Are Trade Tensions Easing?


CHICK-NEWS and EGG-NEWS have previously commented that with regard to trade agreements the White House has too many balls in the air at the same time. After unilateral withdrawal from the Trans Pacific Partnership and consequential exclusion from the restructured Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and renegotiation of NAFTA to establish USMCA, the U.S. has progressed to a state of malignant uncertainty with most trading partners including the E.U. Delaying imposition of tariffs on automobile parts from Japan and the E.U. will expedite the unilateral agreement with Japan and the E.U. As with most White House initiatives, a six-month deadline has been imposed kicking the can down the road while negotiations continue.

Given that businesses have investment periods measured in years and crops have an annual cycle, a six-month moratorium on trade disruption is hardly cause for complacency. It is however encouraging that the counsel of moderates within the Administration and the patience of our allies have resulted in concessions which have brought us back from the brink of absolute trade disruption. Certainly rescinding the tariff on steel and aluminum from Mexico and Canada has increased the prospect of ratifying the USAMCA to replace NAFTA.

Neil Bradley, Chief Policy Officer at the US Chamber of Commerce stated “The continued threat of tariffs on cars and auto parts only creates more uncertainty and is weakening our economy”. Cecilia Malstrom, the E.U. Trade Commissioner stated “We completely reject the notion that our car exports are a national security threat”.

In coming months, Robert Lighthizer, the U.S. Trade Representative will be extremely busy negotiating concurrently with Tokyo, Brussels and Beijing to achieve equitable trade agreements that comply with both economic reality and narrow political imperatives.


Food Waste a World Problem of Concern to Japan


During the past two weeks, Barbara and I have been traveling in Japan reviewing supermarkets, interacting with consumers, scanning English-language newspapers and absorbing the ethos of a culture that in many respects is very different to our own.  There are however some similarities and common issues including protection of the environment and sustainability that need to be addressed among all economically advanced nations. 


The May 19th edition of the Japan Times featured a front-page article on initiatives to reduce food waste.  The United Nations Food and Culture Organization estimates that 1.3 billion tons of food was wasted in 2018.  Japan estimates that six million tons of edible product is discarded annually by a population of 128 million. 


To resolve any problem it is necessary to understand the metrics and contributory factors.  The retail sector in Japan was responsible for 0.6 million tons of wastage in 2017.  Food manufacturing and the restaurant sectors each contributed 1.35 million tons with households responsible for 40 percent or close to 3 million tons of discarded food.  In the context of Japan it is important to recognize that “freshness” is an important attribute in the motivation to purchase, consume or discard food.  The problem of indiscriminate wastage was emphasized by a directive from the Chief Cabinet Secretary of the Government of Japan who stated, “Reducing food loss means less waste of natural resources and it is also important from a standpoint of easing burdens on companies and households.”  The Government will coordinate the activities of various ministries to “deal with a challenge”. 


Sadanobu Takemasu, president of Lawson Station, a major retail chain stated, “Food loss is a big problem domestically and globally so convenience stores also need to confront the issue.”  He estimates that ten percent of his company’s rice balls and lunch boxes, popular in Japan are discarded as waste.  Traditional mores in Japan will have to be changed to resolve problems inherent to their society.  Although portions served in restaurants are relatively small compared to the U.S. the concept of doggie bags is completely unknown in Japan.   A representative of a restaurant group stated, “It’s up to the customers whether or not they finish their meals.”


The Government of Japan has set a target to reduce waste by 50 percent from a 2000 base over the next ten years.  This will require changes in attitude by consumers at the household level. Improvements in food distribution are required to provide longer shelf-life and freshness of produce and especially fish which comprises a disproportionately higher contribution to the Japanese diet than in the U.S. 


It is possible that new food processing technology could reduce organoleptic deterioration while maintaining nutritional quality and extending shelf life. The simple expedient of lowering prices near to expiry dates has reduced the volume of food discarded by the Lawson Station chain and presumably followed by major competitor 7-Eleven Holdings. Since the population of Japan is far less individualistic than in the U.S. and recognizes common societal needs, effective leadership and publicity will result in concerted efforts to resolve the problem for the common good.


