Egg Industry News


No Progress on 2023 Farm Bill

02/22/2024

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

 

What ever happened to compromise and deadlines?


 

Consumer Reports Highlights Chemical Contamination of Foods

02/21/2024

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

 

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

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


 

Egg Week

02/21/2024

USDA Weekly Egg Price and Inventory Report, February 21st 2024.

Market Overview

  • The average wholesale unit revenue values for Midwest Extra-large, Large and Medium sizes were unchanged on average this past week. Prices were approximately $1.30 per dozen above the 3-year average for mid-February. This past week shell egg inventory was up by a substantial 7.3 percent, following a rise of 2.0 percent the previous week. Supply is lower despite routine and progressive weekly increases in pullet flocks placed. Hen numbers are offset by the loss of close to thirteen million hens due to HPAI on twelve complexes holding from 250,000 to 2.6 million hens during the 4th Quarter of 2023. Flocks are gradually being replaced although pullets are in short supply with losses of 2.5 million in this level of stock. This past week, chains widened the spread between delivered cost and shelf price. This could result in a potential decrease in generic stock unless compensated by a proportional rise in demand and constant re-ordering to fill the pipeline through mid -month. Discounters are holding prices on generics influencing mainstream retail stores. Eggs are still highly competitive in price against the comparable costs for other protein foods.
  • Total industry inventory was up by 6.3 percent overall this past week to 1.61 million cases with a concurrent 2.6 percent increase in breaking stock, following a 5.3 percent fall during the preceding processing week. Demand for egg products will presumably increase in the weeks preceding Easter (March 29th Good Friday) with more home baking and entertaining. Egg products are required for the food service and manufacturing sectors although exports are at a moderate to low level attributed to domestic price. USDA Benchmark prices were approximately $0.60 per dozen higher than the previously exceptional but rapidly falling prices during the corresponding week in 2023, influenced by HPAI flock depletions and accompanied by high demand.
  • It is now apparent that the inventory held by chains and other significant distributors may be more important over the short term in establishing wholesale price compared to the USDA regional inventory figures. Changes in stock held by DCs and in the pipeline as determined by weekly orders are probably responsible for cyclic fluctuation in weekly industry stock, especially after a holiday weekend.
  • Cases of HPAI in the commercial poultry industry and backyard (non-commercial WOAH) flocks have tapered, coincident with the end of the Fall migration of waterfowl that was extended in late 2023 by mild weather. The number and extent of future possible outbreaks during the early winter of 2024 cannot be projected but the epornitic appears to be over with migratory birds moving southward following colder weather. More surveillance information should be released by USDA-APHIS concerning the prevalence rate of carriers among resident domestic free-living birds and a review of molecular and field epidemiology for the 2022 spring and fall waves of HPAI. The USDA has yet to identify specific modes of transmission for the 2022-2023 epornitic including likely airborne spread from wild birds and their excreta over short distances.
  • The current relationship between producers and chain buyers based on a single commercial price discovery system constitutes an impediment to a free market. The benchmark price appears to amplify both downward and upward swings as evidenced over the past two years. A CME quotation based on Midwest Large, reflecting demand relative to supply would be more equitable. If feed cost is determined by CME ingredient prices then generic shell eggs should be subject to a Midwest Large quotation.
  • According to the USDA the U.S. flock in production was down by 0.7 million hens (0.23 percent) to a new level of 304.2 million for the week ending February 21st The stated total flock of 309.1 million included about two million molted hens that will resume lay during coming weeks plus 5.0 million pullets scheduled to attain production. Given the latest figures it is estimated that the producing flock is at least 13 to 15 million hens lower than before the onset of HPAI in 2022. It is evident that USDA has now provided a more realistic figure of flock size having adjusted figures to account for depopulation of 13 million hens spread over the last quarter of 2023. There were evident discrepancies between published figures and the theoretical number of hens taking into account known losses and predetermined pullet replacements.
  • The ex-farm price for breaking stock was down 3.7 percent to $1.61 per dozen.Checks delivered to Midwest plants were unchanged at $1.51 per dozen over the past week. Prices for breaking stock should follow the wholesale price for shell eggs usually with a lag of about one to three weeks.

 

The Week in Review

 

Prices

According to the USDA Egg Market News Reports released on February 20th 2024, the Midwest wholesale price (rounded to one cent) for Extra-large was unchanged from last week at $3.22 per dozen. Large was unchanged at $3.20 cents per dozen. Mediums were unchanged at $2.15 per dozen delivered to DCs. Prices should be compared to the USDA benchmark average 4-Region blended nest-run cost of 76.8 cents per dozen as determined by the Egg Industry Center based on USDA data for January 2024. This value excludes provisions for packing, packaging materials and transport, amounting to 57 cents per dozen as determined in mid-2023 from an EIC survey (with low response) and now realistically 60 cents per dozen. The January release by the EIC is delayed for adjustment of values.

 

Currently producers of generic shell eggs should be operating with positive margins irrespective of region and customer-supply agreements. The progression of prices during 2023 and 2024 to date is depicted in the USDA chart reflecting three years of data, updated weekly.

 

The February 20th edition of the USDA Egg Market News Report confirmed that the USDA Combined Region value (rounded to the nearest cent), was up 9.3 percent to $3.29 per dozen delivered to warehouses for the week ending February 14th 2024. This average price lags current benchmark Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $3.20 per dozen. At the high end of the range, the price in the South Central region attained $3.36 per dozen. The USDA Combined Price last week was approximately $1.30 per dozen above the 3-year average of $1.90 per dozen. This past week Midwest Large was approximately $0.60 per dozen above the corresponding week in 2023 that was sharply lower at $2.70 per dozen as production recovered from HPAI depletion and with declining market demand.

 

Flock Size 

Previously EGG-NEWS questioned the accuracy of the weekly values for total and producing flocks. The number of replacement pullets based on actual hatch figures 20 to 22 weeks previously and the number of hens depleted as a result of HPAI are firm. Since the difference between the total and producing flocks was uniformly constant until five weeks ago the loss of approximately 13 million hens due to HPAI during the fourth quarter was not reflected in weekly USDA figures. The USDA has now adjusted data to reflect losses due to HPAI depopulation in recent weekly reports.

 

Given the importance of weekly flock numbers to pricing accurate values of flock size devoid of obvious discrepancies are required by producers.

 

According to the USDA the number of producing hens reflecting February 21st 2024 (rounded to 0.1 million) was apparently down 0.7 million as an adjustment from last week to 303.5 million. The total U.S. flock includes about one to two million molted hens due to return to production Approximately 5.0 million new pullets on average reach maturity each week, based on USDA monthly chick-hatch data for 20-weeks previously. The increase is offset by routine flock depletion in addition to residual losses during the Fall phase of the 2022 HPAI epornitic and an additional loss of approximately 13 million hens during the last quarter of 2023. To date some flocks have been replaced. Based on inventory level and prices, the population of hens producing table eggs and breaking stock should now be producing below seasonal demand by consumers. Industrial and food service off-take although increasing, is approaching pre-COVID levels. Prices will continue to fluctuate but commenced a seasonal albeit late rise in price two weeks ago.

 

According to the USDA the total U.S. egg-flock on February 21st 2024 was stated to be down by 0.7 million hens to 309.1 million including second-cycle birds and those in molt. The weekly difference of 5.6 million hens between flocks in production and total hens is an approximate value but the repetitive figure (that raises questions) denotes that molted hens are resuming production consistent with current demand. Given the season and the trajectory in benchmark wholesale prices, only a few older flocks were molted or depleted before mid-January 2024. At present it is estimated that there are 13 to 15 million fewer hens in the total flock now reflected in weekly USDA figures. The apparent difference is equivalent to about 4.5 percent of the pre-HPAI 2022 national flock of 326 million hens.

 

INVENTORY LEVELS

 

Cold storage stock of frozen products in selected centers on February 20th 2024 was unchanged at 2.389 million pounds (1,086 metric tons), down 1.4 percent from last week compared to 2.424 million lbs. on February 1st 2024. The monthly USDA Cold Storage Report below quantified an increase in the actual total stock level at the end of December.

 

The most recent monthly USDA Cold Storage Report released on January 24th 2024 documented a total stock of 29.8 million pounds (13,562 metric tons) of frozen egg products on December 31st 2023. This quantity was up 23.1 percent from the December 31st 2022 value of 24.2 million pounds. December 31st 2023 frozen egg inventory was up 1.6 percent from the previous month ending November 30th 2023 attributed to presumably slightly lower domestic or export demand or their combination. Compared to December 31st 2022 inventory of whites was down 18.5 percent to 2,783 million lbs. on December 31st 2023. Compared to December 31st 2022 yolk inventory was up 5.2 percent to 958 million lbs. on December 31st 2023.

 

A total of 87.5 percent (26.1 million lbs.) of combined inventory comprised the categories of “Whole and Mixed” (41.7 percent) and “Unclassified” (45.8 percent). The lack of specificity in classification requires a more diligent approach to enumerating and reporting inventory by the USDA.

