Editorial

 

Questions over Federal GM Label Legislation

Jul 22, 2016

    

The 11th hour compromise in the Senate Agriculture Committee which allows for a uniform Federal standard of labeling with respect to GM ingredients has been hailed by the food industry as a solution to the problem raised by Vermont Law 120, mandating the designation of GM status on food labels for other than exempted animal-derived foods.

The compromise negotiated between Senator Pat Roberts (R-KS), Chairman of the Senate Committee on Agriculture, Nutrition and Forestry and the ranking member, Senator Debbie Stabenow (D-MI) involves Smart Label® technology promoted by the Grocery Manufacturers’ Association.  Consumers wishing to determine the GM status of a food item can scan a code to establish whether GM-derived ingredients are incorporated in the product.  Alternatively accessing a company website will provide the required information.

 

It must be noted that various state and local initiatives to enforce GM labeling on the basis of the claimed “right to know” are effectively aimed at GM technology with the intention of demonizing foods derived from genetically engineered cultivars.  Accordingly the solution proposed in the Federal bill will in no way satisfy the opponents of GM technology.  Vani Hari a prodigious blogger and disseminator of misinformation, suspicion and pseudo-science has tweeted “it is not true transparency – it is another way to hide the truth.”  In a second tweet she ominously noted “mark my words; food companies that decide to use Q.R. codes will be targeted by major on-line campaigns to shame them.”

Cognizant of the power of the manipulative bloggers, and uncertainty and timing of federal legislation, food manufacturers have responded according to their perceptions of customer desires.  Campbell Soup Company commented that they remain committed to on-package label disclosure and in anticipation of the advent of Vermont legislation introduced a label descriptor indicating the presence of GM ingredients.  Other major manufacturers including ConAgra Foods and General Mills, while applauding the Senate comprise which has yet to be voted on, may have second thoughts when the internet barrage is activated.

The primary issue of labeling is contested against the reality that foods containing GM-derived ingredients are wholesome, nutritious and do not differ in safety or nutrient value from generic counterparts.  The second issue is whether average consumers really care about GM.  The Pew Charitable Trust, an activist organization, in applying their survey approach maintains that 90 percent of respondents are in favor of labeling.  However when consumers were asked by researchers at Oklahoma State University to list the attributes they considered important to appear on labels only 7 percent cited GM as an issue of concern.

As expected a uniform Federal labeling bill will emerge.  The value will be in preventing individual states and local jurisdictions from establishing their own labeling regulations resulting in an uncoordinated patchwork of requirements which would prove disruptive and expensive to the food industry and ultimately to consumers.

All foods other than those certified by the USDA Organic Program or the soon to be introduced USDA GMO-Free certification could be labeled “May Contain Ingredients Derived from GM Technology” paralleling the situation with nuts and other allergens.

The scientific Luddites opposed to GM technology will not be satisfied with the Senate compromise.  It is expected that the controversy will continue and that some companies will attempt to generate a competitive advantage through their labeling and from spurious and implied claims relating to health and safety.

   

Egg Industry News

 

Status of 2016 Corn and Soybean Crops

Jul 27, 2016

    

The USDA Crop Progress Report released Monday 25th July indicated a continued favorable trend in corn and soybean crops in 18 states, expressed in the table below:-

                                                         WEEK ENDING

Crop

July 17th

July 24th

5-Year Average

Corn dough

-

13

13

Corn silking

 56

               79

             70

Soybeans Blooming

       59

  76

 66

Soybeans setting pods

18

  35

             26

 

Crop Condition:

Crop

V. Poor

Poor

Fair

Good

Excellent

Corn

1

 4

19

57

19 slightly changed

Soybeans

2

5

22

56

15 slightly changed

 

The prospects for corn and soybean growth and yield depend on adequate soil moisture. USDA reported data for 48 contiguous states which shows a slight deterioration from the previous week, as shown in the table below:-

Moisture Classification (%) for Week Ending July 24th.  

