2020-2021 market year have attained 8.3 million metric tons (304 million bushels) with 51.7 million metric tons (1,896 million bushels) actually shipped. This past week some previously placed orders from China were cancelled. Weekly sales of soybeans attained 1.67 million metric tons (61.3 million bushels) with 1.1 million metric tons (38.7 million bushels) shipped.

 

The following quotations for delivery in the months as indicated were posted by the CME at 15H00 on February 26th 2021 compared with values posted at 14H00 on February 19th 2021 (in parentheses) reflecting specified months in 2021 for delivery.

 

COMMODITY

Corn (cents per bushel)

 March 556 (543)

May 549 (547)

Soybeans (cents per bushel)

 March 1,408 (1,377)

May 1,408 (1,380)

Soybean meal ($ per ton)

 March 424 (424)

May 422 (424)

 

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

 

COMMODITY CHANGE FROM PAST WEEK

 

Corn: March quotation up 13 cents per bushel (+2.3 percent)

Soybeans: March quotation up 31 cents per bushel (+2.3 percent )

Soybean Meal: March quotation unchanged ( 0 )

 

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

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

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

 

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

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

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

 

This week the small changes in the prices of corn and soybean meal would increase nest-run production cost for eggs by 0.6 cent per dozen and for broilers 0.3 cent per live pound. Over the past two months escalations in the prices of major ingredients have added 8.4 cents per dozen and 4.7 cents per live-weight lb.

 

According to the February 9th WASDE, corn harvested in calendar 2021 will attain 14,183 million bushels with ending stocks projected at 1,502 million bushels, down 3.2 percent from the January Report. Values will be updated reflecting ongoing export volumes, domestic use and the March WASDE, incorporating recent planting intentions. Compared with February 19th at 14H00, the CME quotation at 15H00 for corn on February 26th was up 13 cents per bushel for March delivery to 556 cents.

 

The social restrictions imposed in the U.S. as a result of COVID-19 will reduce ethanol demand by 1.5 billion gallons or 10 percent of projected 2020-2021 requirement accepting a nominal ten percent addition to gasoline. This past week 40 percent of the U.S. ethanol fermentation capacity was off-line or operating at lower than capacity. The outlook for increased demand is questionable with depressed domestic demand and ten percent of production exported. According to the U.S. Energy Information Agency the industry produced on average 658,000 barrels per day down 27.8 percent from the 911,080 barrels per day for the week ending February 11th 2021 due to severe weather. Ethanol stocks stood at 22.8 million barrels on February 19th 2021 down 1.5 percent from the previous week. Ethanol was priced at $1.69 per gallon on February 26th unchanged from February 12th and compared with a five-year low of $0.92 per gallon on March 26th 2020. Concurrently RBOB gasoline at $1.88 per gallon (quoted, New York Harbor) was up 7 cents per gallon from the previous week (presumably due to weather conditions) and is now 19 cents per gallon higher than ethanol but with a 63 percent higher BTU rating.

 

With more plants among the 201 operational on January 1st 2021, DDGS is freely available commanded a higher price than in the fourth quarter of 2020. Eastern Corn-belt product was priced at $250 per ton on February 24th 2021, $8 per ton higher than the previous week and $94 per ton more expensive than on February 18th 2020.

 

 Soybeans are the beneficiary of demand by China. The CME price at 15H00 on February 26th rose 31 cents per bushel over the week to 1,408 cents per bushel for current month delivery. The USDA documented a 2021 crop of 4,135 million bushels. Ending stocks according to the February 9th 2021 WASDE projection will attain 120 million bushels, down from the January 2021 projection of 140 million bushels representing a seven-year low.

 

On February 10th 2021 Meat and Bone meal quoted Central U.S. attained $410 per ton, up $10 from the previous week and compared to $235 per ton on February 18th 2020.

 

On February 16th the BRL exchange with the CNY was 0.86, (up CNY 0.02 from the previous week). The conversion of the US$ to the CNY was set at 6.48, down CNY 0.01 from the previous week.

 

For consecutive calendar years 2017 through 2019 the U.S. supplied 34.4 percent of soybean requirements for China amounting to 95.5 million metric tons. This was followed by a decline to 16.9 percent of 88.5 million metric tons in 2018 and 16.6 percent of 88.0 million metric tons in 2019. The USDA anticipates that soybean imports by China will amount to 95 million metric tons during the 2020-2021 market year.

 

For the 2019/2020 market year China imported 2.1 million metric tons of corn from the U.S., 4.8 percent of total exports of 43.3 million tons, but 12 percent less than in the 2018/2019 market year. The U.S. Grains Council documented sales of U.S. corn to China through December 31st 2020 during the 2020/2021 year amounting to 11.7 million metric tons (460 million bushels) with 65 percent yet to be shipped.