 

Shell Inventory

 

The USDA reported that the national stock of generic shell eggs effective February 19th 2024 was up 6.3 percent over the previous week. Inventory over the past week followed a rise of 2.0 percent the previous week reflecting seasonal consumer demand and orders placed by buyers of the major chains. Combined with breaking stock, the total inventory of shell eggs in industry cold rooms is now at a rounded level of 1.61 million cases (1.52 million last week; 96,300 cases higher this week). The U.S. population of laying hens at this time is influenced by:-

 

  • A small number of older birds previously culled during the fall phase of the 2022 HPAI epornitic now approaching the end of their first cycle.
  • Recent outbreaks of HPAI with the loss of over 13.0 million hens during the fourth quarter of 2023.
  • The population unaffected by HPAI.
  • Flocks retained after molting with an anticipated increase in this category as influenced by prevailing wholesale egg prices, and indirectly responding to fourth Quarter 2013 flock depopulation from HPAI.
  • Started pullets from chick placements during late August 2023. Going forward, younger hens will assume a larger proportion of the national flock as more flocks are placed compensating for the flocks depleted due to HPAI.

 

All six USDA Regions reported higher stock levels this past week. The regions are listed in descending order of stock: -

  • The Midwest Region was up 8.4 percent from the previous week to 439,800 cases.
  • The Southeast Region was up 13.2 percent to 247,100 cases
  • The South Central Region was up 5.5 percent to 227,400 cases
  • The Northeast Region was up 3.1 percent to 168,600 cases
  • The Southwest Region was up 4.0 percent to 121,700 cases.
  • The Northwest Region was up 1.2 percent to 77,200 cases

 

The total USDA six-area stock of commodity eggs comprised 1,613,300 cases (1,517,000 cases last week), up 6.3 percent, of which 81.1 percent were shell eggs (80.4 percent last week). The inventory of breaking stock was up 2.6 percent to 304,500 cases. Shell-egg inventory was up 7.3 percent attaining 1,308,800 cases. These changes are a function of regional shell-egg demand coupled with a response to erratic re-stocking as buyers manipulate the industry benchmark price discovery system. A reduction in the incidence rate of HPAI may influence buyers who are now less concerned over short-term availability.

 

A rise in breaking stock was recorded over the past week despite some diversion to the shell egg market. Subsequent weekly stock levels of shell eggs will indicate the extent of industrial and consumer demand. Breaking is stimulated by conversion to egg powder and liquids for export and by higher demand for liquids by industry and food service. The average price for Midwest checks and breaking stock combined was 48.7 percent of the average value of Midwest Extra-large and Large shell eggs (54.3 percent for previous week) consistent with unchanged prices for shell eggs this past week compared to breaking stock that was down 1.9 percent. The narrower differential of 48.7 percent can be compared to 80.0 percent in April 2022 reflecting the initial period of high demand for both shell eggs and products. This demonstrates the respective demands for shell eggs and egg products and the interconnectivity of the packing and breaking segments of the egg industry under circumstances of extreme disturbances in either supply (lower due to HPAI in 2022) or demand (higher during early COVID in 2020). The price for breaking stock and for checks is influenced by the relative demand for generic shell eggs and contract obligations with breakers.

 

On February19th 2023 the inventory of other than generic eggs amounting to 429,000 cases (up 6.1 percent from last week at 404,300 cases) among three categories (with the previous week in parentheses) comprised: -

 

  • Specialty category, down 0.5 percent to 31,900 cases on promotion. (was down 2.3% to 32,100 cases)
  • Certified Organic, up 7.1 percent to 86,800 cases. (was down 0.4% to 81,000 cases)
  • Cage-Free category, up 6.6 percent to 310,300 cases. (was down 4.6% to 291,200 cases)

 

Demand for cage-free product will not increase materially over the intermediate term while generic eggs from caged flocks and some surplus down-classified cage-free eggs are on the shelf at $2.20 to $2.40 per dozen during normal supply and demand conditions. Currently there is a small differential in shelf price between conventional caged eggs compared to cage-free white but a wider difference between higher priced omega-3 enriched, cage-free, free-range and pasture-housed products. That the higher priced egg categories will experience an erosion in demand as generic prices fall is supported by the findings of a comprehensive review relating to the transition from cages to alternative systems.*

 

Existing and proposed individual state legislation mandating sale of only cage-free eggs will support most of the completed and anticipated transition from cages but significant additional re-housing will not be completed by the beginning of 2025, less than 10 months away and ultimately never, as projected by most industry observers. The constitutional status of Proposition #12 was confirmed by SCOTUS in a May 11th 2023 decision with specific reference to the dormant Commerce Clause relating to interstate trade. It is unlikely that a legislative initiative (the EATS Act) will be incorporated into the 2023 Farm Bill (that will be delayed beyond February 2024), to limit the impact of Proposition #12 on sows housed for pork production. Many retail chains are ‘renEGGing’ on or extending their time commitments to achieve an acceptable transition to cage-free eggs despite coercion by animal welfare groups. The State of Utah is extending the deadline by five years. With the current proportion of non-caged flocks and lower prices for generic cage-derived eggs, cage-free eggs are surplus to demand in some areas. Cage-free eggs are becoming a commodity in many markets subjected to the same price pressures as generic eggs from caged hens. Inventory of this category is holding solidly below 100,000 cases although this quantity represents the approximate production of three days of lay. Long-term demand for cage-free eggs will be influenced by the relative shelf prices of the category in comparison with generic white-shelled eggs from caged flocks. Inventory of this category is now slightly above the 300,000-case benchmark, but effectively is working stock given weekly production of 1.7 million cases per week. At the other end of the price range, consumers will purchase less-expensive brown cage-free product over organic eggs when there is a differential in price greater than about $1.20 per dozen under normal conditions of supply and demand. Similarly, consumers will traditionally purchase white-shelled generic eggs in preference to white or brown-shelled cage-free with a differential of over $1.20 per dozen.

 *Caputo,V. et al The Transition to Cage-Free Eggs. February 2023

 

A comprehensive structured market research project on cage-free eggs has provided an indication of consumer willingness to pay for this attribute. The industry requires a study on other aspects including shell color, GM status and nutritional enrichment using conjoint analysis. Above all, agricultural economists should evaluate the impact of disruption in supply and demand arising from large-scale depopulation following the 2015 and 2022-2023 HPAI epornitics and the current wave of outbreaks extending through partial restoration of hen numbers but with a disproportionate decline in wholesale price during the first quarter of 2023.

 

RELATIVE PRICES OF SHELL-EGG CATEGORIES

 

USDA-AMS posted the following national shell egg prices as available, for February 16th 2024 for the preceding week in the Egg Markets Overview report for dozen cartons with comparable prices in parentheses for the previous week: -

 

Retail Prices

Large, in cartons generic white: $2.57 Up 53.9 percent ($1.67)

Large, in cartons cage-free brown: $2.88 Down 11.3 percent ($3.25)

 

Wholesale

Midwest in cartons $3.21 Up 9.5 percent ($2.93)

Large C-F, California in Cartons: $5.39 Down 3.6 percent ($5.59)

National loose, (FOB dock): $2.38 Up 3.5 percent ($2.30)

NYC in cartons to retailer: $3.34 Unchanged ($3.34)

 

Regional in cartons to warehouse reported February 20th for previous week.

Midwest $3.20 Up 9.6 percent ($2.92)

Northeast $3.25 Up 9.4 percent ($2.97)

Southeast $3.34 Up 9.2 percent ($3.06)

South Central $3.36 Up 7.7 percent ($3.12)

Combined $3.29 Up 9.3 percent ($3.01)

 

WEEKLY ADVERTISED PRICES OF SHELL-EGG CATEGORIES W/E FEBRUARY 22nd.

USDA Certified Organic, Brown, Large: $4.25 ($4.53)

Cage-Free Brown, Large: $3.07 ($3.40)

Omega-3 Enriched Specialty, White, Large: $2.79 ($2.31)

Generic White, Large Grade AA $2.66 ($1.65)

Generic White, Large Grade A featured $2.57 ($1.67)

 

The advertised price for Large white grade AA as featured for the week ending February 22nd was $2.66 per dozen, (109 stores) up $1.01 or 61.2 percent above $1.65 per dozen last week. Current supply was probably in balance with retail demand this past week given the small rise in inventory held by the industry as reported by the USDA. Independent producers continue to divert shell eggs from breaking to the retail market. Large integrated companies and packers continued to deliver to DCs and this week chains increased orders to stock shelves for Christmas demand.

 

The USDA benchmark-advertised retail price for certified organic for the week was $4.25 per dozen, (97 stores), up $0.28 per dozen or 6.2 percent from the USDA price of $4.53 per dozen posted last week. A USDA advertised price of $3.07 per dozen was posted for cage-free brown during the past week (74 stores), up $0.33 per dozen or 9.7 percent up from last week at $3.40 per dozen. The price differential between USDA organic and cage-free brown of $1.18 per dozen will favor of certified organic attracting purchasers at the expense of cage-free brown eggs. Week-to-week single digit fluctuations expressed as a percentage can be expected in the stock of specialty and organic eggs based on the small base of these categories. There was a small downward movement in the inventory of certified organic this past week consistent with increased demand for this category based on price and promotion.