Recognizing problems such as food wastage and analyzing its causes are important precursors to developing appropriate solutions.  Comparison among nations leads to innovative approaches and contributes to alleviating poverty and starvation which affect one-tenth of the world’s population.


AEB 2018 Annual Report


According to the AEB Annual Report the Board ran a deficit of $4 million for financial year 2018 ending December 31st. Expenditures amounted to $28.9 million. Revenue of $24.6 million was derived from 246.4 million cases of eggs.

During 2018 Consumer marketing was the largest category at 53.2 percent of 2018 expenditures. Other cost allocations included egg-product marketing at 6.5 percent, food service at 8.2 percent, industry programs 6.9 percent and the Egg Nutrition Center 13.8 percent. It is noteworthy that administrative overhead and related expenses including Board meetings amounted to 6.1 percent of expenditures.

At the direction of the Board, the AEB increased consumer marketing expenditure by 67 percent with active campaigns intended to increase demand for eggs and egg products consistent with the mission of the Board. USDA projections indicate a net increase in per capita consumption of one egg to 279.9 or a 0.4 percent yearly increase. The Disney Pixar Incredibles-2 promotion and round-the-year marketing were notable achievements.

Market development included customized workshops for manufacturers, intensive promotion to the food service sector and activities directed towards universities and K-12 food service. Although AEB has worked closely with USAPEEC, exports of eggs and egg products have not increased to a level that offsets the evident excess in production due to an injudicious national flock size. State support was increased from $0.4 million to $1.1 million representing recognition of individual state associations that can mount “local” promotional campaigns.

Funding for industry programs were reduced 17 percent to $1.98 million, and egg product marketing expenditure was lowered by 19 percent to $1.88 million. Expenditures were diverted mainly to consumer marketing.

The American Egg Board activities should not be judged simply by increases in per capita consumption. The Board has responded both proactively and reactively to issues relating to cholesterol that emerged recently and also considered to substitutes for eggs, especially in the liquid segment of the industry following unprecedented price rises in 2015 and 2016 following the HPAI eponetic.

Anne L. Alonzo, president and CEO, her newly appointed staff and the Board should be complimented on prudent management of check-off funds, innovative programs and promoting the image of eggs among consumers while developing new markets and products.


Walmart Develops Angus Beef Supply Chain; Implications for Egg Producers?


Pressure on the major supermarkets by Amazon Prime and deep discounter Aldi has resulted in the mega-chains reevaluating their business models. Walmart Stores has announced the result of a two-year program to build a supply chain for Angus beef to be sold in 500 southeast stores. This initiative obviously bypasses current major suppliers including Tyson Foods and Cargill.

According to Scott Neil, Senior Vice President for Meat, Seafood and Fresh Quality Control stated that the Angus beef supply chain is “an opportunity to look at it from end to end”. The program will include 44 farms and 6 Cattle Feeders in Texas. Creekstone Farms operating a slaughter plant in Kansas and a packing plant owned by Walmart to be operated by FPL Food will process cattle.

The action by Walmart follows the opening of a milk processing facility in Indiana that commenced operation in 2018 displacing Dean Foods as a major supplier. The Liberty Foods broiler complex financed and dedicated to Costco in Nebraska is a parallel development in which a retailer has integrated back into the supply chain.

If this trend continues, it is highly probable that Walmart, Kroger or Costco, may consider entering egg production through the purchase of an existing producer or developing a strategic partnership to eliminate intermediaries and stabilize prices into their DCs.

Given that many producers are now obliged to replace obsolete cage units with aviaries or other alternative systems requiring capital investment, retailers may determine the benefit of an inexpensive acquisition or financing conversion to secure a steady supply of eggs at a predetermined cost irrespective of market fluctuation. The only deterrents to integration would be considerations such as diversion of capital to farm production, becoming involved in management and assuming risks of disease and natural disasters.


EIC Report on Egg Processing and Transport


In mid-April, the Egg Industry Center released a special report entitled Egg Processing, Cartoning and Transportation Costs.  The comprehensive report was compiled by Maro Ibarburu and Lesa Vold of the Egg Industry Center and Dr. Alejandro Plastina of the Department of Economics at Iowa State University.  For the record is noted that the University hosts the Egg Industry Center located on the ISU campus.


