Editorial


Impact of Covid-19 - Now and in the Future

03/25/2020

Momentous events have a way of changing perceptions and altering personal and business routines and activities. The unprecedented demand for eggs is a case in point. Over the past three weeks, national egg inventory has declined successively over a range of 9.7 to 12.6 percent, reducing stock in some cases to the bare floors of coolers. Demand has risen by 40 percent and Midwest wholesale prices have vaulted by over 150 percent.

 

Consumers are depleting supermarkets shelves with their transition to an “eat-at-home” lifestyle. Supermarkets are pressured to replenish tray-pack chicken, eggs, shelf-stable milk substitutes, paper goods, and toiletries. Demand for eggs has transcended all categories, although some price sensitivity is evidenced by the fact that “pasture reared” and similar products, priced upwards of $6 per dozen remain unsold. Nationally-branded specialty eggs, house brands and generics are whisked off shelves to consumers’ refrigerators throughout the nation. In accordance with the laws of supply and demand, price has risen in response to availability with an average national price now exceeding the three year average, following a very depressed 2019.

 

There are a number of observations and lessons from the increased demand for eggs since the advent of COVID-19:

  • The distribution system from packing plants through to supermarket shelves cannot respond adequately to surges in demand. Out-of-stock represents a lost sale and in turn revenue to a retailer and ultimately a reduction in the potential increase in per capita consumption.
  • In visiting supermarkets over the past few weeks, it is evident that stores receiving direct delivery are more able to keep shelves stocked. In contrast, there appears to be a delay interposed by distribution centers that have not reacted to the surge.
  • As with manufacturing industries, the obvious risks and costs associated with “just-in-time” management are becoming apparent. What works under an optimal situation has proven to be inefficient when challenged by increased demand.
  • Retailers will have to maintain more stock and motivate their deli personnel to transfer eggs from coolers to shelves as necessitated by volume of sales.
  • More frequent deliveries from DCs to stores are obviously necessary with an emphasis on critical items. This may result in a deterioration in cost per ton-mile, but may well be justified in terms of enhanced store revenue and consumer satisfaction. Evidently, chains must become more flexible with regard to sourcing supplementary deliveries direct from packers, especially if they are unable to receive deliveries through company DCs.

 

A situation such as Covid-19, which has resulted in a profound shift in dining from QSRs and restaurants to the home, has highlighted the versatility of eggs. Not only due to the reality that most consumers can cook an egg, be it boiled, fried, or scrambled, consumers have now extended from breakfast to lunches and even dinners. A stay-at-home lifestyle mandated by COVID-19 restrictions is probably bringing more families together to eat and the industry should experience an increase in demand after the present crisis is resolved. Publicity generated by the American Egg Board emphasizing eggs as a source of protein and other nutrients and their excellent use of social media to promote diversity of meals that can be prepared with eggs should reinforce an obvious consumer trend.

 

Since shopping at large supermarkets may be regarded as a risk of acquiring COVID-19, smaller stores including Dollar and convenience units are now regarded as locations to buy eggs, milk, bread, and other necessities. This trend may persist when normal conditions return. Accordingly, distributors involved in restocking these stores may play an important role in maintaining an anticipated increase in egg consumption.

 

Pack size may well be influenced by demand, favoring 18 and 24-egg presentations. Fewer visits to supermarkets require larger packs to maintain volume of sales. More eggs in the refrigerator will probably translate to greater consumption.

 

The final lesson relates to willingness to pay. It is possible that this episode of high demand and concurrent escalation in price will create a greater appreciation of the value of eggs and an inclination to pay for their inherent nutrients. Not only are we retraining a cohort of consumers, but we may in fact be recalibrating chain buyers who are essentially the arbiters of price.

 

There are probably many lessons to be learned from the current situation, as stressful and unfortunate as it may be. Again, EGG-NEWS stresses the need for a professional study on egg pricing under unusual marketing conditions. Previously, it was suggested that the AEB fund studies by agricultural economists to examine price and supply relationships in the shell egg and liquid masrkets and their interaction during and following the 2015 avian influenza epornitic. The COVID-19 demand is yet another opportunity for the industry to take advantage of market perturbation to learn more about how demand and supply influence price in the short and intermediate term. This will allow more rational decisions on allocation of capital for expansion and cage-free transition, flock placement and marketing programs to capitalize from both normal and abnormal situations.


 

Court Orders USDA to Establish a Justification for Withdrawing the 2017 Organic Livestock and Poultry Practices Rule

03/18/2020

The Organic Livestock and Poultry Practices Rule (OLPP), that was intended to establish standards for organic production, was signed into effect during the last hours of the Obama Administration in January 2017 by then Secretary of Agriculture Tom Vilsack.  The incoming Secretary of Agriculture, Dr. Sonny Perdue, successively delayed implementation of the Rule and on March 13th 2018 issued a final withdrawal notice which terminated the initiative.

 

The Organic Trade Association initiated litigation to reverse the USDA decision.  After considerable delays requested by USDA, the U.S. District Court for the District of Columbia has ruled that the USDA now has 180 days to rectify errors in economic models and to return to the Court with a defense.