 

USDA cage-free brown was priced retail at $3.07 per dozen, higher by $0.29 per dozen (10.4 percent) compared to the cage-free white price of $2.78 per dozen (148 stores)

 

Certified organic was promoted this past week at 17.5 percent of the total, despite a slightly lower inventory, (last week 31.0 percent of features). Omega-3 enriched comprised 45.9 percent of features with higher inventory (29.8 percent last week). Cage-free was at 10.3 percent with higher stock (23.3 percent last week). This past week Large represented 16.7 percent and mediums were 9.6 percent of features. This confirms that retailers promote any category if available in excess of demand.

 

USDA Cage-Free Data

 

According to the latest monthly USDA Cage-free Hen Report released on February 1st 2024, the number of certified organic hens in January was down 0.5 percent from December 2023 at 18.4 million, (rounded to 0.1 million).

 

The USDA reported that the cage-free (non-organic) flock in January 2024 was down 1.4 percent from December 2023 to 103.9 million, (rounded to 0.1 million).

 

According to the USDA the population of hens producing cage-free and certified organic eggs in January 2024 comprised: -

Total U.S. flock held for USDA Certified Organic production = 18.4 million (18.7 million in Q4 2023).

Total U.S. flock held for cage-free production = 103.9 million (106.4 million in Q4 2023).

Total U.S. non-caged flock =122.3 million (125.1 million in Q4 2023).

 

This total value represents 37.5 percent (December, 38.0 percent) of a nominal 326 million total U.S. flock pre-HPAI in 2022 (but 40.0 percent of the national flock after HPAI mortality to a presumed January complement of 306 million in production). Hens certified under the USDA Organic program have decreased in proportion to cage-free flocks since Q1 of 2021.

 

The accuracy of individual monthly values is questioned given a history of either constant numbers or a sharp change in successive months as documented over the past two years. It is currently not possible to reconcile the USDA values for the number of cage free hens with known HPAI depopulation and projected replacement and assumed routine depletion. USDA adjusted the total and producing flocks this past week to account for depopulation due to HPAI. It is anticipated that the March release will reflect a realistic number of producing hens housed cage-free. Precise quarterly reports would be more suitable for the industry in planning expansion and allocation of capital than inaccurate monthly values.

 

Processed Eggs

 

For the processing week ending February 17th 2024 the quantity of eggs processed under FSIS inspection during the short week as reported on February 21st 2024 was down 4.7 percent compared to the previous processing week to a level of 1,321,337 cases, (1,386,649 cases last week). The proportion of eggs broken by in-line complexes was 53.6 percent with less diversion to higher-priced shell markets by uncommitted producers, (51.7 percent in-line for the previous week). The differential in price for shell sales and breaking will determine the movement of uncommitted eggs. This past week 68.6 percent of egg production was directed to the shell market, (71.5 percent for the previous week), responding to the differential in prices paid by breakers and packers. Breaking stock inventory was up 2.6 percent this past week to 304,500 cases. Apparent demand from QSRs and casual dining is at stable to slightly lower levels. There is ongoing demand from baking and eat-at-home despite the weekly fluctuation in the inventory of breaking stock. During the corresponding processing week in 2022 in-line breakers processed 51.3 percent of eggs broken.

 

For the most recent monthly report reflecting January 2024, yield from 7,053,212 cases (5,697,623 cases in December) denoted a decrease in demand for liquid and diversion to shell egg sales over the period December 31st 2023 through February 3rd 2024. Edible yield was 38.4 percent, distributed in the following proportions expressed as percentages: - liquid whole, 60.7; white, 24.0; yolk, 12.2; dried, 3.1.

 

All eggs broken during 2023 attained 69.78 million cases, 8.4 percent less than 2022. Eggs broken in 2024 to date amounted to 9.76 million cases, 2.8 percent less than the corresponding period in 2023. This is attributed to moderately increased demand for egg liquids from retail, food service and QSRs and casual dining restaurants. Consumers are constrained by economic uncertainty following the ending of COVID support, moderate inflation, high credit card interest rates and a tendency to purchase only essentials.

 

PRODUCTION AND PRICES

 

Breaking Stock

 

The average rounded price for breaking stock was down 3.7 percent this past week to $1.61 per dozen with a range of $1.58 to $1.64 per dozen delivered to Central States plants on February 20th 2024. Checks were unchanged this past week at an average of $1.51 per dozen over the most frequent range of $1.50 to $1.52 per dozen suggesting that the market for breaking stock follows prices for shell eggs following pronounced up or down swings.

 

Shell Eggs

 

The USDA Egg Market News Report dated February 20th 2024 confirmed that Midwest wholesale prices for Extra-large, Large and Medium sizes were unchanged over the previous week. A higher inventory combined with a static price, suggests that the market is probably operating with increased demand. The following table lists the “most frequent” ranges of values as delivered to warehouses*:-

 

Size/Type

Current Week

Previous Week

Extra Large

320-323 cents per dozen

Unchanged

Large

318-321 cents per dozen

Unchanged

Medium

213-216 cents per dozen

Unchanged

Processing:-

   

Breaking stock

158-164 cents per dozen

164-170 down 3.7%

Checks

150-152 cents per dozen

Unchanged

*Store Delivery approximately 5 cents per dozen more than warehouse price

 

The February 20th 2024 Midwest Regional (IA, WI, MN.) average FOB producer price, for nest-run, grade-quality white shelled Large size eggs, with prices in rounded cents per dozen was unchanged from last week, (with the previous week in parentheses): -

  1. $2.94 ($2.94), (estimated by proportion): L. $3.02 ($3.02): M. $1.95 ($1.95)

 

The February 20th 2024 California price per dozen for cage-free, certified Proposition #12 compliant Large size in cartons delivered to a DC, (with the previous week in parentheses) was down 18.6 percent from last week, despite depopulation of a third of the laying hens in the state but offset by introduction from Midwest and Southwest supplying states.

  1. $4.46 ($5.46); L. $4.39 ($5.39); M. $3.65 ($4.15)

 

Shell-Egg Demand Indicator

The USDA-AMS Shell Egg Demand Indicator reported on February 21st 2024 was down 12.1 points from the last weekly report to 0.5 with a 6.3 percent increase in total inventory and a 2.6 percent higher shell inventory from the past week as determined by the USDA-ERS as follows: -

 

Productive flock

303,459,817 million hens (down 0.2%)

Average hen week production

82.2%(was 82.3%)

Average egg production

249,442,178 per day

Proportion to shell egg market

68.6% (was 71.5%)

Total for in-shell consumption

475,533 cases per day (down 4.3%)

USDA Table-egg inventory

1,308,800 cases (up 7.5%)

26-week rolling average inventory

4.39 days

Actual inventory on hand

4.37 days

Shell Egg Demand Indicator

 0.5 points (was 12.6 on February 14th 2024)

*USDA adjustment for HPAI depopulations

 

The USDA Monthly Report covering January 2024 production including text, tables, data and prices and the 2nd Quarter results for Cal-Maine Foods can be accessed under the STATISTICS tab.

 

Dried Egg Products

 

The USDA extreme range in prices for dried albumen and yolk products in $ per lb. was released on February 16th 2024. Data posted by the USDA is incomplete but available values are depicted for the past week and in parentheses for the previous week and also past months to illustrate the trend in prices influenced by HPAI depopulation and subsequent repopulation:-

 

Whole Egg

$5.00 to $6.70

($4.80 to $6.70)

Average Aug. $ 7.08

Sept. $ 6.51

Oct. $ 5.75

Nov. $ 5.75

Dec. $ 5.63

Jan. $ 5.40

Yolk

$4.00 to $5.70

(Unchanged)

 

Average Aug. $ 5.16

Sept. $ 5.03

Oct. $ 4.75

Nov. $ 4.63

Dec. $ 4.55

Jan. $ 4.49

Spray-dried white

No quotation, past week

Average Dec ‘22. $14.18

Jan. $14.18

Feb. to Dec. ’23 No release

Blends

No quotation, past week

 

 

Frozen Egg Products

 

The USDA range in prices for frozen egg products in cents per lb. based on the extreme range on February 16th 2024 compared to the previous week showed fluctuation in price:-

 

Whole Egg

$1.39 - $1.42

$1.28 - $1.37

White1

$1.21 - $1.29

$1.20 - $1.401

Average for Yolks

$1.98 - $2.031

$1.99 - $2.04

  1. extreme range

 

Whole egg: Up 6.0%: Whites: Down 3.1%:; Yolks: Up 0.5%

This indicated a relative increase in demand for whole egg from the manufacturing and food service sectors and for export:

January averages (December): Whole. $1.11, ($1.10); Whites, $1.08, ($1.03); Yolks, $1.87, ($1.87).

 

Liquid Egg Products

 

Values for Whites and Yolks covering non-certified truckload quantities have not been released for many weeks. Whole egg values attained on average 91 cents per lb. last week. January averages (cents per lb.) are compared with November values (in parentheses): -

Whole, $1.01, ($0.91); Whites, $0.76 ($0.72); Yolks, $1.72, (none).

