Shane Commentary

 

Italy Proposes Restrictions on Vegan Diets for Children

Aug 26, 2016

    

Based on demonstrated nutrient deficiencies in strict vegan diets which will affect the growth and development of children, an Italian lawmaker Elvira Savino, representing the conservative Forza Italia party has introduced legislation to ban the feeding of vegan diets to children. 

Recent cases of parents feeding diets devoid of all animal products including eggs and dairy foods has resulted in stunting and pediatric complications.  The proposed law would apply to minors up to the age of 16. Parents or caregivers would be subject to a four year prison sentence in the event of a deficiency syndrome or seven years imprisonment in the event of a fatality.

  

Savino stated “If even only one child ends up in hospital because of this behavior I feel we have to protect them all.”  It is her belief that pediatricians should be required to report parents to authorities if they believe that vegan diets are responsible any developmental abnormality.

By the same token, supplying children with raw milk also represents a form of abuse given the probability of infection with a number a bacterial pathogens including Listeria, Salmonella, Campylobacter and  E.coli.

   
 

MISINFORMATION ON SE DISSEMINATED IN DISTORTED REPORT

Aug 25, 2016

    

Dan Flynn writing in Food Safety News has rendered the U.S. egg production industry a disservice by dredging up anachronistic facts and recounting the 2010 episode of, SE attributed to Quality Egg LLC., operated by Austin “Jack” DeCoster and his son Peter.

  

Among many of the misconceptions amplified by Flynn include:

  • Estimates show 1 egg in 50 might be a danger to human health. This is absolute garbage and relates to an imperfect assessment reflecting the SE status of flocks in the late 1990s before intensified biosecurity, vaccination and surveillance were introduced. An egg from a flock or complex with a 15 or more year history of freedom from environmental SE will have a negligible probability of contamination. Given that less than 2 percent of commercial egg-producing flocks are positive by environmental monitoring, and that vertical transmission of the pathogen to eggs is limited by vaccination and that a cold chain is in effect from packing to point of sale, the number of eggs with viable SE capable of initiating an infection is infinitesimally low.  This is evidenced by the fact that there have been no confirmed SE outbreaks attributable to commercial egg-producing farms functioning under the Federal program, a State EQAP or a Company mandate.  Extrapolation by Flynn in 2016 using the discredited and unrealistic“1 in 50” proportion is disingenuous and he should know better.
  • The best thing you can do is to buy pasteurized eggs for use in your home kitchen and seek out restaurants that only serve pasteurized eggs. It is a matter of fact that pasteurized shell eggs represents less than one percent of the market despite having been introduced at the height of SE concern in the late 1990s.  In- shell pasteurized eggs have never gained traction in the marketplace. Interest in pasteurization for shell eggs, other than for immunosuppressed individuals, has sharply declined. This is based on the advances made by the egg production industry in the U.S. to eliminate infection, even before the FDA final rule on Salmonella was introduced in 2010.
  • We do think it’s time for USDA and FDA to move from the sidelines to the center of the housing debate with scientifically drawn criteria. The FDA was a late-comer to control of SE and their unilateral progress to the Final Rule and subsequent implementation in 2011 was less than efficient.  The USDA has in fact been promoting “family farm” and retrograde egg production systems despite the advantages in sustainability, hygiene and quality associated with commercial-scale production applying vertical or horizontal integration.  An example of the conflict faced by the regulatory agencies relates to the fact that producers are sanctioned if an FDA inspection reveals a hole in a structure larger than a quarter which can allow entry of mice yet the proposed USDA Certified Organic rules mandate entry and exit apertures measured in square feet to promote outside access for free-range flocks.  Egg producers are cognizant of the impact of house design, construction and finishes on hygiene and biosecurity and are well advised by in-house and consulting veterinarians and extension specialists as to requirements for healthy flocks.

It must be recognized that the DeCosters represented an aberration in the U.S. egg production industry.  Jack DeCoster has a long record of association with SE extending from his Turner, ME farm which precipitated the index case in Boston in 1985, an outbreak from a farm he operated in Maryland in 1987 and the most recent 2010 Iowa outbreak.  He and his son pleaded guilty to a number of misdemeanors have paid a substantial fine and are awaiting an appeal against three- month prison terms considered justified by the judge given the egregious deviations from industry standards, placing public health at risk and degrading the image of egg producers in the U.S.

