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Editorial

HSUS Files Complaint with FTC over Pilgrim’s Pride “Natural” Claim

12/17/2018

The Humane Society of the United States has filed an 81-page complaint alleging that Pilgrim’s Pride claims of “100 percent natural” and “raised as humanely as possible” are false and misleading. The issues raised relate to stocking density, growth rate, electrical stunning and mechanical slaughter. We have seen this movie previously and the document regurgitates the same set of allegations against almost all U.S. companies involved in intensive chicken production.

 

The GNP subsidiary owned by Pilgrim’s Pride markets Just Bare™ and Gold ‘n Plump™ which receive special diets and in some presentations are certified as organic.  The plant processing GNP brands employs controlled atmosphere stunning (CAS). A majority of the 160 million broilers processed each week are stunned by either low voltage AC or pulsed DC in a water-bath stunner. These installations when operated correctly are over 99.9 percent effective in inducing unconsciousness before mechanical slaughter by trans-section of the jugular veins and carotid arteries leading to exsanguination.  A fraction estimated at less than 0.01 percent of birds may not be stunned or may miss the mechanical knife.  Accordingly, plants position a ‘back-up slaughterer to effect manual transection of cervical vessels using a hand-held sharp knife before birds enter the bleeding tunnel.  Claims that birds are “drowned and scalded to death are essentially fallacious and are not supported by any specific data quantifying “red birds” which are recorded and condemned.

 

It is acknowledged that transferring birds from a conveying to a hanging line is stressful both on workers and the flock since it involves inversion and handling of live birds.  The alternative involving controlled atmosphere stunning is more expensive than current systems. Although possible, retrofitting existing plants to CAS would be both disruptive and capital intensive.

 

The issues relating to rapid growth and stocking density are spurious since Pilgrim’s Pride and all other responsible U.S. integrators conform to the National Chicken Council codes of practice and standards.  If conditions in broiler grow-out houses operated by contractors were less than optimal, growth rate, livability and feed conversion efficiency would be adversely affected with dire financial consequences in a competitive market. It is a matter of record that performance standards achieved in the U.S. are among the highest in the world, closely approximating genetic potential. The USDA maintains responsibility through the Food Safety and Inspection Service for wholesomeness and welfare extending from the point of delivery to a plant through to slaughter. 

 

A number of companies have adopted E.U. standards such as the the Global Animal Partnership requirements.  Slow growing strains, low stocking density, enrichments and windows in barns certainly add to the cost of production, ultimately passed on to consumers.  The actual benefits to flocks are difficult if not impossible to quantify.  Any advantage is within the perception of the consumer and is guided by labels and influenced by the Internet.

 

In a free-enterprise society, a chicken producer survives by marketing products, which are in demand.  There are niche markets for flocks with perceived welfare advantages at a high cost.  So be it.  Enforcing unrealistic standards on the entire industry will effectively drive up the cost of production and limit the availability of protein to those who cannot afford to purchase their chicken in boutique supermarkets.

 

The FTC is empowered to regulate advertising claims.  In the past, complaints filed by the Humane Society of the United States have resulted in some changes in labels specifically with regard to gestation crates and the use of animal-derived fur in clothing.  The HSUS complaint to the FTC is yet another example of coercion and an attempt to disrupt chicken production.

 

At the end of the day the Humane Society of the United States is an organization committed to a vegan agenda.  There is no satisfying their demands, short of abandoning intensive livestock production. Less than five percent of the U.S. population claims to be vegetarian. There appears to be an aggressive minority within this group who wish impose their lifestyle, for whatever reason, on the majority.  This “do good” zealotry must be opposed.

 

Poultry Industry News

USDA-WASDE FORECAST #584 December 11th 2018

12/11/2018

OVERVIEW

The December11th 2018 USDA WASDE projections for the 2018 corn and soybean harvests are based on actual yield and harvest data. The acreage for corn was retained from the July through November WASDE projections at 81.8 million acres (83.1 million in 2017). Soybeans will be harvested from 88.3 million acres (89.5 million acres in 2017).