 

V. Short

Short

Adequate

Surplus

Topsoil

9

24

60

 87

Subsoil

8

22

65

 5 relatively unchanged

   
   
 

CME Prices

Jul 27, 2016

    

At the close of trading on July 22th CME quotations for corn, soybeans and soybean meal with values for July 15th reflecting the months as indicated in parentheses were:-

COMMODITY
Corn (cents per bushel)                       Sept.   336      (352)       Dec.    343       (358)      
Soybeans (cents per bushel)              Aug. 1,00  (1,064)      Nov.    989   (1,056)  
Soybean meal ($ per ton)                    Sept    346     (367)        Dec     342      (360)   

September corn down by 4.5 percent.
September Soybean meal down by 5.7 percent.

  

 For each 10 cent per bushel change in corn :-

  • The cost of egg production would change by 0.45 cent per dozen
  • The cost of broiler production would change by 0.25 cent per pound live weight

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

  • The cost of egg production would change by 0.40 cent per dozen
  • The cost of broiler production would change by 0.25 cent per pound live weight

See posting on the June USDA-WASDE Report #554 for an update on quantities and price projections for commodities

   
 

USDA Weekly Egg Price and Inventory Report, July 18th 2016

Jul 22, 2016

    

Midwest-wholesale prices for Extra Large and Large sizes fell by 13 percent, this past week, from an already low base. Mediums declined sharply by 28 percent from last week reflecting the large number of pullet flocks coming into production (0.3 million increase in U.S. productive flock in Week 2016- 28). During previous weeks as reported by the USDA, prices increased by approximately 4 percent, 16 percent, 36 percent and 25 percent in week sequence but with a previous series of weekly declines of 3 percent, 13 percent and 20 percent respectively.

  

The USDA Combined Region value for Large commodity eggs delivered to warehouses, which lags the Midwest quotation by one week, rose 2 cents to $0.86 per dozen, compared to the 12-month trailing peak price of $2.77 per dozen in mid-August 2015.  The USDA Combined range for Large, rose 3 cents to $0.81 per dozen in the Midwest. In the South Central Region, price rose 4 cents to $0.91 per dozen. The current USDA Combined Range Price is $0.40 per dozen below the three-year average which is inflated by the rise in price during 2015, attributed to the HPAI epornitic.

The reversal in the five-week price trend into the last week of July, three weeks after the Independence-day weekend suggests lower prices through Summer. This is based on two sequential increases in weekly stock level for generics predicating against any significant rise in short-term price. The National productive flock excluding pre-lay pullets and hens in molt, is still down by 5 million hens compared to the situation prior to the advent of HPAI, at approximately 294.3 million, up 300,000 this past week. Older flocks were depleted following extremely low post- Easter prices and hens not required to supply contracts are being either depleted with replacement by pullet flocks or are being molted.

The market will respond to changes in availability of both shell eggs and breaking stock attributed to re-stocking, projected exports and cessation of imports of breaking stock from the EU.  

   
 

CME Prices

Jul 22, 2016

    

At the close of trading on July 15th CME quotations for corn, soybeans and soybean meal with values for July 8th reflecting July and September in parentheses were:-

COMMODITY

 

 

Corn (cents per bushel)

Sept. 352        (449)

Dec. 358        (355)

Soybeans (cents per bushel)

Sept. 1,064 (1,041)

Nov. 1,056 (1,068)

Soybean Meal ($ per ton)

Sept. 367        (378)

Dec. 360        (374)

 

For each 10 cent per bushel change in corn:-

  • The cost of egg production would change by 0.45 cent per dozen
  • The cost of broiler production would change by 0.25 cent per pound live weight

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

  • The cost of egg production would change by 0.40 cent per dozen
  • The cost of broiler production would change by 0.25 cent per pound live weight

See posting on the June USDA-WASDE Report #554 for an update on quantities and price projections for commodities

  

   
 

Status of 2016 Corn and Soybean Crops

Jul 22, 2016

    

The USDA Crop Progress Report released Monday 18th July indicated a continued favorable trend in corn and soybean crops in 18 states, expressed in the table below:-

                                                                            WEEK ENDING

Crop

July 10th

July 17th

5-Year Average

 

 

 

 

Corn silking

 32

                56

              46

Soybeans Blooming

       40

  59

 49

Soybeans setting pods

 7

  18

             13

 

Crop Condition:

Crop

V. Poor

Poor

Fair

Good

Excellent

Corn

1

 4

19

58

18 unchanged

Soybeans

2

5

22

57

14 slight deterioration

 

The prospects for corn and soybean growth and yield depend on adequate soil moisture. USDA reported data for 48 contiguous states which shows a slight deterioration from the previous week,  as shown in the table below:-

Moisture Classification (%) for Week Ending July 17th.  

