Editorial

Future of Cell Cultured Meat-a Reasoned Appraisal

mid the swirl of doubt concerning the technical and financial viability of producing cell-cultured meat, Didier Toubia CEO of Aleph Farms commented on the state of his industry in a recent posting on Fast Company.  Toubia states, “My colleagues and I are part of a dynamic business sector comprising over 100 companies and billions of dollars in investment”.  This is undisputed but the reality is that despite considerable investment none of the established companies has been able to transform from pilot level production to commercial-scale production in metal reactors. 

 

Toubia expresses confidence averring, “I’m optimistic about cultivated meats’ prospects of complementing conventional meat.” A laudable sentiment but unfortunately reality does not support his position to date. He is however correct in his statement that promoters of cell-cultured meat created optimism over the prospect of commercialization and promises of displacing conventional meat. Entrepreneurial hype was intensified by many environmental and welfare activists intent on ultimately destroying intensive livestock and poultry production. 

 

In this respect no one is more responsible for creating unjustified anticipation than the P.T. Barnum of faux food, Josh Tetrick who has presided over a string of unfulfilled promises extending over two decades. Now with shuttered production facilities in Singapore and facing a $100 million claim for breach of contract and failure to pay suppliers he is now embarking on a new line to solicit funding. He appears to have appropriated CRISPR as a buzzword claiming that this is a new approach to developing cell-cultured meat.  We have seen this movie before. In the 1990’s he claimed that a database of legume seeds was the key to developing plant-based foods including his now-forgotten mayonnaise and a non-competitively priced egg substitute.

 

In contrast, Toubia cautions patience stating “Cultivated meat is not a quick fix.  Regulatory pathways are not seamless.  At commercial scale production costs are formidable.  Reaching single-figure market share will take time.”  Where CHICK-NEWS differs from Toubia is his analogy with EV production.  In contrast to cell-cultured meat there is an evident demand for EV vehicles as demonstrated by the growth of this sector of transport especially with numerous brands and large-scale manufacturing and export from China.  In contrast, focus groups and market surveys have demonstrated a reluctance to consume cell-cultured meat even at a price comparable to conventional products.  The claimed environmental benefits are now questioned given the power and water requirements for production, even if eventually attained.  The opposition to cell-cultured meat is evident in the enactment of laws mandating descriptive labeling and banning either production or sale of cell-derived products in meat-producing states of the U.S. and in some E.U. nations.

 

The emerging cell cultivated meat sector would be well advised to heed the experience of the major agribusiness companies that introduced GMO crop varieties four decades ago.  It was anticipated that the wonderment of the science involved and the benefits to the farming community would translate into universal acceptance by consumers.  Producers of GM seeds failed to recognize that grocery shoppers were the actual market and not farmers who actually benefitted from GM technology. An evident measure of self-confidence bordering on arrogance was expressed in the marketing of GM seeds by the agro-biotech giants of the E.U. and the U.S. They were oblivious to the naysayers and the Luddites opposed to innovation and who successfully generated a message of potential harm.

As with many innovations, it is necessary to prepare the market and demonstrate benefits that could include safety, environmental compatibility and even welfare to encourage initial consumption.  Long-term adoption will depend on quality and price.  Failure to satisfy consumer expectations with respect to these important attributes is the reason for the current downturn in the plant-based meat alternative sector with falling sales and substantial losses.

 

There may well be niche opportunities for cell-cultured protein.  Toubia points to foie gras and seafood as products that would benefit from cell-cultured production and where a differential in cost would not be a deterrent to consumption.

 

It is unlikely that venture capital companies will see any return over the intermediate term from investment in cell-culture meat that has yet to become a commercial reality.  They had best be guided by responsible entrepreneurs with solid scientific and business credentials. Didier Toubia expresses a realistic assessment of the state of development. His reasonable and measured appraisal is devoid of hucksterism and unsubstantiated claims based on a combination of self-deception and avarice.  Both venture capitalists and aspirant manufacturers should carefully consider the sage comment by Toubia that “qualifying success and managing expectations are necessary and that cultivated meat is a marathon rather than a sprint.”

 

Poultry Industry News

Turkey Month

Monthly Turkey Production and Prices, March 25th 2024

 

Poult Production and Placement:

 

The March 12th 2024 edition of the USDA Turkey Hatchery Report, issued monthly, documented 25.05 million eggs in incubators on March 1st 2024 compared to 26.76 million eggs on March 1st 2023* The March 2024 set was down 1.71 million eggs (6.4 percent) from March 2023 and 0.38 million eggs (1.5 percent) less than the previous month of February 2024.