The USDA confirmed corn yield to be 178.9 bushels per acre, unchanged from the November WASDE (175.4 bushels in 2017). Soybean yield was held from November at 52.1 bushels per acre (49.5 bushels in 2017).

The December USDA projection of ending stock for corn was raised 2.6 percent to 1,781 million bushels for November. Ending stock for soybeans was held at 955 million bushels with minimal effect on CME quotation subsequent to the noon release of the December WASDE.

The 2018 corn and soybean crops will be the second largest ever but harvested during a time of uncertainty regarding previously projected, anticipated and ongoing export volumes. The USDA projections of ending stocks and hence prices for corn and soybeans take into account current announced tariffs on U.S. products but do not reflect future tariffs or an anticipated resolution of the trade conflict with China.


 

WEEKLY COMMODITY REPORT

12/14/2018

The following quotations for the months as indicated were posted by the CME at close of trading on Friday December 14th together with values for the reference months in parentheses confirming a small downward move in the price of soybeans and soybean meal compared to the previous week. The decline is attributed to disappointment that China placed orders for only 1.5 million metric tons of soybeans. This was lower than the 3 to 5 million metric tons anticipated as part of the "substantial quantity" anticipated from the December 1st dinner meeting.

 

COMMODITY

 

Corn (cents per bushel)

Dec.'18 378 (374)

March '19 385 (385)

Soybeans (cents per bushel)

Jan. '19 900 (916)

March '19 914 (928)

Soybean meal ($ per ton)

Jan. '19 307 (309 in Dec.)

March '19 312 (315)


 

Weekly Turkey Production and Prices

12/14/2018

Poult Production and Placement:

The December 14th edition of the USDA Turkey Hatchery Report, issued monthly, documented 28.4 million eggs in incubators on December 1st 2018 (30.4 million eggs on November 1st 2018) up 2.3 percent (0.6 million eggs) from November 1st 2017.

A total of 25.1 million poults were hatched during November 2018 (23.3 million in October 2018) and up 7.8 percent from November 2017.

A total of 21.1 million poults were placed on farms in the U.S. in November 2018, (21.6 million in October 2018), 1.5 percent more than in November 2017. This suggests disposal of 4.0 million poults during the month. Assuming all tom poults were placed, 31.2 percent of hen poults or 15.5 percent of all November poults hatched were not placed.

For the twelve-month period December 2017 through November 2018 inclusive, 285.3 million poults were hatched and 266.3 million were placed. This suggests disposal of 18.9 million poults. Assuming all tom poults were placed 13.2 percent of hen poults or 6.6 percent of all November poults hatched were not placed.

USDA will release the next monthly report in mid January 2018.


 

Weekly Broiler Production and Prices

12/14/2018

Chick Placements

The December 12th edition of the USDA Broiler Hatchery Report confirmed that a total of 221.5 million eggs were set during the week ending December 8th approximately the same as the corresponding week in 2017. A total of 174.5 million day-old chicks were placed among the 19 major broiler-producing states during the week ending December 8th. This was one percent less than the corresponding week in 2017. Total chick placements for the U.S. amounted to 182.3 million. Claimed average hatchability was 81.9 percent for eggs set three weeks earlier. Broiler chick placements for 2018 through December 8 th amounted to 8.91 billion, up 1.0 percent from YTD 2017.

Broiler Production

For the processing week ending December 8th 164.1 million broilers were processed at an average live weight of 6.13 lbs. (6.30 lbs. last week) and a nominal yield of 76.0 percent. The number of broilers processed was 0.4 percent more than the corresponding processing week in 2017. Processed (RTC) broiler production for the week attained 764.3 million lbs. (347,394 metric tons), 1.7 percent less than in the corresponding week in 2017. Production of RTC for 2018 to date attained 37.2 billion lbs. (16.89 million metric tons), 0.6 percent more than the corresponding period in 2017.