The 2019 Report follows a previous study conducted by Don Bell at the University of California, Riverside, released in 2000.  The purpose of both reports was to establish the costs of processing, cartoning and transportation. Considerations related to pack size, in-line versus off-line processing and cost of delivery within-USDA regions to a DC or store were included in the 2019 version.


With respect to in-line processing, the ‘trimmed mean’ value was determined to be 13.5 cents per dozen compared to 15.3 cents per dozen for eggs sourced off-line.  The ‘trimmed mean’ carton costs were 9.8 cents for a 12-pack, 9.9 cents per dozen for 18-pack plus a 3.9 cent per dozen cost for an outer cardboard container.  Reusable plastic containers generated a ‘trimmed mean’ of 4.3 cents per dozen.  Added cost such as shrink-wrap and insertion of slip-sheets added 0.9 cents per dozen to packaging material.


Delivery of eggs to store-door incurred a cost of 8.6 cents per dozen compared to 5.2 cents per dozen to a DC.  Eggs collected by customers from a warehouse resulted in a cost of 1.9 cents per dozen for storage and handling.


The study calculated the loss in grade-yield of 7.6 cents per dozen for in-line eggs and 9.5 cents for off-line eggs.  Store returns added 0.1 cent per dozen and the difference between standard and USDA grading was 1.3 cents per dozen.


In comparing the results of the 2019 survey with the previous evaluation performed by the late Don Bell 18 years ago, showed a close correlation adjusting for inflation.  In 2000 the combined processing, packaging and transport cost was 25.97 cents per dozen comprising 9.8 cents per dozen for processing, 4.5 cents per dozen for trucking, 1.4 cents per dozen for marketing and 10.2 cents for packaging.


In reviewing the report, it is noted that out of 107 one-page surveys sent to egg producers, a total of 23 responses was received, representing a return rate of 21 percent. This is considered to be suboptimal especially when only partial responses were provided to specific questions. There is significant reluctance by producers to participate in any cost or production-related survey given the emergence of litigation alleging collusion among competitors in the egg, broiler and beef industries. The fact that the survey was conducted in effect by a University creates the potential problems of confidentiality given the possibility of discovery through litigation or requests under Freedom of Information or public records legislation.


The compilers of the report considered that the 23 responses represented 150 million hens or 67 percent of the national flock maintained to produce shell eggs.  Disparity between respondents and their relative contribution to egg production reflects the oligopoly prevailing in the industry.  In the case of one large company, their single response, if submitted in entirety would have represented 19 percent of the shell-egg population.


The overriding question is how supporters of the Egg Industry Center and those reviewing the Report will be able to apply the findings to their own operations.  Many of the respondents and those that declined, probably participate in a commercial benchmarking system that provides greater detail and specifics far beyond the scope of the one-page survey. Participants in the commercial benchmarking system for which they obviously pay, provides companies with data that can be applied directly to intermediate and long-term management and investment decisions. 


To ascertain the cost of packaging, it would have been more representative to have approached the limited number of suppliers in the U.S. who would be in a far better position to anonymously provide cost data for their products.  The report did not distinguish among polystyrene, PET or fiber packs or combinations of cardboard and fiber.  There are wide differences in cost among the alternatives and there is obviously a bulk supply factor inherent to any cost determined for a specific type of pack.


There are wide differences in configuration of plants, packing rate, regional wages, utilities, environmental restraints, age of facilities and equipment that influence maintenance and daily run-time. A review of the industry benchmarking system would have resolved many of these questions fundamental to an understanding of the composition of cost. Many of these factors should have been incorporated in either the questions or an interpretation of responses.


In reviewing the Report there appears to have been an inordinate preoccupation with statistical technique including elimination of outliers hence the calculation of a “trimmed mean”.  This was possibly dictated by the need to analyze a limited number of responses of variable content and consistency depending on how questions were interpreted. The Report actually confirmed what the industry already knows.  Packaging and transport costs are well documented and are so similar that individual companies can do little to change values through management or even investment in mechanization or automation. 


