In a February 14^th meeting, the USAPEEC reviewed key issues impeding exports with Alexis Taylor, Under Secretary of Trade and Foreign Agricultural Affairs. The outstanding topic of concern was funding of export promotion programs. The second issue involves the possible use of vaccination as an adjunct to control the infection in the U. S. Currently HPAI has resulted in unjustified restrictions on entire states by some importing nations as a result of an HPAI diagnosis.  These include bans by China, South Africa and the Dominican Republic that are deviating from WOAH policy that allows for regionalization.  Many importing nations have confined embargos to counties.  In the case of China and South Africa, HPAI is endemic in those nations so that their unjustified restrictions are contrary to WOAH rules relating to trade.

USDA Weekly Egg Price and Inventory Report, March 22^nd 2023.

Market Overview

• The average wholesale unit revenue values for Midwest Extra-large and Large sizes were higher this week by 12.7 percent on average, representing a continuation of the upward move for four weeks after seven previous consecutive weeks of decline. Mediums were up 6.8 percent with a larger gap from Large and indicating restoration in the balance between supply and demand in this size with many pullets commencing production. This past week shell egg inventory was up 5.7 percent inconsistent with increased seasonal demand and presumably lower shelf prices. Retail price is increasing but will be moderated by restoration of the national flock with a lagging rate. Over the coming three weeks the volume of retail purchases will be influenced by seasonal pre-Easter demand. If chains reduce margins consistent with prevailing wholesale prices, higher demand can be anticipated. Eggs are still competitive in price against the comparable costs for other protein foods. Availability and hence prices have been influenced by depletion of close to 44 million hens in 22 large complexes in eleven states extending from the last week in February through mid-December 2022 with the producing flock down on average by 20 million hens during 2022 and continuing into 2023 compared with the pre-HPAI complement.
• Total industry inventory was higher by 4.4 percent overall this past week to 1.62 million cases with a concurrent 1.3 percent decrease in breaking stock attributed to diversion and the combination of food service and industrial demand. Wholesale unit prices during early 2023 although on a downward trajectory during January and early February have trended upwards and contrast favorably with the two previous years that were characterized by low ex-plant unit revenue.
• It is now apparent that the inventory held by chains and other significant distributors may be more important over the short term to establishing wholesale price than the USDA regional inventory figures published weekly. This is probably the reason for the 8.7 percent swing in total inventory over two weeks with only a small change in the size of the national flock.
• Due to the depletion of flocks as a result of HPAI, comparable high unit revenue will now be a reality through the remainder of March and through April 2023. Sporadic outbreaks of HPAI are likely given the seasonal Spring migration of waterfowl. The number and extent of outbreaks cannot be assessed until more information is available concerning the molecular and field epidemiology relating to cases. The USDA has yet to identify modes of transmission for the 2022 epornitic including airborne spread. There have been no case-control studies released on possible deficiencies in biosecurity on affected complexes that presumably demonstrated specific risk factors. APHIS has been remiss in evaluating available data and providing timely practical guidance on prevention as evidenced by releasing a backdated report during the first week of March that was devoid of recommendations to prevent HPAI infection in flocks.
• The current relationship between producers and chain buyers based on a single price discovery system constitutes an impediment to a free market. The benchmark price amplifies both downward and upward swings as evidenced over the past six months. The benchmark possibly functions to the detriment of the industry over the long term. 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 0.4 percent or 1.2 million hens to 299.1 million hens during the week ending March 22^nd. The flock in production includes about 3.0 million molted hens that resumed lay during the past week plus 4.0 million pullets attaining production.
• The ex-farm price for breaking stock was up 8.5 percent this past week to 292.5 cents per dozen.Checks delivered to Midwest plants were up 17.2 percent to 279.0 cents per dozen. Prices for breaking stock will remain high over the period of recovery from HPAI until replacement flocks reach maturity.

The Week in Review

Prices

According to the USDA Egg Market News Reports released on March 20^th the Midwest wholesale price (rounded to one cent) for Extra-large was up 12.6 percent to $3.30 per dozen. Large size was up 12.7 percent to $3.28 per dozen; the Medium price was up 6.8 percent to $2.90 per dozen as delivered to DCs. Prices should be compared to the USDA benchmark average 6-Region blended nest-run cost of 85.3 cents per dozen in February 2023. This excludes provisions for packing, packaging materials and transport, amounting to 50 cents per dozen in mid-2022, according to the EIC but now probably closer to 55 cents per dozen. The progression of prices during 2023 to date is depicted in the USDA chart reflecting three years of data, updated weekly.

 The March 20^th 2023 edition of the USDA Egg Market News Report documented a USDA Combined Region value rounded to the nearest cent, of $3.01 per dozen delivered to warehouses for the week ending March 14^th 2023. This average price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $2.91 per dozen. At the high end of the range, the price in the South Central region attained $3.11 per dozen. The USDA Combined Price last week was approximately $1.80 above the 3-year average. This past week Midwest Large was approximately $1.85 above the corresponding week in 2022.

Weekly Commodity and Energy Report: March 23^rd 2023.

 OVERVIEW

At 13H00 on March 23^rd CME corn was down 0.3 percent to 631 cents per bushel compared to the previous week. Corn price was influenced by lower ethanol production and a projected higher ending stock as projected in the March WASDE despite noteworthy export orders this past week. Soybeans were down 5.2 percent from last week to 1,421 cents per bushel for May delivery. Soybean meal was 6.6 percent lower to $442 per ton for May delivery. The market has now accepted projections of crop size and higher stocks as documented in the March 8^th WASDE Report. Commodity exports that rose this past week were influenced by a moderate fall in the Dollar Index to 102.2.

WTI was 4.0 percent higher at $70.96 per barrel on March 23^rd at close of trading due to recession-related World fall in demand.

Factors influencing commodity prices in either direction over the past four

 weeks included:-

• A mild U.S. recession in 2023 appears more likely following turbulence in the bank sector in the U.S. and Europe. The Federal Reserve increased the benchmark interest rate by 25 basis points at the March 22^nd FOMC Meeting tempered by data indicating a gradual decline in inflation. This action to combat inflation was taken despite evidence that progressively higher rates are  stressing banks with two failures last week, albeit in mismanaged institutions. The GDP for the fourth quarter of 2022 attained 2.9 percent. The February 2023 CPI (6.0 percent) and WPI (3.9 percent) were lower than forecast (Transitory downward pressure on markets)

• It is evident that polarization in the closely divided houses of Congress will result in conflict over raising the debt ceiling and agricultural legislation including the 2023 Farm Bill that includes SNAP and other entitlements. (Ultimately, downward pressure).

• Geopolitical tensions that impact wheat, corn, oilseeds and vegetable oil exports from Ukraine persist. Extension of the Black Sea Grain Initiative for an additional 60 days was accepted by the Russian Federation on March 18^th against undisclosed concessions on sanctions. The invader has inflicted extensive and deliberate damage on the agricultural and energy infrastructure of Ukraine including elevators and crushing plants. (Upward pressure on corn and wheat and an indirect effect on soybeans if Black Sea shipping is interrupted.)

• The March 8^th WASDE documented lower soybean and grain production and reduced exports from Argentine due to drought. The U.S. will export less corn resulting in higher ending stocks. Soybean exports will be higher, reducing ending stocks with resulting changes in price. (Lower domestic prices)

• There is an expectation that Brazil will attain a record soybean harvest of 153 million metric tons with export of 93 million metric tons. Corn harvests from Brazil for the 2022-2023 season will be higher than the previous season although recent dry weather will reduce yields. Corn exports will attain 50 million metric tons (Lower prices in the future subject to favorable reports on crop progress and actual harvests)

• The Dollar Index (DXY) has ranged from 95 to 116 over 52 weeks but has recently shown less volatility. The DXY was 102.2 on March 23^rd. The dollar index influences timing and volume of export orders. (Fluctuation in corn and soybean prices, high value depresses U.S. sales)

EXPORTS

The restored and functional ‘legacy’ FAS Export Report released on March 23^rd for the week ending March 16^th reflecting market year 2022-2023, confirmed that outstanding export orders for corn amounted to 16.35 million metric tons (643.7 million bushels) with 18.6 million metric tons (731.5 million bushels) actually shipped. Net orders for the past week covering the 2022-2023 market year attained a noteworthy 3.1 million metric tons (121.9 million bushels) with 1.4 million metric tons (54.4 million bushels) shipped over the past working week. For the current market year outstanding sales of corn to date are 38.7 percent lower than for the corresponding week a year ago. For market year 2023-2024 outstanding sales this week amounted to 1.95 million metric tons (76.8 million bushels), with 0.1 million metric tons (3.7 million bushels) ordered for the 2023-2024-market year.

(Conversion 39.36 bushels per metric ton)

The FAS Export Report for the week ending March 16^th reflecting market year 2022-2023, recorded outstanding export orders for soybeans amounting to 5.9 million metric tons (218.2 million bushels) with 43.5 million metric tons (1,599 million bushels) actually shipped. Net weekly soybean orders attained 0.15 million metric tons (5.6 million bushels) with 0.7 million metric tons (25.9 million bushels) shipped for the past week. For the current market year to date outstanding sales of soybeans are 1.5 percent higher than for the corresponding week a year ago. Sales recorded for market year 2023-2024 amounted to 1.8 million metric tons (64.1 million bushels) with sales of 0.2 million metric tons (7.3 million bushels) this past week. 

(Conversion 36.74 bushels per metric ton)

A ProMED-Mail post dated March 19^th reported on a story distributed by TASS, the official news service of the Russian Federation, of an outbreak of HPAI. According to the release, now disproved, an apparent outbreak of avian influenza affected villagers of Velyka Oleksandrivka located near Kherson, that is under the control of the Republic of Ukraine. According to the TASS report, 18 villagers were hospitalized with two fatalities. 

It is possible that a strain of human influenza that has been reported from five other villages in the vicinity was responsible for the cases.

The ProMED moderator of the original post rightly suggested disinformation, given the source of the article and the absence of confirmatory laboratory diagnostic procedures. Health authorities in Ukraine, vigorously denied the report that emanated from the Russian Federation.

Regrettably the ProMED posting will circulate on social media in truncated form deleting the source and the denial.

A posting on Inside Climate News reported on a study involving 1.8 million homes in six states to determine the impact of an adjacent solar farm on property values.  Research was conducted by the Lawrence Berkeley National Laboratory and included homes in Minnesota, North Carolina, New Jersey, California, Connecticut and Massachusetts.

 The price differential between houses within one-half mile and two to four miles from a utility-scale solar plant averaged 1.5 percent disfavoring those close to an array.  In the case of California and Connecticut, house values were higher by 0.9 percent and 1.6 percent, respectively.  The highest devaluation figures were in North Carolina and New Jersey with 5.8 percent and a 5.6 percent reduction in value.

The study was conducted to determine the effect of large solar arrays that have generated resistance in local communities. The major objection has been based on a reduction in property values. In addition spurious claims of health effects have appeared on social media posts adding to opposition to solar arrays. 

The 1.5 percent decline in property values as determined by the Department of Energy Lawrence Berkeley National Laboratory refutes the claims of up to a 40 percent reduction as advanced at recent meetings of some local zoning boards.

According to a posting on ProMED-Mail on March 20^th, the Taiwan Centers for Disease Control and Prevention confirmed a diagnosis of avian influenza strain H9N2 in a poultry farm. The location was not disclosed but the flock of non-confined ducks was depleted.  The current concern relates to the fact that there is a history of human respiratory infection associated with H9N2 avian influenza virus with 90 percent of the cases reported from China.

The Taiwan Department of Disease Control and Prevention is monitoring the situation with surveillance of farm workers and their families.

Taiwan will attempt to eradicate H9N2, although this may be an insurmountable task.  China, Israel, South Korea, Pakistan, Egypt, Iran and the UAE have implemented vaccination to suppress the infection.  This zoonotic infection is especially a risk in nations with wet market sale of poultry to both rural and urban populations.

EGG-NEWS has reported previously on eye infections arising from the use of contaminated eye drops manufactured by Global Pharma and Delsam Pharma, both manufacturers of OTC preparations in India. The brand most implicated was sold by drug stores in the U.S as EzriCare Artificial Tears.  According to the Centers for Disease Control and Prevention, there have been 68 cases of ophthalmitis of varying severity in sixteen states.  The outbreak required 16 hospitalizations with eight afflicted by blindness, four involving enucleations and three fatalities.

The pathogen responsible for the outbreak is an extensively drug-resistant strain of Pseudomonas aeruginosa.  This strain, prevalent in India and previously unknown in the U. S., is carbapenem-resistant and carries genes expressing extended spectrum β-lactamase and metallo-β-lactamase.

The Centers for Disease Control and Prevention has issued warnings and the Food and Drug Administration has recalled both EzriCare and Delsam Pharma products.

According to Dr. Marissa Grossman, a CDC Epidemic Intelligence Service Officer, the pathogen can be carried asymptomatically and screening is now underway in a number of healthcare facilities.  There is evidence that the infection may be transmitted from patients to unaffected contacts.  Introduction of a Pseudomonas carrying VIN and GES genes is a potentially serious health hazard.

 It is questioned whether FDA has inspected the pharmaceutical plants producing the contaminated products and whether further surveillance will be instituted as a result of the outbreak. Once again EGG-NEWS questions why the U.S has to import eye drops from India or for that matter any other nation. We must re-shore manufacture of pharmaceuticals including OTCs and generics.

Field research has shown that bald eagles (Haliaeetus leucocephalus) in western states have been deprived of salmon carcasses, their natural source of food during the spawning season.  Climate change and human intervention in waterways has reduced the population of salmon in rivers resulting in a movement of eagle populations in the Pacific Northwest to farmland.  Eagles are now taking free-range chickens where available and are consuming carcasses of dead calves. Since the onset of HPAI, eagles are predators of migratory waterfowl and are infected from predation and scavenging on carcasses of birds that have died of the disease.

EGG-NEWS has regularly commented on the risks inherent to production of broilers for the live bird market (LBM) system in the Northeast. This past week the Pennsylvania Department of Agriculture imposed quarantine orders on 207 flocks in Lancaster and Chester Counties following outbreaks of Highly Pathogenic Avian Influenza in the two areas.

According to Dr. Kevin Brightbill, Pennsylvania State Veterinarian, there is anecdotal evidence that owners of some (LBM) flocks have failed to report sick and dying birds presumably as a result of exposure to H5N1 avian influenza virus.