 

V. Short

Short

Adequate

Surplus

Topsoil

8

22

62

 8

Subsoil

7

21

66

 6 relatively unchanged

                             

                                                           

 

 

   

 

   
 

AEB Action in 2015 Contributes to Restrictive Legislation

Jul 21, 2016

    

On Thursday July 14th Deena Shankar in Bloomberg reported on The Commodity Checkoff Program Improvement Act of 2016 introduced into Congress by Senator Cory Booker (D-NJ) and Senator Mike Lee (R-UT).  This action arises from the disclosures revealed in terms of the Freedom of Information Act request by lawyers representing Hampton Creek. 

Internal memoranda showed that the then President and CEO of the AEB and her staff were actively opposing the company in its efforts to market a mayonnaise substitute.  The AEB is funded by checkoff payments by egg producers and funds are intended for research, education and promotion of eggs as a commodity under rules laid down by the USDA-AMS.

  

In the event, an investigation by USDA-AMS resulted in management changes at the AEB to ensure compliance with statutory rules under the guidance of the recently appointed President and CEO, Ms. Anne Alonzo, a veteran of AMS.

The Bill will require budgets to be made public, which in the case of the AEB is a reality but would also require disclosure on payments to service providers and consultants and the purpose of contracts in order to enhance transparency.

In commenting on the proposed legislation, Senator Booker stated “When checkoff programs engage in anticompetitive activity it is a threat to a dynamic and informed free marketplace.”  He added “This bipartisan legislation will help increase transparency and restore trust in checkoff program practices.”

   
 

FSIS Will Post Pasteurization Test Results

Jul 21, 2016

    

In a July 11th press release, the Food Safety and Inspection Service stated that it intends to post data on the efficiency of pasteurization of egg products on <www.data.gov>.  The purpose of this action “will allow consumers to make more informed choices, motivate individual establishments to improve performance and lead to industry-wide improvements in food safety by providing better insight into strength and weaknesses of difference practices.”

  

Data sets will also indicate processes used at each inspected facility but the data on Listeria and Salmonella will apply to meat plants.

   
 

Incidence of Human H1N1 Influenza Increasing in Brazil

Jul 21, 2016

    

On July 12th ProMED posted a report documenting over 1,200 fatalities attributed to H1N1 influenza as of the beginning of July.  This compares to 160 and 35 deaths respectively for the corresponding period in 2014 and 2015.  Since the outbreak is centered on Sao Paulo there have been relatively few deaths in Rio de Janeiro. This is reassuring given the imminence of the 2016 Olympics Games.

  

During the period April 30th through May 20th, the Ministry of Health supervised a mass vaccination campaign to immunize almost 50 million citizens of whom 96 percent including children, pregnant women, and the elderly comprising the target population.  Mortality continues despite the administration of vaccine.

   
 

Will India to Comply with OIE Ruling on Imports from the U.S.?

Jul 21, 2016

    

Following the adverse decision against India in the dispute relating to a spurious ban on importation of poultry from the U.S. based on avian influenza, the Ministry of Agriculture indicated that it would allow importation from countries in accordance with the regulations of the World Organization for Animal Health.  This notification acknowledges the imperative that health regulations cannot be distorted to protect domestic industries.

  

Importation is generally based on health certificates which specify requirements with respect to specific diseases.  India has yet to prepare a health certificate, which hopefully will conform to OIE guidelines including regionalization and compartmentalization.

It is understood that USAPEEC is in the forefront of negotiation to eliminate barriers against U.S. exports of poultry.

   
 

Hillandale to Install Cage-Free Housing in Connecticut and Ohio

Jul 21, 2016

    

According to recent statements and an article in the Hartford Courant, Hillandale of Pennsylvania, the holding company of Hillandale of Connecticut indicated that their subsidiary would initiate a program of converting conventional cages to alternative systems.