 

U.S. Broiler and Turkey Exports for January-October 2018.

12/14/2018

Data for January-October 2018 indicates a moderate increase in export of broiler parts in comparison to the corresponding ten months of 2017. Total broiler exports for January-October 2018 attained 2,661,068 metric tons, 3.9 percent more than the corresponding period in 2017 (2,561,051 metric tons). Total value improved by 2.1 percent to $2,670 million ($2,614 million).

During January-October 2018 the National Chicken Council (NCC), citing USDA-FAS data, documented exports of 2,866,373 metric tons of chicken parts and other forms (whole and prepared) valued at $3,024 million with a weighted average unit value of $1,055 per metric ton, 0.9 percent higher in value compared to the first ten months of 2017 ($1,065 per m. ton).


 

Updated USDA-ERS Poultry Meat Projection for 2018 and 2019.

12/17/2018

The USDA-Economic Research Service released production and consumption data for broilers and turkeys for 2017 (actual), 2018 (projected) and 2019 (forecast) respectively on December 17th 2018.

Broiler data for 2019 was essentially unchanged from the November report. Production in 2019 will increase by 1.4 percent compared to 2018 to 19.659 million metric tons (43,250 million lbs.) RTC. Per capita consumption was upgraded from the November report by1.0 percent in 2019 corresponding to 42.3 kg. (93.0 lbs.) Exports will represent 16.4 percent of RTC production attaining 3.221 million metric tons (7,085 million lbs.) and based on the presumption that the recently concluded USMCA will be approved by Congress and by the legislatures of Canada and Mexico.

Turkey production will increase by 0.2 percent in 2019 to 2.684 m metric tons (5,905 million lbs.) RTC, due to a revision of 2018 production now projected to be 2.677 million lbs. (5.890 million lbs.). Per capita consumption will attain 7.3 kg. (16.1 lb.) during 2019, a 1.4 percent downward projection. Export volume will be 0.4 percent lower at 0.270 million metric tons (595 million lbs.). Forecast values for production and consumption of RTC turkey in 2019 are considered to be optimistic given 2018 prices, recent egg settings, poult placements and disposal, weekly production levels and inventory. The USDA projection presumably takes into account that the recently concluded USMCA, if ratified by the legislatures of all three nations, will avert tariffs. This will maintain market share in Mexico despite growing competition from Chile and other nations in Latin America.

Metric values for the broiler and turkey segments of the U.S. poultry meat industry are tabulated below:-

 

 

Parameter

2017 (actual)

2018 (updated)

2019 % Difference (forecast) 2018 to 2019

Broilers

     

Production (m. metric tons)

18.937

19.395

19.659 +1.4

Consumption (kg per capita)

41.3

41.9

42.3 +1.0

Exports (m. metric tons)

3.087

3.207

3.221 -0.4

Proportion of production (%)

16.3

16.5

16.4 -0.6

       

Turkeys

     

Production (m. metric tons)

2.718

2.677

2.684 +0.3

Consumption (kg per capita)

7.4

7.4

7.3 -1.4

Exports (m. metric tons)

0.282

0.271

0.270 -0.4

Proportion of production (%)

10.3

10.1

10.1 nil

Subscribers are referred to the weekly updates of production and inventories of broilers and turkeys posted weekly on CHICK-NEWS

Source: Livestock, Dairy and Poultry Outlook -December 17 th 2018


 

In ovo Stimulation of Muscle Growth

12/07/2018

According to a Kansas State University release, Dr. John Gonzalez and student Ms. Stephanie Kruger have demonstrated increased muscle definition in broilers following in ovo injection of nicotinamide riboside, an analog of vitamin B3. The researchers apparently quantified an increase in muscle mass at an unspecified age. The preliminary report does not indicate whether the injection results in increased muscle mass at harvest.