The quarantine order would allow samples to be taken from flocks at regular intervals and has enjoined owners to disclose any unreported illnesses.

Not only is the live bird market system a danger to commercial poultry production, wet markets provide a possible means of transmitting H5N1 to customers and bird handlers.

In the 21st century, there is no justification for an archaic system of distributing poultry.  Both kosher and halal certified broilers and ducks are available in supermarkets and specialty stores, that were processed under USDA or state supervision.  Live bird markets and their suppliers represent a danger to the poultry industry and to the public.

Published research by scientists at the Purina Animal Nutrition Research Laboratory in combination with university and private test facilities demonstrated the benefits of a combination of probiotics and prebiotics (Fulfill® Plus) to suppress Salmonella Enteritidis (SE) infection in both pullets and laying hens.

In the first of a series of trials¹, cage-housed day-old pullets were challenged with 1.8x10⁹ CFU on day 21 as a positive control.  The second treatment was fed the pre-and-probiotic combination at a level of 1.5 lb./ton.  Pullets were sampled for SE shedding at 6, 10, 14 and 18-days post infection.  The pre and probiotic combination numerically suppressed SE counts in the caeca by 0.5 log10 at 18 days post-infection.  Fulfill® Plus significantly reduced the number of caecal samples yielding SE compared to the untreated, positive controls.

In a subsequent trial² to evaluate the pre and probiotic combination, Fulfill® Plus was fed to caged pullets from 10 weeks of age.  At 17 weeks, pullets were individually challenged with a dose of 3 x 10⁶ CFU SE per bird.  The pre-and-probiotic combination was administered at week 10 and significantly reduced the level of isolation of SE from the caeca of pullets in addition to reducing recovery from ovaries over the 10 to 77 week period.

¹ Kimminau, E. A. et al., Applied Research Note:  Combination of Probiotic and Prebiotic Impacts Salmonella    Enteritidis Infection in Layer Pullets, Journal of Applied Poultry Research. doi.org/10.1016/j.japr.2022.100286

² Kimminau, E. A., Combination of Probiotic and Prebiotic Impacts Salmonella Enteritidis Infection in Layer Hens, Journal of Applied Poultry Research. doi.org/10.1016/j.japr.2021.100200.

The USDA has added ten new cases of H5N1 avian influenza infection of mammals in four states involving five species.  To date, 131 cases have been reported in both terrestrial and marine mammals.  Species that are susceptible include black bears, red foxes, mountain lions, bobcats, raccoons, otters, mink and skunks.

According to an epidemiologist at the University of Minnesota Center for Infectious Disease Research and Policy, "the Eurasian H5N1 clade currently affecting wild birds and poultry on five continents has a mutation that makes it more recognizable to mammalian airway cells including humans".

The California State Water Resource Control Board has approved a recommendation by the U.S. Bureau of Reclamation to divert 600,000 acre-feet of water from the San Joaquin River to the Central Valley and adjacent wildlife refuges.  The projected volume of water is equivalent to the annual demand by Metro Los Angles with a population of 12.5 million.

The state maintains that this action will save water that would otherwise be unused and is required to replenish aquifers. As a result of a three-year severe drought wells in the Central Valley have run dry and ground subsidence has resulted in damage to buildings and canal infrastructure.

The proposed action under the direction of Governor Gavin Newsom has generated opposition from activist groups including the Natural Resources Defense Council and the Union of Concerned Scientists.  Their objections appear to be based on the fact that “Big Ag” will benefit at the expense of smaller landowners downstream along the San Joaquin River.  In response a representative of the State Water Resources Council stated, “The amount of water that will be diverted is relatively low compared to the volume of water that will flowing through the system.”

Governor Newsom has stated his intent to recharge groundwater each year by 500,000 acre-feet to offset losses by abstraction for irrigation and livestock.  Depletion of groundwater in the Central Valley has totaled 36 million acre-feet over the past 20 years, far in excess of the rate of recharging.

Results of a survey conducted by market research company Numerator, documented the responses of SNAP recipients for their purchases of groceries as impacted by COVID.  In an article in Supermarket News on March 15^th, Numerator compared SNAP and non-SNAP consumers.

• SNAP recipients represent the lowest percentile in terms of purchasing power with 61 percent in the bottom 30^th
• Almost half have children in the home compared to one third of non-SNAP households.  SNAP recipient households are twice as likely to be African-American or Hispanic in demographic compared to non-SNAP households. 
• Approximately 20 percent of SNAP households are “overwhelmed with financial burdens”.  More than half are concerned about job stability compared to one third of non-SNAP recipients. 
• Despite SNAP benefits, one quarter of recipients are encountering food insecurity.
• SNAP recipients experience health problems and disability at a higher rate than non-SNAP recipients.

• SNAP recipients spend disproportionately greater amounts per unit of purchase compared to non-SNAP recipients.  This difference may arise from SNAP recipients buying their needs from dollar stores or small groceries that predominate in inner cities.  Many SNAP recipients do not have access to large supermarkets or deep discount groceries. 
• Regional and ethnic grocery stores that are attracting SNAP recipients include Market Basket, Ranch Market and Wegmans.
• Due to lack of personal or inadequate public transport, SNAP recipients require delivery services.  SNAP recipients use Walmart +, DoorDash and Albertsons Fresh.

The U.S. Surface Transportation Board has approved the purchase of Kansas City Southern Railway Company by Canadian Pacific Railway Ltd. in a transaction valued at $31 billion.  This will create a single carrier extending from Canada to Mexico operating 20,000 miles of track and employing 20,000.

The merger was regarded by the regulatory authority as an end-to-end operation without overlapping routes.  The combination will enhance efficiency and create competition among the six large U.S. railways.  This might create some benefits for the U.S. poultry industry.

In an address to the Russian Union of Industrialists and Entrepreneurs, Vladimir Putin, the President of the Russian Federation, blamed sanctions for the 4.7 percent decline in GDP. He stated “It is evident that sanctions are now affecting a wide range of businesses forcing Russia to shift trade to ‘friendly’ nations”. Putin also noted, “These problems as you know were not created by us,” a statement that can be regarded as a high water mark in cynicism and self-denial. 

Sanctions were imposed on the Russian Federation following the unprovoked invasion of Ukraine thirteen months ago. Deliberate shelling has destroyed agricultural and industrial infrastructure. Curbs on export of Russian commodities, restrictions on strategic imports and isolation of the Russian economy should hasten peace talks and a withdrawal of Russian forces from occupied eastern states of Ukraine.  Crimea is probably lost to Ukraine but entry of the nation into the European Union and NATO are real possibilities with long-term detrimental consequences for the Russian Federation.

The invasion has created artificial shortages of commodities previously exported by Ukraine and has affected their prices ultimately to the disadvantage of livestock producers and consumers worldwide.

Dollar Tree announced on March 14^th that due to high wholesale prices, it would suspend sales of shell eggs.  This is an overreaction since prices are declining and there is continuing demand for eggs and other refrigerated foods.  If customers cannot purchase eggs at Dollar Tree stores, they may well shift their purchases to deep discounters including Aldi.  It is generally accepted that higher price items carry larger margins and Dollar Tree has successively moved up unit prices, introducing a $3-$5 range in 2,000 stores. Their decision appears contrary to engendering additional custom and contributing to the bottom line and will be reversed.

Minnesota is considering legislation to allow all school children to eat breakfast and lunch in irrespective of parental income.

Senator Heather Gustafson (D-FL) stated, "feeding kids at school is the right thing to do".  She added, "being hungry makes learning almost impossible".

To qualify for free and reduced priced meals, schools must enroll in a federal program with the state paying for students who do not qualify for a subsidy.  The vote to place $380 million in the state budget to cover universal school meals was approved by a 38 to 26 bipartisan majority.

Previously EGG-NEWS reported on proposals to pipe carbon dioxide produced by ethanol plants in Midwest states to the High Plains where sequestration at more than a mile underground could be accomplished. The permitting of pipelines is now actively opposed by landowners who fear possible rupture with discharge of carbon dioxide. Those farming above the strata proposed for disposal are concerned over upward migration and contamination of aquifers with carbon dioxide resulting in acidification.  This would be deleterious for both agriculture and livestock production.

The project to establish pipelines with sequestration followed an extensive evaluation by the Department of Energy in 2021. The motivation for an extensive system of pipelines raises a significant question as to the current methods for disposal of carbon dioxide produced by ethanol plants.  When fermented, corn producers equal quantities of ethanol, dried distillers grains and carbon dioxide.  If this greenhouse gas is not disposed of in an environmentally acceptable manner, it is deleterious to the environment. Release of large quantities of carbon dioxide into the atmosphere by ethanol plants belies the contention that fuel ethanol is beneficial to the environment.  Do we have a situation in which the Department of Energy and the Environmental Protection Agency are working at cross purposes?  Disposal of carbon dioxide should have been considered and resolved before ethanol plants were designed and erected. Is this problem analogous to the failure to develop an acceptable program of disposal of nuclear waste from generating plants that were established 65 years ago?

Conventionally off-line plants record egg deliveries by pallet.  In response to market requests and to improve efficiency, OVO-Vision has upgraded their software. The enhancements allow plant management to pack from houses with an in-line configuration allowing the blending of age groups without sacrificing traceability and accuracy of egg counts. With the new OVO-Vision Software, the number of eggs as recorded by egg-counters can be correlated with grade-out data. Results can be used to plan packing schedules and to compare data with predetermined standards.

The new OVO-Vision Software accumulates grading data for a specific shift or day of operation and can allocate production to individual houses.  Data can be integrated with financial and quality reports.

The OVO-Vision software upgrade allows packers to alternate between in-line and off-line while retaining records of stock inventory and location of product irrespective of the respective stages in the production cycles of supply flocks.

The new OVO-Vision software has been extensively tested and is available as an upgrade to users of OVO-Vision systems.

For additional information, E-mail J.Jenniskens@OVO-Vision.com or call 1-(31) 475 343180.

Senator Deb Fischer (R-NE) has introduced the Consumer and Fuel Retailer Choice Act.  This legislation would harmonize state regulations and allow for year-round use of E-15 ethanol blend. The Bill is supported by a bipartisan group of senators from all corn-producing states. Senator Fischer stated, “Our bipartisan legislation is the only permanent, nationwide solution to unleashing the power of year-round E-15.  It’s why we’ve been able to bring together a diverse group of stakeholders from the oil, gas, biofuel, agriculture and transportation sectors to support our legislation.”

U. S. Representatives Adrian Smith (R-NE) and Angie Craig (D-MN) have introduced companion legislation in the House.

The major obstacle to E-15 blend will be the number of vehicles equipped to receive a higher level of ethanol.  The second problem will be delivering higher blends. This will require either separate tanks or multiblend pumps.  Irrespective of the system adopted, capital investment will be required with federal funding.  This will conflict with current Administration policy of expanding electric charging stations for electric vehicles.  Increasing the blend rate will resolve the problem of the ongoing ‘blend ceiling’. Although the cost to consumers of E-15 blend will be lower than E-10, the advantage will be offset by lower miles per gallon since ethanol effectively dilutes the energy content of gasoline.

Greater demand for fuel ethanol is currently limited by the 10 percent “blend ceiling”. Extending to an E-15 blend would result in diversion of more corn to ethanol with a consequential increase in the price of livestock feeds that will ultimately be inflationary.  The move to E-15 will increase production of ethanol with the consequences of more abstraction of water from aquifers and release carbon dioxide from plants to the atmosphere.

Dr. Richard Murphy, Director of Research at Alltech, has published a white paper. Organic Selenium: A Comparison of Form, Source and Function.  In commenting on his work, Dr. Murphy stated, “Peer-reviewed research has clearly shown that dietary intervention with organic selenium results in significantly enhanced production and health benefits for all species.”

He added, “Organic selenium has been found to be a more effective source than inorganic selenium products, resulting in an increased number of live young per animal, the stimulation of immune function, overall improvement in animal health and an enhanced shelf life for meat, milk and eggs.” 

Dr. Murphy noted that the numerous selenium sources available on the market vary in terms of their stability and shelf-life.  Organic selenium sourced from yeast has high stability in premixes and in compounded feed, even with pelleting.

Alltech offer selenium yeast as Sel-Plex® that has been the subject of more than 300 performance studies.

Currently, there is no federal regulation mandating reporting of cases of COVID to the U. S. Centers for Disease Control and Prevention.  With the extensive use of home diagnostic kits, most asymptomatic and mild cases do not enter the CDC database.

Effective March 8^th, the cumulative number of U.S. cases of COVID, since inception of the pandemic, has attained 103.7 million. This figure is an undercount with, possibly more than one third of the population having been infected.  The cumulative death toll of 1.1 million also understates the impact of COVID since individual states imposed different criteria for certification of cause of death.

Given the obvious deficiencies in counting cases, the CDC recorded 170,576 incident infections during the week of March 8^th, down 15 percent from the previous week.  For the same week, 1,862 fatalities were recorded, down 19 percent.  Hospital admissions are a relatively accurate method of determining trends in COVID infection since diagnostic procedures are documented. There was a ten percent decrease in new admissions and a corresponding decline in the 23,112 hospitalized during the week of March 8^th. Concurrently there were 3,084 patients with COVID in Intensive Care Units. Most of the hospitalizations involved the elderly, the non-vaccinated and those with predisposing conditions.

The Omicron sub-lineages XBB.1.5 represented 90 percent of all sequenced viruses isolated from new cases with the remainder identified as sub-variants of Omicron SARS-CoV-2 virus. 

Clearly, the impact of COVID is waning but the infection is taking a toll on the elderly and the still susceptible non-vaccinated or incompletely vaccinated in our population.

Recent epidemiological studies in South Korea have shown that acceptable protection from severe, clinical symptoms and hospitalization can be attained with two initial mRNA vaccines followed by the administration of two boosters.  In the interests of simplicity it appears that the FDA will recommend a single annual booster.  In contrast, the study conducted in South Korean recommended boosting at six-month intervals rather than as a single, annual dose administered concurrently with the seasonal influenza vaccine in the fall as contemplated for the U.S.

Amid calls for the food-related responsibilities of the U.S. Food and Drug Administration to be transferred to a new agency, there are questions over the extent of supervision exercised by the FDA over foreign pharmaceutical plants.  The Economist recently highlighted the problems of Marion Biotech and Maiden Pharma that were allegedly responsible for mortality in children in Gambia and Uzbekistan as a result of cough syrup manufactured with a toxic ingredient.  Both Marion and Maiden are small, privately-held companies that are presumably under the jurisdiction of Pharmexcil, a trade group in India that operates with government recognition.