 

For the 2019/2020 market year China imported 16.3 million metric tons of soybeans from the U.S., 36.2 percent of total exports of 44.9 million metric tons, but 3.9 percent less than in the 2018/2019 market year.

 

COMMENTS

Subscribers are referred to the February 9th 2021th WASDE #609 under the STATISTICS TAB.

 

Consistent with the need for self-sufficiency China announced on January 8th that an additional 1.7 million acres would be planted to corn in 2021. China intends to rehabilitate 6.8 million acres of “polluted land” to be brought into production.

 

Approximately $16 billion was disbursed under the Coronavirus Food Assistance Program (CFAP) in early 2020. An additional $14 Billion relief package was announced by the Administration on September 18th with all of the allotment having been distributed. Additional funds will be included in the proposed Coronavirus Relief Package.


 

Comparison of Commodity Prices in China with CME Quotations.

The relative prices expressed in US$ per short ton for corn, soybeans and soybean meal, March delivery, were downloaded from the Dalian Commodity Exchange website reflecting major contracts at close of trading on February 26th.  These values were compared with the spot price at 15H00 on the CME as indicated

 

 

Commodity

Dalian CE

52-week range

CME 02/26

Corn

$396*

 N/A

$199

Soybeans No 1

Soybeans No2

$822*

613*

 

N/A

 

$469

Soybean Meal

$525*

N/A

$424

 

* short ton with exchange rate CNY 6.48=US$1

 

It is evident that due to the higher price of feed, producers of hogs, eggs and conventional broilers in China are at a disadvantage in production cost compared to their counterparts in the U.S. and Brazil.

 

Large eggs (57g) traded on the Dalian exchange at 51 cents per dozen.

 


 

USDA DATA ON FEBRUARY 2021 CAGE-FREE PRODUCTION

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

 

The USDA Cage-Free Report for the month of February 2021 released on March 1st 2021 documented a 1.2 percent increase in the population of hens producing under the Certified Organic seal to 17.5 million. Cage-free flocks increased by 3.9 percent to 67.5 million compared to January 2021. (rounded to 0.1 million). The respective numbers of hens in organic and cage-free flocks should reflect the realities of supply and demand in the market over successive quarters. It is evident that a noteworthy proportion of organic and cage-free eggs are down-priced to the generic category when comparing Nielsen retail sales data with potential production based on hen numbers documented by the USDA.

 

Average flock production was unchanged from January at 79.0 percent for both categories of non-caged hens. This reflects flocks of stable average age. Younger flocks increase availability of cage-free eggs and organic eggs pre-Christmas and pre-Easter. Average flock production represents a balance between older flocks and the higher relative production from pullet chicks placed during October 2020 and the few molted flocks resuming production during the month.

 

Flock size Feb. Jan. ‘21 Av.

Q4

(million hens) 2020

Av. Q3

2020

Av. Q2

2020

Av. Q1

2020

Certified Organic 17.5 17.3 17.2

16.2

15.7

15.7

Cage-free hens 67.5 65.0 62.8

62.9

61.5

56.3

Total non-caged 85.0 82.3 80.0

79.1

77.2

72.0

 

Average weekly production (cases)

January 2021

February 2021

Certified Organic

266,216

268,689 +0.9

Cage-free

997,781

 1,036,814 +3.9

Total non-caged

 1,263,997

 1,305,503 +3.3

Average Whole Contact Price Cage-Free Brown

$1.60/doz. ($1.51 Sept. to Dec. 2020 $1.60 Jan. 2021)

Range:

$1.15 to $2.35/doz. (Unchanged from January)

FOB Negotiated price, grade quality, nest-run. Loose

Price range $0.86 to $2.13 per dozen

Average Value of $1.78/doz. (was $1.71 Jan 2021.)

Average Advertised National Retail Price C-F, L, Brown

$2.48/doz. (was $2.42 January 2021))

USDA 6-Regions

High: NE $2.91/doz. $2.77 (NE)

Low: SC $2.32/doz. $2.22 (SC)

 

The wider range for both wholesale and retail prices this past month reflects the unexpected increase in demand and hence prices that were maintained during January 2021.

 

Based on the importance of cage-free production, the USDA-AMS issues the report on volumes and prices at monthly intervals for the information of Industry stakeholders. There is some doubt as to the accuracy of the individual monthly flock numbers especially when reports show either no change in the cage-free flock for sequential months or a large difference usually after the end of a quarter as in this report. It is suggested that USDA consider a quarterly report with more accurate and consistent hen data to be more useful to the industry.