Flynn questions whether QSRs, supermarkets and food service companies that have announced their intention to transition in sourcing eggs from caged to non-caged flocks have considered SE.  He should be aware that irrespective of housing, companies such as McDonald’s Corp and other large users of eggs impose standards of biosecurity and hygiene which exceed the somewhat deficient requirements of the FDA Final Rule which has no provision for vaccination and incorporates a program of flock surveillance inferior to that required by the United Egg producers and a leading cooperative producing and distributing branded eggs nationally.

   
 

DeCoster’s Requesting Re-hearing on Sentencing

Aug 19, 2016

    

Peter Keisler, the attorney representing Austin “Jack” DeCoster and his son Peter has predictably entered an application for a re-hearing before the entire bench of the U.S. Court of Appeals for the 8th Circuit. The DeCosters were both sentenced to a three month term of imprisonment in addition to a substantial fine after pleading guilty to misdemeanor charge arising from the extensive 2010 SE outbreak. At issue is whether a jail sentence can be imposed for a strict liability misdemeanor.

  

The 22-page brief filed by Attorney Peter D. Keisler contends that the 2-1 decision conflicts with established law.  Applying the Park Doctrine handed down by the U.S. Supreme Court, “responsible corporate officers liable under the Food Drug and Cosmetics Act for company offenses requires proof of individual fault.”

The Park Doctrine also referred to as The Responsible Corporate Officer Doctrine arises from U.S. v. Park U.S. 658(1975). In 1970 John Park served as the president of Acme Markets. At this and subsequent times inspection by FDA officers detected rodent infestation in stores and warehouses operated by the Company. Park was found not guilty since he claimed no knowledge or intent to adulterate food products. The decision of a lower court was overturned by the Supreme Court resulting in payment of a fine on each of five counts. The Department of Justice in recent years has established a cooperative relationship with the FDA. Criminal proceedings are predicated by persistent violations and evidence of causation of injury.

It is understood that a number of Amicus briefs have been filed with the 8th Circuit in support of the DeCoster’s as the sentence has profound implications for executives responsible for food companies in the event of disease outbreaks associated with their products.

Attorney Keisler maintains that the appeal is exceptionally important and if the sentence is allowed to stand, the three-month term would be an unprecedented expansion of Federal powers to imprison.

   
 

Consumers Are Unlikely to Use QR Codes Imprinted on Packages of GM-Containing Foods

Aug 11, 2016

    

The compromise which led to the Genetically Modified (GM) labeling Act signed into law by President Obama in late July has raised a number of questions regarding access to information concerning the GM status of packaged foods.  The Act requires some form of labeling either as a direct statement, a website URL or a QR (quick-response) code. 

  

According to an August 4th report in The Wall Street Journal by Heather Haddon, the University of Pennsylvania, Annenberg Public Policy Center determined that 59 percent of 1,011 U.S. adult respondents stated that they were unlikely to use either a smartphone or an in-store scanner to determine the GM status of a product.  Of significance was the finding that 80 percent of those surveyed still consider it important to designate the GM status of a food.  The results of the University of Pennsylvania study should be viewed against the investigation carried out by the Food Marketing Institute that determined that 20 percent of consumers use QR codes to ascertain nutritional value of grocery items.

The Organic Consumers Association, opposed to the law advocated for open labeling of products containing GM ingredients, less as an informational exercise than it was to demonize GM foods. The organization representing producers of USDA Certified Organic products claims to have collected close to 500,000 responses to an online campaign for open declaration of GM content.

It is expected that most of the members of the Grocery Manufacturers Association will participate in imprinting SmartLabel codes on products, led by significant producers including General Mills, Campbell Soup, Hershey and Unilever.

Despite the enactment of the GMO labeling law it is noted that compliance will commence only in 2019, given the need to develop regulations and to follow the statuary public comment period.  It is also significant that the responsibility for administration of labeling regulations is now under the USDA and not the FDA.  This is realistic given the reality that GM ingredients have no health-related effect.