It is hoped that in a subsequent edition of this report, more specific aspects of processing, packaging and transport should be evaluated.  Alternative packaging material over and above pack size should be considered.  The influence of robotics and labor costs is relevant to investment in technology.  Transport should not be restricted to intra-region distribution.  The reality facing the industry is hoe to play the differential between Midwest and Southwest feed and labor costs and those prevailing in California and relating the ex-plant costs to moving product westward on I-10 and I-80. 


Without detracting from the initiative of the EIC and the value of the Report which is somewhat pedestrian, the industry needs more focused studies in order to discern trends in cost and the influence of equipment, methodology and packaging material with the objective of optimizing return on investment.


Financial Realities of Plant-Based Meat Substitutes


Over the past few years trade publications have hyped plant-based alternatives to meat. As each successive press release records another QSR either trialing or offering a veggie-burger commentators extoll the virtues of sustainability, welfare and create a “feel-good” halo for the category.


Beyond Meat the putative leader in the field filed for an IPO on Monday April 22nd anticipating sale of shares valued at $183 million and raising the company to “unicorn” status with a potential valuation of $1.2 billion. As an uninformed observer it would be fair to assume that production of a plant-based burger could be effected less expensively compared to beef. The recent SEC Form S-1filing by Beyond Meat Inc. in advance of their IPO dispels this notion. For FY 2017 ending December 31st the Company generated a loss of $30.3 million on sales of $32.6 million. This might by acceptable for a potential high-tech start-up incurring high R&D expenditure in addition to organizational and preliminary costs but an analysis of the prospectus reveals a serious flaw in the vegetable-burger model.


For FY 2016 the cost of goods sold representing raw ingredients, processing and packaging amounted to $22.5 million exceeded revenue of $16.2 million by 39 percent. The cost of goods sold in FY 2017 amounted to $24.3 million or 115 percent of revenue.  For the nine months ending September 2018 Beyond Meat managed to increase revenue from $21.1 million to $56.4 million albeit by almost doubling the Selling, General and Administrative (SGA) expense category ($23.1 million) compared to the corresponding first three quarters of FY 2017 ($12.4 million). It would be expected that scale of volume and experience would have reduced the cost of the vegetable-burgers in relation to sales. For the two nine-month periods the proportion of the cost of goods sold expense category improved from 115 percent of sales through Q3 of FY 2017 to 83 percent of sales value through Q3 of FY 2018. Given R&D costs of $6.3 million, restructuring, amounting to $1.1 million and the SGA expenditure of $23.1 million the Company generated net losses of $23.4 million and $22.4 million respectively for the successive nine-month periods.  


It would appear that the high cost of manufacturing plant-based meat substitutes is disproportionate to their value in competition with ground beef. This would seriously constrain the profitability of the enterprise irrespective of scale. Perhaps this is the reason why Kleiner Perkins and two other venture capital investors with collectively 42 percent of the equity, wish to expedite an IPO to recoup their capital.  Tyson New Ventures previously held seven percent of the equity but the Company announced on April 24th that it had sold its shareholding valued at $80 million based on the proposed IPO share price. Noel White CEO of Tyson Foods obviously can read financial statements.

Beyond Meats may be a company with a great future behind it. Unless production cost can be brought into line with beef patties prospects for future positive earnings look dim. As it is the company is losing money on every patty but to quote Henry Ford they “hope to make it up on the volume”


Petrochemical Industry Concerned over Plastic Waste


Jim Fitterling, CEO of Dow Chemical recently stated “Plastic waste. I believe, is going to be the sustainability issue of our time.”  Addressing the World Petrochemical Conference in San Antonio in mid-March, he opposed restrictive legislation aimed at reducing plastic waste.  Currently 21 U.S. states are considering 133 bills related to use and disposal of plastic.

Fitterling noted that developing nations including Thailand and China do not have the infrastructure to handle waste.  He characterized the situation as “it is not plastics, the issue is the lack of an effective collaboration, recycling and reuse system. Since China implemented the “National Sword” program exports of plastic waste to that nation has ceased resulting in an accumulation of 450,000 metric tons of material in the U.S. 