 

The USDA has not released a report on dried egg inventory since March 13th 2020 due to inability to obtain data from producers, and will not issue reports for the immediate future.

 

COMMENTS

 

During the 4th quarter of 2023 and extending into January 2024, outbreaks of HPAI have required depopulation of close to 13 million egg-producing hens. In contrast to 2022, broiler flocks were affected with cases in California and Arkansas during fall of 2023 and during the past week in Nebraska. Incident outbreaks of HPAI appear to have abated among growing flocks (except NC) and breeder turkeys in six affected states. There are still incident cases recorded in wild birds and backyard flocks in addition to free-living predatory and presumably in scavenging carnivorous mammals. Given the risks and consequences of infection it will be necessary to continue to maintain high levels of structural and operational biosecurity with intensification persisting through the remainder of February. HPAI is now diagnosed seasonally in breeding colonies of marine birds in costal areas of Europe and sporadically in commercial flocks. This resulted in trans-Atlantic dissemination following the pattern during the 4th quarter of 2021 extending into 2022. Outbreaks in commercial flocks appear to be correlated with shedding of AI virus by migratory birds that have now moved southward with sharply colder weather. The downward trajectory in incident cases suggests a decline in future outbreaks consistent with the pattern at the end of 2022.

Approximate losses in commercial flocks confirmed with HPAI and updates during the 2022/4 phases of the ongoing epornitic included:-

  • 6,900,000 broilers on 28 farms in 8 states during 2002 - 2023
  • 330,000 broiler breeders on 11 farms in 6 states.
  • 360,000 upland game birds October through December 2023.
  • 14,100,000 turkeys including breeder flocks in 8 states during 2022 and through 2023 year-to-date. During the past nine weeks losses have approximated 2.9 million growing turkeys with 63 incident cases confirmed in seven states (SD; ND; UT; MN; IA; WI, MI.).
  • 52,300,000 egg-production hens in total with 95 percent on 37 large complexes above 0.5 million in addition to 3,500,000 pullets with a total of 54 locations in 12 states. Pullet mortality does not include “at risk” replacements depleted on affected complexes with contiguous pullet rearing. Since October 2023 more than 13.0 million hens have been depopulated in 13 outbreaks.

 

Losses reported by USDA during the past week ending February 20th comprised 21,000 growing turkeys in NC; and onev WOAH non-poultry flock (WV.). There were no cases of HPAI reported in either egg-producing or replacement pullet flocks.

 

Depopulation of hens (rounded to 0.1 million) as a result of HPAI in the states most affected during the fourth Quarter of 2023 comprised: OH., (4.5 m.); CA., (3.2 m); IA., (2.7 m); KS., (1.5 m) and MN. (1.0m).

 

Backyard flocks (non-WOAH) allowed outside access will continue to be at risk of infection in the U.S. These small clusters of birds in both suburban and rural areas are of minimal significance to the epidemiology of avian influenza as it affects the commercial industry. Backyard flocks serve as indicators of the presence of virus among free-living birds as evidenced by ongoing outbreaks in commercial poultry flocks across the U.S. The late 2023-early 2024 epornitic evidently has a long tail. Recent outbreaks in backyard flocks especially in northern tier states suggest shedding by resident, non-migratory free-living birds that may have become reservoirs. This has implications for seasonality

 

The USDA-APHIS published a report on the results of epidemiologic studies* on farms in early 2022 and made available on July 25th. Results for 18 egg-production case farms and 22 control farms suggested higher risk of infection associated with the presence of a farm in a control zone, proximity of wild birds, mowing or bush hogging of vegetation adjacent to the farm, and off-site disposal of routine mortality. These factors suggest possible aerogenous introduction of virus shed by wild birds onto farms over short distances. This presumption is based on anacdotal observations and recent research from Taiwan demonstrating avian influenza virus in air in proximity to migratory birds. The USDA study predictably suggested that protection was enhanced by effective structural and operational biosecurity. The validity of findings was limited by the confounding inherent to the diversity in size of flocks incorporated into the case-control study and deriving data from a 26 page questionnaire by telephone survey, months after outbreaks, introducing recollection bias and responder fatigue.

*Green, A. et al Investigation of risk factors for introduction of highly pathogenic avian influenza H5N1 virus onto table egg farms in the United States, 2022: a case-control study. Frontiers in Veterinary Science. Doi: 10.3389/vets.2023.1229008

 

It is hoped that APHIS recognises the need to provide the industry with science-based recommendations to prevent additional incident HPAI outbreaks. This presumes prompt analysis and reporting of whatever field and molecular epidemiology is collected. The Agency is also presumed to have planned epidemiologic field studies and allocated personnel and other resources in anticipation of a spring 2024 resurgence in HPAI. Given that large complexes in six states were infected during November and December, appropriate guidance from USDA-APHIS is anticipated by the Industry in advance of any spring or fall 2024 reoccurence.


 

Iowa Proposes to Allow Unapproved Application of Animal Waste

02/21/2024

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

 

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

 

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

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


 

HPAI Outbreaks in Asia

02/21/2024

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

 

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

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


 

Walmart Announces Q4 and FY 2024 Financial Results

02/20/2024

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

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

 

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

 

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

 

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


 

Benson Hill Divests Soy Plant

02/20/2024

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

 

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


 

Deere and Co. Reduces FY2024 Sales Projection

02/20/2024

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


 

Ahold-Delhaize Posts Q4 Results

02/20/2024

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

 

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


 

USPOULTRY 2024 Feed Mill Management Seminar

02/19/2024

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

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


 

Costco January Sales

02/19/2024

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

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

 


 

Nebraska Public Schools Using Collection Agencies to Recover Overdue Payments for Meals

02/19/2024

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

 

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

 

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

 

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

 

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

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


 

Utah Extending Deadline for Cage Ban

02/19/2024

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

 

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

 

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

 

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


 

Harvard University Team Develops Synthetic Antibiotic

02/19/2024

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

 

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


 

Interim Director of EIC Appointed

02/19/2024

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

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

 

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

 

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


 

SpartanNash to Deploy Additional Robotic Tally Units

02/19/2024

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

 

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

 

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

 


 

Opposition to Kroger-Albertsons Merger in Colorado

02/19/2024

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

 

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

 

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

 

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

 

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


 

Kentucky Senate Approves “No Flyover” Bill

02/19/2024

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

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


 

Instacart to Reduce Head Count

02/19/2024

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

 

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

 

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

 

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

 

 


 

Oklahoma to Assist in Conversion to Group Housing of Sows

02/19/2024

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

 

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

 

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


 

Restaurant Brands International Q4 and FY 2023 Financial Results

02/18/2024

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

 

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

 

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

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

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

 

Segment results comprised:-

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

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

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

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

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

 

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

 

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


 

Zoetis Reports on Q4 and FY 2023

02/18/2024

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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


 

Egg Month

02/17/2024

REVIEW OF JANUARY 2024 EGG PRODUCTION COSTS AND STATISTICS.

 

The EIC has justifiably separated the production costs and unit revenue values for eggs derived from caged and cage-free flocks for the current year. Accordingly EGG-NEWS will summarize data accordingly but will consolidate production and export statistics for the U.S. egg industry comprising the two shell-egg categories and the breaking-products sector

 

JANUARY HIGHLIGHTS

  • January 2023 USDA ex-farm blended USDA nest-run conventional benchmark price was 172.0 cents per dozen, up 0.9 percent from the December 2023 value of 170.4 cents per dozen. For comparison, average monthly USDA benchmark price over 2023 was 146.0 cents per dozen with a range of 323 cents per dozen in January down to a low of 57 cents in May. Stock levels and prices prior to the onset of flock depletions due to HPAI indicated a relative seasonal balance between supply and demand. Future nest-run and wholesale prices will be largely dependent on consumer demand for eggs and liquid and the rate of replacement of pullets and hens depleted due to HPAI. Other considerations include diversion to shell sales from the egg-breaking sector in an interconnected industry.
  • Fluctuation in wholesale price is attributed in part to the amplification of upward and downward swings associated with the commercial benchmark price discovery system in use. Restoration of seasonal prices commenced midway through the fourth quarter of 2023 with a plateau after Christmas followed by a seasonal decline into January 2024. From mid-January through to the present prices have been high for the period. An unknown factor in future pricing will be the incidence rate and severity of highly pathogenic avian influenza in spring months. Close to 13 million hens and 2.5 million pullets were depopulated during the fourth quarter of 2023 among five states with heavy losses in California.
  • January 2023 USDA average nest-run production cost for generic eggs from caged flocks, applying updated inputs was down 4.1 cents per dozen to 76.8 cents per dozen compared to the December 2023 value of 80.9 cents per dozen, mainly attributable to an 11.7 percent lower average feed cost per dozen. Approximately 60 cents per dozen should be added to the USDA benchmark nest-run cost to cover processing, packing material and transport to establish a realistic price as delivered to warehouses.
  • January 2024 USDA benchmark nest-run margin attained a positive value of 95.2 cents per dozen for generic eggs from caged flocks compared to a positive margin of 89.5 cents per dozen for December 2023. Average nest-run monthly margin over 2023 was 64.2 cents per dozen compared to 155 cents per dozen in 2022. This differential was mainly due to higher prices following HPAI-depletion of flocks. It is emphasized that the U.S. benchmark price reflects nest-run conventional eggs.
  • The January 2024 national flock in production (over 30,000 hens per farm) was stated by the USDA to be down 2.0 percent or 6.1 million hens (rounded) to 299.7 compared to the revised December 2023 value of 305.8 million. This figure apparently takes into account depletion of 4.2million hens during December 2023 that were not recorded in the month. Approximately 3.5 million hens returned to production from molt in January together with projected maturation of 22.0 million pullets, with this number offset by depletion of spent flocks. During the fourth quarter of 2023 approximately 13 million hens were depopulated due to HPAI in five states.
  • December 2023 pullet chick hatch of 24.2 million was up 0.8 percent or 0.2 million chicks from November 2023.
  • December 2023 exports of shell eggs and products combined was up 38.8 percent from November 2023 to 604,100 case equivalents representing the theoretical production of 8.0 million hens. The increase was attributed to elevated demand especially in products following flock depopulations in importing countries due to HPAI

 

TABLES SHOWING KEY PARAMETERS FOR JANUARY 2024.