Organic Farm with aviaries and sun porches

 

The Organic Trade Association stated “At the end of the day, and despite this delay, we are more confident than ever that our lawsuit will prevail and that the will of the industry will be served.  We are confident that the Organic Livestock and Poultry Practices Rule will be reinstated.”

 

The OLPP mandated extensive outside access for egg-production flocks. This requirement would have disqualified most in-line egg production units that use sun porches as a substitute for outside access.

 

From the perspective of biosecurity, hens should not have outside access to pasture as they are vulnerable to infections including avian influenza carried by migratory waterfowl and are susceptible to infection with Salmonella and parasites.

 

If the OLPP rule is reinstated, the contribution of organic eggs from large in-line aviary units without outside access will cease, resulting in escalation in the price of organic eggs.  The industry will predictably respond by developing a new category of ‘GMO-free’ eggs that will effectively satisfy the majority of current organic customers, but at a far lower price.

 

The OLPP rule may reemerge irrespective of lawsuits and court decisions in 2020, if there is a change in Administration, since the industry can expect a reversion to the previous policy favoring “family farms”. This would be unfortunate for both producers and consumers as eggs produced under the proposed OLPP Rule would retail for over $6.00 per dozen compared to certified organic eggs fron in-line units currently retailing for approximately $3.75 per dozen in club stores. Organic eggs under the strengthened OLPP Rule would have no quantifiable quality or nutritional benefit over eggs from hens held in aviaries and allowed access to protected sun porches.


 

Investment for In-line Complexes Dictates Professional Planning and Execution

03/12/2020

The initial phase of conversion from conventional cages to aviary units in the 2010s involved reconstruction and modification of existing high-rise houses to accommodate aviaries or in some cases floor systems. Building restrictions, farm layout, house dimensions and design dictated decisions on equipment, ventilation and services. 

 

Midwest Complex Representing the ultimate in professional planning and execution

Establishing a green-field complex to accommodate two million hens is a far more complex endeavor requiring not only technical input from qualified engineers and production specialists but coordination of the various disciplines to achieve an optimal outcome. Where owners of laying operations could serve as their own general contractors in the 1990s the complexity of a project comprising nine or more multi-level aviary houses each holding more than 300,000 hens requires a competent general contractor with deep resources and experience.

 

The initial and critical step in a project is to prepare a comprehensive feasibility study, required in any event by financial institutions. This key planning document takes into account a realistic market forecast that should determine the size of the intended complex, production and packing parameters, capital and operating cost and a projection of return on investment.

 

Lenders are now disinclined to advance funds for projects in excess of $100 million without assurances that recipients have the capacity to service loans. Collateral represented by a completed in-line project can only be used for egg production. In a market depressed by prolonged overproduction, the value of capital assets to produce eggs would be heavily discounted in the event of a default.

 

It is a valid observation that some projects are conceived in isolation without reference to the activities of competitors.  This is partly the reason why our industry has traditionally undergone wide swings in profitability, attributed to cycles of overproduction relative to demand. To paraphrase the late Vice President Hubert Humphrey, a few million additional hens here and there soon adds up to real volume.

 

Conceptual planning must take into account the ultimate size of a complex including feed production, packing and further processing in addition to the facilities for pullet rearing, laying hens, biosecurity and services. In recent years, complexes have been erected without adequate biosecurity or with unbalanced capacities for rearing and laying that detract from optimal utilization of capital intensive facilities.  Neglecting biosecurity can result in complete depopulation in the event of exposure to a catastrophic disease or at best a severe impact on production and profit following introduction of an erosive infection such as coryza.  Inadequate capacity to rear pullets may require purchase of pullets or alternatively houses may stand idle while they incur fixed costs including interest and depreciation.

 

Professional input is required to design multi-level structures to ensure they are able to withstand floor loading, wind forces, extreme heat or snow accumulation depending on location.  Over-design is expensive but under-design can be catastrophic.  Structures and equipment are becoming more complex requiring the input of electrical engineers and suppliers experienced in installing computerized sensor and control equipment to monitor and manage flocks. Although there are many efficient component systems available to control ventilation, to ensure regular egg flow to the packing plant and to monitor flock performance it is necessary that systems be compatible and coordinated with respect to their function.  This requires consultation among management, equipment suppliers and professional consultants. 

 

Compliance with environmental restraints, welfare mandates, state and local regulations including building and fire codes must be incorporated into planning and permitting. Erection of a complex representing a continuum from breaking ground to completion requires coordination, applying modern project-management technology.  Delays in delivery of imported or critical components can impact progress and distort completion schedules, requiring appropriate modification.  Compromises involving the inherent biological cycle of rearing and egg production can have profound financial impacts if flocks are transferred prematurely or if older flocks are retained beyond their productive and economic life. 

 

Committing upwards of $100 million to a complex requires a level of professionalism commensurate with the magnitude of the investment.  Traditional approaches to building single-level, high-rise complexes of the 1990's are no longer valid. Capital cost and complexity have increased at a rate requiring a high degree of professional involvement.  We have seen too many new buildings engulfed in flames due to substandard electrical installations.  Disease outbreaks that have occurred in recent years can be contributed to defects in both structural and operational biosecurity.  The return on investment in many operations is less than optimal due to deficiencies in planning and execution. 