The Act exempts animal-derived products from herds and flocks fed GM ingredients.  This recognizes the fact that there is no DNA residue from feed ingredients in milk eggs, or meat. In reality all ingredients irrespective of whether GM or conventional are degraded the same way during digestion to amino acids and sugars and are absorbed and metabolized without distinction as to source in pathways specific for the nutrient.

   
 

PETA Claims Support from “Corporate Activism”

Aug 11, 2016

    

TheStreet.com recently drew attention to the activities of animal activist groups such as PETA in mounting campaigns against target companies by purchasing stock and filing shareholders resolutions. Most of the mainstream animal-rights activists have relinquished Yakuza-style disruption of annual meetings, but the presence of the lunatic fringe is frequently evidenced by the appearance of bizarrely costumed protesters.

Anne Kellogg, manager of corporate affairs for PETA stated “Our shareholder program is one of our most meaningful ways to engage companies that are not making progress on animal welfare issues.  She added “No company or shareholder wants to be associated with companies that are cruel to animals.”

  

Taking a page out of the book of financial activists such as Bill Ackman and Carl Icahn, advocacy organizations in the areas of environmental concern, worker rights and other issues continually file resolutions which are invariably rejected but generate publicity and inexorably initiate some change.

Commenting on the trend, a former commissioner of the Securities and Exchange Commission, Troy Paredes is quoted as saying “There are many socially valuable causes, but the SEC and corporate law are not places for dealing with them.”  Paredes questions whether protests relating to social and animal rights issues are in the interest of either the corporation or investors.

There is a darker side to the motivation for animal rights groups to purchase shares in companies.  By shorting stocks of targets in advance of protests and negative press releases, it is possible to gain from premeditated action at the expense of shareholders, while cynically appearing to fulfill a social function. To date there is no evidence that any organization has “moved the needle” for a large corporation but any pro-vegan group with an income of over $100 million annually and off-shore investments could conceivably try to profit from their activities.

   
 

The Cost of Conversion to Cage-Free

Aug 5, 2016

    

Following the cascade of announcements that food service companies, QSRs, food retailers and restaurants have committed to transitioning to housing systems for egg producing hens involving other than conventional cages, it is valid to estimate that the cost of the exercise.

If it is assumed that 200 million hens are housed for production of shell eggs and that currently 10 percent of this cohort is held in other than conventional cages, (Enriched colony modules, barns and aviaries) 180 million hens will have to be re-housed over ten years at a cost of approximately $35 per bird.  This represents an expenditure of $6.3 billion using 2016 values but with passage of time, inflation will increase the capital cost of conversion.  Allowing for a conservative three percent compounded escalation in cost, the value over ten years might amount to $8.5 billion.   

  

Given the differential in both fixed and variable costs associated with conversion from conventional cages to alternative systems, the cost at the supermarket shelf will  not be less than 50 cents per dozen for generic eggs.  Given a 2016 consumption of 15.2 dozen shell eggs per year based on 260 eggs per capita and 70 percent consumption in the form of shell eggs, the cost accruing to a population of 320 million would amount to $7.60 per person annually or a total value of $2.4 billion each year for the domestic shell market.

The value of 50 cents per dozen is considered to be lowest possible differential between eggs derived from cages compared to alternative systems.  It is a matter of record that for 2016 ending June 4th, the differential between cage-free and caged eggs averaged $1.25 per dozen reflecting disparity between supply and demand.  At present, five percent of shell eggs sold are designated cage-free with an additional four percent sold as USDA Certified Organic.  Free-range egg sales represent 0.2 percent of the market.  With a transition from conventional cages to alternative systems including aviaries and barns, the price differential will narrow with producers experiencing declining margins given increased supply as more hens are housed in alternative systems.

It is a valid question as to whether it is ethical and morally acceptable for a small group of animal welfare activists to coerce, manipulate and bully an industry into converting from conventional cages to alternatives to satisfy their desires and have producers and

consumers  foot the bill.  Clearly the HSUS and its surrogates including Mercy for Animals outwardly place animal rights above human needs for nutrition at an acceptable price.  We already have in place a “Pacelle Tax” of approximately 40 cents per dozen in California following the introduction of Proposition #2 enacted in 2008 which came into effect in 2015

Given the billions of dollars involved, the HSUS should be more forthcoming over the cost impact of its actions and balance benefits against expenditure.