Summary tables for the latest USDA January 2024 flock statistics, costs and unit prices made available by the EIC on February 16th 2024 are arranged, summarized, tabulated and compared with values from the previous January 10th 2023 posting reflecting December 2023 costs and production data as applicable. Monthly comparisons of production data and costs are based on revised USDA values.

 

VOLUMES OF PRODUCTION REFECTING THE ENTIRE INDUSTRY

 

PARAMETER

January 2024

 DECEMBER 2023

Table-strain eggs in incubators

49.0 million (Jan.)

 49.0 million (Dec.)

Pullet chicks hatched

24.2 million (Dec.)

 24.0 million (Nov.)

Pullets to be housed 5 months after hatch

21.8 million (May.)

 21.7 million (Apr.)

EIC 2023 December 1st Flock Projection (estimate)

328.9 (Jan.)

321.6 million (Dec.)

National Flock in farms over 30,000 

299.7million (Dec.)

305.8 million (Nov.)

National egg-producing flock 

316.5 million (Dec.)

322.8 million (Nov.)

Cage-free flock excluding organic

105.4 million (Jan.)

105.4 million (Dec.)

Proportion of flocks in molt or post-molt

12.5% (Jan.)

12.7% (Dec.)

Total of hens in National flock, 1st cycle (estimate)

 276.9 million (Dec.)

 279.5 million (Nov.)

Total U.S. Eggs produced (billion)

8.14 December

8.02 November

Total Cage-Free hens in production

122.3 million (Jan.)

12.3% Organic

123.9 million (Dec.)

14.9% Organic

“Top-5” States hen population (USDA)1

147.9 million (Dec.)

153.7 million (Nov.)

Notes 1. Texas excluded to maintain confidentiality

 

PROPORTION OF U.S. TOTAL HENS BY STATE, 20231

Based on a nominal denominator of 300 million hens in flocks over 30,000 covering 94.6 percent of the U.S complement.

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

Sizes

STATE

DECEMBER *

2023

 NOVEMBER*

 2023

 

 Iowa

14.3%

13.8%

 

Indiana

11.8%

11.5%

 

Ohio

12.6%

13.2%

 

Pennsylvania

8.0%

8.1%

 

Texas (estimate)

7.5% ?

7.4%

 

California

3.0%

3.5%

 
  1. Values rounded to 0.1%

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

Rate of Lay, weighted hen-week (USDA) 83.0% November 2023. 82.8% December 2023

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

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

Revised per capita egg consumption 2022:- 279.0 (down 3.5 eggs from 2021 due to HPAI) Projected per capita egg consumption 2023:- 281.3 (up 1.3 eggs from 2022) Forecast per capita  egg consumption 2024 284.4 (up 3.1 eggs from 2023 accepting HPAI losses)

*Revised, using data from USDA Livestock, Dairy and Poultry Outlook January 19th 2023 taking into account demand from the food service sector and presumably including the effect of HPAI depopulation.

 

Egg Inventories at beginning of January 2024:

Shell Eggs: 1.83 million cases down 5.7 percent from December 2023.

Frozen Egg Products: 769,306 case equivalents up 2.0 percent from December 2023

Dried Egg Products: Not disclosed since March 2020 following market disruption due to COVID. Moderate level of inventory are assumed

Eggs broken under FSIS inspection (million cases)

NOVEMBER 2023, 6.73 DECEMBER 2023, 6.41

 

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

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

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

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

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

Cumulative 2024: proportion of total eggs tba JAN.

EXPORTS DECEMBER 2023: (Expressed as shell-equivalent cases of 360 eggs).

Parameter

Quantity Exported

Exports:

2023

Shell Eggs (thousand cases)

NOV. 185 Dec. 250

Products (thousand case equivalents)

NOV. 251 Dec. 355

TOTAL (thousand case equivalents)*

NOV. 436 Dec. 605

 

*Representing 2.7 percent of National production in DECEMBER 2023.

 

COSTS AND UNIT REVENUE VALUES FOR CONVENTIONAL EGGS FROM CAGED HENS

Parameter

JANUARY 2024

DECEMBER 2023

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

76.8 c/doz

80.9 c/doz

Low

75.0c/doz (MW)

76.6 c/doz (MW)

High

78.2 c/doz (West)

90.5c/doz (N.West)

Components of Production cost per dozen:-

 

JANUARY 2024

DECEMBER 2023

Feed

36.9 c/doz

41.8c/doz

Pullet depreciation

12.0 c/doz

12.2 c/doz

Labor (estimate) plus

   

Housing (estimate) plus

 27.9c/doz1

 26.9c/doz

Miscellaneous and other (adjusted May 2023)

   

 

Ex Farm Margin (rounded to nearest cent) according to USDA values reflecting JANUARY 2024:-

172.0 cents per dozen1- 76.8 cents per dozen =95.2 cents per dozen (December 2023 comparison: 170.4 cents per dozen – 80.9 cents per dozen = 89.5 cents per dozen.

 

Note 1: USDA Blended nest-run egg price

   

DECEMBER 2024

DECEMBER 2023

USDA

Ex-farm Price (Large, White)

172.0 c/doz (Jan.)

170.4c/doz (Dec.)

 

Warehouse/Dist. Center

213.8 c/doz (Jan.)

195.0c/doz (Dec.)

 

Store delivered (estimate)

218.8 c/doz (Jan.)

200.0 c/doz (Dec.)

 

Dept. Commerce Retail National

251.0 c/doz (Dec.)

213.8 c/doz (Nov.)

 

Dept. Commerce Retail Midwest

239.0 c/doz (Dec.)

 

asdfasdf

MONTH DECEMBER 2024 DECEMBER 2023

U.S. Average Feed Cost per ton

$240.60 $258.97

Low Cost Midwest

$218.57 $235.16

High Cost Northwest

$288.32 $312.62

Differential

$ 69.75 $ 77.46

 

Pullet Cost*

 (19 Weeks)  $4.67 JANUARY 2024 $4.79 DECEMBER 2023

(16 weeks) $4.10 JANUARY 2024 $4.19 DECEMBER 2023

* Values adjusted by EIC in May 2023

 

COSTS AND UNIT REVENUE FOR EGGS FROM CAGE-FREE HENS

Parameter

JANUARY 2024

 

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

96.7 c/doz

 

Low

92.3c/doz (MW)

 

High

106.3 c/doz (West)

 

 

Components of Production cost of cage-free eggs per dozen:-

 

JANUARY 2024

 

Feed

43.1 c/doz

 

Pullet depreciation

15.8 c/doz

 

Labor (estimate) plus

   

Housing (estimate) plus

 37.8c/doz1

 

Miscellaneous and other (adjusted May 2023)

   

Ex Farm Margin (rounded to nearest cent) according to USDA values reflecting JANURY 2024:-

 

Cage-Free brown 3.00 cents per dozen1- 96.7 cents per dozen = 203.3cents per dozen

   

JANUARY 2024

 

USDA

Average Ex-farm Price1

168 c/doz (Jan.)

 
 

Warehouse/Dist. Center

300 c/doz (Jan.)

 
 

Store delivered (estimate)

305 c/doz (Jan.)

 
 

Dept. Com. Retail C-F Brown

Dept. Com. Retail C-F White

336 c/doz (Dec.)

322 c/doz (Dec.)

 
 

Dept. Com. Retail Organic

Dept. Com. Retail Pasture

522 c/doz (Dec.)

1,051 c/doz (Dec.)