 

It is always more expensive to modify and redesign after completion of a project compared to the return from professional planning and execution - just ask Boeing.


 

COVID-19 Infection and Potential Impacts on the Egg Industry

03/04/2020

The present situation

Approximately ten weeks after the first recognition of COVID-19 infection in China, the disease has been reported in sixty-one nations.  At the present time, the highest number of cases have occurred in China with approximately 80,000 infected and 3,000 fatalities.  Second is Italy with 2,500 cases and 79 fatalities and Iran with 2,300 cases and 77 fatalities.  Korea has had 5,700 cases with 35 fatalities and Japan has diagnosed 1,000 cases.  At the present time the U.S. has positively diagnosed 118 cases with nine fatalities

 

It is noted that the incidence rate (new cases within a specific time) in China is declining, attributed in large measure to the draconian measures enforced by the central government on affected provinces.   Approximately 50 million people were under lockdown for at least three weeks although workers are returning to factories and offices but under strict surveillance.  It remains to be seen whether an upsurge in new cases will occur following relaxation of quarantines.  It is generally acknowledged that Western nations could not impose the same restrictions that appeared effective in China.

 

With respect to the U.S., initial cases were acquired overseas but during the past two weeks it is apparent that community spread of the SARS-CoV-2 virus (as designated by the WHO) is clearly transmissible among people in close contact.  Preliminary information from China suggest that 80 percent of cases are extremely mild to moderate, 14 percent result in severe complications and 6% of patients with predisposing conditions experience life-threatening pneumonia.  Fatality rates in China vary from 0.7% to 5% depending on province.  It is clear that without knowing the actual number of individuals infected by applying retrospective serologic surveys, it is impossible to determine the denominator to be used to establish rates of infection and fatality.  A preliminary study conducted in Guangzhou Province indicated that the infection rate was in fact low, but the situation may be different in Hebei Province.   Realistically, authorities in the U.S. do not know the extent of infection given the slow start to antigen (virus) assay.  A more precise knowledge of the extent of infection over the past two weeks will evolve and will be necessary to guide preventive measures and policies.

 

Despite the predictions of pundits, economists, politicians and other amateur epidemiologists, the nation should rely on authoritative statements based on past experience with SARS and influenza outbreaks and science.  Key personnel include Dr. Anthony Fauci, Dr. Nancy Messonnier and Dr. Clifford Lane of the NIH, Dr. Scott Gottlieb, previously Commissioner of the FDA, Dr. Jerome Adams, Surgeon General and Dr. Robert Redfield of the CDC.  Statements by White House personnel, at variance with established scientific fact, aimed at downplaying the severity of the situation for political purposes represent a disservice to our nation.   

 

Effects on the Poultry Industry and Society

The possible impacts on the egg industry will relate to the extent of quarantines and possible restrictions on interstate transport. Although there is no indication of U.S. policy on quarantines it is accepted that we will not follow the lead of China. Despite some inconveniences farms will receive ingredient and eggs will be delivered to retail and egg liquid to manufacturing plants.  If however, the infection assumes epidemic proportions, obvious impacts on logistics and ongoing operations including the availability of workers will emerge as restraints.

 

 

Of immediate concern is a disruption in the supply chain for critical components.  The U.S. poultry industry is relatively secure with respect to vaccines for poultry diseases.  Since a high proportion of vitamins and other compounds emanate from China, delays in manufacture and supply of nutrients may cause problems.  Port delays in China during mid-January extending through February have reduced the volume of broiler feet and parts shipped although the congestion at points of entry appears to be easing.  Hong Kong is the largest importer of U.S. shell eggs but at this stage there does not appear to be any disruption in the chain of delivery.  Exports to our USMCA neighbors, Canada and Mexico should not be affected unless one of the three nations imposes border restrictions that would be deleterious to all commerce and agriculture.      

 

The most immediate risk facing the egg industry appears to be maintaining a productive work force at both the farm and plant levels.  Hopefully the suggestions provided by CDC and reiterated in EGG-NEWS that all personnel should have received the 2019 influenza vaccine have been followed. This is relevant since a late winter or early spring upsurge of influenza will complicate recognition and diagnosis of COVID-19.

 

An effective and proven safe vaccine may only be available for field deployment during the late summer of 2021, given time required for development and testing. Egg producers should advise workers to follow common sense precautions including frequent hand washing, avoiding close contact with co-workers and abstaining from attending events involving a high concentration of participants including concerts, sports and political rallies.

 

It is evident that if COVID-19 becomes epidemic in the U.S. consumers will shun large supermarkets and malls shifting purchases of eggs to smaller stores.  This will require more flexible delivery programs.  Sales of eggs and products in restaurants will probably fall, compensated by greater consumption of home-prepared meals or the use of drive-through lanes at QSRs.

 

It is still too early to predict social, political and economic effects of COVID-19.  What we will need is clear and concise direction based on sound scientific and epidemiologic principles.  This is certainly no time for the blame game or advocacy of quick-fixes and nostrums manifested by misinformation on social media.

 

Hopefully the U.S. will be spared an extensive outbreak and that our medical resources will be able to treat the elderly, the immunosuppressed and those predisposed to respiratory infection.