Whatever ever happened to informed consumer choice and reason? How did these people get their hands on our checkbooks, purses and wallets?

   
 

Settlement in Class Action Lawsuit Against Egg Producers

Jul 29, 2016

    

In an article in the Legal Intelligencer on July 12th P.J. D’Annunzio reported on a negotiated settlement for $8.4 million in relation to the long standing case brought by grocery stores and restaurants against egg producers. 

Previously Cal-Maine Foods and Land O’ Lakes on behalf of their then subsidiary Moark LLC settled following negotiations.

  

The class comprising supermarket chains, commercial food manufacturers and restaurants were certified as a class in September 2015 and were referred to as “direct purchasers.”  U.S. District Judge Gene E.K. Pratter of the Eastern District of Pennsylvania accepted the reality that “class members could not have systemically avoided the effects of a lower supply of eggs by obtaining a substitute but would instead have had to pay the increased prices for eggs.”

The defendants in the case and the amount in which they paid comprised Midwest Poultry Services ($2.5 million), National Food Corp. ($1 million), United States Egg Marketers with United Egg Producers ($500,000), NuCal Foods ($1.4 million) and Hillandale Farms ($3 million).  In addition to the settlement amount, all of the defendants incurred extensive legal costs.

The case arose following the decision by egg producers to conform to the UEP welfare requirements which successively raised space allowance in cages to the current 67 square inches for white feathered hens comprising the majority of the market.  The Plaintiffs also alleged that the Defendants colluded to restrict the supply of eggs by early depletion of flocks, and promoting exports at prices lower than prevailing wholesale values.  It is understood that evidence was presented to support allegations of collusion in the form of injudicious memos and circulars.

The case raises the question of whether the industry will be accused of “rigging the market” with the transition from conventional cage housing to alternative systems which will result in a reduction in the national flock unless additional housing is constructed at high capital cost.

   
 

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. 

   
 

Letter to the National Organic Program USDA-AMS-NOP

Jul 15, 2016

    

The following letter was addressed to the administrators of the NOP in response to their request for comments on aspects of the proposed changes in housing and management. Responses expressing support or rebuttals are welcome".

Download and read the letter from http://egg-cite.com/documents/sms-160715.docx

  

   
 

Chipotle Unjustifiably Blamed for Alleged Incident

Jul 15, 2016

    

The distortion initiated by a “tweet” can result in a severe impact on brand image and share price of a company. A posting dated 08H20, July 7th disseminated by author Eric Van Lustbader claimed that his editor became acutely ill after eating at a New York Chipotle Mexican Grill restaurant. 

  

The tweet read “This Chipotle thing is still ongoing.  My editor ended up in urgent care after being deathly ill all night from eating at Chipotle’s” This was followed by a subsequent tweet “She was sent to the ER spent 7 hours there bacteria found.  Doctors surmised unsanitary food handling.”

In the first instance, there was no diagnosis of either a foodborne infection or toxicity.  Secondly ER physicians could not have “found bacteria” in a clinical setting. The attribution of the condition to Chipotle as expressed in the tweet is pure speculation.

Diagnosing a foodborne infection requires isolation and identification of a pathogen from the patient and demonstrating the same serotype of pathogen in the restaurant or in an unopened package of the suspect food together with confirmatory epidemiologic evidence.  None of these criteria were met and accordingly the tweets by Van Lustbader were invalid. 

Notwithstanding the lack of justification for the tweet, negative publicity resulted in a three percent decline in the share price of CMG by noon on July 7th although a recovery was evident after the company issued a statement refuting the tweet.  Comments on social media were divided as to either support or condemnation of Chipotle Mexican Grill depending on the bias or perception by the individual posting a subjective opinion on the CNBC website.

At 15H00 on July 7th CMG traded at $391.00, down 2.5 percent from the open.  The 52 week range for the stock is $385 to $759 suggesting that recovery following the series of foodborne disease outbreaks in 2015 has yet to be reflected in either share price or earnings.