Bob Patel, CEO of LyondellBasell Industries cited in the Chemical and Engineering News, April 8th edition, advocated for more extensive recycling.  In the event that waste plastic is not processed into new items, he believes that the growth in the plastics industry will decline from a four percent annual rate to two percent.  He stated, “it may change how we think about capital deployment and drive us to embed circularity in our business models.”  He added, “let’s do more to explain why plastics are good for society and I believe that the time has come to address the issue head-on rather than to advocate for why we are great.”


Both Dow and LyondellBasell have committed to the Alliance to end Plastic Waste involving 35 companies that collectively will spend $1.5 billion to reduce waste through promoting infrastructure and recycling, mainly in developing nations.


Nina Bellucci Butler, CEO of More Recycling commented on the “tsunami of material coming online compared to a droplet of recycling”.  The problem from her prospective is that it cost more to process post-consumer plastics than it does to buy virgin material.  This is in part due to the low price of shale-derived gas serving as the feedstock for the petrochemical industry.


With an increase in projected annual demand in the region of 6 to 7 million tons of ethylene annually, expansion in the U.S. and China will add 10 million tons per annum from 2020 through 2023.  Additional volume will enter the market even though plant capacity will decline to 88 percent. Coal-to-chemical plants manufacturing vinyl chloride and ethylene glycol will be financially non-viable and obsolete ethylene crackers, mainly in China, will probably close.


With a narrower focus, the U.S. egg industry uses a large quantity of polystyrene foam cartons.  This material provides excellent protection for eggs, is light in weight and technically can be recycled.  The challenges are establishing collection center and consumer education.  Unfortunately there is a demonization of plastic packaging material promoted by environmental groups and amplified on the web.  The obligation for manufacturers of non landfill-degradable packaging will be to create a chain of recycling which will benefit manufacturers, egg producers and the environment.  From discussions with the allied industry, it is evident that they are aware   of legislative initiatives and consumer resistance and are taking positive steps to resolve the issue.  Time is running out and the longer it takes to develop a solution the more intense will be the need for consumer education.  As it is, children are being taught in schools that plastics are “bad”.  To quote Patel, “If we don’t do something about the waste issue soon then perhaps the teachers are right.”


ECDC Surveillance Report on Salmonellosis Highlights SE from Polish Flocks


The Annual Surveillance Report for 2016 prepared by the European Center for Disease Prevention and Control (ECDC) documents data from 30 EU and EA nations.  A total of 95,326 cases of salmonellosis were confirmed during 2016 yielding an incidence rate of 20.4 cases per 100,000 population.  The rate varied widely among reporting nations with the highest from the Czech Republic at 110 per 100,000. Within the EU, the Southern European nations, Portugal (3.6 per 100,000), Italy and Greece (both 7.0 per 100,000) apparently were the lowest in incidence rate. This may not represent a low rate of exposure but rather indicates deficiencies in diagnosis, reporting and maintaining accurate databases.  Nordic countries reported that a high proportion of their cases were acquired during travel to Southern Europe, Thailand, Turkey and India. 


Among the thirty reporting nations, salmonellosis was clearly related to improved diagnosis applying both PCR and more recently multiple-locus variable-number tandem repeat analysis (MLVA) introduced in 2016. 



Subsequent to the recognition that eggs from Poland were a source of infection, epidemiologic surveys demonstrated that 1.4 percent of breeding flocks were infected and that 7.2 percent of laying flocks comprising 169 farms were infected with S. Enteritidis.  Following control measures applied by authorities in Poland and restricting distribution of potentially contaminated eggs, the incidence rate in the EU declined within months.


Salmonella Enteritidis Phage Type 8 was identified in 2016 associated with exposure to pet reptiles and feeder mice. Over 275 cases were identified in the UK and the outbreak apparently persisted for a number of years prior to surveillance in 2016.


The annual Epidemiologic Report concluded that egg and egg products persist as high risk factor for Salmonella outbreaks.  Premature relaxation of control measures against SE especially in Poland were cited as possible reason for the upsurge in a previously controlled disease.  The report stressed the need for vaccination and biosecurity presuming that commercial chicks are hatched from flock free of vertically transmission infection. The need to cook eggs to 165F is a meaningful preventive measure given that consumption of raw and under-cooked eggs is more prevalent in the EU compared to the U.S.

