Based on the proliferation of vegetable-based milk substitutes, organizations representing the dairy industry have petitioned the FDA to establish standards restricting the “milk” designation to products derived from udders. Concern over nomenclature of plant-based foods involves accurate information for consumers.

Dr. Scott Gottlieb, Commissioner of the FDA commented, “The information provided through food labeling must be truthful and not be misleading. The consumer’s choice must be based on this information and can have important impacts on health.”

The FDA arranged a meeting on nutrition innovations strategy in mid-July to review the topic of food identity.  It is intended to initiate a public discussion on how consumers respond to product identity including animal and farm-derived foods.

Gottlieb noted, “We are actively looking at how we have been enforcing the Food, Drug & Cosmetic Act with respect to food names and our own standards of identity for milk and what it means when milk is qualified with words such as almond or soy.”  Apparently, there are 300 separate standards in FDA regulations.  Gottlieb commented that standards of identity can restrain industry in developing and marketing of products.  Accordingly, the FDA will solicit input from stakeholders to be incorporated in the eventual regulations relating to food identity.

Although dairy producer are most involved with milk substitutes, it is evident that the issue of egg identity will have to be addressed given the introduction of plant-based synthetic egg products.  Although formulated to demonstrate similar organoleptic attributes to eggs, the nutritional quality is obviously inferior to natural eggs. Consumers should be made aware of the deficiencies of “scrambles” made from mung beans.

• July 2018 USDA Ex-Farm Benchmark Price up 24 Percent from June Consistent with Demand.

• Production Cost Down 0.9 Percent with Feed Lower by 1.9 Percent.

• Positive Nest-run Margin Increased to 32.2 Cents per Dozen

INTRODUCTION.

Summary tables for the latest USDA July 2018 statistics and prices made available by the EIC on August 6th are arranged, summarized, tabulated and discussed in comparison with values from the previous July 9th 2018 posting reflecting June 2018 data.

COSTS & REVENUE

• Hen Numbers in Production Increased by 0.5 million to 318.2 Million as Molted Hens and Late-February Chick Placements Approached Peak.
• Shell Inventory Down by 5.6 Percent Confirming Market Stabilization After 2.8 Percent Fall Last Week.
• Generic Prices for Extra Large and Large Were Unchanged Compared to Previous Week.

OVERVIEW

Prices

According to the USDA Egg Market News Reports posted on August 6 th the Midwest wholesale prices for Extra Large and Large sizes were respectively unchanged at 98 and 96 cents per dozen respectively. Mediums were higher by 18.6 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 August 6th USDA Egg Market News Report (Vol. 65: No. 32) documented a USDA Combined Region value rounded to the nearest cent, of $1.04 per dozen delivered to warehouses effective August 2nd This price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $0.96 per dozen. At the high end of the range, price in the South Central and Southeast Regions attained $1.10 per dozen. The USDA Combined Price last week was 42 cents per dozen below the three-year average and 18 cents per dozen above the corresponding week in 2017.

According to the July 12th 2018 WASDE Report #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 quotations for the months as indicated were posted by the CME at noon on August 3rd together with values for the corresponding week in parentheses.

*2018 crop

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

COMMODITY CHANGE FROM PAST WEEK

Corn: Sept. quotation up 8 cents per Bu. (+2.2 percent)

Soybeans: Aug. quotation up 12 cents per Bu. (+1.4 percent)

Soybean Meal: Sept. quotation unchanged ( 0 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

Increases in the prices of soybeans and hence soybean meal this week are attributed to the promise of exports to the E.U. despite the reluctance of the trading block to import GM product. Five nations in the E.U. have an outright ban on introduction of GM ingredients and any food product marketed in the E.U. would have to be labeled as to GM content. Temporary optimism during the past two weeks should be viewed against the reality of resumption of Southern hemisphere soybean exports from Brazil and Argentina coupled with a cessation of U.S. shipments to China resulting from imposition of retaliatory tariffs which took effect on June 6th. Effectively exports to China ceased weeks ago.

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

The USDA Crop Progress Report released on August 6th documented complete emergence of the 2018 corn and soybean crops. Corn is denting at 12 percent of the crop and at double the 5-year average. Soybeans planted early are blooming consistent with good soil moisture and climate conditions, leading the 5-year average by six percent. Approximately 75 percent of the soy crop is setting pods, 17 percent ahead of the 5-year average. 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.

WEEK ENDING

On August 2nd Post Holdings (POST) reported Results for Q3 of FY 2018 ending June 30th. The company operates five segments (Consumer Brands; Weetabix; Private Brands, Refrigerated Foods and Active Nutrition). Results for Michael Foods which produces and processes eggs in the Midwest and Northwest regions is included in the Refrigerated Foods segment.