   
 

Opposition to GMO Labeling Bill

Jul 8, 2016

    

A pro-organic organization termed the Rodale Institute mounted an eleventh-hour campaign to oppose the July 6th Senate vote on proposed legislation which would standardize GM labeling for the entire U.S.

At issue is Law 120 passed by the Vermont legislature scheduled to come into effect on July 1st but deferred until December 31st 2016.

   

The objections raised by the Roadale Institute are:-

  • The Senate bill does not prescribe mandatory standards for GM labeling and preempts existing and proposed label standards which may be at the discretion of the present or future Secretaries of Agriculture.
  • The Bill would exempt numerous GE foods from labeling including foods containing ingredients derived by gene deletion.  This is entirely a spurious objection since gene deletion or silencing genes does not involve transgenesis or add to the genome.
  • The Bill may discriminate against rural, low income and elderly populations who may not have access to websites or be able to read QR codes.  Since there is no adverse effect associated with GM foods, there will be no deleterious effect and this demographic has the option to select alternative labeled products if they so desire.
  • The Rodale Institute considers that the proposed bill preempts state labeling laws such as Law 210 passed by the Vermont legislature.  The Institute is raising irrelevant objections relating to the selection of cultivars by farmers who know exactly what they are purchasing and sowing.
  • The Bill which was devised by the Senate Agriculture Committee after considerable deliberation and compromise apparently has no civil or criminal penalties for non-compliance. Obviously this omission will be rectified before the final Bill is considered by the full Senate.
  • The Rodale Institute takes issue with the fact that eggs, dairy, poultry and meat products derived from herds and flocks which are fed GM ingredients are exempt.  This objection is completely unjustified since there is no change in the composition of the ingredients and obviously no difference in the nutritional content or composition of eggs, milk or meat and their derivatives, as a result of feeding GM-derived ingredients. Any sentiments to the contrary are scientifically unfounded and justifiably raise issues of suspicion, distrust and uncertainty where no dangers exist.

The comprise legislation which should be passed after adoption of a cloture procedural vote (65 to 32) will allow consideration by the full Senate.

Prospects for the bill in the House are less favorable since Representative Mike Conway (R-TX) chairman of the House Committee on Agriculture has yet to act on the initiative by the Senate.  

The Bill will avert a patchwork of local regulations based on the proclivities of residents and voters and will avoid considerable cost associated with specific labeling for states such as Vermont with less than one percent of U.S. consumers and even for local municipalities and activist communities.

The objections advanced by the Rodale Institute will predictably be introduced into debate in the House but hopefully meaningful Federal legislation will be forthcoming.

   
 

The Impact of Child Nutrition on Future Earnings

Jul 8, 2016

    

Scientists at the Harvard T. H. Chan School of Public Health have published a report on the impact of child nutrition on future earnings and contributions to the economies of their respective nations. 

The study was funded by Grand Challenges Canada headed by Peter Singer.  Inadequate nutrition, premature birth, low rate of breast feeding and early exposure to intestinal infections contributes to stunting which affects 30 percent of children in developing nations.

The study authored by Dr. Gunther Fink derived a value of losses attaining $177 billion annually after a review of data relating to 123 million children born in 2010 in 137 low income nations.

  

Strategies to improve early growth included:

  • enhanced anti-natal care,
  • breast feeding
  • supplemental nutrition especially vitamins A and E,
  • appropriate measures to prevent intestinal infection including vaccination
  • the provision of clean water

All of these modalities contribute to improved early growth and development.  In this respect, eggs have an important contribution given the balanced protein and micronutrients essential for brain development, immunity and growth.

   
 

OPPOSITION TO THE “CAGE FREE” MOVEMENT GROWS BASED ON PRICE CONSIDERATIONS

Jun 30, 2016

    

Bethany Mandel a contributor to the Federalist recently posted a column questioning why animal rights activists coerce the egg industry into converting to cage free housing by pressuring customers with the ultimate cost to be borne by consumers.

Mandel is quoted as stating, “I’ve considered buying cage-free numerous times, however unfortunately my need to feed my family affordably has made the cost-prohibitive nature of cage- free a non-viable option”.  She decries the fact that the “anti-science, pro-feelings, food-justice lobby has denied families like ours to choose what we put on our dinner plates”.