ECDCP in Solna, Sweden


Glyphosate Trial Goes Against Monsanto


The second stage of the trial in which Edwin Hardeman sued the Monsanto Company has concluded with the six-person jury awarding $80 million in damages. Hardeman successfully convinced the jury in the first phase of the trial that exposure to glyphosate contained in RoundUp™ applied in his garden over a number of decades was responsible for a diagnosis of non-Hodgkin Lymphoma.

The outcome of the two-phase trial is a serious setback for Bayer AG the acquirer of Monsanto in 2017. The parent company indirectly now faces approximately 1,000 lawsuits claiming diagnoses of cancer. Bayer stated "We stand behind these products and will vigorously defend them". The company will appeal the March 27th verdict, but will face five additional trials in California alleging similar health outcomes through the remainder of 2019.

The $80 million awarded to Hardeman included $75 million as punitive damages, considerably less than the $290 million awarded to Dewayne Johnson in a previous case, although this jury award was reduced to $79 million, and is also under appeal.

Monsanto submitted extensive scientific evidence confirming the safety of glyphosate. This data was previously adequate to convince regulatory authorities to issue licenses and approvals in many nations including the U.S. Unfortunately, scientific and epidemiologic evidence was rejected by the jury in favor of the submissions by the Plaintiff's legal team. An important consideration was the 2015 monograph released by the International Agency for Research on Cancer (IARC), a subsidiary of the World Health Organization that designated glyphosate as "probably carcinogenic to humans". This determination was subsequently withdrawn following scientific submissions made by epidemiologists and toxicologists affiliated to universities and international organizations maintaining that glyphosate was in fact not carcinogenic. This reality appears to have escaped the jury and most journalists. It is also a matter of record that a prominent U.S. scientist directly involved in drafting the IARC monograph also served as a plaintiff's expert in cases filed against Monsanto and Bayer. This represented a clear conflict of interest.

Demonstrating that glyphosate is carcinogenic is a windfall for tort lawyers but has some serious implications for row-crop farmers and also for the intensive livestock industry. Resistance to glyphosate induced in GM corn and soybeans allows farmers to use the compound as an effective herbicide reducing production costs and boosting yield. The campaign to demonize glyphosate is effectively directed at GM technology. The lawsuits alleging an association between exposure to glyphosate and non-Hodgkin Lymphoma are essentially a sideshow perpetrated by the legal profession.


Canadian Farmers Concerned Over Cancellation of Canola Seed Imports by China


Canada has relied on exports to China for up to 70 percent of canola seed harvested. During the past week, importers in China have cancelled orders for the ingredient.

The South China Morning Post suggests that the cancellations are retribution for Canada arresting and detaining the CFO of Huawei on a warrant issued by the U.S. China does not apparently understand the rule of law and the independence of the Executive, Legislative and Judicial branches of government in a democracy. Prime Minister Trudeau has been placed in a difficult position by the case, but cannot personally intervene and overrule the judiciary.

China holds Canada responsible for the arrest of Huawei CFO, Meng Wanzhou daughter of the company founder, who is under house arrest in Vancouver on allegations that her company contravened U.S. sanctions against Iran. Huawei has come under scrutiny from officials in many western nations including the U.S. Australia and the U.K. alleging that Huawei 5G systems will represent a potential for espionage.

The action by China against canola exporters illustrates the gap in understanding of procedural law in western democracies and illustrates the ruthlessness with which the central government of China will react to achieve predetermined policies and maintain ‘face’.


Allocation to Control vvND in California. More of the Same?


Reversing an earlier policy decision, USDA has allocated $45 million to APHIS and the CDFA from emergency funds not used during the 2014-2015 HPAI outbreak.