India has approximately 10,000 pharmaceutical plants operated by 3,000 companies producing drugs valued at $50 billion, annually.  Approximately 40 percent of America’s generic drugs are imported from India.

In 2022, the Food and Drug Administration sanctioned four large companies in India, blocking specific shipments.  It is widely acknowledged that drug manufacturers in India operate with a strong profit motive and minimal government supervision.  Domestic whistleblowers are ignored or threatened with government sanctions for disparaging the image of the Indian pharmaceutical industry and impacting exports.  In the absence of a functional legal system, civil litigation is ineffective.

Given the frequency of adverse reactions and evidence of contaminated and impotent drugs, the safety of generics imported from India is questioned.  We have only the FDA standing between unscrupulous manufacturers and consumers in the U. S.

Two questions arise.  Is the FDA maintaining appropriate surveillance over drugs manufactured in India and other Asian nations?  If not, do they require additional resources to conduct in-company inspections that, it is understood, occur at infrequent intervals?  The second question is why the U. S. is dependent on nations, such as China and India, for generic drugs?  Why can these products not be manufactured locally, given that the pharmaceutical industry is not labor intensive but is reliant on trained technicians and quality control personnel?

Separating food from the FDA will allow the Agency to concentrate on drugs and medical devices for which it apparently has an adequate functional organizational structure and staffing.

Who confirmed my daily generic was safe?

According to a March 16^th posting on ProMED-Mail, authorities in China have diagnosed a case of H5N1 influenza in a 52-year-old woman in Jiangsu Province.  No details were provided on her condition although the report noted recent contact with live poultry.

Sequencing of the isolate confirmed H5N1 clade 2.3.4.4b common to the current panornitic in Asia, Europe and the Americas.   This is the second human case in 2023 following a diagnosis of H5N1 in a child living in Ecuador.  The isolate in China was different from the H5N1 clade 2.3.2.1c that has circulated in Cambodia among contacts with chickens for two years.

According to a posting by Mark Hamstra in Supermarket News on March 13^th, total digital grocery sales attained $128 billion in 2021.  Data was assembled by Incisiv with an expectation that sales might attain $150 billion in 2023.

During the past year, 14 percent of grocery sales were through a digital channel expanding to an anticipated 15 percent in the current year.  It is estimated that the proportion of grocery shoppers using digital channels will increase from 63 percent in 2022 to 87 percent in 2023. 

Although convenient for shoppers, digital sales incur incremental expenses that reduce margins for chains.  Grocery pickup is the least costly for retailers but incurs additional labor to select and assemble orders and to deliver packages to customers.  Third-party service has declined sharply from 31 percent of sales in January of 2022 to 19 percent in December of that year.

EGG-NEWS previously reported on a Salmonella Enteritidis (SE) outbreak at the CA Cedergren complex in Smaland, Sweden during December 2022 that resulted in an extensive national recall of shell eggs.  The outbreak, traced back to the farm, included 80 confirmed cases in 16 regions of the Nation. The Department of Agriculture in Sweden supervised the depopulation of the flock, comprising 165,000 hens in production.

It now appears that following repopulation, SE is still present on the farm and accordingly, additional depopulation will be carried out.  It is evident that this action followed surveillance for SE, although no cases among consumers have been diagnosed.

It would be of interest to determine whether the flocks on the CA Cedergren complex were vaccinated against Salmonella and if so, the type of vaccines and the ages of administration.  Sweden imposes non-conventional restraints on vaccination including a ban on immunizing flocks against Newcastle disease, resulting in a number of outbreaks  of this viral infection in recent years.

The February Department of Labor jobs report indicated 311,000 additional positions added during the month including workers in the hospitality and restaurant sector.  The Bureau of Labor Statistics reported 70,000 new jobs for bars and restaurants and 14,000 in accommodation.

For January, 99,000 additional positions in food and drink establishments were added with 15,000 in accommodation. In contrast, technology and retail sectors recorded fewer positions.

Leisure and accommodation are still approximately 400,000 positions down from the beginning of 2020, pre-COVID representing a loss of three percent of the previous workforce.

A National Restaurant Association survey revealed that 90 percent of restaurant operators are facing challenges in recruitment and retention with two-thirds of the respondents operating at 10 percent below acceptable levels of employment.  It is projected that 15.5 million will be employed in the restaurant industry by the end of 2023 compared to 12.2 million in December 2020, reflecting layoffs and restaurant closures during the COVID pandemic. Many employees in leisure and entertainment found new positions outside the industry during and after COVID restrictions, necessitating recruitment and hiring of new entrants to the sector.

The February Consumer Price Index (CPI) attained 6.0 percent compared to February 2022 and was down from the January value of 6.4 percent.  This was the eighth consecutive month of lower inflation.  For February, the CPI increased 0.4 percent compared to the corresponding month in 2021 and conformed to consensus estimates.  The January CPI was 0.5 percent higher than in January 2022. Core CPI excluding energy and food prices attained 5.5 percent year-over-year and 0.5 percent for February.

The inflation rate for Food was 9.5 percent with the food-at-home category reflecting grocery prices, up 10.2 percent year-over-year.  In contrast, inflation in the Services category was up by 0.8 percent in February and 8.1 percent year-over-year.

The lower inflation figures corresponding to estimates, will be considered by the U. S. Federal Reserve Open Markets Committee that will decide on whether to increase rates at the March meeting and if so to select a level ranging from 25 to 50 basis points.  Apart from the CPI and other data, two recent bank failures will influence the Committee decision with a consensus of a pause or an increase of only 25 basis points.    

The U. S. Environmental Protection Agency (EPA) has proposed a national drinking water standard covering six per-polyfluoroalkyl compounds generally referred to as PFAS (“forever chemicals”).  The proposal would require regulation of two of the chemicals in the group to four parts per trillion with a limit over the mix of four others in the group. In 2016, based on available information at the time, the recommended PFAS concentration in drinking water was set at 70 parts per trillion. Operators of water systems will be required to determine levels and take corrective measures to reduce contamination.

This action follows emerging evidence that PFAS compounds are deleterious to health and that imposing stricter upper limits would eliminate health hazards. Accumulation of PFAS in liver and kidney tissues can predispose to cancer, obesity, elevated blood cholesterol and decreased fertility.

Since 1940, PFAS compounds have been incorporated in water repellant clothing, furniture, carpets, non-stick pans, paints, cosmetics and fire-fighting foam.  Two of the most toxic compounds were phased out of production a decade ago, according to the American Chemistry.  Council.  Predictably, this industry questions the scientific justification used by the EPA to set levels.

Currently ten U. S. states in the Northeast and in Michigan and Wisconsin have limits on PFAS in drinking water.  Despite reduced use of these compounds, their persistence in the environment, including soil and water, will represent a problem for centuries to come.

The EPA proposal will be subject to public comment and if adopted, public water systems will have three years from the date of the regulation to comply. There will be considerable expense to comply with the proposed standard. Extesive litigation is expected that will delay resolution of an accepted level.

Dutch farmers are turning to street protests against proposed limits on nitrogen emissions.  If implemented, the restrictions would seriously limit agriculture and reduce food production.

In contrast, environmentalists are protesting tax rules that grant exemptions to refineries and power-generating plants burning coal.

Protests are preceding regional elections in Holland in an attempt to persuade incumbent and aspirant members of the Dutch Parliament to support either farmers or environmentalist in a nation strongly divided by conflicting opinions.

Georgia Power has announced that the Vogtle Unit-3 Reactor has reached initial criticality.  This means that the nuclear reaction is self-sustaining as a prerequisite for generation of electrical power. This is the first reactor to commence operation in the U.S. since May 2016.

Nuclear power is an obvious approach to reducing reliance on fossil fuels and the technology can now be maintained with operational safety.  The question of disposal of nuclear waste has yet to be resolved and should be addressed since disposal sites have been identified and appropriate methods of sequestering spent rods have been developed.  Unfortunately, a not-in-my-backyard mentality persists among state and regional legislators. This serves as a barrier to safe and permanent disposal that would facilitate reliable clean-power generation and offset the deleterious effects of greenhouse gas emissions from coal, gas and oil.

Currently the U.S relies on aging nuclear plants to supply 18 percent of power consumed. This is surpassed by renewable sources at 22 percent and the remainder fossil fuels with power demand growing at one percent annually. In contrast France relies on nuclear generation for 70 percent of electric power.

According to a March 14^th posting on ProMED Mail, the Government of India reported an outbreak of H5N1 Highly Pathogenic Avian Influenza on a state poultry farm in Jharkhand.  It is considered interesting that the although the outbreak commenced on February 2^nd, it was confirmed only two weeks later on February 17^th  and was reported to the WOAH on March 9^th.

Previous cases of HPAI in commercial flocks caused by H5N1 and H5N2 were reported India during 2021 and 2022. Extensive losses in migratory cranes and in domestic wild birds were reported in 2022.

The outbreak may have implications for export of shell eggs to the Middle East but should not affect shipments of pasteurized egg products and dried eggs that would be free of virus following heat treatment. 

The presence of H5N1 in commercial poultry in India is generally underreported, being deliberately or unintentionally misdiagnosed as Newcastle disease.  Given the high level of vaccination against Newcastle disease applied to commercial flocks, any significant elevation in mortality accompanied by cessation of egg production should be regarded as HPAI unless appropriate laboratory diagnostic procedures, including PCR, eliminate this most probable diagnosis.

Weekly Commodity and Energy Report: March 16^th 2023.

OVERVIEW

At 14H00 on March 16^th CME corn was up 3.4 percent to 633 cents per bushel compared to the previous week. Corn price was influenced by static ethanol production and a projected higher ending stock in the March WASDE despite higher export orders for two successive past week. Soybeans were down 1.5 percent from last week to 1,489 cents per bushel for May delivery. Soybean meal was 2.8 percent lower to 473 per ton for May delivery. The market has now accepted projections of crop size and higher stocks as documented in the February 23^rd USDA Grains and Oilseeds Outlook and confirmed in the March 8^th WASDE Report. Commodity exports that rose this past week were not  materially influenced by a moderate fall in the Dollar Index to 104.6.

WTI fell 10.5 percent to $68.20 per barrel from $76.52 per barrel on Wednesday 15^th at close of trading due to recession-related World fall in demand.

Factors influencing commodity prices in either direction over the past four

 weeks included:-

• A mild U.S. recession in 2023 appears more likely following turbulence in the bank sector in the U.S. and Europe. The Federal Reserve increased the benchmark interest rate by 25 basis points at the February FOMC Meeting. In Congressional testimony on March 7^th and 8^th Chairman Powell opined that higher raises in rates may be applied if inflation is not reduced. This hawkish sentiment drove down equity markets by two percent on March 7^th.  The Federal Reserve determination to raise rates on March 22^nd will be tempered by data indicating a gradual decline in inflation. More significantly evidence that progressively higher rates are indirectly stressing banks with two failures, albeit mismanaged institutions, this week gives rise to an anticipation of a pause at the March FOMC Meeting. The GDP for the fourth quarter of 2022 attained 2.9 percent. The February 2023 CPI (6.0 percent) and WPI (3.9 percent) were lower than forecast (Transitory downward pressure on markets)

• It is evident that polarization in closely divided both houses of Congress will result in conflict over raising the debt ceiling and agricultural legislation including the 2023 Farm Bill that includes SNAP and other entitlements. (Ultimately, downward pressure).

• Geopolitical tensions that impact wheat, corn, oilseeds and vegetable oil exports from Ukraine persist. Limited restoration of Black Sea shipping was accomplished following security guarantees by Ukraine to the Russian Federation in November 2022. Extension of the Black Sea Grain Initiative into April is most probable, especially if the Russian Federation receives concessions on sanctions. The invader has inflicted extensive and deliberate damage on the agricultural and energy infrastructure of Ukraine including elevators and crushing plants. (Upward pressure on corn and wheat and an indirect effect on soybeans if Black Sea shipping is interrupted.)

• The March 8^th WASDE documented lower soybean and grain production and reduced exports from Argentine due to drought. The U.S. will export less corn resulting in higher ending stocks. Soybean exports will be higher, reducing ending stocks with resulting changes in price.

• There is an expectation that Brazil will attain a record soybean harvest of 153 million metric tons with export of 93 million metric tons. Corn harvests from Brazil for the 2022-2023 season will be higher than the previous season although recent dry weather will reduce yields. Corn exports will attain 50 million metric tons (Lower prices in the future subject to favorable reports on crop progress and actual harvests)

• The Dollar Index (DXY) has ranged from 95 to 116 over 52 weeks but has recently shown less volatility. The DXY was at 101 on June 2^nd 202 peaking at 116 in late October 2022 but declining to a range of 103 to 105 during February through mid-March 2023 and attaining 104.6 on March 15^th. The dollar index influences timing and volume of export orders. (Fluctuation in corn and soybean prices, high value depresses U.S. sales)

EXPORTS

The restored and functional ‘legacy’ FAS Export Report released on March 16^th for the week ending March 9^th reflecting market year 2022-2023, confirmed that outstanding export orders for corn amounted to 14.64 million metric tons (576.3 million bushels) with 17.3 million metric tons (678.8 million bushels) actually shipped. Net orders for the past week covering the 2022-2023 market year attained 1.2 million metric tons (48.6 million bushels) with 1.2 million metric tons (45.8 million bushels) shipped over the past working week. For the current market year outstanding sales of corn to date are 40.1 percent lower than for the corresponding week a year ago. For market year 2023-2024 outstanding sales this week amounted to 1.86 million metric tons (73.2 million bushels), with 0.18 million metric tons (7.2 million bushels) ordered for the 2023-2024-market year.

(Conversion 39.36 bushels per metric ton)

The FAS Export Report for the week ending March 9^th reflecting market year 2022-2023, recorded outstanding export orders for soybeans amounting to 6.5 million metric tons (238.6 million bushels) with 42.9 million metric tons (1,574 million bushels) actually shipped. Net weekly soybean orders attained 0.67 million metric tons (24.7 million bushels) with 0.8 million metric tons (28.4 million bushels) shipped for the past week. For the current market year to date outstanding sales of soybeans are 1.2 percent higher than for the corresponding week a year ago. Sales recorded for market year 2023-2024 amounted to 1.5 million metric tons (56.8 million bushels) with sales of 66,000 metric tons (2.4 million bushels) this past week.   (Conversion 36.74 bushels per metric ton)

For the week ending March 9^th 2022 net orders of soybean meal and cake amounted to 220,100 metric tons for the market year 2022-2023. During the past week 337,600 metric tons of meal and cake combined was shipped, representing 6.2 percent of the total 5,451,200 metric tons shipped during the current marketing year. This quantity is 95.7 percent of the volume shipped through the corresponding weeks of the previous market year. For the next market year outstanding sales attained 264,000 million metric tons with sales of 35,000 metric tons this past week.