 

Subscribers are referred to weekly USDA wholesale and retail prices posted in the EGG-NEWS Egg Price and Inventory Report E-mailed each Friday. The previous Monthly Cage-Free Report is available under the STATISTICS Tab.


 

Egg Week

USDA Weekly Egg Price and Inventory Report, March 4th 2021.

 

  • Shell inventory was down by a noteworthy 6.7 percent after a 0.8 percent increase last week. This confirms increased demand relative to supply with implications for prices extending through the beginning of March leading into the April 2nd Easter weekend. Buyers have purchased in quantity to refill the pipeline following successive mid-February blizzards. It is noted that a large number of molted hens are returning to production. Prices for Extra Large and Large in the Midwest were stable this past week but expected to stabilize or rise slightly unless oversupply contributes to excess inventory. Problems relating to distribution and severe weather conditions in Texas and southeast states have eased with restoration of power and warmer weather. There is little evidence of a return in the food service sector as liquid and dried-egg prices are stable and reopening of the economy is slow despite a decrease in COVID-19 incidence rates in many regions, coupled with more rapid deployment of vaccine.
  • The U.S. flock in production was up 5.3 million from the week of February 24th to 322.2 million, with about 1.0 million molted hens resuming production within weeks.
  • The USDA average Midwest benchmark generic prices for Extra-large and Large sizes were unchanged from the previous week at an average of 112.5 and 110.5 cents per dozen. Mediums were also unchanged at an average of 82.5 cents per dozen. The recent stability in price reflects a balance from increased demand in relation to a moderate increase in the U.S. flock in production.
  • The Midwest price of breaking stock was up again by 24.2 percent to an average of 56.5 cents per dozen. Checks in the Midwest were 12.5 percent higher to 45.0 cents per dozen.

 

OVERVIEW

Prices

According to the USDA Egg Market News Reports released on March 1st 2021 the Midwest wholesale prices for Extra-large and Large sizes were unchanged on average from the previous week as delivered to DCs, attaining 112.5 and 110.5 cents per dozen. Mediums were unchanged at an average of 82.6 cents per dozen reflecting a stable supply from young flocks that have matured. Prices should be compared with the USDA benchmark average 6-Region blended nest-run, (excluding provisions for packing and transport) cost of 70.3 cents per dozen in January 2021. The progression of prices during 2019 to date is depicted in the USDA chart reflecting three years of data, updated weekly.

 

The March 1st 2021 edition of the USDA Egg Market News Report (Vol. 68: No. 09) documented a USDA Combined Region value rounded to the nearest cent, of $1.20 per dozen delivered to warehouses for the week ending February 27th 2021. This average price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $1.11 per dozen. At the high end of the range, price in the South Central Region attained $1.26 per dozen. The USDA Combined Price last week was almost the same as the 3-year average and about 30 cents per dozen above the corresponding week in 2020.

 

Flock Size

According to the USDA the number of producing hens reflecting March 3rd (rounded to 0.1 million) was up 5.3 million to 322.2 million. If USDA data is accurate, the producing flock contains molted hens now coming back into production with approximately 5.0 million pullets reaching maturity during the week, offset by flock depletion. The hen population producing eggs is in balance relative to seasonal consumer demand but is depressed by lower industrial and food service off-take. Any number above 317 million hens in production in early March portends lower than average prices and increased inventory, unless matched by proportional increases in demand. Prices have stabilized and show indications of rising into pre-Easter demand following the 3-year average.

The total U.S. egg-flock was up 4.4 million to 328.1 million hens including second-cycle birds and those in molt. The difference of 5.9 million hens (6.8 million last week) between hens in production and total hens is equivalent to 1.8 percent of the national flock and 0.9 million lower than the previous week suggesting the return to production of molted hens. In addition young pullets that will commence laying consistent with chick placements in late September and early October 2020. The obvious reduction in hen numbers in Iowa and to a lesser extent among the next three largest egg-producing states that occurred following the onset of COVID-19 in February 2020 has partly reverted to pre-COVID numbers in anticipation of Easter 2021. Chick placement data suggests that 20 to 21 million pullets per month will commence production in the first quarter of 2021. This has implications for prices, given current supply and stock levels in relation to 1st quarter demand before the Easter rise.


 

Land O' Lakes Reports on FY2020

In a February 24th release, Land O' Lakes reported on financial results for FY 2020 ending December 31st.  For the period, the co-operative reported net sales of $13.9 billion and earned $266 million.  Comparable figures for FY 2019 were net sales of $13.9 billion, with net earnings of $207 million.