Simply increasing muscle mass may well exacerbate the problem of myodystrophy since muscle tissue, irrespective of the rate of accretion must have a commensurate vascular supply. The claim for a 35 percent increase in muscle mass must have been measured in either embryos following the 10-day administration of nicotinamide riboside or shortly after hatch. There is no way that under practical conditions pectoralis major tissue could be 35 percent larger than in high-yield broilers.

The Kansas State University Research Foundation is attempting to obtain a patent on the process which appears inconsistent with patent office guidelines. Nicotinamide riboside is a known compound used therapeutically. In ovo administration of nutrients is also far from novel and has been subject to extensive research for decades. Even if a patent were to be issued, enforcing it would be extremely difficult, if not impossible.


 

Prevention of Blackhead

12/12/2018

Dr. Robert D. Beckstead of the Prestage Department of Poultry Science has reported on a PCR assay to detect ova of Heterakis gallinarum, (cecal roundworm), the intermediate host of the protozoan parasite Histomonas meleagridis, responsible for blackhead.

The study funded by the U.S. Poultry Foundation as Project F067 demonstrated that the PCR assay was capable of detecting Heterakis in earthworms and darkling beetles obtained from the environment of poultry houses. All mature broiler breeders and floor-raised layers surveyed were positive for Heterakis in their ceca.

A number of chemical compounds including sodium hypochlorite, QAT-disinfectants, hydrogen peroxide, short chain organic acids, salt and diesel fuel were evaluated as potential inhibitors of Heterakis. Only sodium hypochlorite at 1.5 percent was capable of inactivating Heterakis when evaluated in a laboratory assay.


 

Vietnam Prepares for ASF

12/12/2018

Given the rapid spread of African swine fever in China, authorities in Vietnam have initiated contingency planning and drills to respond to an extensive infection. Sixty-three cases have been diagnosed in Vietnam since August in the northern border provinces abutting China. To date 324 hogs and 17 tons of pork products have been destroyed.

 

 

Vietnam has more than 27 million hogs for domestic consumption in a nation of 95 million.

 

Commenting on the planning and control activities, an official stated, “If this fever infects our pigs it will be a major hit to the economy, society and the environment.”

 


 

Chicken Strips vs. Nuggets

12/12/2018

Research conducted by the NPD Group has shown that the rise in consumption of breaded chicken strips is not at the expense of nuggets.  The market research company has concluded that different demographics purchase either nuggets or strips.

                                                      

NPD calculated that annual consumption of nuggets attained 2.3 billion servings for the year ending September 2018 compared to 1.5 billion servings of chicken strips.


 

Giant Food to Invest $175 Million in D.C. Market

12/14/2018

The Giant Food chain, prominent in the greater Washington D.C. region has announced an intended investment of $175 million in a new store and for remodeling 24 existing locations.

 

Gordon Reid, President of Giant Food stated, “As the region's leading grocer, this announcement is part of our long-term commitment to deliver a consistently exceptional experience for our shoppers.”  He added, “We look forward to updating and enhancing our existing stores and constructing both new and replacement locations to give our shoppers a fresh and imaginative selection, unique in-store experiences and superior customer service.”

 

The mid-Atlantic region has seen the recent introduction of new banners including Publix and Wegmans. Existing chains have had to up their game to compete.


 

Latin American Poultry Summit at 2019 IPPE

12/14/2018

The inaugural Latin American Poultry Summit focusing of broiler and layer production in addition to processing will take place Monday February 11th and Tuesday February 12th concurrently with the IPPE.  The program is sponsored by the Latin American Poultry Association and various media. 

 

Topics will include trends in poultry welfare, management of the gut microbiome in broilers, vaccines and health improvements for prevalent diseases, biosecurity for Latin America, managing necrotic enteritis without antibiotics and other contemporary issues.  The keynote speaker will be Andrick Payen Diaz de la Vega of Rabobank who will consider World poultry market trends.

 

The cost of attendance is $249 for pre-registrants to the IPPE.  Further information is available on www.ippexpo.org


 

Church’s Chicken Appoints VP for Digital Marketing and Technology

12/14/2018

In a December 5th press release, Church’s Chicken has appointed Alan Magee as the Vice-President of Digital Marketing and Technology.  Alan gained experience with brand marketing for two leading restaurant groups and a major international hotel.