 


 

Converting to Cage-Free—A Financial and Timing Dilemma

02/26/2020

As we transition through 2020 we should remember that we are now at the mid-point of the ten-year grace period to achieve conversion from cage-free housing of hens to alternative systems, intended to be complete in 2025. As of January this year the USDA reported 70 million hens out of a nominal 330 million were housed in other than conventional cages representing 21 percent of the national flock in production on commercial farms. This means that in the next five years an additional 260 hen-places will be required for the shell egg and products segments. At a conservative cost of $40 per hen, representing an average between conversion of existing houses and erection of new complexes, the capital required to achieve re-housing will amount to $10.5 billion for hens plus a provision of about $2.5 billion for rearing pullets assuming no further expansion through 2025. 

 

How did we get to the present situation? The Humane Society of the United States (HSUS) under the direction of then president Wayne Pacelle adopted alternative housing for hens as a primary objective. Not because his organization cared for hens (or for that matter any animal), but the issue served as a rallying cry to attract funding for the HSUS. Income that was to be used for lobbying, advancing a vegan agenda and supporting a cadre of administrators feathering their collective nest. Animal shelters received less than one percent of revenue over successive years in the 2000s and since despite heartbreaking TV spots featuring neglected dogs and cats.

 

Pacelle advanced a two-pronged approach to pressuring producers to convert from cage housing. The first involved ballot initiatives in states that functioned with constitutions allowing legislation by citizen vote. Mounting a successful campaign in California, Proposition #2 passed with two thirds of ballots cast in 2008 paving the way for Oregon, Washington, Rhode Island and Michigan. More recent initiatives or legislation is under consideration for Arizona, Colorado and Hawaii. States with constitutions placing the legislative process in the hands of elected representatives and senators were refractory to HSUS tactics of voter manipulation using ballot initiatives.

 

Then came the second prong. The HSUS coerced a range of egg purchasers to commit to announcements of a ten-year period of transition to achieve complete conversion. Failure to make a declaration in 2015 through 2016 would have been to invite adverse publicity, condemnation on social media, store demonstrations and brand degradation. For an executive a commitment to convert was essentially a no-brainer given that most of the decision makers would have moved on or retired by 2025. The HSUS was initially helped with their campaign by a number of companies mostly with E.U. roots involved in food service, manufacturing and retail. Most of the members of the Food Marketing Institute, National Restaurant Association, National Council of Chain Restaurants and others were blindsided by the speed at which commitments were extracted and publicized.

 

The justifications regarding consumer demand for enhanced welfare in the form of cage-free housing was thin to non-existent. Superficial and unscientific surveys with biased questions and doubtful validity were commissioned by the HSUS and also by kindred animal rights and pro-vegan organizations. Sure the studies showed that affluent shoppers would prefer to have hens scratching in pasture or roaming in barns than confined to cages. The surveys were constructed to deliver a pre-determined result, rather like asking a six-year old if they are in favor of ice cream. A scientific study has yet to be published using conjoint analysis to determine willingness to buy eggs from hens housed under different systems but with unique and relevant prices. Everyone wants welfare but not everyone is willing or able to pay for it. Effectively we are witnessing an after-the-effect manifestation of consumer choice with multi-tier attributes and pricing. Generic eggs from hens in cages are marked at about $1 per dozen on the shelf compared to cage-free aviary and barn eggs at $2.50 per dozen. They have the same nutritional value, similar packaging but bear a price differential reflecting the additional cost of production and retail markup arising from the cage-free attribute.

 

Given the effective saturation of the shell-egg market characterized by small annual incremental increases in demand, despite promotion by the AEB, consumers have effectively defined the volume of cage-free product they will buy and at what price. To continue with conversion by committing loan capital in a market offering negative returns is fallacious. Dolph Baker Chairman and CEO of Cal Maine Foods has indicated that conversions by his Company going forward from 2020 would be “market driven”. Mainstream supermarkets now regret their haste in conceding to the HSUS and desperately want to retain the option to sell a range of eggs to consumers with the existing range under stable conditions of $1 per dozen for caged product up to $3.00 for eggs derived from hens under alternative systems.

 

Now is the time for members of the FMI, NCCR, NRA and others ensnared by the HSUS to collectively absolve themselves from commitments made in haste in 2015 and 2016. Decisions made under duress and without appropriate market research. Customers are now voting with their purses and wallets. The industry has reached a plateau in conversion and to continue to completion by 2025 would be detrimental to financial institutions, producers, retailers and consumers. Conversion can and should continue but at a pace consistent with replacement of obsolete high-rise houses fitted with cages and with an expectation of a reasonable rate of return on capital invested.


 

Opportunities for Fairness in Farming Act of 2020 Introduced into the House

02/10/2020

Representative Dina Titus (D-NV) has introduced the Opportunities for Fairness in Farming Act of 2020 designated H.R. 5563.  This intended legislation parallels a similar Bill introduced into the Senate sponsored by Senators Mike Lee (R-UT), Cory Booker (D-NJ), Rand Paul (R-KY) and Elizabeth Warren (D-MA).  The proposed legislation would create additional audits and reporting for commodity boards financed by check-offs.  An important provision of the Bill would prevent Boards from cooperating with or funding organizations that engage in any form of lobbying.  According to the UEP, justifiably opposing bills constraining check-off programs, the American Egg Board would be denied the opportunity to work with numerous organizations including the School Nutrition Association.