 

  1. Contract price, nest-run loose Range 135 to 235 c/doz.

 

Cage-Free Pullet Cost*

 (19 Weeks)  $5.67 JANUARY 2024

(16 weeks) $4.95 JANUARY 2024

Average national and regional conventional feed as per caged flocks

 

COMMENTARY ON JANUARY 2024 STATISTICS AND COSTS

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

 

From March 2021 California costs were inexplicably excluded, representing an unjustified concealment of data. The three Pacific Coast states could be combined to maintain confidentiality while providing representative U.S. data. Costs include fixed components (interest, depreciation and overhead) and variable components (feed, pullet depreciation, labor) recalculated in May 2023 by the EIC based on surveys

PRODUCTION DATA FOR JANUARY 2024 COMBINING CAGED AND CAGE-FREE FLOCKS

 

  • According to USDA, the estimated average complement of U.S. hens in flocks over 30,000 during December 2023 amounted to 299.7 million, reflecting a net 6.1 hens (2.0 percent) decrease in flock size during the month. The apparent reduction represented a delayed adjustment for depopulations during the fourth quarter of 2023 that were not incorporated in monthly reports. Losses and routine depletion were offset by pullet replacements second cycle hens and retained flocks. The average total U.S. flock including hens in molt on all farms counted by the USDA amounted to 316.5 million in December 2023. The average end-of-year flock sizes over the past seven years respectively were, 2014, (311 million); 2015, (291 million post-HPAI losses); 2016, (319 million); 2017, (329.6 million); 2018, (341.6 million); 2019, (341.6 million) and 2020, (325.5 million). The December 1st 2024 flock was projected to be 328.9 million hens during January 2024 applying the EIC model. With replacements, molting and delayed depopulation it is estimated that the national flock now comprises 12 to 14 million million fewer hens at present] than before the advent of the H5N1 HPAI epornitic in 2022. In the absence of a vaccine only effective biosecurity will help protect flocks going forward.
  • Pullet chick hatch attained 24.2 million in December 2023, up 0.2 million from November 2023. During late January 2024 egg prices rose above the seasonal average possibly influencing demand for chicks together with the need to compensate for depopulated pullet and hen flocks.
  • The total in-molt and post-molt population of hens in the 5-Regions monitored by the USDA attained 12.5 percent of the national flock in January 2024, down 1.6 percent from the previous month. Annual averages for molt and post-molt combined were 14.4 percent in 2021; 13.5 percent for 2020 and 15.2 percent for 2019. The historical high value of 23.8 percent in 2016 was due to the loss of hens during the 2015 HPAI epornitic. This situation will not be revisited in 2024.
  • During the fourth quarter of 2023 the average monthly transfer of pullets to laying houses was 25.2 million compared to 24.9 million in the third quarter. Revised data anticipate the transfer of 23.1 million pullets per month during the first quarter of 2024.
  • The projected hatchery supply flock (parent generation) peaked at 3.1 million hens in June 2022. The previous high parent-flock of 3.1 million hens in production was in June 2015, coinciding with the end of the HPAI epornitic in that year. Parent hens then declined to a low of 2.5 million during the fourth quarter of 2016. During 2023 the flock size for parent hens averaged 2.4 million over the fourth quarter of 2023 and 2.5 million during the first and second quarters of 2024. The size of the parent flock is unlikely to be revised based on pullet chick orders influenced by the demand to replace depopulated pullets and hens and in response to possible higher producer margins. It is understood that production of additional pullet chicks is unlikely given forward planning by breeder-hatcheries and full utilization of facilities.
  • Average hen-week production of 82.8 percent in December 2023 compares to a value of 83.0 percent in January 2024. This reflects an increasing proportion of younger hens in the national flock with many first-cycle hens and early second-cycle hens in production. Average rate of lay in 2023 was 81.8 percent. The average rate of lay during any period is a function of the proportion of pullets placed, the rate of depletion of flocks and retention of molted hens for a second cycle. Average flock production declines as the weighted flock age increases or conversely will rise due to early depletion thereby increasing the proportion of young hens in their first cycle.
  • The January 25th edition of the USDA Poultry Slaughter Report documented 4.96 million light spent-hens processed under FSIS inspection during December 2023, 3.3 percent more than the previous month of November 2023 and 0.7 percent less than in December 2022. These differences are inconsequential in comparison to the presumed depletion of 15 million hens per month with most either rendered or consigned to landfills. Provided housing space is available, prevailing low prices will result in depletion of flocks with more routine or previously scheduled flock depletions.

 

JANUARY 2024 COST AND UNIT REVENUE DATA FOR CONVNTIONAL EGGS FROM CAGED FLOCKS.

  • The USDA ex farm benchmark blended egg price in January 2024 was 0.9 percent higher at 172 cents per dozen from the December 2023 value of 170.4 cents per dozen. This contributed to a positive margin of 89.5 cents per dozen based on ‘nest-run’ generic eggs (ungraded as delivered from the laying house) in January 2024, compared to a positive margin of 83.5 cents per dozen in December 2023. The January 2024 USDA benchmark price of 172.0 cents per dozen should be compared to 106 cents per dozen for the corresponding month in 2022 and 323 cents per dozen in January 2023 influenced by HPAI and demand. The relatively high values from the second through fourth quarters of 2022 compared to corresponding periods for the two previous years were due to depletion of hens following the emergence of HPAI coupled with a rise in demand following relaxation of COVID restrictions and the amplification of price rises due to the benchmark costing system.
  • During January 2024, the feed component of production cost averaged 36.9 cents per dozen, down 11.7 percent or 4.9 cents per dozen from December 2023. During 2023 average feed cost was 46.4 cents per dozen compared to 50.1 cents per dozen in 2022 and 42.5 cents per dozen in 2021.
  • Combining data from the USDA and the EIC, producers recorded a positive margin of 95.2 cents per dozen at farm-level for generic-egg flocks during January 2024. This compares with a margin of 89.5 cents per dozen in December 2023. Cumulative average monthly algebraic nest run margin for 2023 attained 71.5 cents. During 2022 cumulative average monthly algebraic margin attained 1,887 cents. For 2021 the cumulative average algebraic margin was 9.1 cents per dozen against USDA benchmark ‘nest run’ values.
  • The simple average price of feed in January 2024 over 5-regions was $240.60 per ton, lower by $18.37 per ton or 7.1 percent compared to December 2023. Southwest data is no longer disclosed to avoid compromising a company that predominates in Texas. The highest cost among five regions was the West at $288.32 per ton, down 7.8 percent from December 2023. This may be compared to the lowest-cost region, the Midwest at $218.57 per ton, down 7.1 percent from the previous month. The average cost for feed includes ingredients plus milling and delivery at a nominal $10 per ton.
  • The benchmark price of corn was $175.46 per ton in January 2024, down $7.22 per ton or 4.0 percent from the average December 2023 price, taking into account the difference in basis paid by producers. The differential in corn price between the Midwest and the West in January 2024 was $75.10 per ton. A 14.8 percent decrease of $68.98 per ton in the price of soybean meal to $398.15 per ton in January 2024 added to the lower price of corn in reducing feed and hence production cost. During January 2024 there was a differential of $69.75 per ton in feed price between the Midwest and the West compared to a difference of $77.46 per ton in December 2023 corresponding to 16.9 cents per dozen compared to 12.5 cents per dozen in December 2023. The industry has experienced sharp increases in the cost of phosphate additives, fat and vitamins since Mid- 2022.
  • Feed price will continue to be a major factor driving production cost and hence margin. December WASDE #645 (under the STATISTICS TAB) released on February 8th projected the volumes for the 2024 corn and soybean harvests, ingredient use, exports and ending stocks for the two major feed ingredients. Unknown factors influencing feed cost during the fourth quarter of 2023 will include:-
  • the consequences of conflict in Ukraine and the Middle East with inevitable disruption in production and especially for shipping through the Black Sea and Suez Canal.
  • The projected large harvests in Brazil and Argentina.
  • Demand by China will influence prevailing prices in international trade.
  • The availability and hence prices of ingredients will also be influenced by weather conditions in the Southern Hemisphere following the transition to an El Nino event in the second quarter of 2023.
  • Export volume from the U.S. and especially to China.
  • Diversion of corn to ethanol and of soy oil to biodiesel.
  • The economic and logistic effects associated with inflation.

 

There is obviously higher demand for ethanol with production projected by the U.S. Energy Information Administration at 970,000 barrels per day but with an average exceeding one-million barrels per day during 2023. Substantial exports of soybeans to China, during the current 2o23-2024 market year is supporting domestic price and hence cost of egg production. Each $10 per ton difference in feed cost represents approximately 1.70 cents per dozen. A change of $1 per ton (2.8 cents per bushel) in the price of corn is reflected in a 0.11 cent per dozen change in production cost. A $10 per ton change in the price of soybean meal affects production cost by 0.35 cent per dozen.

 

  • The EIC calculated the 4-Region (excluding the West) adjusted total nest-run production cost in January 2024 to be 76.8 cents per dozen, 4.1 cent per dozen lower than December 2023. Production costs for conventional eggs from caged flocks during January 2024 ranged from 75.0 cents per dozen in the Midwest up to a calculated value of 85.7 cents per dozen in the West, higher than the Midwest region by 10.7 cents per dozen. During 2023 the average monthly cost of production was 85.9 cents per dozen and 81.0 cents per dozen in 2022.

 

Deletion of California and West data is considered a substantial deficiency of the EIC Report.