Hillandale was recently the subject of a public disclosure by animal welfare activists concerning alleged abuse in the Maine complex leased from Jack DeCoster.

  

   
 

Cal-Maine Foods Reports on Q4 and FY 2016

Jul 20, 2016

    

In a press release dated July 18th 2016, Cal-Maine Foods (CALM) announced results for the 4th Quarter and Fiscal 2016, ending May 28th 2016.

The following tables summarize the results for the most recent quarter and Fiscal 2016  comparing financial values with the corresponding quarter and the previous fiscal year (Values expressed as $ x 1,000 except EPS)

  

   
 

Tesco in UK to Convert to Non-Caged Supply Flocks

Jul 20, 2016

    

Tesco has announced that it will transition to sourcing eggs from flocks which are not confined to “cages” by 2025.  The action follows the decision by major competitors Sainsbury’s, Marks and Spencer and Aldi.  As a holdout, Tesco was forced into their decision by an online campaign which attracted 280,000 signatures on Change.org.

  

In anticipation of the 2012 ban on conventional cages, many farmers in the UK installed enriched colony modules.  Unfortunately it appears that this housing system is regarded as a “cage” and is therefore unacceptable to a segment of the consuming public. More important is the perception relating to welfare of buyers representing the large supermarket chains.

Currently Tesco sells 1.4 billion eggs annually with 43 percent derived from enriched colonies.  Based on standard parameters, eggs sold by Tesco are produced by a constant population of 4.8 million hens.  The most recent decision will require alternative housing in the form of barns or free-range for 2.1 million hens.

The Guardian quoted Matt Simister Commercial Director For Fresh Food for Tesco who stated “Our decision on caged hens is one of a number of Tesco initiatives designed to ensure sustainable sourcing, and improved animal welfare.”  He added “We carried out an extensive and collaborative review with our suppliers and key industry experts to help us work through how best we can move to 100% cage-free eggs.”

   
 

DeCOSTERS’ TO APPEAL ADVERSE DECISION ON IMPRISONMENT

Jul 20, 2016

    

According to press reports, Austin ‘Jack’ DeCoster and his son Peter are considering an appeal to the entire 8th Circuit U.S. Court.  This action follows the adverse 2 to 1 decision by a three-judge panel upholding the sentence handed down by Judge Mark Bennett in response to the guilty plea to misdemeanor charges by the DeCosters’.

  

There is no question as to guilt on the part of the accused following their plea.  What is now of concern is whether imprisonment can be imposed in addition to fines on “responsible corporate officials for violations of a strict liability statue”. 

The DeCoster case has aroused concern by business groups including the U.S. Chamber of Commerce and the National Association of Manufacturers.  Peter Keisler of the Washington D.C. firm of Sidley and Austin represents the DeCosters’ and is expected to submit a brief in support of a re-hearing before a full Bench before August 3rd.

   

Shane Commentary

 

AI in Live Bird Markets

Jul 22, 2016

    

EGG-CITE and CHICK-CITE have previously commented on the recent detection of low pathogenicity H5 avian influenza in live bird markets in Pennsylvania, New York and New Jersey.

All H5 and H7 isolates irrespective of pathogenicity must be reported to the World Organization for Animal Health (OIE) and the U.S. must also notify trading partners in terms of bilateral agreements.

  

It is important to note that the detection of AI in a live bird market indicates that supply flocks wherever located are infected.  The detections in markets will require traceback and will inevitably result in import sanctions being imposed against counties, states or even the entire U.S. depending on whether an importing nation conforms to the principle of regionalization as laid down by the OIE.

It is an epidemiologic reality that low pathogenicity H5 and H7 strains have the potential to mutate to high pathogenicity given sufficient time and a large number of potential hosts. This was the case in Pennsylvania during 1983 when low pathogenicity H5N2 (a different strain from the 2015 epornitic) smoldered in small flocks in Lancaster and adjoining counties for four months before becoming highly pathogenic in November 1983.  A similar case occurred in Chile among broiler breeders but transition from LPAI to HPAI was rapid. More recently in the January H7 limited outbreak, affecting turkeys in Indiana, nine farms were infected with low pathogenicity AI and one farm with an H7 strain characterized as highly pathogenic suggesting a change in virulence over a short period.

