Egg-News

Editorial


Corporate Greed and Shrinkflation Emerging as Unjust Election Issues

Despite the fact that inflation is receding, there is both perception and reality that the prices of food items have not declined in proportion to other items.  Deflation has, in large measure, been a reflection of the lower cost of energy although it is generally accepted that a gas price above $3.25 impact budgets and influences voters more than fluctuation in the price of a dozen eggs or a pound of ground beef. In actuality inflation as measured by the Consumer Price Index has declined from 8.9 percent in June 2022 to 3.2 percent in February 2024.

 

It is apparent that the Presidential re-election campaign will involve messages implying that the food manufacturing and distribution sectors are indulging in “corporate greed” and that prices are unnecessarily high and that unscrupulous companies are employing shrinkflation for packaged goods.  This was emphasized in the 2024 State of the Union address and according to polling, resonates with the electorate.

 

Inflation was an inevitable result of injecting trillions of dollars into the economy in response to the emergence of COVID with widespread disruption of production capacity and consumption.  Economists including ex-Treasury Secretary, Larry Sumner warned of the effect of inflation, but this was to be a price to pay to avoid a depression. We did not have soup and breadlines on Wall street or Hoovervilles on the Mall but we still have homelessness and SNAP. Through skill and a measure of luck, the Federal Reserve has guided the economy over the past three years to what is forecast to be a “soft landing” without resulting in mass unemployment.  Compared with other industrialized nations, the U.S. has emerged from the pandemic with a relatively strong economy as measured by gross domestic product, with Q4 GDP at 3.2 percent, low unemployment of 3.9 percent in February 2024 and increasing agricultural and industrial productivity.

 

The Administration message that the food production sector is taking advantage of consumers is incorrect and unjustified.  While there may be isolated cases of overt shrinkflation or price gouging, profit margins generated by food producers are consistent with restraint in pricing that is expected in a free market and competitive economy.

 

Political rhetoric conveniently forgets the twenty percent increase in wage rates over the past five years.  This is reflected in all components of the food production chain from field workers through to serving. Quoted in Politico, Dean Baker a Senior Economist at the right leaning Center for Economic and Political Research, stated, “We are not going to have a world where people get to keep their 20 percent pay increases and pay what they did four years ago for food.

 

 

The largesse exhibited during the COVID period comprising Federal funding through the Coronavirus Aid, Relief in Economic Security (CARES) Act of 2020 and the American Rescue Plan of 2021 in all probability averted a depression.  Not even the U.S. government can realistically spend the artificial money created. Various Departments including the USDA still hold undistributed funds that should be returned to the Treasury to offset the national debt.   Funds made available to the Department of Agriculture have been misused in futile attempts by Secretary Tom Vilsack to restructure protein production.  He has consistently attempted to oppose the major packers and broiler integrators through new regulations under the Packers and Stockyards Act.  He has distributed vast sums to unproductive projects claiming support for the “disadvantaged and underrepresented” in agriculture.  The scale of USDA “giveaways” has intensified this year possibly because administrators and initiators of programs recognize the likelihood of a change in administration that would bring about an end to their activities. 

 


Inverse relationship between ascending Fed rate and deflation

 

It is unfortunate that the agricultural sector and the food industry have become targets of political rhetoric through unjust accusations of corporate greed. The Administration has attempted to divert criticism from current disaffection to focus on an essentially innocent industry. This is confirmed in the March 12th release of the Consumer Price Index that documented a 2.2 percent increase in all food on an annual basis with food-at-home up 1.0 percent and food-away-from-home up 4.5 percent, reflecting labor costs.

 

Given that alleged price gouging and corporate greed will be emphasized as talking points in the coming election campaign, industry associations should prepare rebuttals and be able to counter unjust accusations, applying sound reasoning supported by economic facts.

 

Subscribers are directed to the Economy Section of the weekly Economy, Energy and Commodity Report in this edition.


 

Egg Industry News


Egg Week

USDA Weekly Egg Price and Inventory Report, March 13th 2024.

Market Overview

  • The average wholesale unit revenue values for Midwest Extra-large and Large sizes were down by 4.9 percent but Medium size was unchanged this past week. Wholesale prices for Midwest in cartons were approximately $0.50 per dozen above the 3-year average for early March. This past week shell egg inventory was up by 2.1 percent, following a fall of 1.0 percent the previous week. Although there has been a progressive weekly increase in pullet flocks transferred to laying houses hen numbers are reduced by the loss of close to thirteen million hens due to HPAI on twelve complexes holding from 250,000 to 2.6 million hens during the 4th Quarter of 2023. Pullets are in short supply with losses of 2.5 million growing birds mainly in California.
  • This past week, chains widened the spread between delivered cost and shelf price. This could result in a potential increase in generic stock unless compensated by a proportional rise in demand and constant re-ordering to fill the pipeline through mid-month. Discounters are holding prices on generics influencing mainstream retail stores. Eggs are still highly competitive in price against the comparable costs for other protein foods.
  • Total industry inventory was up by 1.9 percent overall this past week to 1.71 million cases with a concurrent 1.3 percent increase in breaking stock, following a 1.8 percent rise during the preceding processing week. Demand for egg products will presumably increase in the weeks preceding Easter (March 29th Good Friday) with more home baking and entertaining. Egg products are required for the food service and manufacturing sectors although exports are at a moderate to low level attributed to domestic price. USDA Benchmark wholesale prices for eggs in cartons were approximately $0.35 per dozen lower than the corresponding week in 2023.
  • It is now apparent that the inventory held by chains and other significant distributors may be more important over the short term in establishing wholesale price compared to the USDA regional inventory figures. Changes in stock held by DCs and in the pipeline as determined by weekly orders are probably responsible for cyclic fluctuation in weekly industry stock, especially after a holiday weekend.
  • Cases of HPAI in the commercial poultry industry and backyard (non-commercial WOAH) flocks have tapered, coincident with the end of the Fall migration of waterfowl that was extended in late 2023 by mild weather. The number and extent of future possible outbreaks during the spring and fall months of 2024 cannot be projected but the epornitic appears to be over with migratory birds having moved south following colder weather in January. Unfortunately sporadic cases in backyard poultry in diverse states continues and HPAI was diagnosed in turkeys in recent weeks in Missouri and North Carolina. More surveillance information should be released by USDA-APHIS concerning the prevalence rate of carriers among resident domestic free-living birds and a review of molecular and field epidemiology for the 2022 spring and fall waves of HPAI. The USDA has yet to identify specific modes of transmission for the 2022-2023 epornitic including likely airborne spread from wild birds and their excreta over short distances.
  • The current relationship between producers and chain buyers based on a single commercial price discovery system constitutes an impediment to a free market. The benchmark price appears to amplify both downward and upward swings as evidenced over the past two years. A CME quotation based on Midwest Large, reflecting demand relative to supply would be more equitable. If feed cost is determined by CME ingredient prices then generic shell eggs should be subject to a Midwest Large quotation.
  • According to the USDA the U.S. flock in production was down by 0.3 million hens (0.1 percent) to a new level of 302.3 million for the week ending March 13th The stated total flock of 306.6 million included about two million molted hens that will resume lay during coming weeks plus 5.0 million pullets scheduled to attain production. Given the latest figures it is estimated that the producing flock is at least 17 to 20 million hens lower than before the onset of HPAI in 2022. It is evident that USDA has now provided a more realistic figure of flock size having adjusted figures to account for depopulation of 13 million hens spread over the last quarter of 2023. There were evident discrepancies between published figures and the theoretical number of hens taking into account known losses and predetermined pullet replacements.
  • The ex-farm price for breaking stock was up 0.7 percent to $1.51 per dozen.Checks delivered to Midwest plants were unchanged at $1.38 per dozen this past week. Prices for breaking stock should follow the wholesale price for shell eggs usually with a lag of about one to three weeks.

 

The Week in Review

 

Prices

According to the USDA Egg Market News Reports released on March11th 2024, the Midwest wholesale price (rounded to one cent) for Extra-large was down 4.9 from last week to $2.16 per dozen. Large was down 4.9 percent to $2.14 cents per dozen. Mediums were unchanged at $1.78 per dozen delivered to DCs. Prices should be compared to the USDA benchmark average 4-Region blended nest-run cost of 76.0 cents per dozen as determined by the Egg Industry Center based on USDA data for February 2024. This value excludes provisions for packing, packaging materials and transport, amounting to 57 cents per dozen as determined in mid-2023 from an EIC survey (with low response) and now realistically 60 cents per dozen.

 

Currently producers of generic shell eggs should be operating with positive margins irrespective of region and customer-supply agreements. The progression of prices during 2023 and 2024 to date is depicted in the USDA chart reflecting three years of data, updated weekly.

 

The March 11th edition of the USDA Egg Market News Report confirmed that the USDA Combined Region value (rounded to the nearest cent), was down $0.80 per dozen to $2.34 per dozen delivered to warehouses for the week ending March 4th 2024. This average price lags current benchmark Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $2.25 per dozen. At the high end of the range, the price in the South Central region attained $2.41 per dozen. The USDA Combined Price last week was approximately $0.50 per dozen above the 3-year average of $1.85 per dozen. This past week Midwest Large was approximately $0.35 per dozen below the corresponding week in 2023 that was rising on demand to $2.70 per dozen as production recovered from HPAI depletion and with declining market demand.

 

Flock Size 

Previously the loss of approximately 13 million hens due to HPAI during the fourth quarter was not reflected in weekly USDA figures. The USDA has now adjusted data to reflect losses due to HPAI depopulation in recent weekly reports.

 

Given the importance of weekly flock numbers to pricing accurate values of flock size devoid of obvious discrepancies are required by producers.

