Editorial


Jury Rules Against Smithfield Farms in North Carolina Hog-Nuisance Case

07/09/2018

In the second jury trial filed against Smithfield Foods, a jury in Raleigh, Wake County ruled in favor of plaintiffs on Friday June 29th. The case involved a bellwether couple living in the vicinity of a 4,700 hog unit contracted to Smithfield Foods.  At issue is the apparent odor, alleged contamination of ground water and deprivation of property rights as a result of operating a lagoon and pasture-spray system of manure disposal.  Although the jury awarded compensatory and punitive damages, state law will restrict compensation to $250,000 per plaintiff and the $25 million total award will probably be reduced to $650,000.

 

The current case in Duplin County follows a previous verdict against Smithfield in a U.S. District Court in which ten neighbors were awarded $51 million which was subsequently reduced to $3 million. This case was regarded as the best opportunity for Smithfield to mount a defense since the bellwether plaintiffs moved to the area after the hog farm commenced operation.

 

The Duke Environmental Law and Policy Clinic at Duke University has emerged as the champion of homeowners in their opposition to hog farms using lagoon storage and spray disposal of manure.  North Carolina has 9 million hogs concentrated in the eastern segment of the state located among 2,000 farms contracted to a few integrators.

 

Alternative technology including biodigestors which could displace lagoons and are considered to be too expensive to install and operate.  Smithfield Foods, a subsidiary of the WH Group of China has indicated that should hog production become uneconomical as a result of lawsuits they will withdraw from North Carolina. The North Carolina Pork Council commented that the two verdicts would have “unforeseen economic consequences for our farmers, the state’s pork industry and North Carolina agriculture.”

 

During the first week of June, the North Carolina legislature overrode a veto by Governor Roy Cooper allowing to stand a law limiting the ability of residents to join a class action lawsuit against farmers and integrators as a result of nuisance.

 

The National Pork Producers Council president, Jim Heimerl stated, “We are deeply troubled by the decision against a farm that has operated responsibly and in compliance with state law since 1985 and maintains the highest standards of environmental and community stewardship.”

 

The two cases have established precedents which will result in a spate of claims of doubtful validity against operators of CAFOs. These may well include egg producers especially in areas where suburban encroachment on farms occurs.


 

Egg Industry News


USDA Weekly Egg Price and Inventory Report, July 19th 2018.

07/18/2018
  • Hen Numbers in Production Increased by 0.3 million to 314.7 Million as Molted Hens and Late-February Chick Placements Commenced Laying.
  • Shell Inventory Up by 7.1 Percent Suggesting a Near-term Price Decline.
  • Generic Prices for Extra Large and Large were Down 1.4 Percent Compared to Previous Week.

OVERVIEW

Prices

According to the USDA Egg Market News Reports posted on July 16 th the Midwest wholesale prices for Extra Large and Large sizes were respectively down 1.3 and 1.4 percent. Mediums were lower by 10.8 percent compared to the past week. The progression of prices during 2018 is depicted in the USDA chart reflecting three years of data, updated weekly.

The July 16th USDA Egg Market News Report (Vol. 65: No. 29) documented a USDA Combined Region value rounded to the nearest cent, of $1.51 per dozen delivered to warehouses effective July 13th This price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $1.42 per dozen. At the high end of the range, the price in the South Central Region attained $1.57 per dozen. The USDA Combined Price last week was 20 cents per dozen above the three-year average and 85 cents per dozen above the corresponding week in 2017.


 

WEEKLY COMMODITY REPORT

07/13/2018

According to the July 12th 2018 WASDE #579, 81.8 million acres of corn will be harvested in 2018 to yield 14.23 Billion bushels. The soybean crop is projected to attain 4.31 Billion bushels from 88.3 million acres harvested.

 

Quarterly corn and soybean stocks were estimated by USDA in a release on June 29th to total 5.3 Billion bushels (36.2 percent of 2017 harvest) and 1.2 Billion bushels (27.3 percent of 2017 harvest) respectively.

 

The following July and September quotations were posted by the CME at close of trading on July 13th together with values for the previous week in parentheses.

 

COMMODITY

 

Corn (cents per bushel)

July ’18     332  (342)        

Sept.  ‘18     340   (351)            

Soybeans (cents per bushel)

July ’18     831*  (834)    

Sept.  ’18     824   (843)      

Soybean meal ($ per ton)

July ‘18     329  (328)

Sept.  ’18      326  (326) 

*Decade low price.