 

A total of 20.18 million poults were hatched during February 2024 down 1.53 million poults (7.0 percent) compared to 21.70 million in February 2023*. The February 2024 hatch was down 1.35 million poults (6.3 percent) from the previous month of January.

 

A total of 18.54 million poults were placed on farms in the U.S. in February 2024, compared to 19.87 million in February 2023*. The February 2024 placement was 1.32 million poults (6.7 percent) less than in February 2023* 2023. This data confirms disposal of 1.63 million poults during the month. Approximately 8.1 percent of the February 2024 hatch was not placed.

 

For the twelve-month period March 2023 February 2024 inclusive, 267.64 million poults were hatched and 249.92 million were placed. This confirms disposal of 17.72 million poults over the 12-month period, corresponding to 6.6 percent of all poults hatched.

* USDA revision from previous monthly report.

 

Turkey Production:

 

The March 22nd 2024 edition of the Turkey Market News Reports documented the following provisional data for turkeys slaughtered under Federal inspection:-

  • For the processing week ending March 16th 2024, 1.653 million hens were processed at 16.6 lbs. live. This was 2.7 percent more than the 1.609 million hens processed during the corresponding week in February 2024 and 3.8 percent less than the 1.718 million processed during the corresponding week in March 2023. Hen slaughter year-to-date has attained 17.5 million, 4.9 percent less than for the corresponding period in 2023. 

                                                         

Ready to cook (RTC) weight for hens over the most recent week was 22.14 million lbs. (10,065 metric tons). This quantity was 3.3 percent more than the 21.44 million lbs. for corresponding week in February 2024 and 9.9 percent less than the 24.6 million lbs. during the corresponding week in March 2023. Dressing percentage was a nominal 80.5 percent. For 2024 to date RTC hen production attained 235.1 million lbs. (106,844 metric tons). This quantity is 11.5 percent less than for the corresponding period in 2023.

 

  • For the processing week ending March 16th 2024, 2.025 million toms were processed at 44.6 lbs. live. This was 1.5 percent more than the 1.995 million toms processed during the corresponding week in February 2024 and 13.8 percent more than the 1.780 million during the corresponding week in March 2023. Year-to-date 21.62 million toms have been processed, 0.8 percent more than for the corresponding period in 2023.

 

Ready to cook (RTC) weight for toms during the most recent week was 72.7 million lbs. (33,040 metric tons).  This quantity was 1.0 percent more than the 72.0 million lbs. processed during the corresponding week in March 2024 and 14.1 percent more than the 63.8 million lbs. during the corresponding week in February 2023. Dressing percentage was a nominal 80.5 percent. For 2024 to date RTC tom production attained 782.5 million lbs. (355,697 metric tons). This quantity is 1.8 percent more than the corresponding period in 2022.


 


Broiler Month

Monthly Broiler Production and Prices, February 25th 2024.

 

Broiler Chick Placements.

 

According to the March 20th 2024 USDA Broiler Hatchery Reports, 974.75 million eggs were set over four weeks extending from the week ending February 24th 2024 through March 16th 2024 inclusive. This quantity was higher by slightly less than two percent compared to the corresponding period in 2023.

 

Total chick placements for the U.S. over the four-week period amounted to 748.76 million chicks. Claimed hatchability for the period averaged 79.1 percent for eggs set three weeks earlier, down from 79.5 percent for the preceding four-week period. Each 1.0 percent change in hatchability represents approximately 1.86 million chicks placed per week and 1.77 million broilers processed, assuming five percent culls and mortality with the current range of weekly settings.

 

Cumulative chick placements for the period January 7th through December 30th 2023 amounted to 9.67 billion chicks. For January 6th through March 16th 2024 chick placements attained 2.05 billion

 

According to the March 22nd 2024 edition of the USDA Chickens and Eggs pullet breeder chicks hatched and intended for U.S. placement during February 2024 amounted to 8.20 million, up 6.4 percent (491,000 pullet chicks) from February 2023 and 10.2 percent (761,000 pullet chicks) more than the previous month of January 2024. Broiler breeder hen complement attained 62.3 million on March 1st   2024, 1.5 percent less (953,000 hens) than on March 1st 2023.

Broiler Production

 

As documented in the March 22nd 2024 USDA Broiler Market News Reports for the processing week ending March 16th 2024, 160.6 million broilers were processed at 6.41 lbs. live. This was 2.2 percent less than the 164.2 million broilers processed during the corresponding week in the previous month of February 2024 and 2.3 percent less than the 164.3 million processed during the corresponding week in March 2023. Broilers processed in 2024 to date amounted to 1,774 million, 3.0 percent lower than for the corresponding period in 2023.