 

As of December 31st, Land O' Lakes posted total assets of $9.2 billion with long-term debt of $947 million.  For FY 2020  $162.9 million of the $266 million in net earnings was allocated to members as patronage.

 

Beth Ford, President and CEO stated, "while I am proud of our performance, I am even more proud of the team that delivered it.  In an involved and difficult landscape, Land O' Lakes was able to perform, we focused on growth in a challenging environment by standing up E-commerce across all business units". Earnings strength was attributed to improved performance in the Dairy Foods and Animal Nutrition segments.

 

 


Beth Ford CEO Land O' Lakes


During the ongoing COVID crisis, Land O' Lakes assisted farmers with Wi-Fi locations in 49 states and has supported digital connectivity.  The co-operative has announced a multi-year alliance with Microsoft to introduce digital innovations. 


 

Cracker Barrel Old Country Store Reports on Q2 2021

On February 23rd Cracker Barrel Old Country Store (CBRL) reported on the second quarter of Fiscal 2021 ending January 29th. For the quarter, the company posted a net profit of $14.0 million on sales of $677.2 million with an EPS of $0.59.  For the comparative second quarter of FY2020, Cracker Barrel earned $61.2 million on net sales of $846.1 million with an EPS of $2.55.

 

CBRL has traded in a range of $53.61 to $160.00 over the past 52 weeks with a 50-day moving average of $144.04.  Prior to release of Q2 results, CBRL closed on Monday, 22nd at $158.24 falling after release but closing on Thursday, 25th at $154.08 4.5 percent lower on a down-market day.

 

Cracker Barrel has a market capitalization of $3.66 billion with assets of $2.87 billion and carries long-term debt of $835 million.  Over the past twelve months, operating margin was -2.1 and profit margin +2.1.  The company has generated a return on assets of -1.2 percent and a return on equity of 7.7 percent.

 

Comparative restaurant sales for Q2 2021 declined by 21.9 percent compared with the corresponding second quarter in 2011.  Comparative retail sales declined by 15.3 percent compared to Q2 of 2020.  Off premises sales increased by 78 percent and represented 30 percent of sales.

 

In commenting on results, Sandra B. Cochran, President and CEO stated, "the resurgence of COVID-19 during the busy holiday and travel season impacted our business on a variety of fronts, but I was proud that our teams were able to provide a hospitable and safe experience for our guests".  She added, "despite the challenges we faced in the second quarter we expect to return to stronger levels of performance in the back-half of the year". Ms. Cochran noted the effect of severe weather disruptions during February.

 

The company projects comparable store restaurant sales down between 11 percent and 14 percent from pre-pandemic 2019 levels.  The company anticipates continued improvement in sales and operating income margin during the fourth quarter.


 

DoorDash Posts Q4 Results

DoorDash (DASH) reported on Q4 on February 25th.  For the quarter that ended December 31st, the company lost $312 million on revenue of $970 million with an EPS of $(2.67).  For fiscal 2020, the company lost $461 million on revenue of $2,886 million with an EPS of $(7.39).

 

Effective December 31st the company posted total assets of $6.35 billion of which 9.3 percent comprised intangible assets and goodwill.

 

DoorDash has a market capitalization of $53.8 billion and has traded over a 52-week period in a range of $135.38 to $256.09 with a 50-day moving average of $190.44.  The company posted a 12-month trailing operating margin of -14.7 percent and a profit margin of -16.0 percent.  DoorDash generated a return on assets of -6.6 percent and on equity -15.7 percent.

 

In providing guidance, the Company noted the potentially beneficial effect of California Proposition #22 and predicted a gross order value of $9.1 billion for the 1st quarter and $33 billion for FY 2021.

 

DoorDash can be regarded as a surrogate for the entire food delivery business.  Share price and hence market capitalization cannot be justified by negative company fundamentals.


 

Target Corporation Posts Q4 and FY2020 Results

On March 2nd Target Corporation (TGT) posted results for Q4 and FY2020 ending January 30th.  For the quarter, the company earned $13.80 billion on revenue of $28.33 billion with an EPS of $2.73.  For the corresponding Q4 of FY2019, Target earned $834 million on sales of $23.40 billion with an EPS of $1.63.  Revenue was 21.1 percent higher and net earnings increased by 65.6 percent.

 

For fiscal 2020, the company posted net earnings of $4.37 billion on revenue of $92.40 billion with an EPS of $8.64. Comparable figures for FY2019 were net earnings of $3.27 billion on revenue of $77.13 billion with an EPS of $6.36.  Revenue for the year increased by 19.8 percent and earnings by 33.6 percent. 