For Q3 of FY 2018, POST generated net earnings of $94.5million (EPS of $1.29) on revenue of $1,609 million. Comparative values for Q3 of FY 2017 were a loss of $62.8 with an EPS of $(0.93) on revenue of $1,272 million.

The Refrigerated Foods segment achieved revenue of $613 million representing 38 percent of total company revenue and contributed $56.5 million to operating profit. Individual sales and margin values for Michael Foods, involved in shell eggs and processing, were not disclosed. The Company report noted that foodservice sales for eggs increased 6.6 percent in volume compared to Q3 of FY 2017 but retail egg sales declined by 7.4 percent, presumably reflecting lower unit price. A $3.5 million loss associated with unfulfilled sales and margin was recorded as a result of a fire in the Klingerstown, PA. processing plant and the need to boil water in the Lenox, IA. facility operated by Michael Foods.

In an August 1st release Bunge Ltd reported an unexpected loss for the second quarter of fiscal 2018.  The company lost $21 million or $(0.15) cents per share for the period ending June 30th on net sales of $12.15 billion.  Corresponding values for the second quarter of fiscal 2017 were a profit of $72 million or 51 cents per share on sales of $11.65 billion.  The loss arose from a $125 million negative trade on soybean hedges and $24 million loss from currency hedges in Brazil. Bunge shares fell three percent to $67.13.  The 52-week range is $63.87 to $83.20.  Currently Bunge trades with a forward P/E of 12.0.

CEO Soren Schroder stated, “It was not what we would have expected given this is a peak quarter in South America.” He added “the soy crushing environment continues to evolve positively and second quarter results in Oilseeds were within the range of our expectations.”  He concluded, “While total company performance in the second quarter came in below our estimates, we expect a strong second half driven by another step in performance in soy crushing as we have committed most of the open capacity for the balance of the year at very attractive margins.”

EGG-NEWS is proud to publicize the activities of the AEB in promoting egg consumption through activities including the “Incredible Egg” website, emphasizing inherent nutritional benefits from babies to the elderly and versatility to food service providers.

The whimsical but factual video presentation is worth watching.

Click here for AEB's video

The Council for Agricultural Science and Technology (CAST) recently released issue paper IP 61 co-authored by Dr. Jacqueline Jacob and Dr. Anthony Pescatore.

The important conclusions from the review are that the advantages of free-range production relate to consumer perception rather than any benefit to the flocks. The principal take-away messages are:

• Greater space does not necessarily enhance welfare.  Flocks on free range systems have higher mortality than when confined to barns.  Predator loss, exposure to pathogens and parasites, inclement weather all detract from “welfare”.
   
• Outside access does not enhance nutritional value.  There is no nutrient that can be obtained from pasture that cannot be incorporated in eggs from flocks fed a balanced or supplemented diet.
   
• Food safety is inferior on pasture compared to confined systems.  It is impossible to decontaminate pasture infected with Salmonella.  Although there is no appreciable difference between clean eggs laid on pasture and those from cages or barns, eggs with heavy fecal contamination from either system will have a higher probability of internal contamination as a result of shell penetration by motile bacteria.
   
• Flocks on pasture are susceptible to ingestion of toxic compounds which may be deposited in the egg.  Backyard chickens in urban areas have lead levels which in some cases exceed accepted tolerance values.
   
• Flocks with outside access are susceptible to infections carried by free living birds.  These include avian influenza, Newcastle disease, colibacillosis, pasteurellosis and erysipelas. The last two infections are re-emerging as important conditions which almost disappeared in egg-producing flocks after confinement systems were introduced.
   
• Pasture management is non-sustainable, requiring extensive land which could be used for crop production or other livestock, and requires more energy and labor for the same quantity of eggs produced in barns.
   
  The differential in cost between eggs derived from flocks held on pasture and those in barns cannot be justified by any quantifiable improvement in either welfare or product quality.  An affluent minority of consumers is apparently willing to pay a $3 to $4 differential for what they perceive as advantages. This market is limited as evidenced by the small proportion of flocks reared on pasture and a virtual plateau in expansion in this segment of egg production.
   

Katie Hayes, RDN, has joined the ENC as Director of Nutrition Communications. Katie has more than a decade of marketing and communication experience developing and implementing food and nutrition communications programs for leading brands and commodity groups.

Katie is also no stranger to the ENC having previously worked on the ENC account while at Edelman Public Affairs 
Katie can be reached at khayes@aeb.org

The Senate has not yet determined the composition of the conference committee to consider the 2018 Farm Bill which expires in September.  The existing Farm Act will have to be extended by special resolution.  The House is in adjournment for the summer recess but has appointed the members who will meet to reconcile the two bills.

There will be delays in finalizing the Senate version of the Bill.  Contentious items include a waiver on some regulations relating to service hours for truckers conveying agricultural products and photo identification for SNAP recipients when making food purchases. 