 

According to the USDA the number of producing hens reflecting March 13th 2024 (rounded to 0.1 million) was apparently down 0.3 million as an adjustment from last week to 302.3 million. The total U.S. flock includes about one to two million molted hens due to return to production Approximately 5.0 million new pullets on average reach maturity each week, based on USDA monthly chick-hatch data for 20-weeks previously. The increase is offset by routine flock depletion in addition to residual losses during the Fall phase of the 2022 HPAI epornitic and an additional loss of approximately 13 million hens during the last quarter of 2023. To date some flocks have been replaced. Based on inventory level and prices, the population of hens producing table eggs and breaking stock should now be producing at or above seasonal demand by consumers. Industrial and food service off-take although increasing, is approaching pre-COVID levels. Prices will continue to fluctuate but commenced a seasonal albeit late rise in price two weeks ago.

 

According to the USDA the total U.S. egg-flock on March 13th 2024 was stated to be down by 0.3 million hens to 306.6 million including second-cycle birds and those in molt. The weekly difference of 4.3 million hens between flocks in production and total hens is an approximate value with the difference from last week denoting that molted hens are resuming production consistent with current demand. Given the season and the trajectory in benchmark wholesale prices, only a few older flocks were molted or depleted before mid-January 2024. At present it is estimated that there are 15 to 21 million fewer hens in the total flock now reflected in weekly USDA figures. The apparent difference is equivalent to about 5.3 percent of the pre-HPAI 2022 national flock of 326 million hens.


 

Egg Month

REVIEW OF FEBRUARY 2024 EGG PRODUCTION COSTS AND STATISTICS

 

Commencing in 2024 the EIC has justifiably separated the production costs and unit revenue values for eggs derived from caged and cage-free flocks. Accordingly EGG-NEWS will continue to summarize data but will consolidate production and export statistics for the U.S. egg industry and compare financial data for the two shell-egg categories.

FEBRUARY HIGHLIGHTS

 

  • February 2024 USDA ex-farm blended USDA nest-run, benchmark price for conventional eggs from caged hens was 251 cents per dozen, up 45.9 percent from the January 2024 value of 172 cents per dozen. For comparison, average monthly USDA benchmark price over 2023 was 146.0 cents per dozen with a range of 323 cents per dozen in January down to a low of 57 cents in May. Stock levels and prices prior to the onset of flock depletions due to HPAI indicated a relative seasonal balance between supply and demand. Future nest-run and wholesale prices will be largely dependent on consumer demand for eggs and liquid and the rate of replacement of pullets and hens depleted due to HPAI. Other considerations include diversion to shell sales from the egg-breaking sector in an interconnected industry.
  • Fluctuation in wholesale price is attributed in part to the amplification of upward and downward swings associated with the commercial benchmark price discovery system in use. Restoration of seasonal prices commenced midway through the fourth quarter of 2023 with a plateau after Christmas followed by a seasonal decline through January 2024. A substantial rise in price occurred during early through late February but with a sharp decline thereafter to mid-March. An unknown factor in future pricing will be the incidence rate and severity of highly pathogenic avian influenza in spring months with northward migration of waterfowl. Close to 13 million hens and 2.5 million pullets were depopulated during the fourth quarter of 2023 among five states with heavy losses in California.
  • February 2024 USDA average nest-run production cost for generic eggs from caged flocks over four regions (excluding SW and West), applying updated inputs was down 1.6 cents per dozen to 76.0 cents per dozen compared to the January 2024 value of 77.6 cents per dozen, mainly attributable to a 4 percent lower average feed cost per dozen.  Approximately 60 cents per dozen should be added to the USDA benchmark nest-run cost to cover processing, packing material and transport to establish a realistic price as delivered to warehouses.
  • February 2024 USDA benchmark nest-run margin attained a positive value of 175.0 cents per dozen for generic eggs from caged flocks compared to a positive margin of 94.4 cents per dozen for January 2024. Average nest-run monthly margin over 2023 was 64.2 cents per dozen compared to 155 cents per dozen in 2022. This differential was mainly due to higher prices following HPAI-depletion of flocks. It is emphasized that the U.S. benchmark price reflects nest-run conventional eggs.
  • The February 2024 national flock in production (over 30,000 hens per farm) was stated by the USDA to be up 0.1 million hens (rounded) to 300.0 compared to the revised January 2024 value of 299.7 million. This figure apparently takes into account depletion of 4.2 million hens during December 2023 that were not recorded in the month. Approximately 3.0 million hens returned to production from molt in February together with projected maturation of 22.0 million pullets, with this number offset by depletion of spent flocks. During the fourth quarter of 2023 approximately 13 million hens and 2.5 million pullets were depopulated due to HPAI in five states.
  • January 2024 pullet chick hatch of 26.1 million was up 8.6 percent or 2.1 million chicks from December 2023.
  • January 2024 exports of shell eggs and products combined was down 34.8 percent from December 2023 to 394,000 case equivalents representing the theoretical production of 5.2 million hens. The decrease was attributed to depressed demand for shell eggs by importing countries.

 

TABLES SHOWING KEY PARAMETERS FOR FEBRUARY 2024.

Summary tables for the latest USDA February 2024 flock statistics, costs and unit prices made available by the EIC on March 13th 2024 are arranged, summarized, tabulated and compared with values from the previous February 16th 2024 posting reflecting January 2024 costs and production data as applicable. Monthly comparisons of production data and costs are based on revised USDA values.

 

VOLUMES OF PRODUCTION REFECTING THE ENTIRE INDUSTRY

                                                                   

PARAMETER

        January 2024

     February 2024

Table-strain eggs in incubators

49.1* million      (Jan.)

 59.1 million     (Feb.)

Pullet chicks hatched

24.2 million        (Dec.)

 26.1 million     (Jan.)

Pullets to be housed 5 months after hatch

21.8 million        (May.)

 22.8 million     (June)

EIC 2023 December 1st Flock Projection (estimate)

328.9                   (Jan.)

328.0 million    (Feb.)

National Flock in farms over 30,000 

299.7million       (Dec.)

300.0 million    (Jan.)

National egg-producing flock 

315.7* million    (Dec.)

310.4 million    (Jan.)

Cage-free flock excluding organic

103.9*  million     (Jan.)

106.5 million    (Feb.)

Proportion of flocks in molt or post-molt

     11.5%             (Jan.)

   11.2%             (Feb.)

Total of hens in National flock, 1st cycle (estimate)

 279.4 million     (Dec.)

 275.6 million   (Jan.)

 

Total U.S. Eggs produced (billion)

    8.143* December 2023

  7.98   January 2024

Total Cage-Free hens in production

  122.3 million   (Jan.)

   15.0*% Organic

124.8 million   (Feb.)

14.7% Organic

“Top-5” States hen population (USDA)1

   147.9 million  (Dec.)

  148.5 million (Jan.)

 * Revised USDA/EIC

Notes 1. Texas excluded to maintain confidentiality            

 

PROPORTION OF U.S. TOTAL HENS BY STATE, 2023/20241                                                                   

Based on a nominal denominator of 300 million hens in flocks over 30,000 covering 94.6 percent of the U.S complement.

USDA has amended inclusion of specific states in regions and eliminated Texas data to protect confidentiality of Company flock

Sizes

STATE

DECEMBER *

    2023

    JANUARY*

       2023

 

 Iowa

    14.3%

      13.8%

 

Indiana

    11.8%

      11.6%

 

Ohio

    12.6%

      12.9%

 

Pennsylvania

      8.0%

        8.3%

             

Texas (estimate)

      7.5% ?

        7.5%?

                   

California

      3.0%

        3.0%?

 

  1. Values rounded to 0.1% 

*USDA data is questioned based on known values for hen depopulation and pullet placements with discrepancies in stated values during the 4th quarter of 2023

 

Rate of Lay, weighted hen-week (USDA)          83.3% January 2024.    82.6% February 2024

 

Revised per capita       egg consumption 2020:-             285.6 (down  7.8 eggs from 2019)*

Revised per capita       egg consumption 2021:-             282.5 (down  3.1 eggs from 2020)*

Revised per capita       egg consumption 2022:-             279.0 (down  3.5 eggs from 2021 due to HPAI)                          Projected per capita   egg consumption 2023:-             280.9 (up        1.9 eggs from 2022)                                                Forecast per capita     egg consumption 2024                283.7 (up        2.8 eggs from 2023 accepting HPAI losses)

*Revised, using data from USDA Livestock, Dairy and Poultry Outlook February 14th 2023 taking into account demand from the food service sector and presumably including the effect of HPAI depopulation.

 

Egg Inventories at beginning of February 2024:

 

     Shell Eggs:        1.51 million cases down 17.5 percent from January 2024.

     Frozen Egg Products: 757,238 case equivalents down 15.7 percent from January 2024

     Dried Egg Products:  Not disclosed since March 2020 following market disruption due to

          COVID. Moderate level of inventory are assumed

Eggs broken under FSIS inspection (million cases)

 

 January 2024,  6.37       DECEMBER 2023,  6.31                   

Cumulative eggs broken under FSIS inspection 2023 (million cases)  78.7         JAN. to DEC.      

Cumulative 2023: number of cases produced (million)                       262.9         JAN. to DEC.

Cumulative 2023: proportion of total eggs broken                               29.9%        (30.8%  2022)

 

Cumulative eggs broken under FSIS inspection 2024 (million cases)   6.37         JAN.

Cumulative 2024: number of cases produced (million)                        22.17         JAN.          

Cumulative 2024: proportion of total eggs                                             28.8           JAN.