The USDA Grains and Oilseeds Outlook released on February 23^rd documented initial 2023 planting intentions, ending stocks and prices for the major agricultural commodities.

• Corn will be harvested from 83.1 million acres with a projected yield of 181.5 bushels per acre. Ending stocks will be up 48.9 percent to 1,887 million bushels, depressing price from the previous season by 16.4 percent to $5.60 per bushel.
• Soybeans will be harvested from 86.7 million acres with a projected yield of 52 bushels per acre. Ending stocks will be up 28.9 percent to 290 million bushels tons, depressing price from the previous season by 9.8 percent to $12.90 per bushel.
• Crushers will produce 54,475 million tons of soybean meal. Ending stocks will be up 35.0 percent to 450,000 tons depressing price from the previous season by 8.8 percent to $410 per ton.

Actual 2022 corn and soybean harvests and projected ending stocks were documented in the March 8^th WASDE #634, posted under the STATISTICS Tab.  Corn yield attained 173.3 bushels per acre with a crop of 13,730 million bushels. Ending stock will increase by 5.9 percent to 1,342 million bushels. Soybean yield was 49.5 bushels per acre with a crop of 4,276 million bushels. Ending stocks were projected down by 6.7 percent to 210 million bushels. The March WASDE report was based on actual harvest data and incorporated amended domestic use and export categories. The WASDE presumably considered the predicted impact on world prices following disruption of the 2022 Ukraine crop by the invasion from the Russian Federation.  Values will be updated when WASDE #635 is released incorporating planting intentions, harvests in South America and trade.

COMMODITY PRICES

The following quotations for the months of delivery as indicated were posted by the CME at 14H00 on March 16^th 2023, compared with values at 14H00 on March 9^th 2023  (in parentheses): -

Despite the 9.5 percent inflation in food cost year-on-year, Walmart is offering a 2023 Easter basket for $100 containing seasonal essentials at the same price as last year.  The offer includes ham, green beans, pie and fixings to serve an Easter meal for a family.

Walmart stated, "We are proud to continue showing up for our customers in the ways that matter most to them.  We are committed to keeping prices low and making the shopping experience easier and more convenient for the important celebrations to the little moments in between".  For additional information access <www.walmart.com/eastersavings>.

USDA Weekly Egg Price and Inventory Report, March 15^th 2023.

Market Overview

• The average wholesale unit revenue values for Midwest Extra-large and Large sizes were higher this week by 10.6 percent on average, representing a continuation of the upward move for three weeks after seven previous consecutive weeks of decline. Mediums were up 4.6 percent narrowing the gap with Large and indicating restoration in the balance between supply and demand in this size despite many pullets commencing production. This past week shell egg inventory was down 4.6 percent consistent with increased seasonal demand and also attributed to presumably lower shelf prices. Retail price has stabilized but will be influenced by eventual restoration of the national flock. Over the coming month the volume of retail purchases will be influenced by seasonal pre-Easter demand. If chains reduce margins consistent with prevailing wholesale prices, higher demand can be anticipated. Eggs are still competitive in price against the comparable costs for other protein foods. Availability and hence prices have been influenced by depletion of close to 44 million hens in 22 large complexes in eleven states extending from the last week in February through mid-December 2022 with the producing flock down on average by 20 million hens during 2022 and continuing into 2023 compared with the pre-HPAI complement.
• Total industry inventory was down by 4.3 percent overall this past week to 1.55 million cases with a concurrent 3.5 percent decrease in breaking stock attributed to lower food service and industrial demand. Wholesale unit prices during early 2023 although on a downward trajectory during January and early February have trended upwards and contrast favorably with the two previous years that were characterized by low ex-plant unit revenue.
• It is now apparent that the inventory held by chains and other significant distributors may be more important over the short term to establishing wholesale price than the USDA regional inventory figures published weekly.
• Due to the depletion of flocks as a result of HPAI, comparable high unit revenue will now be a reality through the remainder of March and through April 2023. Sporadic outbreaks of HPAI are likely given the seasonal migration of waterfowl. The number and extent of outbreaks cannot be assessed until more information is available concerning the molecular and field epidemiology relating to cases. The USDA has yet to identify modes of transmission for the 2022 epornitic including airborne spread. There have been no case-control studies released on possible deficiencies in biosecurity on affected complexes that presumably demonstrated specific risk factors. APHIS has been remiss in evaluating available data and providing timely practical guidance on prevention as evidenced by releasing a backdated report during the first week of March that contained no recommendations to prevent HPAI infection of flocks.
• The current relationship between producers and chain buyers based on a single price discovery system constitutes an impediment to a free market. The benchmark price amplifies both downward and upward swings as evidenced over the past three months. The benchmark possibly functions to the detriment of the industry over the long term. 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 0.4 percent or 1.1 million hens to 300.3 million hens during the week ending March 15^th. The flock in production includes about 3.0 million molted hens that resumed lay during the past week plus 4.0 million pullets attaining production.
• The ex-farm price for breaking stock was up 21.1 percent this past week to 269.5 cents per dozen.Checks delivered to Midwest plants were up 18.4 percent to 238.0 cents per dozen. Prices for breaking stock will remain high over the period of recovery from HPAI until replacement flocks reach maturity.

The Week in Review

Prices

According to the USDA Egg Market News Reports released on March 13^th the Midwest wholesale price (rounded to one cent) for Extra-large was up 10.6 percent to $2.93 per dozen. Large size was up 10.7 percent to $2.91 per dozen; the Medium price was up 4.6 percent to $2.71 per dozen as delivered to DCs. Prices should be compared to the USDA benchmark average 6-Region blended nest-run cost of 85.3 cents per dozen in February 2023. This excludes provisions for packing, packaging materials and transport, amounting to 50 cents per dozen in mid-2022, according to the EIC but now probably closer to 55 cents per dozen. The progression of prices during 2023 to date is depicted in the USDA chart reflecting three years of data, updated weekly.

The March 13^th 2023 edition of the USDA Egg Market News Report documented a USDA Combined Region value rounded to the nearest cent, of $2.73 per dozen delivered to warehouses for the week ending March 7^th 2023. This average price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $2.63 per dozen. At the high end of the range, the price in the South Central region attained $2.82 per dozen. The USDA Combined Price last week was approximately $1.50 above the 3-year average. This past week Midwest Large was approximately $1.35 above the corresponding week in 2022.

Flock Size 

The USDA adjusted the estimate of flock size to reflect depopulation of more than 31.1 million hens through June 6^th as a result of the spring wave of HPAI with subsequent depopulation of approximately 14 million additional hens in Ohio, Colorado, Iowa, Oregon and South Dakota in the fall wave by late-December. According to the USDA the number of producing hens reflecting March 15^th (rounded to 0.1 million) was down 1.1 million (0.4 percent) to 300.3 million. The total U.S. flock includes about 3.0 million molted hens due to come back into production with approximately 4.0 million new pullets reaching maturity each week based on USDA chick hatch data. The increase is offset by routine flock depletion in addition to past losses during 2022 due to the HPAI epornitic. Based on inventory level and prices the hen population producing eggs should now be in mild undersupply relative to consumer demand. Industrial and food service off-take although increasing, has not reverted to pre-COVID levels. Prices will continue to fluctuate, trending mildly upward during the remainder of March and into April 2023. Prices of shell eggs and products will also depend on any future incident outbreaks of HPAI offset by the contribution of new pullets and of molted hens to supply.

According to press reports, Chick-fil-A is developing a long-term plan to expand into Europe and Asia.  The Chick-fil-A brand has apparently benefited from increased sales reported to have quadrupled over ten years, although the family-held company does not release sales or financial data.

Chick-fil-A operates eight stores in Canada but has little experience in overseas international markets. An initial entry to the U.K with a trial location in university city, Reading, Berks. was a disaster and the location was forced to close after three months. Any foray into either Europe or Asia would compete directly with established chains including Yum Brands’ KFC, Burger King and McDonald’s Corporation. Expansion into Asia would even be more complicated and would require a substantial partner in each nation selected.

According to Technomic, Chick-fil-A has expanded to approximately 3,000 U. S locations with sales per unit far in excess of competitors’ locations.

Under the leadership of Andrew Cathy, CEO and third-generation executive, it is possible that Chick-fil-A could develop an appropriate culture conducive to international operation and attract managers with relevant experience.  The question arises as to whether Chick-fil-A has sufficient flexibility to adapt to different business models and consumer tastes in markets to which they aspire.

In an March 9^th release, BJ’s Wholesale Club Holdings (BJ) announced fourth quarter and FY 2022 results for the period ending January 28^th 2023.  The company posted net income of $129.8 million on total revenue of $4,930 million with an EPS of $0.95  Comparable values for the fourth quarter of FY 2021 were net income of $107.6 million on revenue of $4,358 million with an EPS $0.78. During the  fourth quarter BJ’s attained a gross margin of 18.3 percent (18.3 percent in Q4 FY 2021) and an operating margin of 4.2 percent (3.6 percent Q4 FY 2021). For the fourth quarter, comparable club sales, excluding fuel, increased by 8.7 percent. Digital sales increased by 22 percent.

For FY 2022 net income was $513.2 million on revenue of $19,315 million with an EPS of $3.76. During the fourth quarter of FY 2021 net income was $426.7 million on revenue of $16,667 million with an EPS of $3.09.

In commenting on results, Bob Eddy, president and CEO stated, 2022 was a record year, having surpassed $1 billion in Adjusted EBITDA for the first time in the Company’s history,” Eddy, added “Our membership base is stronger than ever with our tenured renewal rate reaching an all-time high of 90 percent. Our continued focus on value has driven traffic and market share gains all year. Our digital business is growing and we’re successfully expanding our footprint. The investments we continue to make in our Company position us well for long-term growth and sustainable value creation.”

Guidance for FY 2023 included a 4 to 5 percent increase in comparable store sales; a 40 basis point improvement in gross margin but with a flat EPS. BJ’s will spend $450 million on capital expenditure.

Effective Janury 28^th 2023, BJ’s posted total assets of $6,350 million including $1,124 goodwill and intangibles and carried long-term debt and lease obligations of $2,701 million.  BJ’s had a market capitalization of $9,900 million on March 14^th. The share has traded over the past 52 weeks from $51.45 to $80.41 with a 50-day moving average of $71.61.  BJ’s closed at $74.34 on Wednesday 8^th March, pre-release, opening on Thursday 9^th March at $78.48.  BJ’s trades with a forward P/E of 19.7.  For the trailing-12 months the company posted an operating margin of 3.8 percent and a profit margin of 2.7 percent.  The company returned 7.7 percent on assets and 60.7 percent on equity over the past twelve months.

BJ’s has contracted with Simbe Inc. to deploy Tally robots with a complementary integrated inventory control system in all stores.

The company operates 237 warehouse stores with 165 fuel centers in 18 states.

The Black Sea Grain Initiative to allow Ukraine to export agricultural commodities from Black Sea ports negotiated in July 2022 will hopefully be extended after the March 18^th expiration by an additional 60 days.

The United Nations and Turkey are, once again, involved in discussions.

Russia through Deputy Foreign Minister Alexander Grushko, is bargaining for the lifting of restrictions on specified products including fertilizer.  Sanctions are obviously impacting the economy of the Russian Federation.

Continuing the shipment of wheat, corn, oil seeds and vegetable oils from Ukraine will restore balance between world supply and demand and ultimately depress prices for U. S. commodities.  This will especially be the case if major importers including China reduce orders and if Brazil and Argentine have sufficient surplus from a bountiful season to supply markets in Asia and Africa.

On Tuesday, March 28^th, Paul Kruse, former CEO of Blue Bell Creamery, will plead guilty to a food safety misdemeanor.  It is understood that the Court will impose a fine of $100,000.  An August 2022 trial of United States v. Paul Kruse ended in a hung jury (10 to 2) with the Department of Justice readying for retrial.

The charge relates to outbreaks of listeriosis acquired from contaminated Blue Bell ice cream. The charge, to which Kruse will plead guilty, included “introduction and delivery into interstate commerce, ice cream that was adulterated, rendering the product injurious to health”.

According to court testimony in the 2022 trial, Paul Kruse in his capacity of CEO was aware of contamination in Blue Bell production facilities and failed to take appropriate action to resolve the problem to avoid illness among consumers.  The Centers for Disease Control and Prevention conducted a retrospective investigation linking Blue Bell Creamery plants to sporadic Listeria outbreaks extending from 2010 to 2015.

Admittedly, the fraud committed by the Parnell brothers, responsible for extensive outbreaks of salmonellosis through shipping contaminated products from their Peanut Corporation of America plant, was far more egregious and resulted in extended prison terms for the owners of the enterprise.  Kruse can consider himself fortunate that although he is now a slightly less rich individual responsible for the loss of his family enterprise, he is free to live the rest of his life in retirement, unlike those who died from listeriosis.

As the current debate proceeds in the U. S. concerning proposed “Made in the USA” or “Product of the USA” labels to be applied to animals or poultry born or hatched and then reared and processed in the U.S., other nations are experiencing similar concerns.  According to a posting in Just Food by journalist Dean Best, the U. K. National Food Crime Unit is investigating allegations of mislabeling.  A grocery chain was advised by the National Food Crime Unit that it was under investigation for selling pre-packed sliced meat sourced from South America as a “Product of Britain”.

A spokesperson for the Agency notified the retailer after an investigation and all product was removed from shelves, based on the evidence presented.  The retail chain in question is cooperating with the National Food Crime Unit and regards the incident as an unintentional food fraud without food safety implications.

The incident in the U. K. raises the question of how the proposed U. S. label will be enforced with respect to beef.  There is no concern over chicken, given that 99 percent of both whole birds and parts labeled “hatched, reared and processed in the U. S.” with obvious supporting documentation and confirmation of source.

Whether the proposed label will become a reality is now in doubt, given the response of Canada. Our USMCA partner correctly recognizes the interconnectivity between U.S. and Canadian production.   Canada has advised that it will oppose the label considered to be contrary to the USMCA.  Mandatory country of origin labeling (COOL) was ruled contrary to the World Trade Organization rules and was withdrawn with the U.S. paying a tariff penalty following an adverse ruling by a WTO Dispute Panel.