 

Ready to cook (RTC) weight for the most recent week was 782.3 million lbs. (355,58` metric tons).  This was 3.0 percent less than the 806.1 million lbs. processed during the corresponding week in February 2024 and 1.3 percent less than the 792.9 million lbs. during the corresponding week in March 2023. Dressing percentage was a nominal 76.0 percent. For 2024 to date RTC broiler production attained 8,730 million lbs. (3.97 million metric tons). This quantity was 1.8 percent less than the corresponding period in 2023.


 


Meat Projection March 2024

Updated USDA-ERS Poultry Meat Projection for March 2024. 

 

On March 15th 2024 the USDA-Economic Research Service released updated production and consumption data with respect to broilers and turkeys, covering 2022 (actual), an updated projection for 2023 and a forecast for 2024.

 

The 2023 projection for broiler production is 46,387 million lbs. (21.085 million metric tons) up 0.4 percent from 2022 and less than a 0.1 percent upward adjustment from the February 2024 report. USDA projected per capita consumption of 99.5 lbs. (45.2 kg.) for 2023, down 0.1 percent from 2022. Exports will attain 7,265 million lbs. (3.302 million metric tons), 0.1 percent below the previous year.

 

The 2024 USDA forecast for broiler production will be 46,875 million lbs. (21.306 million metric tons) up 1.1 percent from 2023 with per capita consumption up 0.3 lb. to 100.4 lbs. (45.6 kg). Exports will be 1.4 percent lower than in 2023 to 7,165 million lbs. (3.257 million metric tons), equivalent to 15.4 percent of production.

 

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

 

Parameter

2022

(actual)

     2023

(projection)

    2024

(forecast)

  Difference

2023 to 2024

 

Broilers

 

 

 

 

Production (million lbs.)

46,207

46,387

  46,875

     +0.8

Consumption (lbs. per capita)

98.9

       99.5

  100.4

     +0.9

Exports (million lbs.)

7,290

7,265

   7,165

     -1.4

Proportion of production (%)

15.8

15.7

    15.3

     -2.5

 

 

 

 

 

Turkeys

 

 

 

 

Production (million lbs.)

5,222

5,457

5,370

     -1.6

Consumption (lbs. per capita)

14.6

14.8

    14.7

     -0.7

Exports (million lbs.)

407

 489

     520

    +6.3

Proportion of production (%)

 7.8

  9.0

      9.7

      7.8

Source: Livestock, Dairy and Poultry Outlook released March 15th 2024

 

The March USDA report updated projection for the turkey industry in 2023 including annual production of 5,457 million lbs. (2.480 million metric tons), up 4.5 percent from 2022. Consumption in 2023 was projected at 14.8 lbs. (6.7 kg.) per capita, up 1.4 percent from the previous year. Export volume will increase by 20.1 percent in 2023 to 489 million lbs. (222,272 metric tons). Values for production and consumption of RTC turkey in 2023 are considered to be realistic, given year to date data, the prevailing economy, variable weekly poult placements, production levels, freedom from HPAI and inventories.

 

The 2024 forecast for turkey production will be 5,370 million lbs. (2.441 million metric tons) down 1.6 percent from 2023 with per capita consumption down 0.7 percent to 14.7 lbs. (6.7 kg). Exports will be 6.3 percent higher than in 2023 to 520 million lbs. (236,000 metric tons) equivalent to 9.7 percent of production.

 

Export projections do not allow for a breakdown in trade relations with existing major partners including Mexico, Canada and China nor the impact of catastrophic diseases including HPAI and vvND in either the U.S. or importing nations

 

The USDA export projection takes into account declining broiler product exports to China. For 2022, China imported 622,099 tons of broiler products valued at $1,087 million including feet at an average unit price of $1,263 per ton. Feet represented 77.8 percent of volume during 2022 (483,538 metric tons) at a unit price of $1,926 per ton. Compared to 2022, exports to China during 2023 were 34 percent lower in volume to 405,343 metric tons and 34 percent lower in value to $711 million.

 

Subscribers are referred to the monthly export report in this edition and update of production data and cold storage inventories of broilers and turkeys respectively posted in each end-of- month edition of CHICK-NEWS with the previous monthly data under the STATISTICS tab.


 

U.S. Broiler and Turkey Exports, January 2024

OVERVIEW

 

Total exports of bone-in broiler parts and feet during January 2024 attained 301,200 metric tons, 4.0 percent lower than in January 2023 (316,629 metric tons). Total value of broiler exports increased by 3.3 percent to $386.8 million ($374,6 million).