 


 

Egg Exports

Exports of shell eggs during the 12-month period commencing March 2022 were constrained by availability due to progressive and cumulative depletion of 44 million hens as a result of HPAI divided among spring and fall waves. The national flock was about 20 million hens lower than the pre-HPAI complement on an average weekly basis during 2022. Sharp rises in price as a result of supply-demand disequilibrium made U.S. export prices non-competitive as denoted by lower volumes over successive months from March 2022. Egg products were also impacted but to a lesser extent than shell eggs. During June 2023 shell and product exports combined represented 2.5 percent of total production, more than double the volume recorded in January 2023 but exports declined in July to 1.9 percent of production by U.S. flocks. At the present time the national flock is approximately 17 million hens lower than pre-HPAI levels with relatively high prices sufficient to constrain exports of shell eggs. Combined shell and product exports in December 2023 represented 2.6 percent of the output of the national flock. It is questioned whether lost markets other than the USMCA and Caribbean nations will be reclaimed over the intermediate term. Sporadic and short-term exports may be made to various nations based on supply disruption caused by HPAI.

 

USDA-FAS data collated by USAPEEC, reflecting export volume and values for shell eggs and egg products are shown in the table below comparing 2023 with 2022:-

PRODUCT

Jan. 2023

Jan. 2024

Difference

Shell Eggs

     

Volume (m. dozen)

5.7

4.6

-1.1 (-19.3%)

Value ($ million)

17.0

8.7

-8.3 (-48.8%)

Unit Value ($/dozen)

2.98

1.89

 -1.09 (-36.5%)

Egg Products

     

Volume (metric tons)

1,652

2,083

 +431 (+26.1%)

Value ($ million)

10.7

11.3

+0.6 (+5.6%)

Unit Value ($/metric ton)

6,476

5,424

 -1,052 (-16.2%)

 

U.S. EXPORTS OF SHELL EGG AND EGG PRODUCTS DURING

JANUARY 2024 COMPARED WITH 2023

 

SHELL EGGS

 

Shell egg exports from the U.S. during January 2024 decreased by 19.3 percent in volume and 48.8 percent in total value compared to 2023. Unit value declined 36.5 percent to $1.89 per dozen compared to the corresponding month in 2023.

 

Canada was the leading importer of shell eggs during January 2024, with 2.2 million dozen representing 47.8 percent of volume and 47.1 percent of the $8.7 million total value of U.S. shipments of shell eggs. Unit price in January 2024 was $1.86 per dozen compared to $3.23 per dozen for consignments in January 2023. Imports by Canada are driven by consumer demand balanced against availability from the controlled supply situation in Canada. This inhibits flexibility necessitating imports from the U.S. to cater for demand.

 

The Bahamas was a distant second in shell egg imports from the U.S. during January 2024, with 0.6 million dozen representing 13.0 percent of volume and 12.6 percent of the total value of U.S. shipments of shell eggs. Unit price in January 2024 was $1.83 per dozen

Mexico was the third-ranked importer of shell eggs in January 2024 with a volume of 0.4 million dozen representing 8.9 percent of export volume and 6.9 percent of value. This price discrepancy was due to a low unit value of $1.50 per dozen compared to an average value of $1.89 per dozen for all exports.

 

During January 2024 the next three significant importing nations (Netherlands Antilles, Cayman Islands and Hong Kong.) with a collective volume of 0.5 million dozen represented 10.9 percent of U.S. exports. Value of exports to these importing nations amounted to $0.8 million in January 2024 compared to $1.1 million in January 2023. Unit price for these importers in January 2024 averaged $1.60 per dozen, compared to the January 2024 average USDA export price of $1.89, per dozen, tray packed, excluding processing but with inland transport and outer cartons. The average 12-month trailing USDA benchmark price for nest-run large shell eggs was $1.37* per dozen weighted by high prices during shortages during the second half of 2022 and the first quarter of 2023 resulting from depletion of flocks infected with HPAI.

 

*USDA 12-month USDA benchmark nest-run unit prices per dozen: February 2023, $2.13; March, $2.74; April, $1.38; May, $0.60; June, $0.82; July, $0.83 and August, $0.90; September, $1.00; October, $0.89; November, $1.65; December, $1.81 and January 2024, $1.72.

 

EGG PRODUCTS

 

The total volume of exported egg products during January 2023 increased 26.1 percent to 2,083 metric tons compared to January 2023. Total value of $11.3 million was higher by 5.6 percent compared to January 2023. Unit value decreased by 16.2 percent to $5,424 per ton compared to January 2023. During 2023 the U.S. exported 29,814 metric tons of egg products valued at $134.3 million with a unit price of $4,505 per metric ton. Fluctuation in unit price reflects the composition of exports and the relationship between World supply and demand. Ukraine is now restrained in production but India continues as a significant exporter.

 

Mexico was the 1st-ranked importer by volume of egg products during January 2024 receiving 672 metric tons from the U.S. valued at $2.4 million representing 32.3 percent of volume and 21.2 percent of value with a unit price of $3,571 per metric ton. Volume for January 2024 was up by 47.1 percent but value was lower by 17.2 percent compared to January 2023.

 

Japan fell to the 2nd ranked importer from the U.S. during January 2024 based on a volume of 382 metric tons with a value of $1.7 million, representing 18.5 percent of volume and 15.0 percent of the total value of U.S. exports of egg products. Exports to Japan fell by 35.5 percent in volume and 34.6 percent value compared to January 2023. The unit value of $4,392 per metric ton can be compared with the average unit value for U.S. exports of all egg products at $5,425 per metric ton. During 2023 Japan imported 10,352 metric tons of egg products from the U.S., valued at $49.9 million. With the conclusion of a bilateral trade agreement, the U.S. is no longer at a competitive disadvantage with respect to the E.U.

 

South Korea was ranked third among importers of egg products during January 2024 with a volume of 315 metric tons valued at $1.2 million. Most flocks in South Korea have been restored to production after depopulation following 2021-2022 outbreaks of HPAI. Import volume may have been influenced by limited but rising flock depletion or alternatively increased demand in advance of the Lunar New Year. In 2023 South Korea imported 1,141 metric tons valued at $5.3 million. Imports to South Korea resumed during November 2023 and continued through December with 237 metric tons valued at $0.7 million. Depending on severity, the return of HPAI may result in a disparity between local availability and demand requiring imports in 2024 as in 2022

 

Canada was the 4th-ranked importer in January 2024 based on a volume of 240 metric tons with a value of $1.1 million. Canada represented 11.5 percent of volume and 9.7 percent of value with a unit price of $4,583 per metric ton. Volumes shipped reflect restoration of the institutional and food service sectors and relative availability of domestic product in Canada.

 

COMMENTS

 

During 2021 the value of shell eggs and egg products attained $101.8 million or 32.7 percent of combined export value. Exports in 2022 amounted to $126.5 million in value equivalent to 47.5 percent of the combined value of shell eggs and products. During 2023 exports valued at $150.7 million represented 50.8 percent of shell egg and egg products amounting to $296.5 million. Canada represented 59.0 percent of the $162.2 million for shell eggs and 10.3 percent of egg products valued at $121.2 million, shipped during 2023, emphasizing dependence on this USMCA partner. During January the USMCA represented 41 percent of combined shell egg and product sales valued at $20 million.

 

Aspirational volumes of exports in excess of five percent of domestic production are unrealistic. Japan, South Korea and Taiwan will buy according to their needs for undifferentiated shell eggs and products based on landed price in a competitive World market. Purchase decisions for commodities are determined by FOB price, freight, duty and broker margins. Shell eggs and the various categories of egg products are essentially commodities and are non-responsive to promotion.

 

Exports will be dependent on the willingness of importers to accept the World Organization for Animal Health (WOAH) principle of regionalization (zoning) in the event of outbreaks of exotic Newcastle disease or isolation of either H5 or H7 avian influenza (AI), in commercial flocks, irrespective of pathogenicity. Most importing nations are now applying regionalization and permitting imports on a zonal, county or state-exclusion basis following H5 or H7 AI infection. Canada and the U.S. operate according to a 2018 bilateral agreement to maintain trade in the event of outbreaks of catastrophic exotic diseases including HPAI and END.

 

Generally pasteurized egg products should not be subject to any embargo imposed following reports of AI or Newcastle disease in a region.


 

Commodity Report

WEEKLY ECONOMY, ENERGY AND COMMODITY REPORT: March 14th 2024.

 

 OVERVIEW

 

Prices for corn and soybean meal were relatively unchanged compared to last week. Prices were influenced by short covering arising from geopolitical concerns and revised projections for crop sizes in Brazil. Secondary factors included disruption in shipping in the Red Sea and Panama Canal, carryover from the 2023 U.S. crop, export orders and predicted ending stocks of corn and soybeans for the 2024 crop.  There was minimal response to the March WASDE that retained projections for production and ending stocks from the February report,

 

At 12H00 on March 14th the CME price for corn was down 0.7 percent compared to the previous week to 423 cents per bushel for March delivery. Corn price was influenced by lower ethanol demand and the proportionally high ending stock of corn from the 2023 crop. Export orders for the current market year have increased in response to lower prices.  Volumes and prices are indirectly influenced by events in the Black and Red Seas. Orders by China resumed at the end of the 2022-2023 market-year and have extended through to March with a lower Dollar Index assisted by low FOB prices but with higher ocean freight. Total exports for the current market year are 31.5 percent higher than for the corresponding week during the 2022-2023 year.

Soybeans were up 3.4 percent from last week to 1,192 cents per bushel for March 2024 delivery. Gain was attributed to short covering and lower projections for the 2024 Brazil harvest. Total exports for the current market year are 18.9 percent lower than for the corresponding week in the 2022-2023 year.