 

Changes in the price of corn, soybeans and soybean meal this week were:-

 

COMMODITY                      CHANGE FROM PAST WEEK

Corn:                       July quotation down 10 cents per Bu.         (-2.9 percent)

Soybeans:                July quotation down 3 cents per Bu.          (-0.4 percent)

Soybean Meal:          July quotation up $1/ton.                          (+0.3 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

 

Declines in the prices of soybeans and hence soybean meal in recent weeks relate to competitive resumption of soybean exports from Brazil coupled with cessation of U.S. shipments to China in accordance with tariff concerns. The CME price of soybean meal stabilized this week. Soybeans continued to fall albeit at a slower rate compared to the past three weeks. The effects of tariffs took effect on June 6th although effectively exports ceased weeks ago.

See WASDE posting summarizing the July 13th USDA-WASDE Report #579, in this edition documenting  price projections and quantities of commodities to be produced, used and exported during the 2018 season.


 

USDA-WASDE FORECAST #579 July 12th 2018

07/13/2018

OVERVIEW

The July 12th 2018 USDA WASDE projections for the 2018 corn and soybean harvests are based on actual planting data, crop progress, long-range weather forecasts and historical records. Harvest areas for corn and soybeans were updated from the June projection to 81.8 million acres (83.1 million in 2017) and 88.9 million acres, (89.5 million acres in 2017) respectively. The USDA held corn yield to 174.0 bushels per acre (175.4 bushels in 2017). Soybean yield was retained at 48.5 bushels per acre (49.5 bushels in 2017). The USDA July projection of ending stock for corn was reduced 0.3 percent to 1,552 million bushels. Ending stock for soybeans was raised 50.6 percent to 580 million bushels compared to the June 2018 WASDE Report.

The USDA projections of ending stocks and prices take into account current uncertainties concerning announced tariffs on U.S. products.

CORN

The projection of the corn harvest decreased by 1.3 percent from the June 2018 Report to 14,230 million bushels consistent with the reality that the crop is now in the stage of silking. The projection for 2018 can be compared to the 2017 harvest of 14,577 million bushels and is down 7.3 percent from the 2016 near-record harvest of 15,148 million bushels. The “Ethanol and Byproducts” category was lowered 0.9 percent to 5,625 m. bushels and exports were raised 25 m bushels to 2,225 million bushels. “Feed and Residual” was raised by 75 m. bushels to 5,425 million bushels resulting in a corresponding decrease of 1.6 percent in ending stocks to 1,552 m. bushels. The projected USDA range in farm price was reduced by 10 cents per bushel on both ends of the range to 330 to 430 cents per bushel. At 14H30 on July 13th CME quotations for July and September 2018 corn were 332 cents and 340 cents per bushel respectively.


 

Status of 2018 Corn and Soybean Crops

07/16/2018

The USDA Crop Progress Report released on July 16th confirmed complete planting and emergence of the 2018 corn and soybean crops. Early-planted corn is silking at a rate 26 percent faster than the 5-year average. Soybeans planted early are blooming consistent with good soil moisture and climate conditions, leading the 5-year average by 20 percent. Approximately 26 percent of the soy crop is setting pods. EGG-NEWS and CHICK-NEWS will report on the progress of the two major crops as monitored by the USDA through the end of harvest in October.


 

Export of Shell Eggs and Products January-May 2018.

07/16/2018

USDA-FAS data collated by USAPEEC, reflecting export volume and values for shell eggs and egg products are shown in the table below comparing January-May 2018 with the corresponding period in 2017:-

 

 

PRODUCT

Jan.-May 2017

Jan.-May 2018

Difference

Shell Eggs

     

Volume (m. dozen)

46.5

45.9

-0.6 (-1.3%)

Value ($ million)

45.4

58.3

+12.9 (+28.4%)

Unit Value ($/dozen)

0.98

1.27

+0.29 (+29.6%)

Egg Products

 

 

 

Volume (metric tons)

18,330

14,671

-3,659 (-20.0%)

Value ($ million)

47.2

53.7

+6.5 (+13.8%)

Unit Value ($/metric ton)

2,575

3,660

+1,085 (+42.1%)

U.S. SHELL EGG AND EGG PRODUCT EXPORTS IN JANUARY-

MAY 2018 COMPARED WITH JANUARY-MAY 2017

Source USDA-FAS/USAPEEC


 

Aldi Introduces HOW2RECYCLE Label

07/15/2018

Aldi has committed to placing HOW2RECYCLE labels on all exclusive brand products with a projected completion date of 2020 according to a July 9th article in the Environmental Leader. Given that Aldi markets 90 percent of SKU’s as house brands, the transition will not involve pressure on suppliers. It is understood that Colgate Palmolive and other major manufacturers have complied with the request for a recycle label.