Previously the SNAP amendment to require recipients to either seek or be in employment failed as anticipated.  The House version contains a work requirement.

Morrisons Supermarket is stacking eggs on racks allowing customers to pick eggs based on size, color and speckles.  Customers are encouraged to bring their own egg cartons and to purchase in quantities ranging from a single egg to a tray of 30.  Free-range eggs are offered at $4.25 per dozen.  The traceback system in the U.K. is based on individual stamping of eggs with a code indicating country of origin, housing system, farm of origin and a use-by date.  If the system were to be applied in the U.S., trace-back information including the date of pack and plant of origin would not be available.

The egg buyer at Morrisons commented, “Some customers told us they wanted to select their own eggs, to ensure none were cracked and to buy the exact amount they needed.”  He added, “We thought that reintroducing a traditional “pick-your-own” local egg stand would help to do this.  In trials customers told us they loved selecting their own eggs, and found it has cut down on waste in their homes.”  The program has been introduced into 200 stores across the U.K.

Henning Companies a Sponsor of EGG-NEWS and CHICK-NEWS has release a new version of their corporate web-site. The scope and achievements of the company founded in 1924 are documented. Recent projects of interest to the U.S. and international poultry industries include:

• An in-line cage-free egg production complex including packing plant in the Midwest
• A turkey hatchery with an area of 86,000 square feet
• A protein recycling plant applying an enzymatic digestion process to convert hens to a pet-food ingredient

The Henning Companies new web-site www.henningcompanies.com can be accessed by clicking on to the logo on the right side of the WELCOME page.

To date USDA-APHIS have reported on 76 specific cases of Exotic Newcastle disease. All have involved “backyard, exhibition and hobby flocks” and no mention has been made of “fighting cocks” which are highly mobile and were involved in the 2003 outbreak.

San Bernardino County has registered 63 cases followed by Los Angeles county (7) and Riverside (7). It is emphasized that no commercial poultry have been infected.

The infection has been recognized since late May without any definitive report from either the USDA-APHIS or the California State Veterinarian concerning the epidemiology of the outbreak. The following questions are relevant:-

• Characterization of the virus with respect to origin?
• How and when the virus was introduced?
• Mechanism of dissemination of the virus?
• The possible role of wild birds of diverse species in infection?
• Contamination of feed purchased by owners of affected small flocks?
• Common temporal, spatial and operational factors among cases?
• How cases are identified and diagnosed?
• Action taken to date to control infection?
• Prospects for eradication in the backyard population of galliform birds?
• The effect of vaccination and the immune status of affected farms?
• When the outbreak will be controlled? Eradicated?

Answers to these questions are necessary to guide the commercial poultry industry in planning and implementation of control measures. Simply advising “enhanced biosecurity” is paying lip service to a potentially serious problem. Structural and hence Operational biosecurity is woefully inadequate on many poultry farms in California as denoted by cases of coryza and mycoplasmosis

On August 8th Costco Wholesale Corporation (COST) reported net sales of $10.59 billion for the retail month of July extending over four weeks ended August 5th, 2018. This figure was an increase of 10.1 percent from $9.62 billion recorded in the corresponding month of 2017.  For the first forty-eight weeks of fiscal 2018, the Company reported net sales of $127.40 billion, an increase of 12.1 percent from $113.70 billion in YTD 2017.

Comparable sales excluding fuel sales were:-

Costco currently operates 757 warehouses, including 526 in the United States and Puerto Rico, 99 in Canada, 38 in Mexico, 28 in the United Kingdom, 26 in Japan, 14 in Korea, 13 in Taiwan, nine in Australia, two in Spain, one in Iceland, and one in France. Costco also operates e-commerce sites in the U.S., Canada, the United Kingdom, Mexico, Korea, and Taiwan.

Amazon has announced that a “click-and-collect” delivery system initiated in Virginia Beach, VA.and Sacramento, CA. as a test will be extended to all Whole Foods locations. Amazon has introduced the system to counter the equivalents established by Walmart and by subsidiary banners operated by Kroger.

Available to Amazon Prime members the service will incur a fee of $5 per order if required within 30 minutes or will be free if fulfilled in an hour or more.

Nielsen has determined that 15 percent of groceries and beverages ordered on-line are delivered to customers’ vehicles. The Store pick-up model obviates the cost of home delivery which is excessive in other than high-density urban settings.

In a press release dated August 7th Aramark Inc. announced results for the Third Quarter of Fiscal 2018 ending June 29th 2018.