 

 

Soybean meal was down 0.9 percent to $335 per ton for March delivery compared to $338 per ton last week. Price was influenced by demand coupled with high crush volumes for three consecutive months through December but with volume presumably restored after the impact of cold weather in January. Price will fluctuate to reflect the CME price for soybeans and the demand for biodiesel despite the adverse financial situation in this sector. The market previously responded to the increased 2023 crop and higher stocks together with projections for 2024 unchanged from February in the March WASDE Report.

 

 WTI was 0.3 percent higher from last week to $79.62 at 16H00 EDT on March 13th with low world demand in relation to supply. The rise in price is inconsequential in the face of disruption of shipping in the Red Sea, turbulence in the Middle East and is countered by U.S. production of 13.3 million barrels per day with ample reserves. The small upward trajectory in price may continue if production cuts by OPEC amounting to 2 million barrels per day and extended through June actually materialize. There was little inter-day fluctuation in price during the week ($76.95 to $79.92 range) with a small upward trend. Crude oil inventory in the U.S., other than the Strategic Reserve, was down 0.7 percent to 31.5 million barrels last week following the seasonal trend.  The U.S. production is constraining domestic and international prices

 

Factors influencing commodity prices in either direction over the past four

 weeks included:-

 

  • Weather conditions in areas of the World growing corn and oilseeds especially in Brazil and also Argentine with favorable rain recently under the influence of a strong El Nino event. The 2023 U.S. harvest was completed ahead of the corresponding weeks in 2022 with higher carryover (downward pressure).

 

  • Geopolitical considerations continue to move markets, especially in the Mideast. Cancellation of the BSGI in July and ongoing attacks on Ukraine port facilities impacted prices of wheat, corn, oilseeds and vegetable oils. Loaded bulk vessels are sailing from Black Sea and Danube River ports using the ‘Humanitarian Corridor” to various destinations. This route is operational despite threats by the Russian Federation to mine the entrance to ports and deploy airborne missiles.  Exports from Ukraine are approaching 1.5 million metric tons per week with a total of 26 million metric tons market year to date, down 11 percent from the equivalent period for 2022-2023 year. Grain production in Ukraine during the current year will be lower than 2022/2023 (Downward pressure on corn and wheat and an indirect effect on soybeans)

 

  • Macroeconomic U.S. factors:-
  • Most economists in academia and the private sector are confident of a “soft landing” for the economy following the release of revised Q4 2023 GDP and recent releases of economic parameters including the CPI and anticipated PPI and a decline in bond rates. Annual inflation as measured by CPI declined from 8.9 percent in June 2022 to 3.2 percent in February 2024. This is in part a response to a series of 11 FOMC rate raises that curbed inflation and cooled the labor market but without precipitating unemployment. There is evident stability in the bank sectors in both the U.S. and Europe. Large U.S. banks passed stringent mid-year “stress tests”. There is now concern over regional banks with exposure to commercial real estate.
  • The Federal Reserve held the benchmark interest rate steady at the monthly FOMC meeting on January 31st 2024, the fourth sequential pause.  The Federal Reserve commentary indicated that the rate would be held at 5.25 percent until a pivot with possibly two to three reductions of 25 basis points each in 2024, after the June meeting at the earliest. Chairman Powell in Congressional testimony and documented in FOMC minutes has indicated that decisions would be based on data and demonstrable progress in reducing inflation to achieve an annual 2.0 percent target by mid-2025. Market optimism with projections of five reductions during 2024 is  now unrealistically optimistic, with no reduction expected before July.
  • The February 28th Bureau of Economic Affairs announcement of the advanced estimate of Q4 GDP confirmed a value of 3.2 percent, slightly below the consensus estimate of 3.3 percent. The rise was attributed to increased consumer and government sector spending and investment in inventory.
  • The February 8th 2024 S&P Manufacturing Purchasing Managers’ Index Report (PMI) rose to 51.8 in January from 51.0 in December 2023. The PMI is approximately three percent below the 10-year average preceding the COVID years. The recent upward trend suggests recovery from the effects of successive raises in the Federal Reserve benchmark interest rate.
  • On February 29th the Bureau of Economic Analysis released the January Personal Consumption and Expenditure Price Index  (excluding food and energy) that was up 0.4 percent from the previous month. This was in line with estimates. Food prices increased 0.5 percent but energy was down 1.4 percent. The Index was up 2.4 percent year-over-year also corresponding to estimates. Food prices were up 1.4 percent and energy down 4.9 percent year-over-year. The PCPI is closely followed by the Federal Reserve and confirms declining inflation.
  • The March 12th Bureau of Labor Statistics release of the February 2024 CPI confirmed a 0.4 percent increase from January, and 0.1 percent above forecast. The annual increase of 3.2 percent was up from 3.1 percent in January and higher than the anticipated value. The increase in the core value (excluding food and energy) was 0.4 percent from January and 3.8 percent for the 12-month period, in line with estimates.  Food at home was unchanged from the previous month. Food away from home was up 0.1 percent from January.  On an annual basis all food was up 2.2 percent with food at home up 1.0 percent and food away from home up 4.5 percent. Energy was up 2.3 percent in February and down 1.9 percent over 12-months, mainly due to a decline in gasoline (-3.4 percent) and fuel oils (-5.4 percent). The shelter category was up 0.4 percent for the month and 5.7 percent over the past year. The macro trend is clearly towards reduced inflation due to a fall in energy prices but this category is moving up, detracting from deflation. The CPI heavily influences FOMC rate decisions.
  • The February Producer Price Index for Final Demand (PPI) released on March 14th was up by 0.6 percent from January compared to an expectation of 0.3 percent. The PPI was up 1.6 percent over the past 12-months. This is compared to a 6.4 percent increase in 2022. The increase in February was due to a 4.4 percent rise in energy and 1.2 percent for finished goods. The core PPI value excluding volatile fuel and food, was up 0.4 percent for February and up 2.8 percent for the 12-month period. Food was up 1.0 percent compared to a 0.3 percent decrease in January.
  • Retail sales in February were up 0.6 percent over January compared to an estimate of 0.8 percent and compared to a decline of 1.1 percent for the revised January value compared to December 2023.
  • A Federal Reserve release on February 15th confirmed that industrial production fell 0.5 percent in January against a projection of a 0.1 percent rise in December. Production was adversely affected by inclement weather during January 2024 with plant closures. Capacity utilization was down 0.2 percent to 78.5 percent, 1.1 percent below the 1972-2020 average.
  • The February 26th report on Durable Goods Ordered for January 2024 was unexpectedly lower by 6.1 percent against a consensus estimate of a 4.5 fall. Transportation and specifically aircraft orders were down 16.2 percent. Excluding the Transportation component, new orders decreased by 0.3 percent in January impacted by inclement weather. Shipments of durable goods decreased 0.9 percent following a fall of 0.6 percent in December 2023.
  • The February 15th release of retail sales data showed a monthly fall of 0.8 percent in January against an expected 0.1 percent decline. This value is compared to the revised 0.4 percent rise in December 2023. Core retail sales increased 0.6 percent in January. Retail sales in January were affected by harsh winter storms and a change in the basis of calculation. The Federal Reserve FOMC closely monitors this index as a measure of the trend in inflation.
  • The February 1st ISM® Manufacturing Index for January rose to 49.1 from 47.4 in December.
  • The Conference Board Consumer Confidence Index released on February 27th for January/February, declined to 106.7 points. This reading was down from a revised 110.9 for the preceding four-week period.
  • The March 1st University of Michigan Index of Consumer Sentiment fell to 76.9 for February down from a revised 79.0 in January.  The Index was up 14.9 percent from February 2023. Both the Current Economic Index (79.4 slightly down from 81.9 in January) and the Index of Consumer Expectations (75.2 down from 77.1 in January) denote a cautious increase in consumer sentiment influenced by lower interest rates and moderating inflation despite geopolitical concerns.
  • Non-farm payrolls added by 275,000 for February, as documented by the Bureau of Labor Statistics on March 9th. This was more than the anticipated 200,000, and compares to the revised January value. The increase is attributed to workers in the business, health care and government sectors. The unemployment rate rose to 3.9 percent with 15 million unemployed. Real average weekly earnings for January showed a 0.1 percent increase over January.  Average hourly earnings rose 0.1 percent to $34.57 in February up 4.3 percent over 12 months. Wage rates are closely followed by the Federal Reserve.
  • The Bureau of Labor Statistics Job Openings and Labor Survey report released on March 6th estimated 8.9 million job openings at the end of January, down 100,000 (-0.1 percent) from December 2023 and consistent with estimates. The January job openings number was the lowest value in 33 months and compares with the March 2022 value of 12.2 million during COVID.
  • The seasonally adjusted initial jobless claims figure of 209,000 released on March 14th was down 1,000 from the revised seasonally adjusted 210,000 for the week ending March 7th but lower than the Reuters  estimate of 218,000. The four-week moving average fell 500 to 208,000 The Bureau of Labor Statistics estimated 1.81 million continuing claims for the week ending March 1st.. There is evidence from data over the past three months that the labor market is cooling despite sporadic weekly reduction in new claims.
  • The February 1st Bureau of Labor Statistics report recorded a 3.2 percent increase in non-Farm Productivity for Q4; Unit Labor Cost was up by 0.4 percent on a normalized basis and Hours Worked was up by 0.4 percent in Q4
  • The ADP® reported on March 6th that private payrolls increased by 140,000 in February, up 29,000 from the revised 111,000 in January and compared to the Reuters estimate of 150,000 jobs. The increase in employment was mostly in the construction, transport and trade sectors. Annual pay was up 5.1 percent year-over-year compared to 5.3 recorded for January. The increase will not directly influence the probability of short-term future changes in interest rate since the ADP® is regarded by the FOMC as an unreliable statistic

 

FACTORS INFLUENCING COMMODITY PRICES

 