 

The appointment is part of the “digital evolution” of the restaurant chain.  Joe Christina, CEO of Church’s Chicken stated, “The decision to bring Alan aboard is tied directly to the roll-out of our new global brand positioning.”  He added, “As our brand moves in an increasingly digital direction, we have created this role specifically to address the unique needs, challenges and opportunities that come with marketing across digital and non-traditional platforms.”


 

JBS Appoints CEO

12/14/2018

According to a press release from JBS S.A., holding company of broiler, pork and beef operations in the U.S., Gilberto Tomazoni will be appointed the role of Global CEO with immediate effect.  He was previously the COO.  He succeeds Jose Batista Sobrinho the Founder of JBS in 1953 and who was forced back into the company from retirement following revelations of insider trading and the revocation of a plea agreement affecting his sons Joesley and Wesley.

 

Snr. Sobrinho patriarch of the family stated, “I am very pleased that Tomazoni is my successor.”  He  added, “He lives the company’s culture and has a deep knowledge of our business worldwide.  As chief operating officer, he led JBS operations with great success.”  Tomazoni previously served as Chairman of Pilgrim’s Pride Corporation and was CEO of JBS Foods, the Chicken Division of the Company in Brazil.


 

JBS Tolleson Faces More Intensive Recall

12/14/2018

According to a December 4th release by the FSIS, the recall from the Tolleson, AZ plant owned by JBS now amounts to 12,000 tons.  The recall involves product packed from July 26, 2018 through September 7, 2018 which may be contaminated with Salmonella Newport.  To date 333 laboratory-confirmed case in 28 states have been identified with illness ranging from August 5 to November 15th. To place the recall in perspective, 12,000 tons would represent 480 semi-trailers extending over seven miles of highway.

 

Since ground beef is frequently held for extended periods in consumers’ freezers, it is possible that additional cases will occur unless product is cooked to an internal temperature of 160 F for at least 30 seconds.

 

The magnitude of the recall, extending to over 100 retailers and the circumstances and timing of the action by FSIS is now the subject of questions by members of Congress concerned with public health and safety. It is evident that JBS will face not only the financial consequences of the recall bur also civil lawsuits arising from infection.


 

Jack in the Box Franchisees Sue Franchisor

12/14/2018

The National Franchisee Association for Jack in the Box has filed a breach of contract lawsuit against the franchisor.  At issue is an alleged breach of a 1999 settlement agreement by which franchisees would be provided with the results of audits of the marketing fund and details of income and expenditures.  The second alleged violation relating to the interaction between the company and its franchisees relates to the cost of major remodeling programs requiring roofing and other structural changes.

 

Robert Zarco, Esq. a renowned legal authority on franchise agreements who represents the Association stated, “The NFA has acted in good faith for years when dealing with their franchisor partners, expecting that their passion for the brand would be matched and their investments protected.”  He added, “They have on multiple occasions made known not only their concerns for the direction of the company, but also their willingness to work in unison with Jack in the Box to correct its course.”

 

 

Michael Norwich, chairman of the Jack in the Box National Franchisee Association stated, “Many of us have invested a great deal in its future.  Healthy franchisees are the key to brand success and we have been an undervalued stakeholder in the eyes of this management.”

 

The Jack in the Box chain comprises 2,000 restaurants with 93 percent  of locations owned by franchisees.


 

Animal Agriculture Coalition Grateful for 2018 Farm Bill

12/17/2018

The Animal Agriculture Coalition representing all components of livestock production has expressed thanks to the respective Chairmen and Ranking Members of both the House and Senate Agricultural Committees for their efforts in expediting the 2018 Farm Bill.

Of interest to the Coalition is the inclusion of funding for research on animal health with specific reference to diagnosis of foreign animal diseases and development and stockpiling of vaccines. The Coalition noted “Investment in animal health is a good start and will help ensure that the industry is better prepared now and into the future, simply put an ounce of prevention is worth a pound of cure.”