According to a March 7^th posting by James Brugges on Inside Climate News, PureCycle Technologies has informed the U.S. Security and Exchange Commission (SEC) that the Annual Report for 2022 will be delayed.  The company is potentially in default on revenue bonds amounting to $250 million issued by public agencies to finance their recycling plant.

The completion of the facility scheduled for December 1^st, 2022, has been delayed. If completed and functional, the plant should eventually be able to recycle polypropylene applying a process developed by Procter & Gamble.

PureCycle intends to operate the initial plant in Ironton, OH. and then to expand operations to South Korea.

Construction of a plant within budget and on schedule is only part of the success for a recycling operation.  It is hoped that PureCycle has established a supply chain extending through collection, consolidation and transport to ensure a sufficient quantity of discarded plastic containers to allow viability of the proposed plant that will market post-user recycled plastic.

Ag Property Solutions based in Emmetsburg, IA. supplies innovative and customized solutions including planning, design, construction and equipping livestock facilities.  The Company was founded by producers and is proud of their record of integrity and efficiency.  Ag Property Solutions undertakes complete turnkey hog, dairy and poultry projects for a range of production capacities including expansion and remodeling.

The website www.agpropertysolutions.com describes the capabilities of the company and provides examples of completed projects. 

For further information contact Michelle Kubat, Marketing Manager mkubat@agpropertysolutions.com (855) 345-6333 ext. 103

Ag Property Solutions based in Emmetsburg, IA. supplies innovative and customized solutions including planning, design, construction and equipping livestock facilities.  The Company was founded by producers and is proud of their record of integrity and efficiency.  Ag Property Solutions undertakes complete turnkey hog, dairy and poultry projects for a range of production capacities including expansion and remodeling.

The website www.agpropertysolutions.com describes the capabilities of the company and provides examples of completed projects. 

For further information contact Michelle Kubat, Marketing Manager mkubat@agpropertysolutions.com (855) 345-6333 ext. 103

Michael Foods is offering a paid summer internship for a student interested in poultry health.  Mentors will provide guidance on necropsy, diagnostic specimen sampling, biosecurity and will provide a perspective on the veterinary specialty of poultry health.  Preceptorships will extend over three weeks and the summer internship for eight weeks.

For additional information contact Dr. Julie Kelly Julie.kelly@michaelfoods.com

Despite the Packers Sanitation Services scandal and an ongoing investigation of the possibility of trafficking of minors, the Iowa legislature is considering a series of bills that would legalize employment of minors.  Children under the age of 18 would be ineligible for employment in meat-packing or rendering plants or be placed in locations where they would be required to operate potentially dangerous machinery.

Employment of minors is viewed as a partial solution to availability of labor but provisions of proposed laws could lead to exploitation.  Bills under consideration would exempt employers from civil liability if a child is injured or undergoes harm attributed to negligence on the part of the employer.  Penalties for noncompliance would be capped at $10,000 per infringement.

Arkansas has enacted the Youth hiring Act of 2023 that generally weakens protection for underage workers. Those under 16 years of age no longer require permission from the State Department of Labor following certification of age, parental permission and a description of intended work. Relaxation of oversight could lead to exploitation and trafficking.

The proposed child labor bills have engendered criticism and opposition from parent groups and predictably unions.

If Charles Dickens were still alive he would be able to write on the consequences of recent child labor bills.

Negotiations to resolve the unjustified ban on GMO corn proposed by the president of Mexico Andres Manuel Lopez Obrador in 2020 is inexorably progressing towards an USCMA dispute process. Negotiations by the USDA and the Office of the U.S. Trade Representative (USTR) meeting with their counterparts in Mexico have failed to resolve the issue.

On Monday, the USTR initiated a formal consultation that requires a meeting within 30 days.  If consultations do not result in an amicable resolution, a Dispute Panel will be appointed with nominees suggested by both the U.S. and Mexico.  The elected panel will review scientific evidence, and gather oral and written testimony from both parties.  Following the decision of the Dispute Panel, the party violating obligations under the USMCA will be obligated to settle, failing which tariffs could be imposed on trade.

Legislators view the decision by Mexico to ban imported GM corn as a potentially serious barrier to exports, even if only confined to Mexico, our largest single customer.  Accepting a ban would be acknowledge that GM corn was in some way deleterious to conventional cultivars.

Over 90 percent of U.S. corn is derived from GM varieties and bans on GM commodities if they were to spread to other importing nations would impact the balance of trade and sharply reduce revenue obtained by farmers. Lower exports would reduce the input cost of feed for U.S.  livestock production. This makes the dispute with Mexico more than of academic or legal interest.

Bioceres Crop Solutions of Argentine will market GM wheat, tolerant to drought for the 2023 planting season.  This action follows approval in Brazil and will certainly advance the adoption of GM wheat and other crops worldwide.

Approval of GM drought-tolerant wheat is justified by the impact of dry weather on the 2022-2023 crop in Argentine and the reality of global warming that will impact future harvests.

Consumption of GM corn or products derived from GM soybeans has not evidenced any deleterious effect including allergies or toxicities for over two generations since introduction.  Growing concerns over feeding burgeoning populations and the reality of climatic extremes serve as motivators for adoption of GM cultivars.

Naysayers including Greenpeace and recently, the president of Mexico, can neither provide scientific evidence of undesirable effects from GM crops nor provide an alternative to enhance yields.

The March 10^th edition of USPOULTRY Wire featured Kuhl Corporation, a long-term exhibitor, for their Daily Spotlight.

Kuhl Corporation, a sponsor of EGG-NEWS, is a manufacturer of automated cleaning equipment and a range of egg washers compatible with Moba grader installations.  Kuhl Corporation, a third-generation company enjoys the confidence of the egg-production industry through quality, fair pricing and efficiency of equipment.  For further information click on to the Company logo on the right side of the Welcome page. 

REVIEW OF FEBRUARY 2023 EGG PRODUCTION COSTS AND STATISTICS.

FEBRUARY HIGHLIGHTS

• February 2023 USDA ex-farm blended USDA nest-run benchmark price was 213.8 cents per dozen, down 34.5 percent from the January 2023 value of 326.4 cents per dozen. For comparison average USDA benchmark price for 2022 was 236.1 cents per dozen with a range of 191.1 cents per dozen in June to a high of 439.1 cents in December. Stock levels and prices prior to the onset of flock depletion due to HPAI indicated a relative seasonal balance between supply and demand. Prevailing wholesale prices will be largely dependent on future consumer demand in an inflationary environment. Other considerations include diversion to shell sales from the egg-breaking sector and fluctuation attributed to the amplification of changes in unit wholesale price due to the price discovery system. A significant decline from unseasonal current levels is anticipated into mid- 2023 unless additional depletion of flocks occurs due to HPAI.
• February 2023 USDA average nest-run production cost was up 1.4 cents per dozen (1.7 percent) compared to January 2023 attaining 85.3 cents per dozen, mainly attributable to a 2.4 percent higher average feed cost per dozen.
• February 2023 USDA benchmark nest-run margin attained a positive value of 125.5 cents per dozen compared to a margin of 242.5 cents per dozen for January 2023. Average nest-run monthly margin for 2022 was 155 cents per dozen.
• January 2023 national flock in production (over 30,000 hens/farm) was up 0.14 percent or 0.4 million hens to 291.4 from the December 2022 value of 291.0 million. Approximately 2.5 million hens returned to production from molt in January together with projected maturation of 24.0 million pullets, with this number offset by depletion of spent flocks. From February through mid-December 2022, approximately 44 million hens were depopulated to control HPAI.
• January 2023 pullet chick hatch was down 7.8 percent or 1.9 million from December 2022 to 22.3 million.
• January 2023 exports of shell eggs and products combined were down 23.5 percent from a low volume in December 2022 to 323,700 case equivalents representing the theoretical production of 4.6 million hens.

TABLES SHOWING KEY PARAMETERS FOR FEBRUARY 2023.

Summary tables for the latest USDA February 2023 prices and flock statistics made available by the EIC on March 10^th 2023 are arranged, summarized, tabulated and compared with values from the previous February 10^th 2023 posting reflecting January 2023 costs and production data.

COSTS & REVENUE

Components of USDA 6-Region 1^stCycle nest-run Cost of Production:-

Note: 1. Rounded to decimal of a cent

* Adjusted January 2022 and used as a rounding factor

In a March 6^th 2023 Statement issued by the White House, the President will veto H.J. Resolution 27 to disapprove the “Revised Definition of Waters of the United States-Final Rule” if passed.

The Administration pointed to the benefits of the revised WOTUS definition that reverts largely to 1986 regulations with appropriate updates and exclusions. The White House maintains that reversion to a pre-2015 definition will be beneficial and will prevent uncertainty if disapproved.

During the past week, in defiance of the White House a bill was passed by a margin of  227 to 198 with the support of Democratic Party members of the Agricultural Committee and House.  The Bill expressed Congressional disapproval of the revised definitions of WOTUS citing Chapter 8 of Title 5 of the United States Code.

The issue in any event is subject to review by SCOTUS with a ruling on the legality of the revised definition to be handed down during the 2023 session.

According to Keith Dailey, Group Vice-President of Corporate Affairs and Chief Sustainability Officer, Kroger is advancing goals initiated in 2006 by investment in energy efficiency. Projects include adoption of renewable energy and installation of refrigerant technology to mitigate emissions from stores and warehouses.

Progress to date includes:-

• Compared to 2018, the company has achieved a 9.1 percent cumulative reduction in greenhouse gas emissions.
• Installed refrigerant leak detection in 2,000 of the company’s retail stores.
• Reduced food waste in retail stores by 19 percent since 2017.
• Initiated a baseline product packaging evaluation in 2022.
• Reduced water consumption by 10 percent by 2021.

Kroger is replacing older vehicles with more fuel-efficient models, improving efficiency by 18 percent.  The company is installing solar arrays at 15 locations and is evaluating anaerobic digestion technology to dispose of waste.

In cooperation with suppliers, Kroger intends extending the program of sustainability.  This will include:-

• A 30 percent reduction in greenhouse gas emissions by 2030 over a 2018 baseline.
• Attaining zero waste.
• Introducing sustainable packaging, including a 100-percent recyclable, compostable or reusable material for Our Brands by 2030.
• Establishing reusable packaging platforms in conjunction with Loop.
• Elimination of single-use plastic grocery shopping bags by 2025.

It is evident that Kroger will require suppliers to parallel their investment and activities in sustainability and enhanced packaging.  Given that Kroger will ultimately acquire the Albertson’s banners, the combined enterprise will represent a significant volume of 5,000 stores nationwide.  The implication of the move by Kroger and paralleled by Walmart, Target and other major retailers is that commensurate investment in power generation and adoption of policies and procedures that reduce greenhouse gas emission will be necessary to continue supplying to Kroger and other chains.  It is questionable whether retail chains will offer a premium for meeting sustainability goals. They are however all intent on burnishing their environmental credentials, inevitably at the expense of suppliers.

A new Bröring Model BIT PS 4.0 IOT scale with Bluetooth and Wi-Fi capability is available.  This unit was imported from Germany for display at the IPPE.  The scale is complete with the reinforced carrying case handbook and accessories. 

Deeply discounted. 

For additional details contact <sshane@nc.rr.com>. (919) 806 8695.

Egglife Foods, Inc., a Chicago-based producer of egg-white wraps, has announced a partnership with Indiana-based HATCH for Hunger (HATCH). This non-profit provides eggs and egg products to food banks nationwide together in association with the American Egg Board.

Andrea Schwenk CMO of Egglife Foods stated "This partnership will take meaningful steps to alleviate the stress food insecurity brings to people across the nation, especially those with dietary constraints. "Danny Leckie, Executive Director of HATCH commented "We believe that the path to food security is fueled by eggs and all they offer. It is not just about providing people with food, it is about the right food”.

HATCH and Egglife will continue their cooperation to supply food banks across the country providing fresh protein options to those in need. The two organizations were joined in their charitable efforts by Rose Acre Farms, Inc., the Nation’s second largest egg producer and a long-time supporter of HATCH.

Amazon.com has announced an impending closing of eight Amazon Go convenience stores located among New York City, Seattle and San Francisco.  A company spokesperson stated, "Like any physical retailer we periodically assess our portfolio of stores and make optimization decisions along the way.  In this case we've decided to close a small number of Amazon Go stores but remain committed to the format operating twenty stores across the U.S."

Amazon CEO Andy Jassy is implementing a program of reducing expenses by relinquishing warehouses and laying off as many as 18,000 workers following a retraction in E-Commerce attributed to national recovery from COVID.

Amazon has struggled to gain a significant presence in the grocery market since acquisition of Whole Foods Market in 2017 for $14 billion. Since this time Amazon has experimented with a range of store sizes, banners, technologies and locations without apparently achieving profitability in the face of competition.

House File 377 introduced by Representative Jeff Shipley intended to ban foods containing GM products, lab-grown protein and insect protein in school feeding.  The bill also incorporated provisions for labeling plant-based protein. The bill was rejected by a subcommittee of the Iowa House of Representatives based on the basis of impracticality.

Legislators at state level frequently propose and sponsor bills that favor agricultural products despite obvious conflicts with constitutional requirements.  These "feel good" bills are intended to generate support among constituents and are intended to burnish the "pro-farm” credentials of incumbents.

The Ministry of Agriculture of China has authorized planting of 650,000 acres of GM corn in 2023.  This is a radical departure from orthodox policy that prevented legal planting of GM varieties of corn and soybeans.  Currently, most of the cotton grown in China uses GM cultivars and illegal cultivation of GM corn is a non-discussed reality.  According to an article in The Economist on February 25^th, corn yields in 2020 averaged 100 bushels per acre compared to  176 bushels per acre in the U.S. in 2021.

Although China was at the forefront of applying genetic modification to tobacco in the 1990s, the technology was never applied to domestic crops for food and livestock.  It is a matter of record that China is the largest importer of corn and soybeans with product imported from the U.S. subject to strain-by-strain approval.

China recognizes the inherent advantages of GM crops, and it is evident that the Government has made a decision to allow legal domestic cultivation in order to improve productivity.  Opposition to Government policy based on sentiment and unsupported by economic or scientific reality does not progress very far in China.