 

  • Retail egg prices as determined by the Department of Commerce for December 2024 averaged 251 cents per dozen, up 37 cents per dozen or 17.3 percent, compared to November 2023 at 214 cents per dozen. During December 2022 and 2023 retail prices were respectively 179 and 425 cents per dozen. From 2017 through 2021 average retail prices did not decline in proportion to ex-farm prices, with chains imposing higher margins at retail, thereby depressing demand. Conventional supermarkets have recently demonstrated some restraint in pricing possibly due to competition from deep discounters and club stores, despite sustained demand.
  • December 2023 average retail markup on generic white Large was 28.7 percent based on a delivered-to-warehouse price of $1.95 per dozen and USDA Retail of $2.51 per dozen.

 

EXPORT DATA FOR JANUARY 2024 COMBINING ALL EGGS.

  • Monthly export data can be accessed under the STATISTICS Tab.
  • According to USDA-FAS data, 250,000 cases of shell eggs were exported in December 2023, representing 1.1 percent of total production. This was a 35.1 percent increase compared to November 2023 despite higher prevailing domestic prices. The increase in exports was attributed to 60,000 more cases to Canada, 10,000 cases to Mexico but offset 6,000 fewer cases to Hong Kong and China.
  • Exports of egg products in December 2023 attained 355,000 case-equivalents up 41.4 percent from the previous month, representing 1.6 percent of U.S. output. Increases were attributed to higher volumes to Mexico, up 19,000 case equivalents, Canada, up 15,000; the E.U.,17,000; Mexico, 12,000; Asia, 61,000 cases including South Korea and Japan impacted by HPAI.
  • Collectively, exports of shell eggs and products in December 2023 comprised the output from approximately 8.0 million hens in production during the month, attaining 604,100 case-equivalents, up 38.9 percent from November 2023 and 1.3 percent more than combined exports during the pre-HPAI first quarter of 2022 averaging 596,300 case equivalents per month.
  • Maintaining export volume is attributed to cooperation between the AEB and USAPEEC, in existing, new and potential markets. Specific attention is directed to nations with the potential to import U.S. product based on landed price against competition. Exports of both egg-products and shell eggs in December 2023 corresponded to 2.7 percent of a nominal national flock of approximately 305 million producing hens, (before HPAI depletions) on commercial farms holding more than 30,000 hens.
  • There is no scientifically justifiable reason why any nation should embargo pasteurized egg products from an approved plant, based on a diagnoses of H5 or H7 avian influenza or velogenic Newcastle disease in a specific state or country.






 

Egg Projection

02/17/2024

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

 

On February 14th 2024 the USDA Economic Research Service issued updated values for egg production during 2022 with a projection for 2023 and a forecast for 2024. Production, consumption and prices were only slightly revised from the previous January 19th 2024 report.

 

Projected egg production for 2023 was reduced by three million dozen from the January 2024 Report to 7,887 million dozen This will be 1.4 percent higher than in 2022 due to progressive replacement of the 44 million hens depleted due to HPAI over the period extending from early spring through mid-December 2022. The per capita consumption of shell eggs and liquids combined for 2023 will be 0.1 percent lower than in the December report to 280.9 eggs but up one egg (0.4 percent) from 2022. The projected average 2023 benchmark New York bulk unit price was unchanged from the January report at 192 cents per dozen. This was 31.9 percent lower than in 2022 attributed to a comparison with unseasonal high prices from the end of March through the 2nd Quarter of 2023.

 

Subsequent USDA projections will provide greater clarity on the recovery in consumption in an economy that is impacted by declining inflation. The 2023 Midwest in-carton wholesale price peaked at $5.17 per dozen on January 3rd 2023 but fell precipitously to a market bottom of $0.78 per dozen on May 8th attaining $2.92 on February 15th This was above the USDA/EIC projection of the combined nest-run December 2023 cost of 76.8 cents per dozen plus processing, packaging and transport of 60 cents per dozen amounting to $1.37 cents per dozen delivered to a distribution center.

 

Restoration in flock size after HPAI flock depletions in 2022 progressed at a rate of approximately 0.5 million per week but was limited by the availability of pullet chicks for replacement and in some companies the rate of conversion to alternative housing systems. Restoration of the national flock was compromised by a resurgence of HPAI with 13.0 million layers depleted during the 4th quarter of 2023 representing 4.0 percent of the nominal producing flock of 325 million hens, mainly on complexes averaging over one million hens. The cost of ingredients will influence margins and may result in cessation of production by some small-scale producers that run out of working capital since financial losses were incurred through summer up to mid-fall. Unpredictable factors affecting price will include the extent of losses during the spring of 2024 due to a predicted reemergence of avian influenza; the supply and cost of ingredients as influenced by world and national availability; exports of eggs and products and the intensity and persistence of domestic consumer demand.

The forecast for 2024 includes a production of 8,000 million dozen, up 1.4 percent from 2023. Consumption will attain 283.7 per capita, up a realistic 2.8 eggs or 1.0 percent above the projection for 2023. This will naturally depress prices with the NY-Large price dropping by 9.9 cents per dozen or 5.1 percent from the average for 2023.

 

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

 

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

 

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

Parameter

2020

(actual)

2021

(actual)

2022

(actual)

HPAI

2023

(projection)

2024

(forecast)

% Difference

2022-2023

             

Production (m. dozen)

8,070

8,031

7,781

7,887

8,000

+1.0

Consumption (eggs per capita)

279.0

282.5

279.0

280.9

283.7

+0.7

New York price c/doz.)

112

119

282

192

183

-31.9

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

 

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


 

U.S. Imposes Dumping Duties on Pea Protein From China

02/15/2024

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

 

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

 

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


 

Impeded Suez and Panama Canal Transit Creating Supply Chain Problems

02/14/2024

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

 

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

 

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

 

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


 

Kroger Pitching “Investment” to Facilitate Proposed Albertsons Merger

02/14/2024

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

 

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

 

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


 

Trader Joe’s Appealing Federal Court Ruling on Union Use of Logo

02/14/2024

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

 

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

 

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


 

California Plastic Bag Ban Unworkable

02/13/2024

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

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

 

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

 

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


 

E.U. Backs Down on Pesticide Restrictions

02/13/2024

Following aggressive opposition including demonstrations by farmers in many E.U. capitals, the European Commission has withdrawn a proposal to reduce pesticide use by half before 2030.

 

Ursula von der Leyen, President of the Commission observed, “Our farmers need to be listened to”.  She added, “I know they are worried about the future of agriculture and their future as farmers”. 

 

The change in policy was welcomed by farmers groups who characterized the “Green Deal” as a “ top-down proposal” poorly designed, poorly evaluated, poorly financed and offering little alternatives to farmers”.

 

At issue is the reality that by injudiciously reducing the application of pesticides, crop yields will be adversely affected creating a financial burden for farmers and increasing the cost of food to consumers.


 

Recycling of PET Packaging

02/13/2024

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

 

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


 

Big Dutchman Launches New Aviary at IPPE

02/13/2024

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

 

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

 

 

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


 

Featured Speakers at 2024 AAAP Annual Meeting

02/13/2024

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

 

  • Dr. Marc de Beer of Aviagen will discuss “Future perspectives for the global poultry industry”.  He will consider emerging technologies, challenges facing the industry and sustainability.


  • Dr. Holly Sellers will deliver the Lasher-Eckroade History Lecture dealing with avian reovirus infections. Dr. Sellers will discuss vaccination against tenosynovitis and arthritis and the evolution of new vaccines that will be effective against emerging variants.

 


 

Federal Court Revokes Re-approval of Dicamba Herbicide by EPA

02/12/2024

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

 

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

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

 

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

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


 

Kroger CFO Moves to Costco

02/12/2024

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

 

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

 

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

 

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

 

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

 

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


 

ADM Facing DOJ Investigation

02/12/2024

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

 

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

 

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

 

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

 

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


 

Sad Passing of Bill Northey

02/12/2024

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

 

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

 

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

 

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


 

Source of Long-Term Listeriosis Outbreaks Identified

02/12/2024

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

 

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

 

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


 

McDonald's Highlights Problem of Menu Pricing

02/12/2024

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

 

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


 

USMCA Dispute Panel to Consider Ban on U.S. Corn by Mexico

02/11/2024

Following the 2020 Presidential Decree by Mexico banning GM corn for human consumption, the U.S. unsuccessfully attempted to resolve the issue by negotiation.  Failure to obtain concessions based on submission of scientific data, the U.S. requested a USMCA Dispute Panel to review and rule on the ban. 

 

At a recent meeting of the National Association of State Departments of Agriculture, U.S. Chief Agricultural Negotiator, Doug McKalip, stated, “This case is about a lot more than biotech corn.  It is about making sure that nations adhere to the provisions of the trade agreements they have already signed and making sure we stick to science as the underpinning of trade.”  At risk are exports of U.S. GM corn valued at $5 billion annually, mostly destined for livestock consumption.  White corn is used to prepare tortillas and other staples in the Mexican diet but is derived from non-GM corn.