The live bird system is an anachronism in the U.S. in 2016 and represents a profound risk to breeders, turkey, egg and broiler producers endangering domestic production and export markets.  The live bird market system benefits a small number of producers and traders catering to the needs of ethnic minorities in urban areas. In applying a “band-aid” approach to the live bird system, state and Federal authorities have created a patchwork of modalities concentrated on retail outlets in an attempt to suppress infection. Imposing periodic depletion, maintaining strict control over disinfection and hygiene certainly determines an end point for infection. The controls imposed at the retail level do not address the problem of perpetuation of infection and dissemination of virus with the potential to extend from the live bird system to commercial farms.  The activities of Federal and state veterinarians in attempting to contain infection in the live bird marketing system is nothing more than active support of the status quo at public expense.

The fact that Joelle Hayden a public affairs specialist with APHIS said “Finding low pathogenic avian influenza isn’t uncommon in backyard flocks and live bird markets” lends credence to the realization that the Agency is basically condoning a state of endemic LPAI.

If marketing of live birds and store-front slaughter were to be banned, if this were possible, lawsuits alleging infringements of rights and deprivation of livelihood would be advanced.  It would be far better to determine the cost of monitoring and supervising the live bird system and to place the onus back on the buyers and sellers in the form of a service fee in the same way that commercial producers pay for FSIS inspection.  Obviously the additional costs would be a heavy burden and would soon result in the demise of storefront purchase and processing.  This would result in the establishment of centralized plants under FSIS scrutiny distributing halal and kosher chickens through supermarkets and specialty stores with an appropriate level of hygiene with a cold chain.

The purchase of chickens slaughtered according to kosher rites in small butcheries was common through the early decades of the 20th century in urban areas. This gave way to specialty producers operating in accordance with the requirements of both religious and Federal rules.  The demographics supporting contemporary live bird markets should undergo the same evolution and conform to the laws and mores of U.S. society.

The time has come to make the live market system in the U.S. obsolete.  If a nation such as Jordan can ban markets in Amman we should be able to do the same in New York, Philadelphia, Boston, Los Angeles and Minneapolis.

   
 

Confusion over Labels

Jul 20, 2016

    

Following passage of a bill entitled The National Bioengineered Food Disclosure Standard to regulate labeling of foods containing GM ingredients, consumers will still be confused over descriptors.  Only USDA Certified Organic broiler, turkey and egg products will be regulated with respect to feeding, housing, management and access to the exterior of houses.

  

Jo Craven McGinty writing in the July 9th edition of highlighted a number of label descriptions which have questionable meaning to consumers.

Inconsistencies include:-

  • Natural – There is no legal definition of “natural” but the FDA has requested comments before establishing a standard.  The term “natural” refers to processing and not to management or the feeding of flocks and herds.
  • Hormones – Many products claim to be “hormone free.”  It’s a matter of record, neither hormones nor steroids have been used in poultry production since 1947.  Recently, Federal regulations required any claim to be “hormone free” to have the additional statement “Federal regulations prohibit the use of hormones.”
  • Cage-Free – The term as interpreted by consumers conveys that hens are not confined by wire which would include conventional cages and enriched colony modules.  Alternatives to cages may include barns with or without outside access.  Confusion occurs with similar terms such as “free-roaming” which could mean unrestricted movement in a barn equipped with slatted floors or aviaries.  Currently organic flocks which should have some outside access which could either be in sun porches or pens.
  • Free-Ranging – This term has been used in deceptive labeling to imply that hens have extensive outside access but in fact were allowed to “roam free” within a barn.
  • Pastured – Approximately one percent of producers use pasture or range with densities of      22 square feet per hen in accordance with either U.S. or UK standards.

Over and above the label claims on housing, there are a wide range of welfare certifications each with a specific seal signifying compliance with the standards of the agency concerned.  Generally consumers are unaware of the requirements and the individual certifying agencies spend more time promoting their programs to producers and retailers than to the public.

Nutritional claims also create confusion.  Specific descriptors as designated by the FDA are frequently misunderstood by consumers. These include: -

  • “Free from” – meaning less than 0.5 gram per serving of a nutrient with an established daily value
  • “Low in” – meaning 3 grams or less per serving
  • “Reduced” – signifies that the food would contain 25 percent less of a specific nutrient per serving than conventional products. 