 

Total export volume of turkey products during January 2024 attained 16,684 metric tons, 37.9 percent more than in January 2024 (12,098 metric tons). Total value of turkey exports increased by 3.3 percent to $44.8 million ($42.0 million).

 

Unit price for the broiler industry is constrained by the fact that leg quarters comprise over 97 percent of broiler meat exports by volume (excluding feet). From the first quarter of 2021 through 2022, unit value of leg quarters increased consistent with international demand followed by a decline in 2023. Leg quarters represent a relatively low-value undifferentiated commodity lacking in pricing power. Exporters of commodities are subjected to competition from domestic production in importing nations. Generic products such as leg quarters are vulnerable to trade disputes and embargos based on real or contrived disease restrictions.

 

HPAI has emerged as a panornitic affecting the poultry meat industries of four continents with seasonal outbreaks. The distribution in the U.S. limits eligibility for export depending on restrictions imposed by importing nations

 

Ongoing outbreaks of African swine fever in China and Southeast Asia from early 2019 and Europe from 2010 onwards reduced the availability of pork. In addition, disruptions in chicken production and logistics due to COVID restrictions decreased availability of protein with international repercussions on trade in chicken and pork. The demand for pork imports to China has diminished with restoration of domestic hog production. Mild overproduction is evident in the white-feathered broiler sector with implications for exports other than feet extending into 2024.

 

EXPORT VOLUMES AND PRICES FOR BROILER MEAT

 

During January 2024 the National Chicken Council (NCC), citing USDA-FAS data, documented exports of 303,591 metric tons of chicken parts and other forms (whole and prepared), down 3.8 percent from January 2023. Exports were valued at $395.0 million with a weighted average unit value of $1,301 per metric ton.

The NCC breakdown of chicken exports for January 2024 by proportion and unit price for each category compared with the corresponding month in 2023 (with the unit price in parentheses) comprised:-

 

 

 

  • Chicken parts (excluding feet)    97.4%; Unit value  $1,231 per metric ton   ($1,148)
  • Prepared chicken                     2.0%; Unit value  $4,502 per metric ton   ($4,183)
  • Whole chicken                         0.6%; Unit value  $1,880 per metric ton   ($1,621)
  • Composite Total                  100.0%;  Av. value   $1,301 per metric ton  ($1,208)

 


 


STOP PRESS

HPAI Infects Dairy Herds in Three States

 

According to an APHIS release on March 25th and postings on ProMED,  Federal and state authorities are responding to outbreaks of highly pathogenic avian influenza in dairy herds in Texas, Kansas and New Mexico.  The serotype has not been revealed but is presumably H5N1. The source of infection is most possibly wild birds apparently found dead in the vicinity of premises in Texas. Affected animals demonstrated clinical depression and lowered milk production. Avian infectious virus was isolated from udder milk samples and oropharyngeal swabs.

Affected herds have been quarantined and milk has been destroyed. A more detailed report will be posted in the Friday edition of EGG-NEWS


 

USDA Finalizes Inclusive Competition and Market Integrity Rule

In a March 5th announcement, the USDA detailed the Inclusive Competition and Market Integrity Rule under the Packers and Stockyards Act.  The purpose is to “establish clearer, more effective standards under the Packers and Stockyards Act for prohibited practices in contracting”.

 

The Final Rule is one of a series initiated through an Executive Order on promoting competition in the U.S. economy.

 

The Rule is intended to: -

  • Prohibit adverse treatment of livestock producers and poultry growers based on race, religion, national origin, gender, disability or age.  The rule includes protection for cooperatives.
  • Prohibit retaliation against producers and growers engaging in lawful communications, participation in associations and cooperatives or evaluating business relationships with competing packers or integrators.
  • Prohibit false or misleading statements or omission of material information in contracts.
  • Support monitoring, evaluation and enforcement of compliance by the USDA through records.

 

The Final Rule will become effective 60 days after publication in the Federal Register.

 

Predictably and justifiably Industry trade associations have commented negatively on the Rule.

 

It was characterized by the NCC as a manifestation of the Administration’s “anti-business regulatory agenda driven by far-left activists” The Council also noted the cost of compliance through additional record keeping.

 

The NAMI was skeptical that the Rule would increase competition and would have the undesirable effect of encouraging lawsuits over contracts.


 

FSIS to Exclude Vaccine Strains of Salmonella from Performance Standards

The Food Safety and Inspection Service (FSIS) of the USDA has announced that vaccine strains of Salmonella administered to flocks would be excluded from calculations applied to establish the status of plants under the Raw Poultry Performance Standards.