 

Comparable same-store sales increased by 6.9 percent for Q4, digital sales were 115 percent higher and drive-up sales increased by 500 percent. During Q4, digital sales represented 22 percent of revenue.

 

Target has total assets of $51.248 billion, up 20 percent from the end of FY2019. Long-term debt and lease obligations attained $13.75 billion, 1.0 percent higher than on February 1st, 2020.

 

In commenting on results, Brian Cornell, Chairman and CEO stated, "following years of investment to build a durable, scalable and sustainable business model, we saw record growth in 2020 as our guests turned to Target to safely provide for their families throughout the pandemic".  He added, "with the strength of our unique, multi-category assortment and the flexibility we offer through our reliable and convenient fulfillment options, we gained nearly $9 billion in market share in 2020 and grew our revenue by $15 billion which is more than the eleven prior years combined".  Based on "highly fluid and uncertain outlook for consumer shopping patents and the impact of COVID-19" the company did not provide sales and EPS guidance for fiscal 2021. 

 

At the end of FY2020, Target Corporation operated 1,897 stores with total retail area of 241,648 square feet. The company invested $2.65 billion in property and equipment during fiscal 2020.

 

Target Corporation has a market capitalization of $93.19 billion.  The company has traded over the past fifty-two weeks in a range of $90.17 to $199.96 with a 50-day moving average of $189.42.  TGT trades with a forward P/E of 21.28.

 

Twelve-month trailing operating margin was 7.0 percent and profit margin 4.3 percent.  The company has generated returns on assets of 8.2 percent and 30.7 percent on equity.


 

The Kroger Company Reports on Q4 and FY 2000.

In a press release dated March 4th The Kroger Company Inc. (KR) announced results for Q4 and FY 2020 ending January 30th 2021.

 

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 US$ x 1,000 except EPS)

 

4th Quarter Ending

Jan. 30th 2021

Feb. 1st 2020

Difference (%)

Sales:

$30,737,000

$28,993,000

+6.0

Gross profit:

$7,046,000

$6,486,000

+8.6

Operating income:             

$(158,000)

$537,000

-129.4

Pre-tax Income

Net Income

         $(110,000)

           $(76,000)

$390,000

$319,000

-128.2

-76.2

Diluted earnings per share:

$(0.10)

$0.40

-125.0

Gross Margin (%)

22.9

22.3

+2.6

Operating Margin (%)

-0.5

1.9

-126.3

Profit Margin (%)

-0.3

1.1

-127.3

Long-term Debt and lease obligations:

$21,669,000

      $20,366,000

          +6.4

12 Months Trailing:

 

 

 

           Return on Assets    (%)

5.0

 

 

           Return on Equity    (%)

31.8

 

 

           Operating Margin   (%)

2.9

 

 

           Profit Margin          (%)

2.2

 

 

Total Assets

$48,637,000

      $45,256,000

         +7.5      

Market Capitalization

$26,000,000

                    

          

 

For FY 2020 Kroger earned $2.59 billion on revenue of $101.597 billion with an EPS of $3.27. For the previous fiscal year Kroger earned $1.51 billion on revenue of $95,294 billion with an EPS of  $2.04

 

For FY 2020 same-store sales increased 14.1 percent over FY 2019. For Q4 Same-store sales increased by 10.6 percent with digital sales growing 118 percent compered to Q4  2019

 

52-Week Range in Share Price:  $27.33  to  $42.99   50-day Moving average  $33.72

Market Close Wed March 3rd pre-release $32.19. March 4th post release 15H42 $34.05.

Forward P/E  12.0                  Beta 0.3

 


In commenting on results for Q4 and FY 2000 Rodney McMullin CEO stated, "Kroger continued to grow market share during the quarter. Our ability to meet our customers' evolving needs is a testament to our deep competitive moats, disciplined investments in our increasingly robust digital capabilities, as well as our associates' relentless focus on our customers. We finished fiscal year 2020 with strong sales and earnings, as heightened demand for fresh, convenient food and meal solutions across modalities, including in store, pick up and home delivery, continued throughout the fourth quarter. 

"Supported by our strong performance and cash position, we were pleased to commit more than $2.5 billion to safeguard the environment our associates and customers work and shop in and to reward associates, including nearly $1 billion to better secure pensions." 

 

Kroger provided the following FY 2021 guidance:

EPS $2.75 to $2.95.   Operating profit $3.3billion to $3.5 billion.