  • The 2023 harvests of corn and soybeans were completed by late November 2023. The March 8th WASDE provided a projection for acreage to be planted, yields, crop size and ending stocks for the 2024 crop.
  • It is evident that both polarization in the closely divided chambers of Congress and intra-party conflict between and among both sides of the aisle in the House will delay adoption of appropriations bills. Passage of the 2023 Farm Bill will be contentious and is subject to a 12-month extension as a stop-gap measure. Progress on the 2023 Farm Bill has been impeded by contention over SNAP eligibility and other entitlements that collectively represent 75 percent of total expenditure. The August 2nd downgrade of U.S. debt from AAA to AA+ by Fitch Ratings recognizes Congressional dysfunction. On November 10th 2023 Moody’s downgraded U.S. credibility from ‘stable’ to ‘negative’ based on an inability to pass required fiscal legislation. After four Continuing Resolutions the House and Senate passed six appropriations bills including the FDA and USDA, avoiding a March 8th partial shutdown of the Federal Government. Agreements have yet to be concluded on the remaining appropriations bills before March 22nd
  • The delayed 2023 Farm Bill is mired in conflict in both the House and Senate. There is no consensus on major issues comprising the magnitude of SNAP payments and eligibility and requested price supports for crops. The Chair of the Senate Agriculture Committee Sen. Debbie Stabenow (D-MI) is standing firm on maintaining both SNAP-WIC benefits and climate remediation funding even if the Farm Bill is delayed through to the 119th Congress  
  • The March 8th WASDE #646 Projected both corn and soybean production parameters with a potential record corn harvest for the 2024 crop. There will be ample world availability of ingredients although inequitable distribution will result in shortages in some nations. Soybean exports will comprise 39 percent of the 2024 U.S. crop with a 12.5 percent increase in ending stock.
  • There is a projection by CONAB (the Soy production association in Brazil)  that at the midpoint of the harvest the 2024 soybean crop in Brazil will attain 147 million metric tons  (5,401 million bushels) down from a previous estimate of 155 million metric tons (5,695 million bushels). Exports of 100 million metric tons (3,674 million bushels) are anticipated and Brazil will crush 56 million metric tons (2,057 million bushels). The harvest will be 7 million metric tons (269 million bushels) lower than the 2023 record crop.
  • Corn production in Brazil for the 2023-2024 market year will attain 124 million metric tons (4,801 million bushels) from all three sequential harvests. But down seven percent from the previous year. Brazil is projected to export of 54 million metric tons (2,125 million bushels). Argentine will produce 56 million metric tons of corn (2,204 million bushels) up 56 percent from the previous year impacted by drought. (Lower prices in the future subject to favorable reports on crop progress and actual harvests)
  • The Dollar Index (DXY) was 103.3 on March 6th, down 0.5 point from last week but under a three-month high with fluctuation following uncertainty over future interest rates and prospects of a prolonged delay in the anticipated pivot by the Federal Reserve FOCM. The DXY has ranged from 99.0 to 107.0 over the past 52 weeks. The dollar index influences timing and volume of export orders and indirectly the price of WTI crude.

 

USDA-WASDE REPORT #646, March 8th 2024

OVERVIEW

 

The USDA provided preliminary values for the production of corn and soybeans in the March 8th World Agriculture Supply and Demand Estimates (WASDE) #646, reflecting the anticipated 2024 crop. These values were understandably unchanged from the February edition given the month and are based on projections of acreage, yield, carry-forward levels from 2023, and with realistic assumptions of domestic use and exports giving rise to ending stocks.

 

The March 8th WASDE report predicted that corn would be harvested from 86.5 million acres, unchanged from February. The soybean crop will be harvested from 82.4 million acres also unchanged.

 

The most recent report retained the yield value for the 2024 corn crop at 177.3 bushels per acre. By comparison yield was 174.9 bushels per acre in 2023. The soybean yield was held at 50.6 bushels per acre compared to 49.9 bushels per acre in 2023.

 

The March 2024 USDA projections for the ending stocks of corn were 2,172 million bushels, up 0.5 percent from 2,162 million bushels respectively.

 

The March 2024 WASDE lowered the ex-farm price of corn by 5 cents to 475 cents per bushel. The projected price for soybeans was unchanged from the February WASDE at 1,265 cents per bushel. Soybean Meal was unchanged at $380 per ton.

 

Projections for world production included in the March 2024 WASDE report reflect the most recent estimates for commodities in the Southern Hemisphere with an emphasis on Argentine and Brazil. Economists also evaluated the likely impacts from hostilities in Ukraine with occupation of ten percent of the Nation’s land area by the Russian Federation and following extensive destruction of agricultural infrastructure. It is evident that production and hence exports of wheat, corn and sunflower from Ukraine will be reduced compared to pre-war averages. Exports from Ukraine have been restored following the collapse of the Black Sea Grain Initiative and destruction of Black Sea and Danube Delta port installations. These adversities have been partly overcome by aggressive naval action allowing the “Humanitarian Corridor” that traverses the national waters of friendly countries along the western Black Sea coast.

 

It is accepted that USDA projections for export are also based on the perceived intentions and needs of China. This Nation has sharply curtailed purchases of commodities and especially U.S. soybeans during the current market year despite drought and taking into effect relaxation of COVID restrictions on consumers with higher demand.

 

Reports on volumes of commodities exported are included in weekly editions of EGG-NEWS, derived from published USDA-FAS sales data.

 

CORN

Based on increased yield and acreage projections for the 2024 corn harvest, January through March WASDE Reports predict a crop of 15,342 million bushels compared to 15,234 million bushels in 2023. The U.S. 2023 harvest was a record, 2.0 percent above the previous record harvest of 15,148 million bushels in 2016. The “Feed and Residual” category was unchanged from February at 5,675 million bushels. The Feed and Seed category was retained at 1,405 million bushels. The “Ethanol and Byproducts” Category was held at 5,375 million bushels consistent with estimated demand for E-10 and higher blends. Gasoline consumption is restrained despite lower prices, easing of inflation and changes in commuting patterns persisting from COVID restrictions. Projected corn exports were unchanged at 2,100 million bushels, based on recent orders, the volume of projected shipments to China and taking into account the anticipated lower availability of coarse grains from Eastern Europe and World weather patterns under an El Nino event. Ending stocks of corn in the March WASDE report were unchanged at 2,172 million bushels.

 

The forecast USDA farm price for corn in the March WASDE report covering the 2024 crop was reduced 5 cents to 475 cents per bushel. At 16H00 on March 8th after the noon release of the WASDE the CME spot price for corn was 440 cents per bushel, up 1.6 percent from the quotation on February 8th and down 7.4 percent from the March USDA projection.

 

MARCH 2024 WASDE #646 Projections For The 2024 Corn Harvest:

Harvest Area

86.5 m acres (0.7% lower than Dec. 2023)

(94.6 m. acres planted), harvest corresponding to 91.4% of acres planted)

Yield

177.3 bushels per acre

(Updated from 174.9 bushels per acre in the December WASDE.)

Beginning Stocks

1,360 m. bushels

 

Production

15,342 m. bushels

 

Imports

25 m. bushels

 

Total Supply

16,727 m. bushels

Proportion of Supply

Feed & Residual

5,675 m. bushels

33.9%

Food & Seed

1,405 m bushels

 8.4%

Ethanol & Byproducts

5,375 m. bushels

32.1%

Domestic Use

12,455 m. bushels

74.4%

Exports

2,100 m. bushels

12.6%

Ending Stocks

2,172 m. bushels

13.0 %

Up 0.5 from 2,162 m bushels in the January WASDE

1 metric ton = 39.368 bushels

 

Average Farm Price: 475 cents per bushel. (Down 5 cents per bushel from from the February WASDE Report reflecting the 2024 projected crop)

 

SOYBEANS

 

Based on a prediction of acreage to be planted the USDA March WASDE projected the 2024 soybean crop at 4,165 million bushels with an estimated yield of 50.6 bushels per acre from 82.4 million acres harvested. Crush volume was unchanged from the February WASDE report at 2,300 million bushels. Projected exports were held at 1,720 million bushels despite China indicating lower pork production and reduced imports. Ending stocks were anticipated to be 315 million bushels, unchanged from the February WASDE report.

 

There is uncertainty over orders from China for the current 2023-2024 market year. This is attributed to competition from Brazil and an assumption of lower requirements for animal feed despite relaxation of previous strict COVID restrictions. In reality traders in China are obligated to order on a stable or declining market unless faced with shortages. Prior to 2018, China, the largest trading partner for U.S. agricultural commodities, imported the equivalent of 25 percent of U.S. soybeans harvested.

 

The USDA February 2024 projection for the ex-farm price for soybeans for the 2024 harvest was unchanged from the February WASDE report at 1,265 cents per bushel. At 16H00 on March 8th following release of the WASDE, the CME spot price was 1,185 cents per bushel, down 0.8 percent compared to the February 8th quotation and 6.3 percent below the March USDA projection.