  

Mandel is incensed that “untrained activist makes decisions that affect not only our diets but also our pocketbooks”. These sentiments have been previously expressed in commentaries and editorials on EGG-CITE. 

It would appear that the die has been cast and that conversion to various alternatives to conventional cages whether aviaries, barns or enriched colony modules will be adopted over the coming ten years.

EGG-CITE supports the principle of consumer choice provided that acceptable standards of welfare, implicit in appropriate housing and management, are adopted by the industry.

   
 

Hampton Creek Seeks Investment Capital

Jun 24, 2016

    

According to a May 24th 2016 article by Olivia Zaleski in Bloomberg Technology, Hampton Creek is negotiating with potential investors to raise $200 million. If successful this would value the company at $1.1 billion. The tone of the article suggest that this is highly speculative given the limited range of Hampton Creek products on the market coupled with as yet non-quantified demand for vegan meat and egg substitutes. 

  

Industry observers question whether Hampton Creek is in reality an innovator with the ability to develop new products or simply an opportunistic marketer relying on existing technology and manufacturers to provide products.  Hampton Creek has announced intentions to increase product offerings to more than 600 items and has aspirations to compete with major food producers. 

Although the investment community has favored food start-ups, Bloomberg notes that the food-tech sector attracted only $680 million during the first quarter of 2016 constituting the lowest level of funding since 2014.

Hampton Creek has stated that it wishes to erect a 95,000 square foot research and development laboratory. Why? Are there not adequate laboratories staffed by distinguished faculty and competent technicians at Land-Grant Universities?  Are there not any commercial contract facilities in operation? The comment that the “scientists will analyze over 960 plant samples per week” taken with previous statements relating to extensive databases on plants appear to be at variance with established industry practice.  In fact the comments by entrepreneurial founder of Hampton Creek and its previous iterations, Josh Tetrick raises images of an infinite number of monkeys sitting at an infinite number of typewriters in the hope that the exercise will produce a sonnet.

Hampton Creek has made use of existing technology, apparently supplied by a contract laboratory to produce an egg-free mayonnaise substitute now competing with a nationally branded product.  Hampton Creek also produces a range of plant-based substitutes for eggs in cookies and baking dough.

There has been little in the way of innovation and product development to date to justify previously claimed tranches of capital.  The disconnect between publicity relating to supplanting eggs and animal products and the reality to date is eerily reminiscent of Theranos which promised to be a “disruptor” of the industry providing clinical-pathology assays. The parallels include

  • A heavy emphasis on publicity featuring the founder,
  • The extravagant claims for innovative products unsupported by established publications in peer-reviewed food science journals,
  • The absence of endorsement of Hampton Creek technology by respected academics or industry figures
  • A high burn rate of funding with operating losses.

These should be warning signs to the investment community. 

   
 

UEP Commitment on Gender Separation

Jun 17, 2016

    

The Board of the United Egg Producers released a statement on disposal of cockerels following the May 2016 meeting.  The statement released on June 9th reads:-

“United Egg Producers and our egg farmer members support the elimination of day-old male chick culling after hatch for the laying industry.  We are aware that there are a number of international research initiatives underway in this area, and we encourage the development of an alternative with the goal of eliminating the culling of day old male chicks by 2020 or as soon as it is commercially available and economically feasible.  The U.S. egg industry is committed to continuing our proud history of advancing excellent welfare practices throughout the supply chain, and a breakthrough in this area will be a welcome development.” 

  

The question of embryonic gender determination was reviewed in postings on September 30, 2015, December 24, 2015, March 25, 2016 and April 22, 2016.

Various avenues of research are currently underway which include:-

  • Ramen spectroscopy on three-day old embryonated eggs in Germany but requiring removal of a quadrant of the shell
  • Transgenic modification of male chicks in Australia to introduce a fluorescent protein to allow removal of eggs containing male embryos at the time of transfer
  • Technology developed on an experimental basis by a start-up, inOVO located in the Netherlands This company has indicated that additional research and proof of concept will take at least a year.  