The label will inform consumers of the appropriate method of disposal for recycling products including packaging, plastic film, foil and other Aldi household products.

Aldi has worked with the Sustainable Packaging Coalition to exclude waste from landfills and to conform with future regulations to be developed by the Federal Trade Commission.


 

IHOp Reverts To Previous Name

07/15/2018

The brief foray into IHOb has ended and the chain will revert to IHOp coinciding with 60th anniversary. The 180 degree rotation of the terminal ‘p’ in the name to ‘b’ was apparently an ill-conceived publicity stunt to inform patrons that the chain had added burgers to the menu.

IHOp still serves among the best omelets around with or without the pancakes and is a significant consumer of eggs.

 EGG-NEWS still maintains that the campaign was probably the worst marketing initiative since Coca Cola changed their formula in 1985.


 

Housing of Temporary Farm Workers

07/15/2018

Farm laborers legally admitted to the U.S. under H-2A work visas are to be accommodated in housing subject to state-inspection. The Consolidated Appropriations Act of 2018 amended the Housing Act of 1949 to extend the Farm Labor Housing Eligibility provision to agricultural workers.

In announcing the change, Secretary of Agriculture Dr. Sonny Perdue stated “Finding suitable housing for temporary agricultural workers has always been a challenge faced by our farmers and producers.” He added “I am pleased that the USDA programs can now better assist farmers needing to provide housing while they are here.  Congress addressed this issue in its recent funding bill and USDA hopes to continue the conversation on farm labor for the agricultural industry”.

The egg-production industry employs workers both citizens and documented aliens year round and the problem of sub-standard housing for temporary migrant field workers is not as evident. Notwithstanding the temporal difference in employment pattern there have been a number of egregious departures from acceptable housing disclosed by state and federal investigations in our industry with specific reference to the Maine and Midwest operations of Jack DeCoster.


 

Dean Foods to Close Illinois Dairy Plant

07/15/2018

Following the announcement that Walmart has now commissioned a dairy plant in Indiana and has cancelled supply contract with Dean Foods, the company has been forced to mothball plants and cancel supply contracts.

Employees and the State of Illinois have been informed that the Huntley plant will be closed in mid-September.

Dean Foods has been impacted by a general decline in demand for milk and milk products and competition from other cooperatives and manufacturers. The decision by Walmart to source dairy products from its own plant announced in 2016 has added to the pressure on the milk production and processing segments of the industry.

The impact on the entire production and supply chain of overproduction of a commodity is demonstrated by milk. Consumers are defecting to alternatives thereby reducing demand while customers in the form of the major chains are negotiating lower prices or integrating backwards into processing. Attempts to bolster production at the farm level by state and federal subsidies are stop-gap measures at the expense of taxpayers. It is indeed unfortunate that small and hence less efficient producers are the most affected by the brutal effect of supply and demand economic realities.

There are obvious messages from the milk and dairy situation which apply to egg production.


 

Walmart to Establish Jet.com Center in the Bronx

07/16/2018

Walmart will increase its presence in a major metropolitan area by establishing a distribution facility in the Bronx.  The unit will be operated by subsidiary Jet.com purchased by Walmart in 2016.

 

Simon Belsham president of Jet.com noted in an interview with The Wall Street Journal, “This is another building block that is part of Jet.com’s strategy focused on urban centers.”  The founder of Jet.com, Marc Lore currently heads all Walmart E-commerce business and is positioning Walmart to compete directly with Amazon.com by offering one- and two-hour delivery through Prime Now in affiliation with Whole Foods Market.

 

The affiliation with Walmart will allow Jet.com to deliver food and merchandise to customers in the New York metropolitan area.  If successful the model will be extended to as many as 100 cities by mid-2019.

 

 

 

 


 

Third North Carolina Hog-Nuisance Trial Underway

07/16/2018

A third trial in a federal court in Raleigh, NC is underway following two adverse verdicts against Smithfield Foods, a subsidiary of the WH Group of China.  In this case, the plaintiffs represent a class comprising neighbors of a farm in Pender County.  Murphy-Brown a subsidiary of Smithfield Foods is the defendant since it owns the flocks raised by contract farmers in the county.

 

The initial case resulted in a $51 million judgment against Smithfield in April followed by a $25 million judgment in June.