The purpose of the funds will be to put "more responders on the ground to increase surveillance and detection (of velogenic viscerotropic Newcastle disease) in backyard flocks." The stated objectives of the increased manpower will be to:

  • Ensure poultry, poultry products and poultry materials that move out of affected areas will be done in accordance with a permit

  • Enforcing quarantines and mandatory depopulation periods before introducing new birds

  • Preemptively depopulating poultry in high-risk areas

These measures are classic approaches to control of an exotic disease and will simply not achieve the goal of eradicating what must now be regarded as endemic Newcastle Disease in the game fowl ("fighting cock") population. These birds are located in dense clusters among conventional chickens and ducks in a three-county area of southern California where over 400 cases have been confirmed. The potential for extension from this population to other areas is evidenced by spontaneous diagnoses in "backyard" flocks in Utah and in northern California and three cases in commercial flocks near Perris in Riverside County.

Authorities simply will not recognize that the infection is endemic in a specific population maintained for the purposes of an illegal activity. Accordingly, owners of fighting cocks who have an economic incentive in addition to a cultural imperative to ignore quarantines and continue their activities in a clandestine manner. Threats of preemptive depopulation will result in dispersal of flocks and further dissemination of infection. "Putting more responders on the ground to increase surveillance" will serve to spread vvND since backyard farms do not have biosecurity facilities that can be used by APHIS and CDFA employees.

An editorial in EGG-NEWS posted in mid-February advocated the intensive application of vaccine to all birds in fighting cock flocks to produce a solidly immune population. This would markedly reduce the susceptibility of the backyard flock and fighting cock populations to below the outbreak threshold and ultimately the endemic threshold.

Any control program relying on an unrealistic dependence on quarantines and permits is bound to fail. Antagonizing owners of fighting cocks will encourage subterfuge. A more realistic approach to control of the 11-month outbreak will be abandoning the objective of complete eradication in this population and initiating a combination of vaccination with education of owners and then applying traditional control measures.

It is incumbent on owners and operators of commercial flocks to impose meaningful structural and operational biosecurity and not rely on federal and state officials to eradicate infection in an endemic subset of the poultry population of California. Even if the $54 million to pay for additional resources achieves eradication, how long will it be before the disease re-enters Southern California from northern states in Mexico where the infection is endemic and cock- fighting is prevalent? There are obvious epidemiologic connections between northern Mexico and southern California with respect to vvND.

Intended expenditure on surveillance, detection and quarantines is simply creating work for USDA and CDFA employees but with no logical outcome or prospect of success. Any program of control which does not encompass the cooperation of flock owners and encouraging them to immunize their birds runs counter to realities and denies the obvious lessons from the 1971 outbreak of vvND in Southern California and the subsequent outbreak in 2003.


Eggs, cholesterol and CVD—Here we go again!


A recent publication in the Journal of the American Medical Association* has resurrected concern over elevated dietary intake of cholesterol and cardiovascular disease (CVD). In recent years, expressing the words of Dr. Robert Eckel, Editor of JAVMA "the association of egg consumption and dietary cholesterol with CVD, although debated for decades, has been thought to be less important."

The article by Zhong and colleagues affiliated with the Northwestern University, Feinberg School of Medicine associates elevated cholesterol intake and hence eggs with a higher incidence of CVD in an analysis based on 29,615 subjects from six prospective studies followed for 17.5 years. The population comprised 45 percent men and included 31 percent blacks. Cardiovascular outcomes included stroke, fatal and non-fatal myocardial infarctions and heart failure. All-cause mortality was compared to CV events. The study adjusted for potentially confounding demographic, socioeconomic and behavioral factors including smoking.

The study concluded that each additional daily 300mg/day intake of cholesterol (say 1.8 large eggs) was associated with a significantly elevated risk (at the 95 percent level of confidence level) of incident CVD, assigning a calculated Hazard Ratio of 1.17. Consumption of one egg every two days was associated with a significantly elevated risk of CVD outcomes with a Hazard Ratio of 1.06. The association between egg consumption and incident CVD was not significant after adjusting for dietary cholesterol consumption.

The authors suggested that the results of their study, associating eggs in the incidence rate of CVD, should be considered in developing dietary guidelines. Although implicating egg consumption the observational study was not able to distinguish between the statistically derived association and actual causation.

It is apparent that in succeeding weeks the Egg Nutrition Center and their consultants in epidemiology will have to evaluate the peer-reviewed article. Dr. Mickey Rubin, quoted in the The Wall Street Journal of March 16th said "this study is inconsistent with multiple recent studies showing no association between eggs and heart disease risk". He will have his work cut out to refute the findings and to promote the nutritional benefits of eggs.