The Russian Union of Poultry producers (Rosptitsesoyuz) has revealed a new policy relating to nationwide vaccination against Highly Pathogenic Avian Influenza (HPAI).  Despite application of structural and operational biosecurity, the government-controlled poultry association regards vaccination as a necessary adjunct to existing control and prevention measures. 

An official statement included, “ Poultry farmers cannot protect birds from airborne infection and it is also impossible to prevent rodents infected with the virus from entering production sites and even the spread of feces of infected birds over poultry farms.  Poultry farmers cannot control factors outside poultry farms, roadway stations, forest, swamps and other factors that contribute to the spread of the virus.”

It is noteworthy that implicit in the decision by the Russian Poultry Association to “encourage” vaccination is the recognition that HPAI can be disseminated by the aerogenous route and that virus is present in the environment of poultry farms from shedding by migratory and possibly, domestic birds.  Although the statement implicates rodents as introducing virus onto farms, it is now recognized that numerous terrestrial mammals are susceptible to infection and could be involved in transmission of infection.

Russia has made the decision to introduce vaccination, given the high probability of losses that will result from infection introduced into many extremely large, integrated broiler production units located on a single tract of land.  Although new facilities have been erected following the pattern of E.U. and U.S. layouts, a number of Communist-era complexes are still functional. These have parent flocks, a hatchery, grow-out and processing all located on a single tract of land, creating an all-or-nothing situation with the high risk of introduction of infection with severe financial consequences.

It is also apparent that Russia recognizes that as HPAI is now endemic, it will be unable to satisfy domestic demand for poultry meat, the principal animal protein applying existing modalities of prevention. This is based on current international sanctions and the need to conserve foreign currency. The Government of the Russian Federation recognizes the inherent principle expounded by Huey Long, Governor of Louisiana during the 1930s, that political stability is dependent on a chicken-in-every-pot.  The Government is obviously concerned over potential criticism and anti-war agitation should the comrades be deprived of chicken.

The Opportunities for Fairness in Farming Act introduced by Senators Mike Lee (R-UT), Elizabeth Warren (D-MA), Rand Paul (R-KY) and Cory Booker (D-NJ) is intended to limit the alleged improper action by administrators of checkoff programs with special reference to the beef industry.  Over the past decade, there have been numerous legal actions and concerns relating to the various checkoff programs at the state and federal levels.

The Ranchers-Cattlemen Action Legal Fund-United Stock Growers of American (R-CALF USA) support the Bill.  In contrast, the National Cattlemen’s Beef Association (NCBA) is opposed to the proposed legislation. This industry association claims that the bill was promoted by activists and dissident producers and that the existing checkoff program is supported by the majority of cattle farmers.  This is evidenced by the 2021 vote strongly supporting the existing checkoff.

The Bill would regulate all federal checkoff programs and would include:-

• Prohibiting contracts with any organization that lobbies over agricultural policy.
• Establishing uniform standards for checkoff programs.
• Intensifying audits for compliance with relevant USDA oversight regulations.
• Promoting transparency with respect to expenditure of checkoff funds.

It is apparent that the proposed legislation arises from disagreements within the beef industry.  In contrast there has been complete harmony within the egg industry with respect to checkoff funding, although a proposal to increase the rate was not approved over a decade ago.  Given the recent review of the benefit to expenditure ratios by a Cornell University agricultural economist, the American Egg Board could consider a rise in the checkoff rate, especially given the present level of profitability in the industry.

To justify an increase, the AEB would have to demonstrate that their activities through promotion, outreach and research actually increase the per capita consumption of eggs.  It is no longer adequate to claim that in the absence of promotional activities by the AEB that consumption would decline

In response to epidemiologic evidence that excess sugar intake is deleterious, especially for children, the Food and Drug Administration is proposing label rules that would effectively prevent cereal manufacturers from claiming that their products are “healthy”.  This action follows initiatives to reduce sugar and salt content of foods, especially those for children.  Similar action is contemplated in Germany.

Predictably General Mills, Kellogg and Post Holdings have threatened legal action to oppose the FDA proposal claiming violation of First Amendment rights.  Collectively, the cereal companies claim that 95 percent of major ready-to-eat cereals would be unable to make a “healthy” claim.  The manufacturers stated, “Ready-to-eat cereal is recognized for its value and nutritional benefits in federal feeding programs that reach more than 20 million participants who are nutritionally at risk. 

There is obviously nothing essentially “unhealthy” concerning cereal.  The problem arises from the addition of excessive quantities of sugar that provide empty calories and may predispose to diabetes and metabolic syndrome.  In contrast to cereals with excessive sugar, parents should consider egg dishes for breakfast and snacks to provide a balance of amino acids, minerals and vitamins with a low caloric intake.

Effective May 1^st, Dr. Frank Siewerdt will assume the position of Head of the Prestage Department of Poultry Science, North Carolina State University.

Dr. Siewerdt is a native of Pelotas, Brazil where he obtained his Baccalaureate degree in agronomy and a Master’s degree in animal genetics.  He subsequently obtained an MBA from the University of Arkansas and then a Ph. D. in genetics and statistics from NC State.  Among his many accomplishments, he is a U. S. Chess Federation Candidate Master and has completed three marathons.

His career experience includes working as a Research Geneticist at Perdue Foods and subsequently, at Cobb-Vantress where he was Senior Director of Genetics.  He has served as a Genetics Officer for the United Nations Food and Agricultural Organization and was a Program Leader in the Division of Animal Systems within the National Institute of Food and Agriculture.

In welcoming Dr. Siewerdt, the Interim Dean of the College of Agriculture and Live Sciences, Dr. John Dole stated, “We are excited to have Dr. Frank Siewerdt join CALS as the Head of the Prestage Department of Poultry Science.  He brings a wealth of experience from his diverse roles in industry, government and academia to lead the Department and contribute to the state’s largest agricultural industry.”

Art Schapp, a dairy farmer in Clovis, New Mexico, recently was obliged to depopulate his herd of 3,250 milking cows.  Those in the egg industry who have been affected by HPAI know the emotional pain and financial hardship following destruction of flocks and business interruption.

In the case of Highland Dairy, contamination of ground water from the adjacent Clovis Airbase resulted in levels of per- and polyfluoroalkyl (PFAS) compounds at a level of 37,000 ppt against the standard of 70 ppt.  The PFAS contamination of wells was due to a long-term application of fire-fighting foam at the adjacent airbase.  Consumption of contaminated water by a dairy herd will result in violative levels in milk, necessitating herd depletion.  Under the circumstances, it is doubtful whether Schapp will ever be able to resume dairy farming at Highland.  At least, egg producers can decontaminate and restock after HPAI.

Eat Just the latest iteration of a series of companies founded by Josh Tetrick has announced that 45 employees out of a total workforce of 260 will be laid off.

Just Egg recently announced that it had achieved parity in production cost with conventional eggs, although this was a hollow claim based on an unprecedented rise in wholesale price during January and also inaccurate.  Given the subsequent trend in restoration of normality in the price structure for liquid and shell eggs, Eat Just will now be competing once more at a price disadvantage.

Given a shelf price of $4.99 for a 12 oz. container of Just Egg the product is clearly non-competitive against conventional shell eggs. It is calculated that the product is 4.1 times as expensive as the liquid from a dozen large eggs at $2 per dozen, 2.7 times at $3 per dozen and 2.1 times with eggs priced at $4 per dozen.

According to a statement by Andrew Nyes head of Global Communications and Public Affairs, the Company sold the equivalent of 360 million eggs over the past 12 months.  This represents the output of 1.2 million hens placing the market share of Just Egg at slightly less than 0.4 percent of all eggs produced.  Nyes confirmed that Eat Just is not profitable and the reduction in workforce is intended to reduce the cost of production together with other initiatives.  Despite the positive spin placed on the reduction in labor force, it is clear that the market for Just Egg and other plant-based substitutes is limited. This is a long way from the unsubstantiated boast made by Tetrick decades ago that his products would displace conventional egg production from hens. Even following depopulation of 44 million hens in 2022 the U.S. had 303 million hens in production last week.

On March 2^nd Costco Wholesale Corporation (COST) posted results for Q2 of FY2023 ending February12^th. This big-box club chain serves as a bellwether for hybrid retail in-store and on line spending and is a barometer of consumer confidence, offering groceries, household necessities in bulk in addition to discretionary recreational and electronic items.

For the quarter, the Company earned $1,466 million on revenue (including fuel and membership fees) of $55,266 million with a diluted EPS of $3.30. For the corresponding Q2 of FY2022, Costco earned $1,299 million on equivalent revenue of $51,904 million with a diluted EPS of $2.92.  Revenue was 6.1 percent higher than in Q2 of FY2022 and net earnings rose by 12.8 percent. Gross margin for Q2 FY2023was unchanged from the corresponding Q2 at 12.3 percent. Concurrently operating margin fell from 3.5 percent in Q2 FY2022 to 3.4 percent for the most recent quarter associated with increased freight, transport, wages and utilities.

Comparable same-store sales for Q2 2023 (excluding fuel and foreign exchange) attained 5.2 percent. U.S. same store sales were up 5.7 percent; Canada by 3.5 percent and the Other International category, 3.8 percent. E-Commerce was down by 11.2 percent

On February 12^th Costco posted total assets of $66,848 million. Long-term debt and lease obligations attained $11,533 million. Costco had an intraday market capitalization of $212,400 million on March 3^rd. COST trades with a forward P/E of 33.3 and has ranged over the past fifty-two weeks from $406.51 to $612.27 with a 50-day moving average of $486.90. Costco closed pre-release at $488.50 on March 2^nd but declined sharply on the open on March 3^rd closing at $$475.26 at close of trading. COST beat consensus of $3.21 EPS on the bottom line but was light on expected sales of $55,5000 million. This was attributed to lower volume in big-ticket items according to CFO Richard Gallanti.

Twelve-month trailing operating margin was 3.4 percent and profit margin 2.6 percent.  The Company generated a return on assets of 7.4 percent and 29.3 percent on equity.

At the end of Q1 FY2023, Costco operated 848 warehouses. There are 584 in the U.S; 107 in  Canada; 40 in Mexico; 31 in Japan; 29 in the U.K. and 57 others in seven nations among the E.U., Asia and Australia.

Naturipe and Driscoll’s rely on PET clam-shell packaging for their range of berries. These market leaders in fruit along with egg producers maintain that PET containers are currently an effective packaging option.  PET containers protect products, are attractive at point of sale and extend the shelf life of berries compared to alternative materials.

Naturipe is promoting recycling of packaging and has included “How2Recycle” on labels.  The use of PET is regarded as sustainable if packs are recycled to post-user plastic material.  Although major chemical companies are installing recycling plants, there are extensive gaps in the chain from consumer to plant mainly due to deficiencies at the municipal collection and separation level.  The problems faced by the producers of berries are in this respect common to the egg industry where PET packaging is widely used but is disfavored by some consumer who are unaware of the possibility of recycling.

The availability of food and the growing problem of starvation was raised at the recent four-day meeting of the Workers Party of North Korea. In response, the Nation’s dictator, Kim Jong Un vowed to increase production of grains and other commodities.  He issued an ominous statement that “In order to attain the gigantic long-term objective of rural development it is necessary to decisively strengthen the party guidance over the agricultural sector and improve the rural party work.”  This approach is eerily reminiscent of Soviet-style collectivization in the 1930’s that led to famine and mass mortality.

If the hermit nation applied resources and personnel to improving the lifestyle of their people and joining in the world economy, they would be in a more favorable situation.  Investing in armaments and maintaining a nuclear program has not created greater security for the nation but it has contributed to the longevity of the three generation dynasty ruling North Korea including the eleven-year tenure of Kim Jong Un.

Agricultural efficiency in both Russia and China benefited from relaxation of central government control allowing initiative and free enterprise albeit in a limited manner with inefficiency and institutional corruption. Limited free-enterprise allowed these nations to be less reliant on imports and in the case of Russia to export wheat.  Strengthening central government control will only exacerbate the low productivity within North Korea and add to misery of its population and the eventual downfall of the regime.

Following the Regan-Udall review of the structure and operation of food-related aspects of the U.S. Food and Drug Administration, Dr. Robert Califf (pictured right), Commissioner of the Agency has proposed a matrix management structure. This is common in the private sector that operates with demanding performance standards. Dr. Califf considers this to be inappropriate to government service. Is this a tacit admission that he considers his personnel to be unmotivated, indolent or lacking in commitment? Criticism of the proposed FDA reorganization is centered on the foods program with indistinct lines of authority that in the past have facilitated the emergence of a silo mentality contributing to problems manifest in deviations from optimal food safety and security. 

Critics of the proposed organization include Roberta Wagner, Vice president of Regulatory and Technical Affairs for the Consumers Brands Association, Brian Ronholm, Director of Food Policy for Consumer Reports and other industry association including the American Frozen Food Institute. Qualified observers together with the Regan-Udall reviewers all advocate for centralization under a competent Deputy Commissioner with line authority over subordinate sections tasked with research, regulation and policy relating to food. It is now up to Congress to take note of criticism and to exert pressure on the FDA to adopt a more consolidated approach to the food component of their mission

EGG-NEWS has frequently commented that the “F” in the Agency title is subordinate to the “D” dealing with drugs and medical devices. This is evidenced in negligence in addressing food related public health problems including obesity, salt, sugar and fat levels in foods. The Agency has neglected to regulate production facilities leading to the infant formula crisis, outbreaks of foodborne infections attributed to leafy greens, heavy metal contamination of fruit juices and outbreaks of salmonellosis, listeriosis and campylobacteriosis.

Congress and the FDA will continue to play ping-pong until a new Food Safety Agency is created, analogous to the EPA. In addition this new entity must of necessity incorporate the current regulatory aspects of red meat and poultry traditionally under the purview of the USDA-FSIS. This would be a radical but ultimately effective solution to an ongoing problem of divided jurisdiction.

Supermarket chain, Publix, a privately held, employee-owned corporation, released limited Q4 and FY 2022 financial data on March 1^st for the period ending December 31^st 2022.  Sales for Q4 attained $15,300 million, up 22 percent from Q4 2021 at $12,750.  Net earnings were $1,300 million compared to $1,050 million in Q4 of 2021. Earnings per share attained $0.38 compared to $0.31 in Q4 2021. Comparable same store sales were up 12.4 percent compared to Q4 of 2021.

Sales for 2022 attained $54,500 million, up 13.6 percent from 2021 at $12,750.  Net earnings were $2,918 million a decline of 33.9 percent compared to $4,412 million in 2021. Earnings per share attained $0.86 compared to $1.28 in 2021.