 



 

USDA Concern Over Implementation of SNAP Programs

02/11/2024

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

 

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

 

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

 

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


 

McDonald’s Announces Compliance With Cage-Free Egg Commitment

02/11/2024

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

 

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

 

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


 

Outbreak of H5N6 HPAI in South Korea

02/11/2024

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

 

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

 

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


 

Potential Outbreak of Hepatitis A in Maine

02/11/2024

Health authorities in Maine have identified a case of hepatitis in a restaurant worker resulting in potential infection of customers.  The Maine Center for Disease Control and Prevention identified two restaurants in Westbrook, adjacent to Portland, where the infected carrier worked over the period January 14th through February 4th.  Diners in the specified restaurants during the risk period should seek preemptive vaccination if they are concerned or consult a medical professional if they develop any symptoms suggesting infection with hepatitis A virus.

 

Although the majority of the 40 to 50 thousand diagnosed cases of hepatitis A resulting in 30 thousand hospitalizations have occurred among the homeless, in prison populations and among IV drug users, restaurant workers and food handlers have the potential to infect many others in the work environment with obvious implications for diners. This and many other similar incidents highlight the need for compulsory vaccination of workers handling, preparing or serving food against hepatitis A. Any shedder of the virus even if asymptomatic, can contribute to local outbreaks that can have severe health and financial outcomes.
 


 

White House Opposing Alleged High Grocery Retail Margins

02/07/2024

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

 

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

 

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

 

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


 

Trade Panel Discussion at IPPE

02/07/2024

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

 

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

 

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


 

Chipotle Posts Q4 and FY 2023 Results

02/06/2024

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

 

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

 

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

 

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

 

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

 

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

 

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


 

Cargill Introduces Reveal™ to Image Abdominal Fat Pads

02/06/2024

Cargill has introduced the Reveal™ noninvasive near-infrared sensor to allow evaluation of the mass of abdominal fat pads.

 

In the literature accompanying the release, Cargill noted that “overdeveloped fat pads in laying hens are problematic for long-term egg production and optimal liver function.”  This may be the case with broiler breeder hens and caged table-egg production flocks.  It most certainly is not a problem with aviary-housed egg production hens that have an energy requirement, in all probability, above current breed specifications.  Veterinarians consistently report small or absent fat pads in high-producing aviary housed flocks through 40 weeks of age. 

 

The Reveal™ system should provide additional information to nutritionists in determining both the formulation and allocation of diets for a specific complex given housing system, insulation and weather conditions. This is achieved by correlating the trajectory of body weight, case weight, H/W egg production and food intake over successive weeks.



 

USPOULTRY Announces Annual Lamplighter Awards

02/06/2024

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

 

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

 

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

 

 

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

 

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

 

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

 

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


 

Frequency of House Fires Compromising Insurance Cover

02/06/2024

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

 

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

 

  • Under-code wiring in many older houses
  • Construction using timber and other flammable materials.
  • Improper maintenance of electrical equipment
  • Defective alarm systems
  • Lack of contingency plans in the event of a fire including an available supply of water
  • Improper storage of manure that can result in spontaneous combustion.
  • Building multi-level high-capacity houses on the foundations of older high-rise units resulting in close proximity of buildings. This creates a greater risk of inter-house spread of fire on a complex.

 

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

 

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


 

USPOULTRY Elects Officers

02/06/2024

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

 

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

 

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

 

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

 

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

 

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


 

Tom Hensley USPOULTRY Workhorse of the Year

02/06/2024

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

 

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

 

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

 

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

 

 


 

Public Health Authorities Express Concern over H10 Avian Influenza

02/06/2024

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

 

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

 

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


 

Chore-Time Appointment Enhances Customer Fulfillment

02/06/2024

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

 

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


 

GI-OVO to Operate Under Giordano Corporate Name

02/06/2024

Following the acquisition of GI-OVO by equipment manufacturer the Giordano Group based in Italy, the corporate identity of the subsidiary in the Netherlands will become Giordano in April 2024.  Trade names including EggsCargoSystem™ will remain.  There will be no changes in either personnel or product range and quality.

 

For further information on egg handling systems including pallets, trays and components, click on to the EggsCargo logo on the right side of the welcome page.

 



 

McDonald’s Corporation Reports on Q4 and FY 2023

02/06/2024

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

 

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

 

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

 

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

 

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

 

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

 

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


 

Aldi Acquisition of Southeastern Grocers Stores

02/06/2024

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

 

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

 

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

 


 

Targan and Viscon Hatchery Automation Announce Strategic Partnership.

02/05/2024

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

 

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

 

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

 

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


 

Inordinate Delay in Designating Eggs as “Healthy”

02/05/2024

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

 

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

 

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

 

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

 

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


 

Aggrieved Farmers in the E.U. Confront National Governments

02/05/2024

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

 

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

 

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

 

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

 

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

 

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

 

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


 

Post Holdings Q1 FY 2024 Release

02/05/2024

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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


 

World Escalation in Food Prices

02/05/2024

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

 

Lower component indices were recorded:-

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

 

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


 

Children’s Healthcare of Atlanta Receives Support from Henning Companies

02/04/2024

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

 

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


 

Bipartisan Tax Bill Passed by House

02/04/2024

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

 

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


 

Alltech Announces New Technology Group

02/04/2024

To reflect global growth, Alltech has formed the Technology Group to be responsible for  nutrition, services and technical support. The focus will be on assisting customers with a diverse range of solutions and services. The Technology Group, will be co-led by:-

• Nick Adams (UK), as Commercial Director. Adams is a 24-year veteran of Alltech, most recently as global director of the Alltech Mycotoxin Management platform.

 

• Dr. Jules Taylor-Pickard (UK), as Technical Director. Taylor-Pickard has worked with Alltech for 22 years and previously served as global director of the Alltech Gut Health platform. 

 

• Martin Minchin (UK), as Commercial Marketing Director. Minchin previously served as global marketing manager of the Alltech Mycotoxin Management platform. He has been with Alltech for nearly seven years.

 

 

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

 

  • Steve Elliott (U.S.), Global Vice-president, Corporate Accounts. Elliott has been with Alltech for more than 29 years in a variety of roles. Most recently, he served as Global Director of the mineral management division. 
  • Claire Boudwin (U.S.), Global Product-launch Marketing Manager. Boudwin, who previously served as North American species marketing manager, has worked with Alltech for nearly six years. 
  • William Wallis (U.S.), Eastern U.S. Marketing Manager, will now also serve as U.S. Poultry Marketing Manager. Wallis has worked with Alltech for 12 years. 



Commercial Director


Global Product-launch Marketing Manager


Technical Director


 

John Starkey Receives Lifetime Achievement Award

02/04/2024

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

 

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

 

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

 

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


 

Dr. Darrin Karcher Receives Charles Beard Research Excellence Award

02/04/2024

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

 

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

 

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


 

Ukraine Successfully Using Coastal Black Sea Export Route

01/29/2024

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

 

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

 

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


 

Cinnamon Implicated in Lead Toxicity Cases Contaminated with Chromium

01/29/2024

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

 

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


 

Iowa to Consider Banning Anonymous Complaints Concerning Environmental Violations

01/29/2024

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

 

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

 

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

 

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

 

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


 

Chicago Considering Legislation to Restrict Dollar Stores

01/28/2024

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

 

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

 

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

 

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

 

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


 

University of Minnesota Study on Marketing Eggs from Farms Infected with HPAI

01/28/2024

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

 

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

 

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

 

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

 

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

 

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

 

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


 

Rembrandt Foods Acquires Artisan Kitchens

01/28/2024

In an announcement by AGR Partners, their subsidiary, Rembrandt Foods has acquired Artisan Kitchens.  This company converts egg products to omelets, egg bites, and other specialty products.  Items are marketed under the Artisan Kitchens brand and for private labels and food service.

 

 

A number of years ago, AGR Partners purchased egg processor Almark Foods, a supplier of hard cooked eggs that was subsequently divested to Michael Foods.



 

Ziggity Systems Restructures Ownership

01/28/2024

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

 

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

 

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

 

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

 


 

Inefficiency of Urban Farming

01/28/2024

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

 

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

 

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

 

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


 

Popularity of Private Label Brands

01/28/2024

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

 

The Top-10 lists of private label brands comprised:

 

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

 

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


 

Kemin Expands Oro Glo® Production

01/28/2024

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

 

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


 

Chipotle Mexican Grill to hire Seasonal Workers

01/27/2024

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

 

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


 

FDA Facing Congressional Pressure Over Lead Contamination

01/27/2024

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

 

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

 

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

 

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

 

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


 

Universal Free School Meals Approved in Many States

01/27/2024

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

 

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

 


 

Funding Proposed for Grocery Stores in Underserved Areas

01/27/2024

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

 

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

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


 

Promotional Seminar in Mexico

01/26/2024

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

 

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

 

The American Egg Board provided funding for the program.


 

House Members Opposed to Proposed Increases in Reference Prices for Commodities

01/25/2024

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

 

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

 

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

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

 

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

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

 

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


 

Store Brand Sales Outpacing National Brands

01/25/2024

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

 

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

 

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


 

Department of Energy to Fund Upgrades for Federal Facilities

01/25/2024

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

 

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

 

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

 

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


 

Aggressive Exxon-Mobil Response to Shareholder Resolutions

01/25/2024

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

 

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

 

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

 

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


 




























































































































































































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