 

The secession of lawsuits filed has the potential to severely impact hog production in eastern North Carolina which is the backbone of state agriculture following the waning of tobacco cultivation.  EGG-NEWS has reported on demonstrations supporting hog farmers in which the Lt. Governor and Commissioner of Agriculture criticized nuisance lawsuits.

 

Opponents of hog production maintain that alternative technology is available to displace lagoons with spraying over pasture. This is the major source of complaints specifying odor and potential contamination of ground water.  The major integrators following extensive consolidation which took place in the 2000’s maintain that biodigesters would be prohibitively expensive.


 

Cargill Reports on Q4 and FY 2018

07/18/2018

In a press release issued on July 12th, Cargill Inc. reported on the 4th Quarter and Fiscal Year ended May 31st 2018.

For the quarter, the company generated net earnings of $711 million ($347 million Q4 FY 2017) on revenues of $30.4 billion, 7 percent higher than the corresponding quarter in 2017.

For the full year, net earnings attained $3.1 billion, a 9 percent increase over FY 2017 on revenue of $114.7 billion, 5 percent higher than FY 2017.

In commenting on results, David MacLennan, Chairman and CEO of Cargill stated “Our strong results show we are creating the connections the world needs for vibrant food and agriculture both today and tomorrow.” He added “Cargill has always moved food from where it is produced to where it is needed. Today, we are pioneering new capabilities and partnerships to invest for the future.”

 In reviewing specific operating segments, the report noted a “steady expansion in value-added egg products”. Cargill is currently a leading pasteurizer and further-processor of egg products in the U.S. functioning as an important intermediary between large in-line breakers and the QSRs and the food service segments of the industry representing end users.

The Animal Nutrition and Protein segment surpassed last year’s strong results for both Q4 and FY 2018. Additional earnings were obtained from feed additives, micronutrients and premixes. During FY 2018, Cargill acquired Pollos El Bucanero in Columbia and formed a joint venture in the U.K. creating Avara Foods in addition to a joint-venture processing plant in the Philippines in partnership with Jollibee Foods. It is anticipated that the company may reenter the broiler production segment having made a bid for Keystone Foods, which will be divested by parent company Marfrig of Brazil.

During fiscal 2018, U.S. investments included the acquisition of Diamond V in addition to Delacon in Austria and Integral Animal Nutrition in Brazil.

In the Food Ingredients and Application Segment, the company was negatively impacted by lower ethanol prices, especially during the 4th quarter. A joint venture was initiated with Puris to produce plant-based proteins.

The Origination and Processing segment improved on 2017 results by strengthening trading activities and upgrades to the supply chain. During the year, a new biodiesel facility was initiated and oil-seed crushing plants were expanded in Brazil and the U.S.


 

Incredibles 2 Increases Traffic to AEB Website

07/18/2018

Traffic to the IncredibleEgg.org website has increased 45 percent from May 24th when Incredibles 2 content went live through to July 6th. A total of 971,000 relevant visits were logged for the site with 214,000 landing page total visits.

The efforts of the American Egg Board are to be commended. It is however cautioned that the objective is to increase consumption of eggs and not necessarily generate interest in websites. The true benefit of the promotional endeavor will hopefully be reflected in increased per capita consumption.


 

Henning Companies Contribution to Habitat for Humanity

07/18/2018

As a result of floods in Des Moines, the Birdland area was severely affected with two-thirds of 270 homes damaged or destroyed. Following reconstruction of a levy, Habitat for Humanity is now able to provide the impacted community with 23 new homes.

As a sponsor of Habitat for Humanity, Henning Companies donated $10,000 and 219 volunteer hours to the project.

Over the course of three days, 31 volunteers from Henning Companies worked together to construct homes and restore the neighborhood.


 

2018 Center of Excellence Scholarships

07/18/2018

The Midwest Poultry Consortium awarded 35 scholarships to students in the 2018 Center of Excellence internship program. The total value of awards amounted to $280,000.

The Center of Excellence program provides students with an opportunity to evaluate a future career in some aspect of poultry production through summer courses and internships.

Henning Companies is a sponsor of the Center of Excellence Scholarship initiative and is represented on the Board of the Midwest Poultry Consortium by Lisa Henning Beohm.


 

Healthy Choice® Brand Power Bowls Introduced

07/18/2018

Conagra Brands has introduced four Power Bowls in their range of breakfast offerings.