 

MARCH 2024 WASDE #647 PROJECTION FOR THE 2024 SOYBEAN HARVEST:-

Harvest Area

82.4 m acres (Down 0.5% from Dec. 2023 WASDE)

83.6 m. acres planted. Harvest corresponding to 99.6% of planted acreage)

Yield

50.6 bushels per acre

(Updated from 49.9 bushels per acre in the Dec. WASDE)

Beginning Stocks

264 m. bushels

(Down 1.5%from the Dec. WASDE for the 2024 crop)

Production

4,165 m. bushels

 

Imports

30 m. bushels

 

Total Supply

4,459 m. bushels

Proportion of Supply

Crushings

2,300 m. bushels

51.5%

Exports

1,720 m. bushels

38.6%

Seed

102 m. bushels

 2.3%

Residual

22 m. bushels

 0.5%

Total Use

4,144 m. bushels

92.9%

Ending Stocks

315 m. bushels

7.1%

(up 12.5% from January WASDE )

1 metric ton = 36.74 bushels

Average Farm Price: 1,265 cents per bushel (Unchanged from the February 2024 WASDE Report)

 

SOYBEAN MEAL

 

The projected production of soybean meal from the 2024 soybean crop will be 54.25 million tons. This was up 0.1 million tons from the February WASDE but inconsistent with an unchanged crush of 2,300 million bushels of soybeans. This figure is questioned based on increased demand for biodiesel with a proportional increase in U.S. crushing capacity. Production is driven both by exports and domestic consumption for livestock feed and for soy oil supplying the food and biodiesel segments. The projection of domestic use was reduced 1.0 percent to 39.03million tons. Exports were raised 0.5 million tons to 15.8 million tons. The USDA retained the ex plant price of soybean meal at $380 per ton as an average for the 2023-2024 season based on supply and demand considerations as reflected in an unchanged ending stock of 400,000 tons representing 0.7 percent of supply.

 

At 16H00 on March 8th the CME spot price for soybean meal was $342 per ton, down 1.4 percent compared to the February 8th CME quotation and $38 per ton or 10.0 percent lower than the March WASDE projection of $380 per ton.

 

MARCH 2024 WASDE #646 PROJECTION OF SOYBEAN MEAL PRODUCTION AND USE

Beginning Stocks

371

Production

54,254

Imports

600

Total Supply

55,225

Domestic Use

39,025

Exports

15,800

Total Use

54,825

Ending Stocks

400

(Quantities in thousand short tons)

 

Average Price ex plant:$380 per ton (Unchanged from the February WASDE Report)

 

IMPLICATIONS FOR PRODUCTION COST

 

The price projections based on CME quotations for corn and soybeans suggest stable feed production costs for broilers and eggs. Going forward, prices of commodities will be determined by World supply and demand and U.S. domestic yield, use and exports.

 

For each 10 cents 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 live pound

 

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

  • The cost of egg production would change by 0.35 cent per doze
  • The cost of broiler production would change by 0.30 cent per live pound.

 

WORLD SITUATION

 

With respect to world coarse grains and oilseeds the February 2024 WASDE Report included the following appraisals by USDA:-

 

COARSE GRAINS:

 

“Global coarse grain production for 2023/24 is forecast 2.7 million tons lower to 1,507.4 million. This month’s foreign coarse grain outlook is for reduced production, larger trade, and smaller ending stocks relative to last month. Foreign corn production is forecast lower with declines for South Africa, Ukraine, Mexico, Venezuela, and Russia that are partly offset by increases for Argentina and Syria. South Africa is down reflecting lower yield prospects. Mexico is cut based on expectations of lower winter corn area. Ukraine and Russia are reduced based on reported harvest results to date. Argentina is raised based on higher expected area. Foreign barley production is down, with reductions for Iraq and Syria that are partly offset by an increase for Australia”.

 

“Major global trade changes include higher corn exports for Ukraine and Argentina but reductions for South Africa and India. Corn imports are lowered for the EU, Saudi Arabia, Israel, and South Korea but raised for Mexico, Venezuela, and Indonesia. Barley exports are raised for Australia. Foreign corn ending stocks are lower, mostly reflecting a decline for Ukraine that is partly offset by an increase for Brazil. Global corn ending stocks, at 319.6 million tons, are down 2.4 million”.

 

OILSEEDS:

 

“Global 2023/24 oilseed production is reduced 0.7 million tons to 658.7 million, on lower soybean and sunflower seed production partly offset by higher rapeseed. Sunflower seed production is reduced on lower output for South Africa. Rapeseed production is increased on higher output for India, Russia, and Ukraine. Global soybean production is reduced 1.4 million tons on lower production for Brazil and South Africa”.

 

“Global 2023/24 soybean supply and demand forecasts include lower beginning stocks, lower production, lower crush, higher exports, and lower ending stocks compared to last month. Beginning stocks are lowered 1.4 million tons mainly on historical crush and import revisions for China. Soybean crush for China is raised for 2020/21 to 2022/23 based on a review of in-country estimates and supplies. Soybean imports for China for 2022/23 are also raised to reflect shipping data by major exporters”.

 

“Global soybean production for 2023/24 is reduced on lower production for Brazil and South Africa. Soybean production for Brazil is lowered 1.0 million tons to 155 million on harvest results in Parana and poor weather conditions in Sa~o Paulo offset by favorable conditions in the north and Rio Grande do Sul. South African soybean production is lowered 0.4 million to 2.1 million on lower yield prospects. Global crush is reduced for Brazil and South Africa on lower supplies, and lower for Ukraine on higher soybean exports. Global soybean exports are raised 3.0 million tons on higher shipments to date from Brazil and Ukraine. Soybean imports are raised on higher imports for China, which are now 0.5 million tons higher than the prior marketing year’s revised estimate. Global soybean ending stocks are lowered 1.8 million tons to 114.3 million on lower stocks for Brazil that are partly offset by higher Chinese stocks”.

 

Factor: Million m. tons

Coarse Grains

Oilseeds

Output

1,507*

659

Supply

1,839

779

World Trade

243

200

Use

1,492

541

Ending Stocks

346

131

*Values rounded to billion metric ton

(1 metric ton corn= 39.37 bushels) (“ton” represents 2,000 pounds)


 

Product of the USA Label Rule

In a March 11th release, USDA announced finalization of the Rule relating to labeling meat, poultry, and eggs as “Product of the USA”.  The label claim can only be applied to foods that were derived from flocks or herds hatched or born, raised, processed and packed in the U.S. 

 

The Rule is intended to prevent deceptive labeling and to assure consumers of the domestic U.S. origin of products.  The label incorporating the “Product of the USA” will be applied on a voluntary basis.  Although no specific pre-approval is required from USDA, processors must maintain documentation to establish the veracity of the “Product of the USA” claim.\ that will be subject to audit.


 

FDA Recommending Voluntary Recall of Cinnamon Products

Based on elevated levels of lead in the region of 200 ppm, the FDA is recommending a voluntary recall of ground cinnamon products.  Six products have been identified that were distributed among retail outlets in California, Missouri, Illinois, Virginia, Florida and Maryland.

 

The levels of lead contamination assayed are lower than the 2,000 to 5,000 ppm in cinnamon associated with the recent recall of pouches of apple puree.

 

The Deputy Commissioner for Human Foods at the FDA, Jim Jones stated, “Today’s actions serve as a signal to industry that more needs to be done to prevent elevated levels of contaminants from entering our food supply.”  He added, “Food growers, manufacturers, importers and retailers share a responsibility for ensuring the safety of the foods that reach store shelves.”

The FDA is cooperating with the Centers for Disease Control and Prevention to evaluate elevated lead and chromium levels in children exposed to contaminated apple cinnamon puree. 

 

There is a world of difference between a recommended, voluntary recall and a mandated recall.  It is questioned why the FDA has not acted more forcefully.  Is this due to lack of authority or a structural and cultural inability to make decisions and to take action?


 

Dispute with Mexico over GM Corn

Mexico has submitted a response to the USMCA Dispute Settlement Panel regarding their ban on importation of GM corn for human consumption. The situation arose following a Presidential Decree banning GM corn for human consumption and the use of glyphosate herbicide. Mexico is claiming a deleterious effect from both glyphosate and GM corn but without substantiation.

 

The U.S. justifiably maintains that GM corn is innocuous given consumption over four decades. The Mexican position is that the U.S. must provide scientific evidence that genetic modification is not harmful. In contradistinction, it should be up to Mexico to demonstrate the actual harm resulting from consumption of GM corn.  The U.S. maintains that in accordance with USMCA rules, decisions to restrict products must be based on sound science.

Mexico imports yellow GM corn that is to be used in animal feed although the Presidential Decree initially called for a phase-out of GM product that would place both U.S. and Mexico at a disadvantage.  The action by the Government of Mexico has placed the U.S. in the invidious position of having to prove that GM corn is not inherently harmful. This is a far more difficult alternative than actually demonstrating a deleterious effect from consumption of a food especially if the Precautionary Principle is applied.

 

Outgoing President Andres Manuel Lopez Obrador (“AMLO”) is ill advised. It is hoped that his most likely successor, Dr. Claudia Sheinbaum, an environmental scientist, will quietly squelch the issue for the benefit of consumers in Mexico and the Nation’s economy.


 

Kentucky to Ease Restraints on Child Labor

Following the example of Arkansas, the Kentucky House of Representatives voted to approve House Bill 255.  This legislation will allow minors to work up to six hours per school day and up to eight hours on non-school days with a limit of 30 hours a week during the school term.  Federal rules are more restrictive for the 16-and-17-year age group. It is possible that Kentucky legislature is enacting a law legitimizing ongoing irregularities. 

Education officials are critical of HB255 that creates the potential for children to be exposed to hazardous occupations.  The duration of work would detract from schooling and there is a potential for exploitation of children from low-income families.  The move towards more extensive employment of minors is in response to availability of workers especially in agriculture and under the prevailing economic situation. 

 

Education presents a pathway for upward mobility.  Depriving children of scholastic opportunities will contribute to perpetuation of a class dependent on federal support programs and may even result in elevated crime rates.


 

Revamp of H-2A Visa Program

A bipartisan working group of the House Committee on Agriculture recently concluded a major review of the H-2A Visa program.  Recommendations include:

 

  • Expanding the program from seasonal to year-round eligibility to meet the needs of specific sectors of agriculture including dairy, hogs and poultry
  • Establishing standard wage rates based on duration of daily labor
  • Expediting procedural improvements in the face of an urgent need to legally employ additional workers

It is now up to both the House and the Senate to modify existing laws and for Federal and State agencies involved to cooperate to provide for a legal pathway to employ eligible workers.