 

APHIS Employees to be Deployed to Administer COVID Vaccine

In a February 17th release, USDA-APHIS announced that 119 employees had been deployed to assist several States to administer COVID vaccine.  This group includes veterinary medical officers and animal health technicians who have appropriate training, experience and certification.  Most of the APHIS deployments are to Nevada and Oklahoma working in mobile teams and pop-up clinics to address the needs of underserved communities.

 

APHIS is working closely with the Federal Emergency Management Agency to achieve the goal of administering at least 100 million doses during the first 100-days of the Biden Administration.  Employees are deployed for 30-days and will be rotated.  USDA Accredited veterinarians and other volunteers may participate in the nationwide-effort.

 

The emergence of variants emphasizes the need to rapidly immunize the U.S. population since this will reduce the number of susceptible individuals that provide an opportunity for viral replication and inevitable mutation.

 


 

UK to Conduct COVID Exposure Trial

Approximately 90 healthy volunteers, aged between 18 and 30, will be exposed to SARS-Cov-2 virus in a safe and controlled environment.  The trial will be managed jointly by the U.K. Vaccine Task Force, the Imperial College London, the Royal Free London NHS Foundation Trust, and hVIVO a commercial entity that conducts human challenge model studies.

 

To date, the UK with a population of 63 million has recorded four million cases of COVID-19 with 120,000 fatalities. As of mid-February, 15 million have been vaccinated with at least one dose of either the Oxford-AstraZeneca or Pfizer vaccines since December 8th 2020.


Prof. Robin Shattock

 

Amazon to Draw on Resources of MIT

According to a recent article in the Progressive Grocer Amazon is working with the Massachusetts Institute of Technology on applying artificial intelligence to expedite deliveries.  The Amazon Last Mile Routing Research Challenge will motivate academics to develop machine- learning models to refine delivery routes.  MIT will update the ‘traveling-salesman’ problem to determine most efficient routes with multiple destinations.  The Amazon Last Mile team will develop planning software for delivery fleets to determine the most efficient routing.

 

The joint initiative between Amazon and MIT will attempt to incorporate driver knowledge into route optimization.  Amazon is making available databases and existing route details and will offer prizes from $25,000 to $100,000 for solutions in the Last Mile competition.


 

Herbruck’s Poultry Ranch Issues Sustainability Report

Consistent with the need for companies to demonstrate progress in implementing principles of environmental, sustainability and governance (ESG), Herbruck’s Poultry Ranch has issued a sustainability report. Herbruck’s is a third-generation family egg-production enterprise, based in Saranac with operations in Indiana and Pennsylvania. The Company subscribes to four pillars of operation involving People, the Planet, Product and Prosperity applying experience and ethics gained in 60 years of operation.

 

The sustainability report details critical aspects of their operation including:-

  • Employee policy with emphasis on health, well-being and safety
  • Serving the community through philanthropy, education and providing job opportunities,
  •  A commitment to the environment through eliminating waste,
  • Local sourcing of grain and other inputs
  • Transforming poultry waste into organic fertilizer
  • Installation of solar power generation. 

 

Herbruck’s is an active participant in the National Pollutant Discharge Elimination System authorized by the Clean water Act.  Currently Herbruck’s is 75 percent cage-free commencing a conversion in 1992 with complete replacement of cages by 2024.  Herbruck’s is a leader in welfare and flock health through biosecurity and prevention of disease by judicious vaccination.

                                                                                                     

 

The sustainability report can be downloaded at www.herbrucks.com


 

Federal Government Reassessing Aid to Farmers

The fallout from the trade war with China and the advent of COVID-19, sharply impacted both row-crop and livestock producers in 2020.  Government support probably represented 40 percent of farm income in calendar 2020.

 

With the sharp increase in imports by China and increased domestic demand, prices of corn, soybeans and beef have risen to levels that have materially increased farm income.  The USDA estimates that farmers will earn an additional $12 billion from row crops and livestock producers will receive an incremental $9 billion over 2020.

Agricultural economist affiliated to Land Grant universities and the think-tanks suggest that farmers will be in a more favorable financial position in 2021 questioning the extent of farm support payments.

 

 


 

Mass Mortality of Wild Birds in Iran Attributed to Botulism

According to a report by Dr. Ali Bayani, ead of the Provincial Department of Environment for the province encompassing the Miankaleh Peninsula, over 40,000 migratory birds including flamingos, ducks, and pelicans have died around the shores of the Peninsula which lies between the Caspian Sea and Gorgan Bay.  The Peninsula is approximately 30 miles long and approximately 1.5 miles wide and is a major migratory stopover and a designated sanctuary. 