According to the Publix SEC Q-10 submission, total assets on November 1^st were $30,347 million with long-term debt and lease obligations of $3,014 million.

Share price was adjusted upward from $13.19 to $14.15 on March 1^st.

In commenting on results Todd Jones, CEO stated, “I'm proud of our operating results and pleased with our stock price increase. I want to thank our associates for continuing to deliver premier customer service.”

The American Egg Board (AEB) circulates Nielsen retail sales data as a service to the industry. The latest report released March 1^st reflected 52-week rolling sales and consumption of eggs and egg products for the period ending December 31^st 2022.  Nielsen data captures a proportion of retail volume and sales value of shell eggs, consumer-packed liquid and hard-boiled peeled eggs. Data is derived from supermarkets, groceries, Dollar outlets, drug and convenience stores all with annual sales in excess of $2 million. Some club warehouses provide data but Costco is excluded.

The data assembled by Nielsen and distributed by the AEB for the past 52-weeks through the end of 2022 documented sales of 3,139 million dozen egg-equivalents in all retail presentations over the 52-week period. This represents 40.7 percent of potential egg production updated on February 8^th by the USDA for calendar 2022 totaling 7,719 million dozen eggs contributing to shell, liquid and exports. According to USDA data the shell-egg segment of the industry comprised 69.2 percent of all U.S. hens held for egg production over 2022.

• For the 52-week period in 2021-2022, retail sales of all shell-egg categories (shell, consumer liquid, hard boiled) all expressed as egg-equivalents was constant despite higher prices.  Dollar value was 47.8 percent higher to $9,787 million. Assumed per capita consumption in 2022 attained 277.5 eggs representing a 1.1 percent decrease from the 2021 period as a result of flock depletion due to HPAI but with depressed sales during 2021 as a result of COVID restrictions. Direct price comparisons are distorted by the late March and April 2020 panic buying in response to COVID and unprecedented price rises in the third and fourth quarters due to HPAI. Projected per capita consumption in 2023 will rise to 289 eggs in all forms

• On a rolling 52-week basis, the volume captured by Nielsen comprising retail shell-egg sales attained 3,013 million egg-equivalent dozens. Shell egg value at retail was $9,258 million with an average 2022 unit value of $3.07 per dozen. Egg alternatives including liquid, frozen and powdered egg products converted to equivalent dozens attained 90.5 million dozen equivalents, a 4.2 percent decrease over the previous 52-week period but with a 6.9 percent increase in value to $325.5 million corresponding to a unit value of $3.60 per dozen. Rolling 52-week hard-boiled peeled egg sales attained 35.9 million dozen, with a 4.6 percent increase in volume and a disproportionate 25.7 percent increase in value to $203.1 million compared to the previous 52-week period reflecting unit price of $5.66 per dozen in 2022.

• In classifying retail sales by product segment, conventional  (caged) eggs represented 72.9 percent and cage-free 17.6 percent. Free-range and pastured combined amounted to 9.6 percent. This figure is however based on loose and inconsistent definitions of these categories of housing with evident deficiencies in capture of sales data. Rolling 52-week conventional (non-organic) egg sales decreased 8.8 percent in volume but were 50.8 percent higher in value.

• The report indicated that 7.0 percent of shell eggs were marketed under the USDA Certified Organic seal almost unchanged in volume but 57.6 percent in value.

• With respect to volume of other than generic shell eggs, 52-week rolling branded egg sales comprised 30.2 percent of retail sales compared to 69.8 percent for private label.  Branded eggs generated 37.9 percent of dollar value compared to private label at 62.1 percent.  Branded eggs increased by 3.9 percent in volume and 35.0 percent in value over the past 52 weeks.

• In analyzing retail channels for shell eggs, 2022 values compared to 2021 documented that sales by supermarkets and groceries (57.5 percent of sales volume) decreased by 2.6 percent, drugstores (0.1 percent of sales) lower by 38.1 percent, convenience stores (1.1 percent of sales volume) were down by 4.4 percent and the combination of club stores and dollar stores (41.2 percent, excluding Costco, an important deletion given their volume) increased by 4.4 percent presumably with the largest contribution from big-box club stores other than Costco.

• Average retail price during December 2022 was $4.22 per dozen compared to $1.98 per dozen in December 2021.

• Egg servings at QSRs during the 4^th quarter of 2022 increased by 8 percent

• LEAP Analytics projected an egg-producing flock of 330 million at the end of December 2023 (307 million from the Egg Industry Center model) with 122 million hens in other than conventional cages.

• The LEAP projections for wholesale Midwest Large were $1.50 per dozen in June 2023 and $1.30 in December 2023. These values assume restoration of flock size in the absence of flock depletion due to HPAI

The Student Careers program will take place on April 12th during the Peak 2023 Convention organized by the Midwest Poultry Federation. The event allows students and prospective employers to interact.

Students and instructors at technical, community colleges and traditional four-year universities are eligible to apply for internships and to consider career opportunities on graduation.

The program is sponsored by Cargill Inc. and is complimentary for students and instructors registered for the Convention.

For additional information access <info@midwestpoultry.com>

On March 2^nd The Kroger Company (KR) posted results for Q4 and FY 2022 ending January 28^th 2023.  Kroger is the second largest retailer of groceries in the U.S. and is a pure supermarket play subject to the pressures of an escalation in food costs, logistics and labor and the impact of inflation in common with national and regional competitors. Kroger has announced the intention of acquiring competitor Albertsons Cos. Creating an enterprise with 5,000 stores but this will be subject to FTC and DOJ approval.

 For the quarter, Kroger earned $450 million on revenue of $34,823 million with an EPS of $0.62.  For the corresponding Q4 of FY 2021, Kroger earned $566 million on sales of $33,048 million with an EPS of $0.64.  Revenue was 5.4 percent higher but gross margin decreased by 1.8 percent to 21.8 percent compared to Q4 2021. Operating margin declined 7.2 percent to $826 million from $965 million in Q4 of 2021.

For FY 2022 Kroger earned $2,244 million on revenue of $148,258 million with an EPS of $3.06.  For FY2021, Kroger earned $1,655 million on sales of $137,888 million with an EPS of $2.17.  Revenue was 7.5 percent higher than in 2021(mainly due to inflation) but gross margin decreased by 2.7 percent to 21.4 percent compared to 2021. Operating margin was 18.6 percent from 2021 to $4,126 million

In commenting on quarterly results, Rodney McMullen CEO stated, "Kroger achieved exceptional results in 2022 as we executed on our Leading with Fresh and Accelerating with Digital strategy, building on record years in 2020 and 2021”. He continued “We appreciate our associates for remaining customer-focused, delivering the products customers want, when and how they want them, with zero compromise on quality, convenience and selection. Our associates enable our success, and we are committed to investing in theirs by continuing to improve wages, comprehensive benefits and career development opportunities”.

He conclude “Our proven go-to-market strategy enables Kroger to successfully navigate many operating environments. We believe that by delivering value for our customers, investing in our associates and serving our communities, Kroger will continue to achieve attractive and sustainable total returns for our shareholders."  

The Company release included FY 2023 Guidance:- 

• Identical Sales growth of 1.0 to 2.0 percent 
• Adjusted EPS of $4.45 to $4.60 
• Adjusted Operating Profit of $5.0 billion to $5.2 billion
• Capital expenditure of $3,400 to $3,600 million
• Adjusted free cash flow of $2,300 million to $2,500 million

Comparable same-store sales for Q4 increased by 6.2 percent (excluding fuel) compared to Q4 FY 2021. “Our Brands” increased by 10.1 percent and digital sales were up by 12.0 percent.

On January 28^th Kroger posted total assets of $49,537 million of which $3,815 million comprised goodwill and intangibles. Long-term debt and lease obligations attained $20,766 million.  

At the end of FY2022 The Kroger Company operated 2,726 stores with 2,252 pharmacies and 1,613 fuel centers, under 25 banners in 35 states and D.C. Kroger operates 34 food plants and 45 distribution centers with five Ocado fully automated fulfillment centers with as many as twenty planned

The Kroger Company had an intraday market capitalization of $31,050 million on January 28^th 2023.  The Company has traded over the past fifty-two weeks in a range of $41.82 to $62.78 with a 50-day moving average of $44.71. KR trades with a forward P/E of 10.2. On March 1^st 2023 the share closed at $43.32 pre-release but opened on March 2^nd at $45.93

Twelve-month trailing operating margin was 3.1 percent and profit margin 1.6 percent.  The Company generated a return on assets of 5.7 percent and 24.4 percent on equity.

Dr. Seth Meyer, USDA Chief Economist, predicts that wholesale egg prices will fall by 27 percent in 2023.  Speaking at the USDA Agricultural Outlook Forum, Meyer noted that the projection assumes an end to the avian influenza epornitic. This disease has resulted in the depopulation of 44 million hens over a 12-month period with an ongoing deficit of 20 million birds in the national flock during 2022.  It is highly likely that Highly Pathogenic Avian Influenza is now endemic, at least regionally and seasonally in the U.S., placing the projection of future egg prices in question.

USDA forecasts a four percent increase in table egg production during 2023, again, based on repopulation of flocks and limited expansion.

Wholesale prices fell for seven consecutive weeks through mid-February with the past three weeks showing higher wholesale values consistent with an increase in demand.

The USDA-ERS would be more helpful to both producers and store chains if they restore reliable weekly statistics for wholesale and retail prices of the various sizes and categories of table eggs.

IRI® recently merged with the NPD Group has issued a review entitled Impact of Inflation on Consumer Behavior. The report notes that, food inflation attained 13.2 percent over the fourth quarter compared to the comparable period in 2021.  Trends noted in the report include:-

• Shoppers are resisting discretionary purchases and are concentrating on essentials.
• Inflation varies according to category, bakery was up 18 percent during the fourth quarter of 2022 versus 2021 with dairy 23 percent higher.  In contrast, fresh meat and seafood were only up by 3.5 percent.
• Shoppers are searching for value and convenience.
• Online ordering, dollar stores and club warehouses are benefitting at the expense of in-person shopping at mainstream brick-and-mortar stores  that grew same store sales by only 7 percent.  In January 2023, dollar stores grew by 14 percent and club stores by 12 percent.
•  Private label food items are displacing national brands.  This lower-priced category is now available as an alternative to 75 percent of all food and beverage offerings.
• Sales value will moderate in 2023 due to deflation in unit prices
• Consumers will continue to satisfy basic needs but will be willing to trial-purchase innovative products offering convenience and cost.

A group termed “Frontline COVID-19 Critical Care Alliance” (FCCA) is still promoting ivermectin as a therapeutic agent for humans.  This group of physicians with unorthodox scientific values, who were opposed to conventional public health precautions during the COVID epidemic, claimed that ivermectin, a veterinary antiparasitic drug, could effectively treat this infection.  Their claim was based on in vitro experiments in which ivermectin apparently destroyed COVID virus in cell culture—an entirely expected outcome. 

Subsequent structured clinical trials failed to demonstrate any beneficial effect from administration of ivermectin. Unfortunately for political reasons the claim was embraced as a ‘quick fix” in Brazil and by some in the U.S. with unfortunate outcomes in terms of mortality.  The FCCA Group now claims that ivermectin is effective against a range of viral infections including respiratory syncytial virus, again without structured clinical trials. 

The World Health Organization and the Centers for Disease Control and Prevention have stated, unequivocally, that ivermectin had no therapeutic application in human medicine other than as an antiparasitic for immunosuppressed HIV patients.

Following an initial trial, McDonald’s has partnered with Krispy Kreme to serve three doughnut alternatives in 160 locations in Kentucky.  A spokesperson for Krispy Kreme stated, “As part of our on-going omni-channel strategy, we are always looking for ways to get our customers more access to our fresh doughnuts through the Delivered Fresh Daily network.”

It will obviously be a stretch for Krispy Kreme to expand from their existing 400 retail locations and regional bakeries to serve 13,000 McDonald’s stores.  It is possible that McDonald’s is using the Krispy Kreme application to establish a base for a pastry that could be introduced as a menu item both in the U.S. market. During visits to Budapest and Vienna it was evident that McDonald’s restaurants served a range of delicious pastries to suit local tastes

There are still opportunities for eggs as a breakfast serving and the American Egg Board is urged to consider funding innovative presentations that include novel egg servings for the breakfast daypart.

In a February 21^st release, Walmart Inc. (WMT) posted financial results for the fourth quarter of fiscal 2023. All U.S. retailers, both brick-and-mortar and online are subject to the same pressures from increased cost for goods, transport and labor in a competitive environment with concern over an impending recession. 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 fourth quarter of FY 2023 ending January 31^st 2023 net income was $6,275 million on total revenue of $164,048 million.  Comparable figures for the fourth quarter of fiscal 2022 ending January 31^st 2022, were net income of $3,502 million on total revenue of $152,871 million. Diluted EPS increased from $1.28 for the second quarter of FY 2022 to $2.32 for the most recent quarter.

Comparing the fourth quarter of 2023 with the previous year gross margin fell from 24.4 percent to 23.5 percent and operating margin fell from 3.9 percent to 3.4 percent.

For FY 2023 ending January 31^st 2023 net income was $11,680 million on total revenue of $611,289 million.  Comparable figures for fiscal 2022 ending January 31^st 2022, were net income of $13,673 million on total revenue of $572,754 million. Diluted EPS decreased from $4.87 for FY 2022 to $2.27 for the most recent year, a decline of 12.3 percent.

In the call following the release, Doug McMillon, CEO and president stated “We're excited about our momentum. The team delivered a strong finish to the year. And as our results in the last two quarters show we acted quickly and aggressively to address the inventory and cost challenges we faced last year. We built momentum in the third quarter, and that continues. We're well positioned to start this fiscal year. For fiscal '23, we added $38 billion in sales globally, and we crossed $600 billion in revenue for the first time in our company's history. Globally, e-commerce now represents more than $80 billion in sales and over 13% of our total sales. Walmart U.S. grew sales by more than $27 billion. International had another strong year with sales and profit growth of about 9%, excluding divestitures, restructuring and currency.”

McMillon added, “As we plan this new fiscal year, we've anticipated stubborn inflation in dry grocery and consumables in particular, which will have some mixed impact. We'll stay focused on general merchandise and earn sales in those categories to offset that impact as much as possible. When we think about our business today compared to what it was during prior economic downturns, we now have a more compelling offer, a true omni-channel experience that makes us optimistic that more higher income families will continue shopping with us across categories because we have pickup, delivery and membership. And we're improving in categories like apparel and home. Our recently remodeled U.S. stores have a focus in those areas, and the early response from customers is promising.”