 

Vital Farms Posts Q4 and FY 2023 Financial Results

In a March 7th release, Vital Farms Inc. (VITL), a Certified B Corporation posted financial results for the 4th quarter and FY 2023. This specialty egg producer competes directly with Eggland’s Best and other producers and distributors of USDA Certified Organic and pasture-raised products including Pete and Gerry’s, Hidden Valley and Egg Innovations. The Company experiences the same pressures of feed cost, contractor remuneration, labor and transport as competitors in a competitive and fluctuating market environment still restrained inflation.

 

For the 4th Quarter of FY 2023 ending December 31st 2021, net income was $7.2 million on revenue of $135.8 million with a diluted EPS of $0.17. 

 

Comparable figures for the 4th quarter of FY 2022 ending December 25th were net income of $1.9 million on revenue of $110.0 million with a diluted EPS of $0.04.

 

Sales increased 23.3 percent over the 4th quarter of FY 2023. Gross margin was 33.2 percent for the most recent quarter (30.3 percent Q4 FY 2022). Operating margin was 6.7 percent compared to 3.1 percent in Q2 2022.  

For the FY 2023, net income was $25.6 million on revenue of $471.9 million with a diluted EPS of $0.59.  Comparable figures for FY 2022 were net income of $1.2 million on revenue of $362.1 million with a diluted EPS of $0.03.

 

The Company increased guidance for FY 2024 projecting revenue of $552 million, an adjusted EBITDA of $57 million and capital expenditure of $35 to $45 million.

 

On December 31st 2023, VITL posted assets of $275.2 million, of which $3.9 million comprised intangibles against long-term debt and lease obligations of $17.3 million. The Company had an intraday market capitalization of $877.0 million on March 13th. VITL trades with a forward P/E of 208 and has ranged over a 52-week period from $10.23 to $21.42 with a 50-day moving average of $16.16.  Twelve-month trailing operating margin was 8.3 percent and profit margin 5.4 percent.  Return on assets over the past twelve months was 9.1 percent with 14.6 percent on equity. At close of trading on March 7th pre-release, VITL was priced at $19.87. Post-release on  March 8th VITL opened at at $21.18.

 

Approximately 36 percent of VITL equity is held by insiders with 61 percent owned by institutions. As of February 29th 6.1 percent of the float was short.


 

Walmart Plans Third Milk Plant for Texas

Walmart Inc. has announced a milk processing plant in Robinson, TX scheduled to open in 2026.  This plant will follow the 2018 facility in Fort Wayne, IN and will reflect the design of the previously announced plant to be located in Valdosta, GA.  Both the planned plants will cost approximately $350 million.

 

Bruce Heckman, Vice-president of manufacturing at Walmart stated, “This new facility continues our commitment to building a more resilient and transparent supply chain and ensuring that our customer’s needs are met for this everyday staple.  Products to be processed in the Texas facility will be distributed to approximately 750 Walmart stores in Texas, Oklahoma, Louisiana, Arkansas and Mississippi.  Milk will be marketed under the Walmart Great Value brand and for Sam’s Club under the Member’s Mark brand.

 


Proposed Walmart Milk Plant

 The fact Walmart has invested close to $1 billion in milk processing to stabilize their supply chain suggest that the Company might be interested in integrating backwards into egg production either through a joint venture or acquisition of an existing large producer. Establishing a series of egg complexes by Walmart is considered unlikely despite the investment by Costco in Lincoln Premium Poultry for rotisserie broiler production.


 

Wind Assisted Propulsion Evaluated


Pyxis Ocean underway

During mid-2023, Cargill initiated a test of the Pyxis Ocean a bulk carrier converted to wind assisted propulsion by WindWings®.  The vessel owned by MC Shipping has made a number of voyages since August 2023 sailing the Indian, Pacific and Atlantic Oceans. The initiative is in response to the International Maritime Organization target of a five to ten percent reduction in carbon energy sources.

 


Pyxis Ocean with aerofoils extended

It was determined that over the test period, the vessel saved three metric tons of bunker fuel daily  representing a value of $2,100. Over a 30-day voyage a Panamax dry bulk vessel carrying 57,000 metric tons of soybeans would save shippers $1.10 per ton. Based on the results, the area of wind capture will be increased to achieve a potential fuel savings of up to ten tons per day with favorable winds providing proportionally higher savings.

 

The question arises as to the return on investment and long-term financial benefits given the capital cost of an installation and the operational components including maintenance.


 

Cal-Maine Foods, Inc. Completes Acquisition of Dexter Complex


Dexter MO Plant to be re-puposed by Cal-Maine Foods

On March 14th Cal-Maine Foods, Inc. announced completion of the previously announced acquisition of a complex comprising a broiler processing plant, hatchery and feed mill in Dexter, MO, closed by Tyson Foods, Inc. in 2023. The Company plans to repurpose the facilities to produce and pack shell eggs and egg products.

 

Sherman Miller, president and CEO stated, “We are pleased to join the Dexter community and are excited about the opportunities to expand our operations”. He added “We intend to partner with the existing strong network of local contract growers who can support our shell egg production”.

 

In commenting on the benefits of the transaction Miller stated “Dexter, MO. has a central geographic location and the strong work force will enhance our supply and distribution capacity for customers in Missouri and surrounding markets. Importantly, we will also benefit from closer proximity to sources for our primary feed ingredients.

He concluded “We look forward to the new production opportunities, including the potential for additional free-range capacity, in this new community and market for Cal-Maine Foods.”

 

Cal-Maine Foods, Inc. is the largest producer and distributor of fresh shell eggs in the United States and marketing in states across the southwestern, southeastern, mid-western and mid-Atlantic regions of the United States.


 

PAHO Regional Health Conference on Epidemiology of HPAI


PAHO Conference on HPAI

The emergence of H5N1 strain avian influenza in Latin America during 2022 resulted in the extensive loss of migratory birds, commercial poultry and marine mammals. Accordingly the Pan American Health Organization (PAHO) organized a regional health conference in Rio de Janeiro on March 16th to review transmissibility among mammals and to assess risk of human susceptibility.  Thirty-five nations participated in the Conference attended by world experts on the molecular biology and epidemiology of avian influenza.

 

During the ongoing panornitic, a large number of diverse migratory and domestic bird species died of the infection.  A more serious concern was the extensive mortality among seals and sea lions in which direct animal-to-animal transmission must have occurred to attain the magnitude of losses recorded along the coasts of Chile and Peru and recently extending into Antarctica.

 


HPAI Marine mammals

Molecular virologists are concerned over mutations that have occurred as confirmed by sequencing of isolates. Dr. Ralph Vanstreels of the University of California, Davis noted “We are seeing the virus doing little evolutionary steps that are on the long-term movement towards potential human infection.”  Nine mutations have been identified in South American strains of H5N1 compared to those circulating in North America.  Despite the fact that the World Health Organization regards the risk to humans from the current circulating strains of H5N1 as being ‘low’ pharmaceutical companies are developing avian influenza vaccine that can be administered to humans.

 

The Conference considered enhanced surveillance, whole genome sequencing of isolates from birds and mammals and protocols to respond to outbreaks including establishing databases and standardized laboratory procedures.  To date only two cases of confirmed avian influenza have been diagnosed in humans, both recording a history of contact with wild birds. The patients survived with appropriate supportive and antiviral therapy but the mortality rate among the low number of elderly patients in Asia infected with H7N9 strain exceeds 60 percent.

 


Dead Seals as a result of HPAI

It is self-evident that maintaining large commercial flocks exceeding one million hens represents the potential for point mutations and recombinant events to occur.  An obvious preventive measure would be vaccination of at-risk flocks in areas with a history of exposure to migratory birds disseminating avian influenza virus.

 


 

 

Individual State Bans on Additives will Create Problems for National Brands


FDA Asleep at the Switch?

California has introduced legislation banning Additives including Red dye number 3, brominated vegetable oils and potassium bromate from human food.  Similar action is contemplated by Indiana, Illinois and by both Washington and New York states.

 

A  patchwork approach to banning specific additives for human food although based on valid scientific criteria and potentially benefiting consumers in those states will create problems for food manufacturers in their formulation and labeling.  It would be preferable for the implicated ingredients to be designated as unacceptable by the federal government through FDA action creating a level playing field.  The FDA has been tardy in assembling data and making decisions that would be beneficial to consumers and convenient for manufacturers.  In some respects, state agencies including those in California and New York are more influenced by the European Union that employs the precautionary principle than the FDA.

 

The difference between approaches to food safety in Europe and the U.S. is a function of the pressure exerted by industry lobby groups by both industry and consumer advocacy organizations on U.S. federal agencies.  In many instances U.S. manufacturers have voluntarily ceased using additives and compounds that are regarded as potentially or overtly harmful without regulatory intervention.  Brominated vegetable oil has not been used in citrus-flavored beverages for many years in the U.S. despite the state restrictions.

 


 

Oklahoma Rescinds Sales Tax on Groceries

Following the initiative of Illinois that imposed a one percent tax on groceries, Oklahoma will eliminate their existing 4.5 percent tax.

In a signing ceremony, Governor Kevin Stitt regarded the rescission as the largest single-year tax cut in Oklahoma history. Grocery taxes are extremely regressive and place a disproportionate burden on lower-income demographics.

 

Grocery taxes in other states include Mississippi at 7 percent, Kansas, 6.5 percent, Idaho, 6 percent, South Dakota at 4.5 percent and seven additional states ranging from 1.5 percent to 4 percent.