It is evident that to be successful a system which will differentiate between eggs bearing male or female embryos will have to be effective with at least 95 percent accuracy by no later than the 9th day of incubation.  Speed of operation should be consistent with current rates of chick service and capital and operating costs should be acceptable to the industry.

The UEP has committed to an implementation date of approximately four years in the future.  This may be optimistic given the state of development of alternative technology.

In the interim, the industry could project a welfare-oriented image by instituting carbon dioxide anesthesia before maceration or grinding as practiced in the EU in some hatcheries and currently under experimental evaluation in the U.S. This inexpensive and practical expedient could diffuse some of the opposition to intensive egg production since the image of grinding conscious day-old cockerels is unacceptable to reasonable consumers.

   
 

Chipotle Facing Lawsuits in California

Jun 17, 2016

    

Steve Ells, founder and CEO of Chipotle Mexican Grill has repeatedly implied that all food served in his restaurant chain was derived from animals raised on GMO-free feed and that cheeses and other dairy products were sourced from herds fed GMO-free diets. 

Justifying his position, Ells stated in an interview with the New York Times “Just because food is served fast it doesn’t mean that it has to be made with cheaper ingredients, highly processed with preservatives, fillers, stabilizers and artificial colors and flavors.”

  

Since Chipotle Mexican Grill has allegedly not complied with the claim of GMO-free sourcing, a series of lawsuits have been filed in California claiming violation of the Consumer Legal Remedies Act, the California False Advertising Law and the California Unfair Competition Law.

In commenting on the ongoing litigation, Michael Roberts, Executive Director of the Resnick Program for Food Law and Policy at the University of California stated “I believe the greatest scrutiny will be applied to GMO-free claims.”  He added “It is likely that this will lead to further suits against not just Chipotle but others as well.”

The prior success of Chipotle Mexican Grill is based on unsubstantiated claims for superior quality, taste and safety.  There is no evidence that poultry, red meats and dairy products derived from flocks and herds fed non-GMO diets are in any way more nutritious or provide higher levels of safety than their conventional counterparts.

Claims of deceptive advertising will most certainly impact the already tarnished image of Chipotle Mexican Grill as it struggles to regain market share after a series of foodborne infections involving three separate pathogens across wide areas of the U.S. in 2015.

   
 

Publix Subjected to Activists’ Pressure over “Cage-Free”

Jun 17, 2016

    

During the past few weeks, EGG-CITE has commented on supermarket chains, QSRs and food service companies committing to sourcing from cage-free flocks over a ten-year period.(See postings March 9 and April 29)

In an article by Kyle Arnold in the May 4th Orlando Sentinel, Publix with 1,100 stores in six states and 765 in Florida, has yet to make a statement on their intentions. Accordingly Compassion in World Farming is apparently placing pressure on the company.  As with many home-grown and contrived campaigns, individuals can initiate petitions using change.org.  In this case, 115,000 signatures have been collected to influence Publix to commit to selling eggs from non-caged flocks.

  

Maria Brous a Company spokesperson stated “Publix would not make a promise or agree to a timeline if we did not think it was feasible.”  She added “We have met with our suppliers and talked about the feasibility of going cage-free.”  Justifiably Publix is concerned as to actually what customers want and also whether there is a willingness to pay for a total commitment to cage-free eggs.  Currently Publix offers organic, cage-free, nutritionally enhanced and conventional eggs to allow consumers to select products according to their specific needs and budgets.

The Coalition for a Sustainable Egg Supply conducted a comparison of egg production in enriched colony cages, aviaries and floor housing systems and projected costs based on production parameters.  Regrettably this study was seriously flawed with respect to the aviary evaluation due to high mortality caused by mismanagement which distorted results. (See posting February 27th 2015). The Coalition failed to adjust their data and an incorrect characterization of aviaries has unfortunately become entrenched in the literature documenting alternative systems.

 The frequently quoted value of an incremental 15 cents to produce cage-free eggs compared to product derived from conventional cages is also highly questionable since conversion to an alternative system is not a “one-size-fits-all” situation.  The actual differential is considerably higher if all fixed and variable costs are included in the calculation. We should not be led astray by spurious projections such as those publicized by the HSUS leading up to the vote on California Proposition No. 2 in 2008. Consumers in the state have learned that the “Pacelle Tax” is in the region of four to five times the claimed “cent per egg” figure used to justify support for the initiative and will have to be paid for years to come.