Miankaleh Peninsula with
Caspian Sea (above), Gorgan Bay (below, right)

Among wild waterfowl and other free-living bird species, botulism is essentially an enterotoxemia in addition to ingestion of preformed toxin from decaying plant material or cannibalism of carcasses or ingestion of maggots.

 

The extent of mortality both with regard to geographic area and numbers of birds involved suggests that highly pathogenic avian influenza should be considered as an alternative diagnosis or a concurrent cause of mortality.


 

Johnson & Johnson Vaccine Approved

Following approval by an internal FDA review panel, the Johnson & Johnson adenovirus vector COVID vaccine was approved by the external review panel and the CDC and should be available for shipping during the first week in March.  The single-dose vaccine can be stored and transported at conventional refrigeration temperature.  Approximately 20 million doses of the vaccine are expected by the end of the March and the company is contracted to supply 100 million doses by the end of June with an option to purchase an additional 200 million doses.


 

China Facing Potential Shortage of Soybean Meal

Faced with delays in receiving shipments of soybeans from Brazil, China is anticipating a shortage of soybean meal.  The average monthly importation of soybeans in 2020 ranged from 8 to 9 million tons but with only 5.5 million tons anticipated in March.  China soybean stocks were at 758,800 metric tons on February 23rd apparently double the quantity compared to the corresponding week of 2020.

 

On February 26th soybean meal traded on the Dalian Commodity Exchange at $525 per short ton compared to $424 on the CME. 

 


 

USDA January Egg Products Report

The USDA Egg Products Report released February 25th demonstrated a sharp decline in the volume of eggs broken during January 2021.  For the month, 177.5 million dozen were processed, down 21 percent from January 2020 and 9 percent lower than in December 2020.  Edible product from breaking yielded  228.6 million pounds of which 59 percent were whole product, 28 percent white and 13 percent yolk.

 


 

MOBA Uniflex Egg Liquid Processor

Moba has introduced the Uniflex concentration unit to process liquid egg. Uniflex is a fully integrated and flexible automated system that can processes both whole eggs and egg whites.

 

Moba Uniflex separates water from liquid egg to produce egg powder. Unique technology concentrates whole eggs by a factor of 1.5 and egg whites by 2, using less energy than conventional evaporation systems. 

 

Uniflex is an easy-to-operate, fully integrated automated system that meets high food safety standards incorporating CIP (Cleaning In Place).

 

Flexibility and conservation of capital are key advantage offered by the Uniflex system to produce egg powder since a single concentration unit can process both whole eggs and egg whites. 

 

The Uniflex system is available for immediate delivery in capacities ranging from 650 to 1,300 gallons per hour.


 

More Cases of Listeriosis Diagnosed from Abuelito Cheese

The Centers for Disease Control and Prevention has identified ten cases of listeriosis across five states with the most recent on February 9th. Additional cases are anticipated based on the prolonged incubation period of listeriosis. Nine of the ten patients required hospitalization.  On June 20th, the FDA issued a warning letter to Abuelito Cheese Company confirming that previous inspections yielded environmental swabs positive for Listeria grayi and Listeria innocua.  The FDA concluded that while these two species of Listeria were present, the probability existed that cheese produced in the facility could be contaminated with Listeria monocytogenes.  As yet, the FDA and CDC have not concluded that cheese produced by the Company was the vehicle of infection and further investigations are in progress.  In the interim, the FDA is maintaining surveillance and has indicated that cheese produced in the plant may be responsible for the outbreak.

 

FDA has a zero tolerance for Listeria spp. and the presence of this Genus of pathogens in the environment of a plant, specifically in drains, suggest that intensive decontamination is required. This is especially the case for any plant producing ready-to-eat dairy or processed meat products.  In 2018, Listeria monocytogenes was isolated from a plant producing hard-cooked peeled eggs representing a potential health hazard.

 


 

Outbreak of SE in Sweden

The Public Health Agency of Sweden is investigating an outbreak of twelve cases of Salmonella Enteritidis that have been diagnosed in ten different regions of the nations.  The first case was reported in December 2020 with a subsequent wave in late January 2021. 

 

Whole genome sequencing has demonstrated commonality of the isolates from patients but the source is unknown.  The sequences of the current isolates are different to those obtained from patients that contracted SE from consuming chicken imported from Poland in 2019 and 2020.  Since eight of the twelve cases are under the age of 10, it is presumed that infection occurred within Sweden and was not acquired beyond the Nation’s borders.


 

Danone Restructures Management

As a result of pressure from investors Artisan Partners and Blue Bell Capital Partners, the Board of Danone has moved Emmanuel Faber recently the CEO to the position of non-Executive Chairman. The company has yet to announce a new CEO. Gilles Schnepp has been appointed as Joint Vice-chairman with Cecile Cabanis, the former CFO. Jean Michel Severino, will be the Lead Independent Director and Chairman of the Governance Committee.