Given the accumulation of scientific evidence contrary to the conclusions of the study there should not be any adverse effect on consumption that has recorded only incremental expansion over the past four years. The danger is that activists opposed to intensive livestock production including vegans, environmentalists and proponents of animal rights will distort and amplify the findings using social media.

If we did not have the AEB and the ENC these entities would have had to be invented. Since we are fortunate to benefit from their resources they are worthy of industry support.

*Zhong,V. W. et al. Associations of Dietary Cholesterol or Egg Consumption With Incident Cardiovascular Disease and Mortality. JAMA. 321:1081-1095 (2019).


GAO Addresses Food Safety


The U.S. Government Accountability Office recently published the High-risk List incorporating 35 government programs and activities including the Federal Food Safety System in their March 6, 2019 edition. The report calls for the Executive Office of the President to develop a national strategy for food safety that establishes sustained leadership, identifies resource requirements and describe how progress will be monitored.  This recommendation was made in the previous high risk report in January 2017 without any action from the White House.


The GAO urges the Government to implement the Performance and Results Act (GRBA) as amended in 2010 to improve strategic and performance planning an interagency food safety collaboration. The  GAO suggested that Congress should direct the Executive Office of Management and Budget to develop performance plans relating to food safety and establish legislation to enable the Food Safety Working Group to improve coordination and leadership.


It is a matter of record that the GAO has called for a single Federal food safety agency combining activities of among others, the USDA-FSIS and the FDA in a single entity consistent with an alternative to the current organizational structure.


When consolidation is mooted, bureaucrats circle the wagons and agree to cooperate and interact.  In January 2018 the USDA and FDA agreed to a formal system of coordination and collaboration with respect to biotechnology.  An obvious example was establishing jurisdictional borders for tissue-culture derived “meat”.


The GAO considers that current agencies responsible for aspects of the Federal Food Safety System are operating without a single performance plan and without clearly defined monitoring of effectiveness.


It would be difficult given resistance to change and “turf” considerations to rearrange responsibility for food safety under a unified sub-cabinet agency equivalent to the status of the EPA.  The U.K. and the E.U. have established unified food safety authorities with benefits to consumers.  It took the national tragedy of 911 to create the Department of Homeland Security consolidating the activities of agencies and bureaus within diverse departments.  It is hoped that evolution towards a unified food safety agency could occur without a serious incident and would be the result of applying mature judgment and logic to a system which currently represents bureaucratic and political expediency.


FDA Announces Strategy for Imported Food Safety


In a February 26th press release, the Food and Drug Administration issued a statement of strategy with respect to imported food. The FDA estimates that the U.S. imports 15 percent of its overall food supply. Products are derived from 200 nations or territories and comprise 30 percent of fresh vegetables, 55 percent of fresh fruit and 94 percent of seafood consumed.

The Food Safety and Modernization Act of 2011 placed emphasis on preventive action to avoid foodborne disease outbreaks. Accordingly, FDA has been granted supplementary oversight and enforcement to meet standards.

The four goals of the FDA strategy to protect the U.S. public are:

  • Food offered for importation meets U.S. food safety requirements

  • FDA border surveillance prevents entry of unsafe foods

  • A rapid and effective response to unsafe imported food

  • An effective food import program should be implemented

During recent months, FDA Commissioner Dr. Scott Gottlieb has aggressively pursued responsibility for aspects of food safety within the jurisdiction of his Agency. Although the goals as stated are realistic and desirable, it is noted that over 125,000 facilities produce or supply foods to the U.S. How the FDA intends to fulfill its mandate is less clear.

Given artificial barriers as designated by Congress, it is doubtful as to how the U.S. can have a seamless and integrated food safety program. Despite lofty goals, increased funding and advances in technology, ultimately a comprehensive food safety agency based on the pattern in the E.U. will have to be established in the U.S. This will leave the FDA with responsibilities for drugs and medical devices that at present it is hard pressed to fulfill. The USDA will have jurisdiction over existing activities with the exception of the Food Safety and Inspection Service.


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