 

There is considerable opposition to state and national check-off programs in the beef industry by independent producers’ organizations.  The representative group, R-CALF USA has alleged irregularities in the use of check-off funds and is currently involved in a number of legal actions at state level. 

 

The American Egg Board came under criticism in 2015 when it was disclosed that check-off funds and personnel were used to oppose a company introducing a vegetable-based egg substitute.  In 2007, the American Egg Board supported opponents of California Proposition #2 in contravention of legislation governing political action. In 2015 the American Egg Board underwent changes in management and has functioned since this time under the leadership of Anne L. Alonzo with strict conformity to USDA-AMS regulations.

 

Given prevailing policy in the USDA, and in recognition of the value of commodity boards among members of Congress and their constituents, it is unlikely that H.R. 5563 will receive meaningful support in the Senate. The Speaker of the House has expressed muted acceptance for changes in the control of commodity boards. A disquieting aspect is the obvious pressure exerted by welfare organizations lobbying for restrictive legislation based presumably on their avowed opposition to intensive livestock production.


 

Wisconsin Recognizes Crisis in Dairy Farms. A Message for Egg Producers?

02/09/2020

In his State of the State Speech, the Governor of Wisconsin Tony Evers stated that he would call a special session of the Legislature to develop programs to prevent bankruptcies and suicides among farmers in the state.  The session is intended to consider bills that would assist farmers and promote agricultural industries.  Evers faces opposition from a Republican-controlled Legislature although Senate Majority Leader Scott Fitzgerald commented “we are all looking for ways to do better when it comes to ag.”  He added “there have been a number of proposals by the Legislature, but I’m all ears on what the government has to offer.”  Governor Evers noted that a proposed bill would create a Wisconsin initiative for dairy exports to increase volume to 20 percent of the Nation’s milk supply by 2024.  The second bill would improve the University of Wisconsin extension services to farmers.  The Governor has proposed a new office of Rural Prosperity to promote agriculture income.

 

With respect to intended actions by the Wisconsin Legislature the future and prosperity of the state dairy industry is governed by simple economics.  The market for raw milk in the U.S. has declined by twenty percent over two decades.  Consolidation and economies of scale have benefitted larger farms and dairies allowing them to capture more of the current declining market placing smaller and hence less efficient family farms at a competitive disadvantage. 

 

We have seen similar trends in the egg industry. Prolonged periods of low prices and negative margins in 2019 suggest that family farms not affiliated to integrators by supplying off-line packing may not survive without solid local and niche markets.  Subsidies and programs that fly in the face of economics provide only temporary relief.  In contrast to the milk industry, egg consumption is increasing although at a glacial rate, despite the strenuous activities of the American Egg Board.  It is more than apparent that there will be a reduction in the number of producers in 2020 and profitability will only be restored with a substantial reduction in the numbers of producing hens.

 

The activities of the American Egg Board and the USA Poultry and Egg Export Council are maintaining export markets for shell eggs and products, principally to our USMCA neighbors. In the case of shell eggs to Hong Kong there are obvious limits given international competition and freight rates.  Notwithstanding the relatively small volume of exports relative to production, this segment of our industry represents 8 to 11 million hens out of a flock of 325-330 birds in production.  Prospects of increasing exports are limited. Accordingly retention of existing markets and export volume are critical to achieving a break-even or profit situation.

 

Unlike the milk industry, egg producers are facing the prospect of considerable capital investment in converting from conventional cages to alternative systems to comply with the demands for enhanced welfare. Commitments to convert to cage-free sourcing by 2025 imposed by members of the Food Marketing Institute , National Restaurant Association, the Food Marketing Institute and the National Council of Chain Restaurants will not be fulfilled. 

 

Progress in transition from cage facilities, at a cost of $30 to $40 per hen, depending on housing and equipment, has attained a proportion of 32 percent of the population of hens producing eggs for the shell market. The rate of conversion and erection of new facilities has probably reached a plateau consistent with market demand, ultimately influencing price and margin. Taking a lesson from the dairy industry and also our history it would be imprudent to replace cages with aviaries or floor systems without reducing or stabilizing the population of hens on new or existing complexes.


 

Coryza Focus of Attention at 2020 IPPE Meeting of Egg Production Veterinarians

02/06/2020

Understandably, the impact of coryza was a major concern at the Winter meeting of American Veterinarians in Egg Production.  This ever-expanding group of Veterinarians in North America involved in egg production and breeding convened concurrently with the 2020 IPPE.

A case report on coryza in a Midwest complex holding two million hens was presented by the company veterinarian.  The condition appeared in two of nine houses on a complex, presenting as mild facial swelling and ascending mortality rising to approximately 0.5 percent per day.  A review of house records showed that water consumption fell precipitously three days before onset of clinical signs followed by a drop in feed intake and production and then the appearance of clinical signs and an increase in mortality.  The entire flock was treated with CTC at a level of 400 grams per ton. 