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as $ x 1,000 except EPS)

52-Week Range in Share Price: $36.28 to $46.09

Market Noon August 8th. $39.63

Forward P/E: 15.4

Beta 0.7

Operating segment achieved the following sales and contributions:-

Segment % sales % Operating Margin

Food Service U.S. 62.9 71.7

Food Service International 23.5 24.5

Uniforms 13.6 1.5

On commenting on results, Eric J. Foss, Chairman, president and CEO stated "we reported record performance driven by broad-based results across the globe. Our focus on delivering an enhanced customer experience drove strong revenue growth. Our productivity initiatives are working well, which led to solid margin expansion, along with double-digit operating income and EPS growth,"

He affirmed full-year Adjusted EPS outlook of $2.20 to $2.30, with approximately 3.5% revenue growth in legacy operations."

Foss concluded: "Aramark benefits from a proven, resilient business model and robust financial flexibility. Looking beyond 2018, we are confident in our ability to continue generating sustainable shareholder value by executing against our clear and focused strategy."

It is noted that Aramark which services universities and businesses has been in the forefront of promoting flock welfare and committed early to sourcing eggs from non-caged flocks.

According to press reports, the Department of Justice and Rose Acre Farms Inc. have reached agreement over a dispute over employment of work-eligible aliens dating back to 2012.  The complaint alleges that between mid-2009 and late-2011, the Company required work-authorized non-U.S. citizens to present a Permanent Resident Card or Employment Authorization Document to prove eligibility for employment. It is understood that the company was acting with prudence at the time to ensure that they did not employ ineligible workers.

It appears Kafkaesque that an apparent deviation from regulations which are frequently arcane resulted in a case extending over six years for events which took place nine years previous to the settlement.

Since the time of the alleged unfair immigration-related employment practices, regulations have undergone numerous changes, including the introduction of E-verify, still a work in progress.

The local health department responsible for Powell, OH. is investigating an outbreak of presumed norovirus foodborne infection associated with a Chipotle Mexican Grill restaurant. According to the Business Insider and other media reports, the restaurant received reports of illness on Sunday and Monday July 28th and 29th concurrently with almost 100 reports on the website <iwaspoisoned.com>.

On investigation it was disclosed that two of five staff members called in sick on Sunday and Monday but there is no information as to whether they were infected at the store or were in fact the source of infection.

The restaurant was closed on Monday July 30 for thorough decontamination but opened the following day.

News of the outbreak impacted share price on Friday July 27 CMG opened at $474 and closed on Monday at $465 but had sunk to $433 by the Tuesday close before subsequently recovering.

As noted previously Chipotle is at higher risk for foodborne infections than conventional QSRs because a high proportion of the food is served uncooked.  In addition there is considerable manual handling both in preparation and in serving.  Since the series of outbreaks of foodborne infections in 2016 and 2017 involving norovirus, E. coli and Salmonella the company introduced appropriate preventive measures both in the food chain and in operations, guided by a professional food scientist.  If in fact the outbreak is attributed to norovirus, greater attention should be paid to the health of workers who must be encouraged to report illness.

The innovations introduced by newly appointed president and CEO Brian Niccol and his immediate management team have probably not worked their way through the system to the level of store managers. They may still be operating with procedures and under a culture prevailing under the mismanagement of the previous CEO, Steve Ells.

In addition to the Powell OH problem, negative publicity was generated by the “free guacamole” promotion which generated consumer disaffection on Tuesday July 31.  The app which allowed customers to claim guacamole dressing at no cost failed at intervals during the day.

 Canadian Government to Fund Egg Scanning Technology

Lawrence MacAulay, Federal Minister of Agriculture and Agri-Food announced $850,000 in funding to develop a scanner (or scammer, depending on the outcome) which will identify infertile eggs and male embryos. Proof of principle has been sparse and initial press reports in 2017 suggested that the technology would be commercially available during late 2018.

While a non-invasive method to clearly establish the gender of an embryo before four days of incubation would be a boon to the egg production industry, there have been no commercially acceptable or financially feasible solutions despite claims and hype. Some of the press releases by developers in the U.S. in one case and in the E.U. have been clearly ingenuous, biologically infeasible or downright fraudulent. Entrepreneurs seeking funding have consistently attempted to obtain official recognition for their technology from a university or a government agency, whether in the E.U. or North America.

The press releases from the promoters of the Canadian technology would be more persuasive if accompanied by details regarding the principle, proposed rate of processing and the projected capital and operating costs.

It is hoped that the Ministry of Agriculture and Agri-Food will not have to explain how public funds were expended on a project in 2018 with no practical results or commercial application by 2020.

A demonstration on the versatility and application of egg liquids was conducted at the Hospitality Industry Training and Development Center in Hong Kong with funding supplied by the American Egg Board and USAPEEC. Chef Koo prepared gourmet recipes using U.S.-supplied egg white and whole egg. The event provided students at the center with a perspective of the U.S. egg industry and quality of products.