For the fourth quarter of FY 2023 segment results comprised:-

Walmart US: Net sales $113,700 million. Operating income $5,400 million. Comparable same-store sales up 8.3 percent (excluding fuel).

International: Net sales $27,600 million. Operating income $1,100 million.

Sam’s Club: Net sales $21,400 million. Operating income $500 million. Comparable same-store sales up 12.2 percent.

Walmart operates more than 10,500 stores worldwide of which 5,400 are in the U.S. including 600 Sam’s Club warehouses. Walmart operates 46 banners in 20 nations and employs 2.1 million.

Forward guidance for FY 2024 included:- A 2.5 to 3.0 percent increase in consolidated revenue; 2.2 percent increase in U.S. same-store sales; operating income up 3.0 percent, and an adjusted EPS  of  $5.90 to $6.05.

On January 31^st 2023, WMT posted assets of $243,457 million with long-term debt and lease obligations of $52,320 million. The Company had an intraday market capitalization of $381,440 million at noon on March 1^st. WMT trades with a forward P/E of 23.1 and has ranged over a 52-week period from $117.27 to $1141.46 with a 50-day moving average of $143.49.  Twelve-month trailing operating margin was 3.3 percent and profit margin 1.9 percent.  Return on assets over the past twelve months was 6.35.2 percent and the return on equity 12.8 percent. At close of trading on February 21^st pre-release, WMT was priced at $147.32. Post-release on February 22^nd WMT closed at $144.22.

Bernd Meerpohl, son of Joseph Meerpohl the founder of the Company, will step down as CEO of the  Big Dutchman Group after a tenure of 31 years. He will be succeeded as CEO and Chairman of the Board of Management by Dr. Frank Hiller with effect from 1^st April 2023. Berndt Meerpohl, the Chairman of the Board of Management will serve as Chairman of the Supervisory Board from 1^st January 2024. 

The planned succession will allow Dr. Hiller to bring new perspectives to complement the stable and proven existing management team. Since Bernd Meerpohl will become the Chairman of the Supervisory Board, Big Dutchman will remain a family enterprise.

In commenting on the change, Jürgen Steinemann, current Chairman of the Supervisory Board stated  “In past decades, Bernd Meerpohl has shaped the development of Big Dutchman and set the course for the future of the Group. The Supervisory Board and the family shareholders commend him for the time and effort he invested in the company and its personnel to make Big Dutchman a world leader in livestock farming technology. He will continue to share his knowledge and remain responsible for the Company as Chairman of the Supervisory Board.”

Bernd Meerpohl noted “Taking over my father’s responsibility as CEO over 31 years ago was an honor, as was advancing the Company for the benefit of our customers and personnel all over the World. The Meerpohl family, my closest colleagues, the Supervisory Board and I believe that a new executive should take over the operational business of Big Dutchman to introduce and integrate new concepts.”

Meerpohl continued “Dr-Ing. Hiller earned a doctorate in mechanical engineering and he brings to the Company a solid foundation based on positions with leading companies and most recently, as CEO of Deutz AG.”  Meerpohl concluded by expressing appreciation to Jürgen Steinemann, the Chairman of the Supervisory Board, for his active support for the management of Big Dutchman over many years. He will continue as Deputy Chairman of the Supervisory Board.

In assuming his new position Dr. Frank Hiller commented “Bernd Meerpohl is a remarkable entrepreneur who has invested much energy and spirit to position Big Dutchman as an international, innovative market leader of an industry that contributes to feeding the world’s population. I am looking forward to succeeding him as CEO and securing and advancing the market position of Big Dutchman, together with the Board of Management and all employees.”

The executive changes relate to the holding Company, Big Dutchman AG located in Germany and will not change the status, management and personnel in subsidiary companies including Big Dutchman USA located in Holland, MI.

On February 28^th Target Corporation (TGT) posted results for Q4 and FY2022 ending January 29^th.  For the quarter, the Company earned $876 million on revenue of $31,395 million with a diluted EPS of $1.89.  For the corresponding Q4 of FY2021, Target earned $1,544 million on sales of $30,996 million with a diluted EPS of $3.21.  Revenue was 1.3 percent higher but net earnings decreased by 43.3 percent.

For Fiscal 2022, the company posted net earnings of $2,780 million on revenue of $109,120 million with a diluted EPS of $5.98. Comparable figures for FY2021 were net earnings of $6,946 million on revenue of $106,105 million with a diluted EPS of $14.10. Revenue for the year increased by 2.8 percent but earnings fell by 60.0 percent. 

In commenting on results Brian Cornell Chairman and CEO stated “We're pleased that our business delivered comparable sales growth in the fourth quarter, in what continues to be a very challenging environment. Strength in Food & Beverage, Beauty and Household Essentials offset ongoing softness in discretionary categories. This performance highlights the benefit of our multi-category merchandise assortment, which drives relevance with our guests in any environment, and is a key reason we grew traffic every quarter last year," Cornell continued, "Looking ahead, we're focused on executing our long-term strategy, including continued differentiation through affordability, assortment, ease and convenience. At the same time, we're planning our business cautiously in the near term to ensure we remain agile and responsive to the current operating environment. We're pleased that we entered the year in a very healthy inventory position, reflecting our conservative approach in discretionary categories and our commitment to reliability in our frequency businesses. As we plan for the year ahead, we will continue to make robust capital investments and pursue efficiency opportunities in support of our long-term growth”.

The Company release included guidance, “For fiscal 2023, the Company expects low-to mid-single digit revenue growth or a decline, operating income will increase by $1 billion and adjusted EPS will range from $7.75 to $8.75”.

Comparable same-store sales increased by 0.7 percent compared to the Q4 FY 2021value of 8.9 percent. Same-day services (Shipt and pick-up) represented 10 percent of sales. Stores generated 79.2 percent of sales with 20.8 percent originated digitally.

At the end of FY2022, Target Corporation operated 1,948 stores with a total retail area of 244,584 square feet. The company invested $5,528 million in property and equipment during fiscal 2022.

On January 28^th Target posted total assets of $53,335 million, down 0.8 percent from the end of FY2021. Long-term debt and lease obligations attained $20,407 million. Target Corporation had an intraday market capitalization of $76,280 million on February 28^th. The Company has traded over the past fifty-two weeks in a range of $137.16 to $254.87 with a 50-day moving average of $161.47.  TGT trades with a forward P/E of 16.8. On February 27^th the share closed at $166.32 but after the morning release on February 28^th TGT closed at $168.50.

Twelve-month trailing operating margin was 4.5 percent and profit margin 3.2 percent.  The Company generated a return on assets of 5.6 percent and 27.8 percent on equity.

The 2023 Shell Academy Virtual Edition will be presented on April 24^th through 28^th, 2023.  The program will provide interactive class sessions on egg quality and food safety, using Zoom.  The Academy will be presented in both English and Spanish versions. 

The two components of the course will include Live Hen Production on April 24 – 26, noon to 14H30 EST followed by Egg Processing and Food Safety April 26 – 28. 

Registration will range from $20 per course per student (current undergraduate or graduate) at colleges or universities to $750 per course per person for individuals. 

The organizers of the Shell Academy should justify what might be regarded as an exorbitant cost for participation in a Zoom program for other than bone fide students. The organizers and presenters are employees of Land Grant Universities or egg production companies and financial sponsorship has been provided by the industry. The Shell Egg Academy is an educational endeavor with the objective of improving quality and safety for the benefit of both the entire industry and consumers.

Questions relating to the 2023 Shell Academy should be directed to Dr. Darrin Karcher at DKarcher@Purdue.Edu

After intensive lobbying and pressure from welfare organizations “birds” will be afforded the same protection as mammals under the Animal Welfare Act. According to a review by attorney Rebecca Bazan of law firm Duanne Morris LLP., commercial poultry comprising both galliform and anseriform birds intended for food production are exempted from the  regulations under the Animal Welfare Act.

The inclusion of "birds" in the Animal Welfare Act applies to dealers, research facilities, exhibitors, auction sale operators and intermediate handlers.  The regulations exclude farm animals intended for food, state and county fairs and other specified exemptions. The standards of welfare will be effective on March 23, 2023.

An investigation carried out by the U. S. Department of Labor, Wage and Hour Division has disclosed extensive exploitation of under-aged workers.  The DuCharme organization paid $92,000 in civil penalties for violations.  A franchisee of seven McDonald’s locations in northern Ohio, DuCharme illegally required 154 minors 14-15 years of age to work extended hours and to operate equipment that is disallowed under the child labor provisions of the Fair Labor Standards Act.

From Fiscal 2018 through 2022, the Wage and Hour Division identified child labor violations in 4,000 cases involving 15,000 minor-aged workers.  John DuMont, Director of the Wage and Hour district for Pittsburgh, PA, stated, “Every employer who hires young workers must know when they can and cannot work, the types of jobs they can do and what tasks they can be safely assigned.”  He added, “The bottom line is that there is no excuse for jeopardizing young workers’ safety or hindering their educational opportunities.”

Working at a QSR is regarded as a rite of passage.  Employment while in secondary school provides a sense of responsibility and establishes a relationship between work and the value of money.  When employment extends to exploitation, the advantage of teenage work becomes socially undesirable and illegal. The question arises as to the responsibility of franchisers in ensuring that their franchisees comply with federal, state and local legislation. Brand image and corporate integrity can be degraded by the actions of individual restaurant operators.

A significant donation has resulted in permanently establishing an American Association of Avian Pathologists (AAAP) Annual Award For Excellence in Mentorship.  The award will now be termed the Huvepharma Excellence in Mentorship Award and will recognize AAAP members demonstrating a passion for mentoring students and fellow colleagues.  The award was introduced in 2019, but now will function in perpetuity due to the generosity of Huvepharma.

The Government of Mexico approved administration of 140 million doses of avian influenza vaccine for commercial farms in areas of high risk in addition to parent and breeding flocks. Vaccination commenced in late January will continue through March.  The Government of Mexico recognizes the nutritional value of eggs with an annual per capita consumption of close to 380.  Consumers in Mexico have experienced an inflation rate of 7.9 percent annualized in common with the U.S. and other nations.

The approach by Mexico in introducing vaccination as an adjunct to traditional control measures is justified by epidemiologic and economic realities. The egg production industry in the U.S. is experiencing criticism for high retail prices by the media and politicians, including Senator Elizabeth Warren (D-MA).  Depopulation of 44 million hens during 2022 resulting in a reduction of 20 million hens at any time during the year, contributing to high prices responding to an imbalance between supply and demand.  High retail markups contributed to the escalation in price estimated at 70 percent from January 2021 through the corresponding month in 2022.

Increasingly, customers require suppliers to be certified according to an accepted certification agency.  FSNS offers certification and auditing services covering SQF, BRCGS (Food Safety) and FSSC 22000.  The company has a team of specialists who can provide counseling and audit services relating to food safety, welfare and USDA Process-Verified Program certification.

For additional information click onto the FSNS logo to access the company website.         

In a recent case in Florida, an owner of four restaurants was ordered to repay $253,000 in back wages to 93 workers.  According to evidence presented to the U.S. District Court for the Middle District of Florida Juan Zarinana, the owner of the restaurants failed to pay wages to servers who were reliant only on tips.  The direct wage for tipped employees in Florida is $7.98 per hour and the Federal rate is $2.13 per hour.  The restaurants concerned also failed to pay overtime rates for time worked over 40 hours in a week.

Following complaints, the Department of Labor Wage and Hour Division will investigate and pursue legal remedies in the event of any contravention of the Fair Labor Standards Act.

During 2022, the combined value of U.S. agricultural exports attained $196.4 billion.  A decline of approximately 3.8 percent annually will become evident from 2023 through 2026.   This is due to decreased demand, especially from China and Mexico.  These nations that have emerged from COVID restrictions are enduring inflation and have reduced their demands for grains, oilseeds and other products. 

From 2027 onward, growth in exports will resume at an annual rate of 1.9 percent through 2032 to attain $182.2 billion. Over the proximal four years, grain exports will decline from $48 billion in 2022 to $34 billion in 2027.  Currently oilseeds and products will decline from $45.6 billion to $35.2 billion.

The implication for poultry production is that greater availability of ingredients and consequently lower prices will prevail unless row-crop production is reduced in proportion to the combination of domestic and export demand.

Lactalis, a privately owned multinational producer of dairy products including infant formula in France is facing criminal charges as a result of contamination in 2018.  The action arises from Salmonella Agona contamination of infant formula manufactured at the Craon Plant.  The pathogen was responsible for at least 40 confirmed cases in the EU although a significant number were undetected or not diagnosed.

Recognition of the source of infant illness resulted in recall of 7,000 tons of potentially contaminated product manufactured in 2017 and distributed to more than 80 nations.  Previously in 2005, the Craon Plant was responsible for 140 illnesses involving Salmonella Agona.

During the week of February 20^th, the Centers for Disease Control and Prevention updated the COVID status in the U.S.  It is noted that since the beginning of 2013, data on incident (new) cases underestimates the actual number, given that many states no longer submit data to the CDC and home testing limits reporting of cases.

To date, 103 million cumulative cases have been recorded, suggesting that almost 1 in 3 U.S. residents have acquired the infection.  The cumulative mortality rate is 1.1 million, although this figure is an underestimate based on variability in the criteria for certifying cause of death. 

For the week ending February 15^th, there were 259,339 cases documented, down seven percent from the previous week.  During this week, 2,838 deaths were attributed to COVID, predominantly in the elderly and especially those who did not receive the initial series of vaccinations.  Approximately 66 percent of U. S. residents have received the primary vaccination series and this is probably responsible for the 5.7 percent weekly decrease in new hospital admissions and a 6.7 percent weekly decrease in hospitalizations.

The Omicron sub lineage XBB.1.5 was responsible for 80 percent of cases that were subjected to whole genome sequencing of SARS-CoV-2 isolates. The BQ.1.1 sub lineage was responsible for 12 percent of cases.

The National Institutes for Health is evaluating the impact of chronic (“long”) COVID that affects the respiratory system and results in neurologic abnormalities that appear to persist for longer than six months.  “Long” COVID is regarded as a major cause of premature retirement and disability claims in the U. K. and is a direct consequence of infection. A similar situation is emerging in the U.S. and will burden our health system for decades.