Initially there was difficulty in identifying the causal organism Avibacterium paragallinarum.  Culture of the organism is difficult using conventional microbiologic culture, but the presence of antigen can be detected using a polymerase chain reaction assay.

The value of the discussion lay in the contribution and collegial interaction among the attendees.  A number of older members of the group who have had extensive experience with the control of coryza and specifically Modesto strain C-2 in Californiaand Mexico and various serotypes in South Africa and Asia provided comments.

A participant noted that if tetracycline is administered to flocks the condition can be resolved within three weeks.  In the absence of antibiotic therapy, the duration of clinical signs is approximately 21 days.  The actual absorption of tetracycline incorporated in a layer diet containing 3.5 to 4.5 percent calcium is questionable.  Since there were no untreated controls in the Midwest Complex, it is not possible to comment on the efficacy of medication. 

Since Avibacterium is a fragile organism, it does not persist for long in the environment compared with other bacterial pathogens such as Salmonella and Pasteurella. Introduction of an infection onto any farm denotes a deficiency in biosecurity.  Failure to subject workers, supervisors and visitors to appropriate de-robing, showering and donning of farm-supplied protective clothing is an obvious risk factor for introduction of coryza.  In the context of large complexes, nest-run eggs from contractors introduced into in-line packing plants, contract service crews and modules used for flock depopulation could all be regarded as potential vehicles of infection.

The consensus was that once a complex is infected, the permanent carrier state will require vaccination of replacement pullets either using a commercial multivalent vaccine or if inadequate protection is achieved, an autogenous product is required. Upgrading of biosecurity is critical to preventing exposure.

During the mid-1960’s and 1970’s in some nations where vaccines were unavailable, producers resorted to contrived infection administering Avibacterium (Haemophilus as it was then classified) to six-week old pullets that were then treated with tetracycline.  Pullets remained permanent carriers but did not demonstrate clinical signs and their production was unaffected when transferred to a multi-age complex.

Given the recent history of coryza as it emerged in Pennsylvania and extended to Ohio, coupled with the presence of infection in California suggest that the disease will be disseminated to additional regions. More effective vaccines will have to be incorporated into pullet immunization programs once the disease is introduced into a flock.


 

Green Party Matures in Germany. Harbringer of an EU Trend

01/20/2020

Mid-January marked the 40th year since the foundation of the Green Party in Germany. Originally an “eccentric band of environmentalists, peaceniks, and anti-nuclear activists” according to The Economist, the Greens have matured and now support policies combining ethics with realism and a commitment to the EU. From minitority outsiders, the Greens have emerged as the second largest party in Germany and may govern the nation following the Fall 2021 election, given the decline of the grand coalition between the CDU and the SPD. The Greens serve in coalitions in 11 of the 16 German states, forming bonds with diverse political groups including both conservatives and ex-communists as expedient.

 

The Green Party intends to phase out coal power and internal combustion engines in automobiles by 2030. They intend imposing duties on carbon emissions but will pursue climate-friendly growth that supports industry and employment.

Implicit in the eco-friendly approach to government is an avowed opposition to intensive livestock production. The Greens have been instrumental in banning conventional cages, beak trimming, and destruction of egg-strain cockerels. Like-minded politicians in other EU nations are clearly following the lead of the Greens in Germany. A 40-year record of slow, but significant, acceptance suggests that Green populism moderated by practicality will be the dominant feature of EU politics through the present decade. Many of the principles advocated by the Greens resonate in the U.S. This has implications for the egg-production industry both with respect to policies and standards required by multi-national customers and the design of equipment.


 

Effect of New SNAP Rules

01/16/2020

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

 

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

 

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

 

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

 

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

 

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


 

The Need to Prevent Barn Fires

01/07/2020

The recent unfortunate conflagration on a farm in Western Michigan resulting in the loss of a cage-free unit with 300,000 hens stimulated a review of fires on egg-production units both in the U.S. and the EU. During 2017 about 1.4 million hens were lost to fire in three incidents in Pennsylvania, Utah and Indiana.  In addition to fires involving older high-rise houses there have been a number of incidents involving destruction of newly completed barns and units under construction.

 Canada documented the loss of half a million hens in a series of barn fires from 2015 through 2018.  It must be remembered that the Canadian controlled marketing system restricts the number of hens on a farm and barns seldom house more than 20,000 birds, suggesting a relatively large number of fires.  Between 2017 through late 2019 the Netherlands recorded fires resulting in the loss of 500,000 hens.  Again, farms have relatively small barns as producers belong to horizontally integrated cooperatives.  In contrast, Germany did not record any losses of hens due to fire.  This may be attributed to the fact that fire alarms and sprinklers are mandatory in livestock buildings in this nation.

In reviewing specific cases, malfunction of electrical equipment including overheating motors and substandard wiring are responsible for fires in older high-rise houses.  A few cases of losses in newly constructed buildings are attributed to deviations from acceptable structural and electrical codes and defective circuit breakers.  It is considered significant that most fires occur at night resulting in total loss of at least the house involved in addition to death and depressed egg production due to smoke inhalation in adjacent houses located on in-line complexes.  This obviously points to defective or absent alarm systems or a delay in the response of managers.