The varieties include:

  • Unwrapped Burrito Scramble comprising turkey sausage, egg whites, black beans and vegetables.
  • Turkey Sausage and Egg White Scramble.
  • Roasted Red Pepper and egg white Shashuska, a Middle-East themed vegetarian bowl combining egg whites, peppers, cheese, onions and leafy greens.
  • Pesto and Egg White Scramble, containing egg whites, kidney beans and Parmesan cheese.

Power Bowls provide 190 calories, 15 grams of protein and 5 grams of fiber per bowl.

The new Power Bowls join plant-based Power Bowls, expanding the vegetarian options offered by the Conagra Brands.


 

Honey Smacks Recall Considered Incomplete

07/18/2018

Despite recalling 1.3 million cases of Honey Smacks cereal in more than 30 states, the FDA has determined that potentially contaminated product is still being sold, posing a risk for further cases of salmonellosis.

According to the Centers for Disease Control, 100 cases have been diagnosed in 33 states. Despite the voluntary recall initiated by Kellogg in mid-June some product is still on shelves, and the Agency has issued a blanket recommendation to discard any Honey Smacks on hand. In contrast to produce, fruit, dairy and eggs, boxed cereals have a long shelf-life and represent a greater danger of incident cases than perishables following a recall.


 

Commentary


“Son of Prop. #2” To Be Placed On California Ballot

06/29/2018

A ballot measure promoted by the Humane Society of the United States will be presented to the California electorate in November. Basically the proposition establishes more specific standards for confinement of livestock. Effectively by 2022, egg-laying hens in California would not be allowed in cages and more extensive housing areas have been mandated for pigs and calves. In recognition of the inevitability of cage-free production, progressive egg production companies including Central Valley Eggs, have erected complexes incorporating aviaries which allow flocks to range within a barn using the cube-volume of the house. Other producers have retrofitted houses with aviaries or floor systems although the number of hens in California declined after 2014 with recent stabilization.

In contrast to the 2008 ballot, United Egg Producers are not taking any stand on the proposition. A spokesperson for the organization stated “Changes in hen housing are complex and costly and require close collaboration with customers.” It is estimated that a new house fitted with aviaries on a green-field complex would require expenditure in excess of $40 to $50 per hen for site development, buildings, equipment, packing plant, cold storage, biosecurity installations and vehicles. Retrofitting aviaries to existing cage-housing could be achieved at proportionately lower cost.

It is estimated that the state of California would face up to $10 million in potential costs for inspection to enforce the measure.

As usual, the ballot will be decided on sentiment without consideration of costs borne by producers and passed on to consumers. Currently California eggs bear a 40 to 50 cent “Pacelle tax” as a result of the passage of Proposition#2 in 2008.

The 2018 ballot initiative is essentially moot since supermarket chains, restaurants and food service suppliers have committed to sourcing from non-caged flocks. After an initial burst of building and modification in 2017, erection of new facilities and retrofits to existing houses have slowed given that a balance has now been established between the demand for cage-free eggs and supply.

The action by the HSUS in promoting the initiative is considered an exercise in rebuilding image and welfare credentials in order to regain momentum in fund raising to support a vegan agenda. The misplaced perception of the HSUS as a defender of animal rights was eroded by allegations of sexual harassment and misuse of funds leading to widespread resignation of board members and executives.


 

Sponsored Announcements


Job Posting

07/12/2018

Hendrix, ISA - USA

Key Account Manager

Job Posting

 

Hendrix-ISA is seeking two Key Account Managers to join the Sales Team in support of their continued growth as the dedicated supplier of day old commercial chicks to the US egg industry. The territories currently available are:

  1. GA, NC, SC, FLA, MS, TX (Southeast)

  2. AZ, UT, CA, WA, CO (Northwest)

Candidates must have previous experience in flock management, poultry health or related services within the poultry industry. Join our team and become part of an organization that aims to help feed the world.

As part of the team, you will be offered:

Job overview:

· Competitive compensation

  • Delivering sales and service support to key accounts

· Access to a personal benefits package

  • Ability to work within a team to troubleshoot producer issues

· Investment in training and your personal development

  • Work in a fast-paced, self-directed environment

Hendrix-ISA is the dedicated US distributor of layer genetics. As part of Hendrix Genetics, a global multi-species breeding company, we aim to provide Better Breeding Today for a Brighter Life Tomorrow.

To learn more or apply, contact Ken Alvarez, Director of Sales & Marketing at

ken.alvarez@hendrix-genetics.com .


 

Visit our Companion Website
http://www.chick-news.com/


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