 

Additional Incident Cases of Salmonellosis from JBS Tolleson

12/17/2018

The Centers for Disease Control and Prevention have announced that the total of laboratory-diagnosed patients infected with Salmonella Newport has risen to 333 in 28 states. Although no fatalities have been reported, 90 patients have required hospitalization. To date, a total of 12.2 million pounds of ground beef has been recalled affecting at least 100 retailers.

Claims arising from the outbreak will be immense given medical costs and compensation for pain and suffering.

As with the previous Hudson Foods episode in 1997 requiring recall of 25 million lbs. of ground beef due to STEC contamination, the magnitude of the claim suggests that JBS Tolleson is unable to demonstrate segregation of batches of product assayed to ensure freedom from contamination.  Effectively FSIS has imposing a blanket recall.


 

FSNS Opens New Food Testing Laboratory in Greeley, CO

12/17/2018

In a December 17th press release Food Safety Net Services (FSNS) announced the opening of their latest analytical laboratory for the food and consumables industry in the central region of the United States. The lab is located in Greeley, Colorado and will conduct a full range of microbiological assays for the food industry. The facility incorporates a training room for education classes and customer use.

 

“We are anxious to have our customers tour this incredible laboratory,” said John Bellinger, CEO of FSNS.He added  “in addition, to this great facility we have an excellent staff led by Julie Tritt, our Laboratory Manager. Julie has been with FSNS for ten years and is an excellent microbiologist and manager.”

 

For more information on the FSNS Greeley laboratory or to tour the facility, contact the lab at 888-525-9788, or access info@fsns.com.

 

Food Safety Net Services (FSNS), headquartered in San Antonio, Texas, is a national network of ISO 17025 accredited testing laboratories open 24/7, 365 days a year. FSNS provides expert technical resources to assist companies with food safety and quality programs delivering critical information needed to improve process controls.


 

END Diagnosed on Riverside County Pullet Farm

12/17/2018

In a Conference call on Monday 17th December, Dr. Jack Shere, APHIS Deputy Administrator for Veterinary Services and Dr. Annette Jones of the California Department of Food and Agriculture provided details on the confirmed END outbreak involving the first commercial flock since 2003.  The case involved a flock of 103,000 egg-production pullets aged six weeks, located in Riverside County.

 

The diagnosis followed routine surveillance, given more than 190 cases in fighting cocks (euphemistically referred to in USDA-APHIS tables as “exhibition birds”) in a contiguous four-county area in California. According to information disclosed in the call, ascending mortality followed the diagnosis but there was neither a comment on clinical signs nor possible epidemiologic risk factors. The flock had been vaccinated three times, presumably with live attenuated vaccines, given the age of the pullets. The ranch was in close proximity to a cluster of incident END cases in backyard/fighting cock locations.

 

The flock was depopulated by manual removal from cages and euthanasia with carbon dioxide. Carcasses were transferred to a landfill. According to the State Veterinarian the premises will be decontaminated and will “lie fallow for 120 days” Appropriate epidemiologic investigations are in progress.

 

A representative of APHIS noted that restrictions imposed by importers of U.S. poultry and products will limit embargos to zones, county and in extreme cases to the State of California.

 

Dr. Shere indicated that the joint goal of APHIS and the CADA would be complete eradication. Given that no firm action was taken between May when the index case was reported and a limited pre-emptive depletion announced in late November in three localities, the prospect for eradication appears a distant hope. Characterizing the infection as ‘Exotic Newcastle disease’ (END) is a misnomer as it appears to be locally endemic in flocks of backyard birds and gamefowl. Despite the declining incidence rate from September through November it was disclosed that 24 new cases were identified during the past week in Riverside County.

 

All commercial operations in California and Arizona are obviously at heightened risk and effective as opposed to “feel good” biosecurity procedures are advised.