The large capacity and hence cost of multi-level cage-free aviary housing elevates the financial consequences of a fire.  At a nominal $30 per hen housed, a structure and equipment involves an investment approaching $10 million if only one barn is impacted.  The value of the flock, depending on age and hence amortization, may range downwards from $1.2 million.   To this must be added the loss of income and the costs of disruption and temporary repairs to continue operation. 

With increasing capital cost and consequential losses associated with a single incident, insurance companies are reassessing risk.  As with floods and hurricanes, any upsurge in claims will result in a reevaluation of premiums and deductibles, placing a greater burden on the insured.

The welfare and public relations aspects of fires which may result in the loss of 300,000 hens in a single barn have yet to be evaluated.  In the past, extensive mortality from heat prostration associated with climatic extremes generates considerable criticism of “factory farming”, detracting from the image of the egg industry.

It is axiomatic that the time taken to respond to a fire especially at night in a rural area results in the loss of at least the affected barn.  All that first responders can do is to contain a fire and prevent spread to adjacent buildings frequently located too close to prevent secondary loss.

Prevention of fires requires a coordinated approach to the design of buildings and selection of fire-proof construction materials.  Wood and pressboard are inexpensive but are inflammable and as a complementary issue are impossible to decontaminate.  Given that electrical wiring and installations are the major cause of fires, all new buildings should confirm to the National Fire Protection Association, Fire And Life Safety Animal Housing Facilities Code.  This Manual is available from the NFPA at a cost $52 by accessing <www.nfpa.org>.


 

“We the People are Pissed” – END in Southern California

01/06/2020

A mid-2019 article in the LA Times by staff writer Jaclyn Cosgrove, confirmed antagonism towards the California Department of Food and Agriculture in response to the ongoing control measures to eradicate exotic Newcastle disease (END). The appellation "exotic" is a misnomer with regard to the outbreak in the three contiguous counties of San Bernardino, Riverside and Los Angeles in Southern California. Any outbreak that resists control and eradication for twenty months cannot in fairness be regarded as exotic. To accept reality, the outbreak may be considered contiguous with the endemic status of poultry in northern Mexico.

 

The classic approach to eradication of END in commercial farms involves rapid identification of infected flocks, euthanasia and disposal followed by thorough decontamination of premises. This approach is obviously coupled with quarantine and surveillance within a two-mile zone around the index farm and monitoring flocks within a wider zone. Following an outbreak, all commercial farms should apply enhanced biosecurity involving personnel, feed delivery vehicles and intra-company bird transfer.

 

The approach to backyard flocks is entirely different. The whack-a-mole approach to eradication involving euthanasia of infected small flocks and preemptive depletion in areas with a high incidence of infection has not worked since May 2018. Forced depletion of small flocks of unaffected domestic chickens and other galliformes that are confined to their premises creates antagonism among owners. In the case of Southern California the approach of depletion of infected flocks is justified. Preemptive euthanasia of small and uninfected flocks is clearly ineffective.

 

The California Department of Food and Agriculture must recognize that there are differences among so-called "backyard and exhibition flocks" so dutifully recorded each week. This designation represents at least two distinct sub-populations. Backyard chickens kept for egg production or as pets or hobby birds are far less important in the epidemiology of END than fighting cocks. This category is subject to frequent movement in accordance with their function, and owners will not respect quarantines. Since it is now illegal to engage in cock fighting, participants will clearly not comply with restrictions on movement as the activity is now 'underground. The threat of preemptive slaughter will simply encourage dispersal of birds. This factor was probably responsible for extension of END from Southern California to isolated outbreaks in Alameda County and to Utah and Arizona during 2019. The fact that a marked increase in incident cases was recorded in December 2018 and in all probability has repeated in December 2019 extending through January and possibly February 2020 should direct the attention of the CDFA towards fighting cocks in dissemination of infection. Backyard hens maintained as pets or for table eggs do not move from their premises although they are held under conditions of low biosecurity. Exotic show birds will be confined by their owners if shows are cancelled as a component of a regional quarantine.

 

Based on experience in the control of Newcastle disease in tropical countries, the following suggestions are provided for consideration by CFDA:

· Hyperimmunize at least 95 percent of backyard chickens using available live and inactivated vaccines.

· Encourage or otherwise oblige owners of backyard hens and other galliformes to confine their flocks under cover to avoid contact with free-living birds. In this respect is the State or regional authority not following the same conditions that are required for dogs and cats mandating licensing, vaccination and confinement

· Apply what little credibility and cooperation that remains between the Department and the owners of backyard hens to enhance biosecurity including restrictions on inter-property movement.

· Suspend all bird shows in the State until the outbreak is officially declared at an end. This will require 13 week from depletion of the last diagnosed case.

· Direct resources and control activities to the high-risk sub-population of fighting cocks. In the 2003 outbreak, the Department together with USDA-APHIS established rapport with the communities owning fighting cocks. It is not clear whether there is any goodwill remaining or whether current policies have alienated owners of game fowl who are not reporting illness in their birds. Again hyperimmunization of this sub-population should be encouraged.