There is considerable interest in consuming products free of gluten, a protein in wheat and related grains.  It is estimated that less than 5 percent of U.S. consumers require a gluten-free diet based on intolerance.  Effectively “gluten-free” has been hyped to create an impression of healthfulness.  Given that there is no scientific basis for this presumption, gluten-free is in all probability a fad and will decline in importance.  According to the FDA, foods labeled “gluten-free” must have been processed to remove gluten and have less than 20 parts per million of the protein.  Deception is created when food that has absolutely no gluten content such as eggs and meat are labeled “gluten-free” to establish a false impression of superior quality.

Douglas Balentine director of the Office of Nutrition and Food Labeling of the Food and Drug Administration stated “Our objective is that the label should be helpful in providing truthful and not misleading information, but we don’t define all the terms on food labels you might see, so there is some flexibility.”

Although gross deception will result in the attention of regulators, priorities are directed more towards blatant deception, leaving many terms in a gray area exploited by aggressive marketers. Label claims are now attracting the attention of the tort Bar where consumer classes are easy to establish especially in California. Caveat vendor!

   
 

AEB PRESIDENT’S MESSAGE TO THE INDUSTRY

Jul 20, 2016

    

In the July 2016 edition of Incredible News issued by the American Egg Board, president and CEO Anne Alonzo referred to progress made by the AEB in promoting egg consumption during the first quarter of 2016.  Achievements include:

  • Participating in the June 3rd National Egg Day in cooperation with McDonald’s Corporation with respect to the 50th anniversary of the introduction of the Egg McMuffin and progress in implementing all-day breakfasts featuring egg items.
  • Co-organizing the Egg Trade Mission to Jalisco in Mexico City to take place August 22nd to  25th in cooperation with the US Egg Poultry and Egg Export Council
   

The UDSA estimates per capita consumption of eggs during the first and second quarters of 2016 will be 66.2 and 65.4 respectively with an anticipated total consumption of 262.8 eggs for the year. This value is approximately 10 percent higher than the 252 eggs used  in shell and liquid form during 2015. Consumption was depressed by high prices associated with shortages occasioned by the Spring outbreak of HPAI. 

Despite the apparent rise in consumption, both nest-run and wholesale prices fell precipitously during the second quarter.  The USDA ex-farm price during the first quarter averaged 83.8 cents per dozen.  In contrast for the second quarter of 2016 the ex-farm price was 34.7 cents per dozen with a range of 41.8 to 31.8 cents per dozen.  Over the first six months of 2016,nest-run  production costs, comprising feed, pullet depreciation, labor, housing and overhead amounted to 61.38 cents. This difference denotes the loss experienced by producers of generic eggs with negative contribution margins throughout the second and third quarters.

McDonald's Egg McMiffin

Despite the strenuous activities of the AEB, potential production, from the current national producing flock of 294 million hens, demand and hence wholesale prices have not increased despite the low prices paid to producers delivering to stores.  The retailers have not decreased shelf price in proportion to the decline in producer price and have maintained very high margins which has depressed consumption.  For the first five months of 2016 USDA nest-run prices have declined by 66 percent and direct store delivered prices by 45 percent. In contrast USDA retail prices declined by 27 percent or approximately half  the decline experienced by producers.

Some retailers including the hard discount chains have sacrificed a portion of their mark- up to offer eggs at a competitive price and generate increased dairy, grocery and produce sales.  With respect to white-shelled generic eggs, store-buyers appear to be setting the price and their chains are enjoying the benefits of super-profits, in part supported by a price-discovery service which may be introducing distortions in the market.  

Specialty eggs representing approximately 20 million hens in production or 10 percent of flocks producing for the shell-egg segment of the industry have been less affected.  This includes cage free, organic and enriched products including both regional and national brands. 

   

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Dr. Simon M. Shane
Simon M. Shane
Contact     C. V.

Industry Prices: Thu Jul 28
 Corn3.39 $/bu
 Soybeans9.78 $/bu
 Soybean Meal340.80 $/ton
 Eggs, Producer30  ¢/doz
 Eggs, Warehouse 48-51  ¢/doz