There is no evidence that hens produce more eggs under non-confined conditions than in cages and there is no difference in either quality or nutritional content of eggs according to housing system.  Given appropriate management and disease control, eggs derived from aviaries and slatted floor systems should be equivalent in safety to conventional eggs derived from cages providing that eggs are subject to washing in accordance with USDA specifications.

The comment by Rachel Dreskin Food Business Manager for Compassion in World Farming that the price for cage-free eggs will drop as supply increases is wishful thinking based on a combination of sentiment and ignorance of the economics of egg production.

 

   
 

Guest Commentary by Senior Veterinarian Advisor to the American Humane Association

Jun 10, 2016

    

Dr. Donald Hoenig, a friend and colleague who serves as the Senior Veterinarian Advisor to the American Humane Association (AHA), Humane Heartland Program, submitted a commentary on a recent posting on  EGG-CITE concerning the transition by the U.S. egg-production industry to “cage-free” housing for hens.

He correctly notes that there is no accepted standard or definition of this term which is loosely applied. In the interest of free discourse, his commentary is posted presenting the views of the AHA and defining the standards required by the Humane Heartland Program.  

  

As the U.S egg industry transitions toward cage-free layer housing over the next 5 to 10 years, there is need for clarity, consistency and standardization in terminology relating to production systems. The list of companies subscribing to the replacement of conventional cages has been documented by the United Egg Producers, the association recognized as representing the U.S. egg-production industry.

An April 19, 2016 article in Fortune magazine pointed out what many within agriculture already know, that consumers are confused when it comes to the term “cage-free.” As the author states, “Consumers have been demanding changes to the food system, but it’s unclear if they know what they are getting.”

Even within the egg industry terminology can be confusing. Phrases and words such as cage-free, free range, aviary, pasture-raised, multi-tier, combination litter and slatted floors, slatted floor platforms and enriched colony housing have different meanings according to the perception of the manager.

Created in 2000, the Humane Heartland program is the Nation’s oldest third-party farm animal welfare program and is based on the U.K. Farm Animal Welfare Council Five Freedoms of Animal Welfare principles.  For the American Humane Association, Humane Heartland Farm Animal Welfare Program, the independent  Scientific Advisory Committee has defined “cage-free” as conforming to the following   standards:-

  1. Hens must have access at all times to a well-maintained litter area
  1. Hens must have an allowance of 1.5 square feet  in barns with all-litter floors; in multi-tier houses or houses with a perching area over a droppings belt the requirement is 1.2 square feet per hen for brown-feathered or 1.0 square feet for white-feathered strains respectively.
  1.  Nests must be provided
  1. Hens must be allowed 6” of perching space.

Access outside the house is not required for the AHA cage-free standard but is necessary for the specific AHA Free-Range and Pasture standards.

The Cage-Free and all other AHA species-specific standards require:-

  • A company policy emphasizing high standards of welfare;
  • An employee code of conduct;
  •  An animal health plan developed and reviewed annually by the flock veterinarian;
  • Additional elements including considerations such as adequate nutrition, air quality, accss to feed and water and welfare-compliant management procedures.
  • Producers certified under AHA Programs must  pass an annual third-party audit by a qualified evaluator.

The AHA believes that consumers deserve financial and ethical choices in their purchase decisions, which is why AHA has established standards for four different production systems for laying hens:-

  • Cage-free;
  • Enriched colony housing (ECH);
  •  Free-range;
  •  Pasture.

Each of the systems focuses on the welfare of  flocks and meets the criteria of the Five Freedoms. Consumers have choices among intensive indoor production using enriched colony modules or cage-free housing or alternatively less confined systems allowing outdoor access to either circumbscribed range or pasture.

Both egg producers and equipment manufacturers need predictability and standardization, as the conversion from conventional cages will take time and involve substantial capital expenditure.  Retailers, quick service restaurants and food service businesses can rely on the widely recognized AHA standards.

Further information about the Humane Heartland program and the AHA farm welfare standards can be found at <www.humaneheartland.org>