 

The contention that it is necessary to euthanize asymptomatic and non- infected hens in order to end the END outbreak is fallacious. Twenty months of effort confirm the futility of the current program of attempted eradiation. There is concern that eradication efforts are directed towards a "soft-constituency" comprising homeowners. It may be that for various reasons the CDFA is avoiding the epidemiologically significant fighting cocks and the demographic owning them.

 

Coexistence of flocks of susceptible backyard hens and fighting cocks in close proximity to commercial farms inevitably results in emergence of END in large units. This was the case in the 2003 outbreak and with the Riverside County cases in mid-December 2018 affecting approximately 350,000 chickens on three farms. The CDFA must recognize that they are now operating in the era of social media that has considerable influence over politicians at the state and national levels. Antagonizing owners of backyard hens through a program of preemptive depopulation will effectively extend the duration of the outbreak and encourage movement of fighting cocks out of quarantined areas to the detriment of the commercial industry.

 

The advent of the New Year would be an opportunity to pause and reflect on what has been accomplished and how a program could be modified or improved to achieve the objective of eradication. It is possible that the endemic status of END in the three contiguous Southern California counties will persist given movement of live birds, contaminated vehicles and personnel northwards from Mexico. It is indeed fortunate with respect to exports that our southern neighbor has accepted the OIE principle of regionalization and has not imposed blanket bans on individual states. To paraphrase Einstein, continuing to pursue an ineffective program and expect a positive outcome is illogical. To put it another way if you are in a deep hole, stop digging.


 

Demographic Reality – Is the U.S. Following Japan?

01/02/2020

Growth of 0.5 percent in the U.S. population from 2018 to 2019 representing 1.5 million people was the slowest annual rate since 1917 according to the Brookings Institution. This belies the claim that “we are full”. For the first time in decades the number of births minus the number of deaths did not exceed one million according to Fortune. The Boomer generation is aging and their mortality rate will surely increase despite advances in medical care.  In the case of West Virginia, Maine, New Hampshire and Vermont, deaths outnumbered births.  There is a clear trend of migration to southern states with population losses in New York, Illinois, West Virginia and Connecticut.  Overall, the northeast states lost 0.1 percent of their population from migration with southern states gaining 0.8 percent.

 

Demographic changes have implications for food consumption, industrial productivity and above all maintaining the integrity of the Social Security system.  Fewer contributors supporting an ever-increasing number of dependents will ultimately require a substantial infusion of public funds to maintain solvency.  The system was established during the FDR Administration when life expectancy was considerably shorter, the average age of the population was lower and the ratio of contributors to dependents was higher than during in the third decade of the current century. 

 

It is evident that the deficit in U.S. births can be compensated by immigration.  Unfortunately the last decade saw a decrease in migrants due to the great recession through the mid-2010s and more recently the consequence of restrictive immigration policies.  Migration dropped from approximately one million in 2016 to 600,000 in 2018.  Dr. William Frey of the Brookings Institution correctly observes that “immigrants tend to be younger and have children and they can make a population younger.” 

 

It is evident that if the U.S. continues to have an aging population, apart from the issue of social security, we will have insufficient children to fill our schools and then universities and there will be a disinclination for our younger citizens to engage in manual labor, trades and the multitude of jobs required to maintain our society.  Japan serves as a clear example of the result of a declining birth rate complicated by xenophobia and ethnic discrimination.  The nation is forced to now take in temporary workers from Indonesia, Korea and the Philippines to perform manual work in industry and agriculture. 

 

In a recent visit to egg-packing plants in Japan, I was intrigued by notices in Portuguese affixed to doors and walls. It was only after an hour spent in the first plant that it was recognized that many of the ethnic Japanese were in fact the third-generation of immigrants from Japan to Brazil. They had returned as guest workers and hopefully immigrants. These workers are apparently acceptable since they are regarded by the domestic population as being Japanese whereas society would reject Brazilians without this ethnicity.

 

It is evident that to maintain population growth the U.S. cannot rely only on the birth rate. We require a regular and steady infusion of immigrants preferably with skills and the ability to assimilate into our population. Even if the first generation reflects a different culture and lacks other than manual skills succeeding generations will take advantage of our free-enterprise and democratic system and demonstrate upward mobility. We obviously must do more to integrate immigrant minorities into the mainstream of U.S. agriculture and industry through incentives and training programs.

 

 Japan and the Federation of Russia have declining and aging populations with attendant undesirable outcomes extending over the intermediate and long term. We should look to the nation of Israel that has welcomed migrants and refugees from their unfriendly and discriminatory home nations to be melded into a nation that stands out as a progressive and homogenous democracy unique on the subcontinent.

 

If we look back on our own history during the late 19th and early 20th centuries, the U.S. received the poor and oppressed of Europe.  The second generation became Americans in every sense and so it must be going forward to the middle of the current century.  Unfortunately there are no longer available Norwegians displaced from the rural areas of their native country willing to settle on the plains. There are no immigrants from Ireland forced to leave by famine and poverty to dig our canals and build our bridges as they did in the mid-19th century. To maintain population growth and an acceptable distribution of ages in our population we will have to be more accepting of qualified immigrants from Latin America and Asia to balance the disparity between births and deaths.


 




































































































































































































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