Emmanuel Faber Outgoing CEO
and Cecile Cabanis CFO

 

Danone sales were 6.6 percent lower for fiscal 2020 compared to the previous year at $28.6 billion.  Danone recently announced that it will sell its equity in Mengniu, a leading dairy producer in China and will reduce head count by approximately two thousand employees.  In recent years, Faber diversified into non-dairy products including plant-based protein.

 

Danone produces under a range of brands including Activia and Alpro.


 

Alltech ONE Ideas Conference May 25th-27th, 2021

The 2021 Alltech ONE Ideas Conference will be held in virtual format allowing leading experts in agri-food, business and ESG to participate.  The event in 2021 will be the 37th consecutive year of the Conference, providing ideas, inspiration, and motivation.  The program will include focus sessions on aquaculture, business, beef, dairy, equine, poultry, and swine.  For further information, access the company website <www.one.alltech.com>.


 

Sanovo Driverless Forklifts

Sanovo is now offering automated guided vehicle (AGV) forklifts for egg-handling and logistics. A range of units is available for rapid delivery that offer a short payback period. Sanovo AGVs are compatible with U.S., U.K. and marine-pallets.

 

Sanovo offers solutions to automate transport from storage to de-palletizing or from case packing to palletizing.

 

With flexible and easy route settings, the AGV transports egg pallets between points on pre-determined routes. Benefits include:

  • Savings on simple pallet transport
  • Flexible and easy route changes
  • Increased efficiency by working 24/7 over 365
  • Reduced damage to goods and equipment by eliminating collisions due to operator error
  • Easy and safe installation and operation – Supplied to Plug n'Produce
  • Short payback period through elimination of operator cost
  • Easy installation and commissioning in under three days

 

For additional information and to receive a custom ROI calculation access <www.sanovogroup.com>


 

Paul Bredwell Continues with Chesapeake Bay Partnership

According to a March 2nd release, Paul Bredwell, Executive Vice President of Regulatory Programs for USPOULTRY was selected by the Chesapeake Bay Partnership to serve an additional two-year term as an at-large member of the Agricultural Workgroup that monitors Chesapeake Bay Total Maximum Daily Load. 

 

There are a large number of poultry operations within the 64,000 square mile Chesapeake Bay watershed.  Over decades, the six states within the watershed have implemented programs to reduce nitrogen and phosphorus runoff that eventually enters the Chesapeake Bay.  Currently regulations to reduce eutrophication are in effect in compliance with the 2009 Presidential Executive Order to the Environmental Protection Agency to reduce environmental degradation.


Paul Bredwell USPOULTRY

Chesapeake Bay Catchment Area

 

In commenting on the extension of his appointment Bredwell noted, “given the poultry and egg industry’s footprint within the Chesapeake Bay Watershed, we feel it is essential to participate in the process to accurately evaluate our contributions and to identify ways to reduce nutrient loads into the Bay.”  He added, “our industry is rooted in research and science, and it makes perfect sense to collaborate with the Chesapeake Bay Partnership to enhance surface water quality within the watershed and restore the health of the Chesapeake Bay.”


 

Walmart Offers COVID-19 Vaccination for Underserved Communities

As a participant in the Federal Retail Pharmacy Program, Walmart will soon receive direct supplies of Pfizer and Moderna vaccines.  The company will initiate vaccination programs at 43 locations in 18 states with an emphasis on demographics with limited access to healthcare.  Walmart has partnered with local community leaders and non-profits including the Casa del Immigrante, the Indianapolis Urban League and the Jackson Housing Authority and other organizations to provide vaccines for susceptible populations.

 

Dr. Cheryl Pegus, Executive Vice President of Health and Wellness at Walmart stated, "we have focused most of our events in medically underserved neighborhoods and we are proud to play a part in increasing access to the vaccine in these communities".  In addition to drive-through locations in store parking lots and in-store pharmacies, Walmart will also establish off-site locations to serve populations most in need.

 

Although the rate of vaccination is increasing to levels of two million doses per day and with greater availability of the two mRNA vaccines, the elderly poor and other minorities are disproportionately less likely to receive a vaccine.  This is based on their inability to make appointments due to lack of internet access and problems obtaining transport.  With the advent of the J&J vaccine that requires only refrigerated storage and is administered as a single dose, Walmart will be in a more favorable position to vaccinate populations in remote rural areas in addition to inner-city neighborhoods.


 

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Dr. Simon M. Shane
Simon M. Shane
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