The Oklahoma sales tax made it worthwhile for border residents to purchase their groceries in adjacent Texas despite the added inconvenience and cost of travel.  It is estimated that eliminating the sales tax would save an average family $700 annually.

 


 

Whole Foods Market Introduces Daily Shop Format

in an ongoing search for alternative store formats, Amazon has established Whole Foods Market Daily Shops.  Stores will range between 7,000 and 12,000 square feet and will be located in urban areas to provide fast and convenient service. Offerings will emphasize prepared meals, snacks and fresh produce.

 

Christina Minardi, Executive Vice President for Growth and Development for Whole Foods Market and Amazon stated, “We are excited to introduce a new way for our customers to quickly pick up their Whole Foods Market favorites making the early morning or after-work grocery trips more efficient and enjoyable”.

 


 

World Decline in Food Prices

On March 8th the United Nations Food and Agricultural Organization released the Index of Food Commodities for February 2024.  A sequential 12-month reduction in food prices is evidenced by the 10.3 percent decrease in the Index from 131.1 in February 2023 to  the most recent value of 117.3.

 

Component indices included:-

  • The Cereal Index was down 6.1 percent from January to 113.8 points due to lower corn and wheat prices but offset by a raise in rice.
  • The Vegetable Oil Index was down 1.2 percent from January to 120.9 points with lower soy and sunflower oils but higher palm oil on increased demand.
  • The Dairy Index was up 1.3 percent from January to 120.0 points
  • The Meat index was up 2.0 percent from January tp 112.4 points with higher poultry and beef  prices but lower prices for pork products with decreased demand from China

Boutiful crops in Brazil and Argentina with restoration of Black Sea shipping using the ‘Humanitarian Corridor’ along the eastern seaaboard have collectively reduced concern over availability of grains and oilseeds and contributed to a moderation in prices for agronomic commodities.


 

State Politicians Become Involved in Missouri Prime Beef Plant Closure

As a result of environmental contamination with inadequately treated wastewater, the Missouri Department of Natural Resources withdrew the relevant permit for Missouri Prime Beef effectively closing the plant.

Representative Jim Kalberloh is cooperating with Representative Mike Stephens on a resolution to the problem to allow over 300 workers to return to the facility.  Kalberloh stated “I understand the impact of fresh water and clean water, so it’s a kind of thin line to try to walk. We are just trying to work out a deal where both can coincide and to live and come to a peaceful conclusion” The solution to the problem would be for the new owners of the plant to make the necessary investment in an effluent treatment plant to conform to state and industry standards.

If legislators strong-arm environmental regulators, over an issue of obvious contamination, the entire process of control will be eroded, with adverse consequences to the residents of the area. It is understood that a petition with 1,000 signatures was presented to the State protesting the release of incompletely treated effluent into the Pomme de Terre River adjacent to the plant. That should grab the Legislators’ attention!

 


 

Almond Boom Has Fizzled

The price of almonds has halved in ten years to $2 per pound.  This has impacted individual farmers and cooperatives that took on debt to establish orchards.

A major California consortium of growers, Trinitas Farming has filed for Chapter 11 bankruptcy based on illiquidity.

 

A number of egg producers established almond orchards on their properties to add to revenue. This is now is in question.


 

SEC Amends Greenhouse Gas Disclosure Requirements

The Securities and Exchange Commission (SEC) has amended proposed regulations requiring public traded companies to disclose greenhouse gas emissions.  Scope 1 emissions that are directly produced and Scope 2 comprising indirect emissions associated with the use of energy in operations will have to be disclosed.  Scope 3 requirements that arise from suppliers to the company concerned were removed from the Rule. 


This would mean that a public traded company producing a packaged food product would be required to disclose Scope 1 and Scope 2 emissions of greenhouse gases arising from manufacture of products including direct use of energy. They would not have to take into account greenhouse gas emissions from agricultural operations supplying ingredients used in the manufacture and packaging of food products.

There is considerable opposition to the SEC disclosure rules that have yet been finalized.


 

ICE Breaks Smuggling Ring from China

Six members of a smuggling ring were arraigned in a New York court on March 5th.  The Government alleges illegal importation of raw poultry from China destined for ethnic restaurants.  Huang Chen and partners organized a network to import, distribute and sell prohibited items from chickens, ducks and geese.  The ring has operated since August 2022 importing shipments incorrectly described on manifests as ‘frozen seafood’.  In raids, accompanying the arrests, the USDA and agents of the Office of the Inspector General confiscated product valued in excess of $150,000.

Illegal importation of raw ethnic delicacies from China represents both livestock and human health hazards. The extensive foot-and-mouth disease outbreak in England during 2001 was introduced through illegal importation of pork from China


 

Vulto Creamery Enters into Plea Agreement over Listeriosis

Vulto Creamery, located in upstate New York, has a history of producing cheese contaminated with Listeria. In March 2017, the facility was linked to an outbreak resulting in eight hospitalizations and two fatalities. An investigation by the FDA led to an indictment alleging “introducing adulterated food into interstate commerce”. Swabs taken by FDA have yielded Listeria monocytogenes and other Listeria spp. over the period July 2014 through February 2017. The owner of Vulto Creamery faces a $100,000 fine and a one-year suspended sentence.  The company faces a fine of $250,000 with appropriate court supervision.

 

U.S. Attorney Carla V. Freedman of the Northern District of New York, stated “This investigation and prosecution holds accountable the defendant who does business who through unsafe practices caused illness and death to consumers in an entirely preventable tragedy.”  She added, “The law enforcement and regulatory partners involved in this case will continue to work together to bring to justice those who endanger the public through unsafe and unsanitary products and facilities.”

 

During the past five years, FDA, the CDC and the Department of Justice have cooperated in prosecuting cases of foodborne infection that can be attributed to negligence or willful distribution of known contaminated products. This evidenced evidenced by the DeCoster, Peanut Corporation of America and Blue Bell Creamery cases.

 

Although the prevalence of SE is negligible in the commercial egg production industry, management should be aware of their responsibilities with respect to public health and should conform to the FDA Final Rule on Salmonella prevention.


 

Kroger and UFCW Local 400 Reach Agreement

A potential strike has been averted following agreement between the Kroger Company and UFCW Local 400 representing workers in West Virginia, Kentucky and Ohio.  The contract will include a starting wage of $13 per hour for new employees, provide raises for department leaders and cap health and welfare costs for the duration of the contract. Union members will be protected from any reduction in hours worked as a result of the Company using vendors and temporary workers.  Approximately 3,000 employees represented by the Union will now vote to approve the agreement. 


 

South Dakota to Facilitate Summit Pipeline

Following a denial by the Public Utilities Commission for Summit to proceed with a carbon dioxide pipeline, the South Dakota Legislature has passed bills that provide protection for landowners but will allow easements to facilitate the project.  Pipeline operators will have to pay for access to survey land and counties could collect a surcharge.  Pipeline companies would be responsible for damage and easements would be restricted to 99 years.  The final version of the legislation allows the Public Utilities Commission to overrule setbacks determined by individual counties.

Summit has proposed the $8 billion pipeline project that would collect carbon dioxide from 57 ethanol plants in South Dakota and neighboring states to be transported to North Dakota for underground sequestration.

 

Some funding will be provided by the federal government in form of tax credits to incentivize reduction of carbon dioxide release.  Tax credits were first introduced in 2008 and were expanded under the previous Administration.

 

The South Dakota Farmers Union was unhappy with the package of bills passed by the State House and Senate.  The Association commented on the domination of the legislature by “large special interest groups to the detriment of family farmers”.  It is significant that South Dakota Ethanol Producers Association supported the bill promoting the first Landowner Bill of Rights claiming that all parties would benefit.

 

 An obvious question is in the absence of a pipeline and sequestration, how is the ethanol industry currently disposing of carbon dioxide produced during the fermentation of corn?  It is understood that only a small proportion is disposed of by capture and sale or on-site subsoil injection.  If one-third of the corn crop is converted to ethanol then one-ninth of the mass of corn produced each year is vented. This contradicts the claim of ethanol being environmentally beneficial when added to gasoline at ten percent.


 

Commentary


FDA Requests $7.2 Billion Budget

The Food and Drug Administration has requested $7.2 billion as a component of the proposed Federal FY 2025 budget.
 

According to the Commissioner, Dr. Robert M. Califf, “This new funding request will help us build on our accomplishments (?) and also modernize our Agency and operations as we plan for the future.”  Included in the request is an additional $15 million to promote a safe and nutritious U.S. food supply.  The newly created FDA Human Foods Initiative will allow the Agency to “prevent or mitigate foodborne illness outbreaks”.  The request also supports programs to reduce diet-related chronic diseases and attain the goals of the National Strategy for Hunger, Nutrition and Health.

 

The Agency is requesting $114 million to support recruitment and support of a public health workforce.  Does this represent a duplication of the activities of the Centers for Disease Control and Prevention? 

It is noted that the Agency will request $1 million to expand foreign offices and strengthen the quality of imported products.  Given that a high proportion of our pharmaceuticals are manufactured in China or India, this appears to be an inconsequential amount given the magnitude of the tasks facing the Agency. The FDA has the obligation to certify the quality, safety and purity of imported drugs available to U.S. consumers.

 

The FDA is also requesting new authorization relating to the safety of foods including infant formula through binding limits for contaminants, testing of final products, environmental monitoring for pathogens and mandatory reporting.

 

Each year the FDA requests a larger allocation of funds citing real challenges and problems that as an Agency they are unable to address and resolve.  Under the immediate-previous and current Commissioners, the U.S. public has been subjected to a number of food-related crises with evident negligence, inactivity and incompetence demonstrated by the Agency.

 

It is time for a new, independent food safety and nutrition agency independent of the FDA.


 

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