 

Genetically Engineered Cotton Seed Will Be Available

12/17/2018

Texas A&M University has received approval from the USDA-APHIS to release genetically engineered cottonseed modified to eliminate gossypol, a toxin for monogastric animals. The new varieties, if cultivated, will allow inclusion of acceptable levels of cottonseed meal into poultry and hog diets.

The cultivar was developed applying gene-silencing technology to produce an ultra-low gossypol cotton seed. Gossypol is still present in the leaves, flowers and stems of cotton where it serves as a natural insecticide. In contrast seed will not contain the toxin.

Petitions have been submitted to the FDA before the product can be approved in human food and as a feed for non-ruminant species including poultry and fish. Dr. Keerti Rathore who has worked on the ultra-low gossypol cottonseed for over 20 years anticipates approval within a year.


 

McDonald’s to Limit Antibiotics in Beef Supply Chain

12/18/2018

McDonald’s Corporation has announced that it will initiate a program to eliminate antibiotic from beef production over the intermediate term.  It will take at least two years to develop programs applicable to ten large markets supplying the U.S and international Divisions. 

 

The World Health Organization regards antibiotic resistance as a threat to human health and has advised against sub-therapeutic use of antibiotics and imprudent use with administration under responsible veterinary supervision.

 

The initiative to eliminate antibiotics is consistent with the vision of CEO Steve Easterbrook to create a “better McDonald’s”.  The antibiotic restriction for cattle effectively implemented for poultry will parallel removal of artificial ingredients from sauces, cheese and buns.

 


 

Shane Commentary

Bayer CEO under Pressure

12/07/2018

Werner Baumann the CEO of Bayer AG advanced to CEO in 2016 on a platform of acquisition with Monsanto as the principal prize representing a $63 billion commitment. The transaction was supposed to turn Bayer into the World’s major producer of seeds and agricultural chemicals critical to feeding and expanding a population expected to reach over 9 billion by mid-century. 

 

Marijn Dekkers, predecessor of Baumann had concerns over the acquisition. Apart from increasing debt load, he possibly foresaw the public relations problems associated with a company in the crosshairs of environmentalists and Green parties in the E.U. and worldwide.  The doubts expressed by Dekkers have now become a reality with Bayer facing up to 10,000 lawsuits over the potential cost of defending lawsuits alleging the carcinogenicity of glyphosate, the active ingredient of Roundup®™.

 

Faced with the current situation, Bayer will cut ten percent of its workforce representing 12,000 positions, spin-off the Animal Health business and sell prime brands, Coppertone and Dr. Scholl’s, acquired from the Merck consumer portfolio.

 

Investors, especially banks and institutions abhor uncertainty. Since the August 10th adverse jury verdict against Monsanto, Bayer shares have fallen by 35 percent possibly making the holding company vulnerable to hostile takeover and subsequent dismemberment.

 

In retrospect, the injudicious purchase of Monsanto was in part stimulated by the failure of Monsanto to acquire Syngenta AG in August 2017.  Subsequently, Syngenta AG. was acquired by ChemChina, a government-controlled enterprise.  This made Monsanto receptive to an acquisition which appealed to Baumann who courted Monsanto from May 2017 through to the announcement of the deal in September 2018.  The Monsanto honeymoon with Bayer lasted only three months until the San Francisco jury verdict.

 

The weight of scientific evidence suggests that glyphosate is not carcinogenic irrespective of the WHO-IRAC Report, which designated glyphosate as a potential carcinogen in March 2015.  This declaration was subsequently retracted based on opposition by independent scientists affiliated to academia and regulatory agencies.  It was also disclosed that a co-author of the Report had a conflict of interest that he was serving as an expert for litigants suing Monsanto.

 

The bottom line for farmers is that their major supplier of genetically modified seeds and herbicides is under financial pressure and will obviously attempt to increase prices.  The livestock industry will lose Bayer Animal Health as an independent supplier of anti-parasiticals since after the subsidiary is acquired the market will be less competitive.

 

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