 

It is recognized that vaccine strains are innocuous given multiple gene deletion and with their biological activity confined to stimulating an antibody response. The decision by the FSIS was based on an analysis of data from eleven pilot projects evaluating pre-harvest strategies.

 

Dr. Ashley Peterson, NCC Senior Vice President of Scientific and Regulatory Affairs, stated, “Companies will no longer be penalized for using a Salmonella vaccine should the strain be detected in the processing facility by FSIS.”

 

Before the change in FSIS policy that will be effective on April 1st, any vaccine strain Salmonella isolated counted against the participating establishment and effectively served as a deterrent to vaccination as a viable intervention measure.  The change in policy will be beneficial to producers and ultimately, consumers given the efficacy of vaccination.


 

Product of USA Label Evokes Protests from Mexico

The Department of Agriculture and Rural Development of the Republic of Mexico has expressed opposition to the recent announcement of the USDA Voluntary Product of USA Label Rule.

 

Mexico, our partner in the USMCA believes that the Rule does not recognize the extent of integration of livestock and meat industries within North America and represents an unnecessary trade barrier inconsistent with the World Trade Organization.  The Voluntary Product of USA Rule could be regarded as a successor to the Country of Origin Label (COOL) that was the subject of a WTO dispute panel leading to an adverse ruling against the U.S. 

 

The Product of USA Rule is a domestic matter and responds to consumer demands for a clear, concise and certainly non-ambiguous label descriptor confirming that beef, pork, chicken and turkey products were derived from herds or flocks born or hatched and then grown, processed and packed entirely in the U.S.  Previously, cattle or hogs were imported into the U.S., slaughtered, packed and distributed with a Made in the U.S. label.

 

It is anticipated that Canada will raise objections to the Product of USA Rule on the basis of discrimination in trade, contrary to USAMC and WTO regulations.


 

Kemin KemTRACE® for Turkeys

Kemin Industries has received approval for the use of KemTRACE® Chromium in growing turkey diets.  The product supplies 0.2 ppm chromium to feed at an addition rate of one pound per ton of the 0.4 percent commercial product.

 

In a trial conducted at North Carolina State University, KemTRACE® Cr was evaluated in turkeys grown through 84 days of age in replicate floor pens.  Treatments comprised a non-supplemented control and 0.2 ppm chromium propionate supplement.  Average daily gain was numerically higher in turkeys receiving the KemTRACE® Cr supplement at 0.2ppm attaining 106.7g per day.  Turkeys receiving the control diet, that analyzed over 2.0ppm of chromium, gained 101.9g per day.  Feed conversion efficiency was significantly improved compared to the controls at 2.18 to 2.11 for the supplemented treatment.  Given the duration of the trial and daily weight gain, live weights of the control and treatment were respectively 8.62kg and 9.03kg.  Effectively, chromium supplementation provided 410g of additional live weight or 320g of RTC mass but required the consumption of an incremental 168g of feed.

 

Concurrently, it was demonstrated that a supplementation rate of five times the approved level attaining 1.0 ppm chromium had no deleterious effect on live performance or hematologic or blood chemistry parameters in turkeys through 84 days of age. 

 

Human food safety of chromium supplementation was demonstrated by assays of liver, muscle, kidney and skin with adherent fat and demonstrated only small increases in chromium concentrations in edible tissues. It was concluded that supplemental KemTRACE® Chromium at five times the approved level (1.0ppm) would have minimal effect on total chromium intake by humans.

 

 

Spears, J.W. et al. Chromium Propionate in Turkeys:  Effect on Performance and Animal Safety, Poultry Science doi.org/10.1016/j.psj.2023.103195

Spears, J.W. et al. Chromium Propionate in Turkeys:  Effects on Incident Sensitivity, Poultry Science doi.org/10.1016/j.psj.2023.103215

Spears, J.W. et al. Chromium Propionate for Turkeys:  Effects on Tissue Chromium Concentrations in Human Food Safety, Poultry Science doi.org/10.1016/j.psj.2023.103196


 

TARGAN Develops First Automated Gender Sorter for Broiler Hatcheries

TARGAN Inc., based in Raleigh, NC, has developed the WingScan™ feather-sexing system for broiler chicks.  The WingScan system comprises a multilevel conveyer system to channel chicks into a single file for passage through a machine-vision detector that can differentiate between fast and slow feathering wing plumage. The system  is engineered to integrate with existing hatchery automation equipment, and will incorporate TARGAN’s  individual chick vaccine delivery system in the future.

 

TARGAN has combined chick-handling technology developed during the 1990s with contemporary machine vision and AI. Under the direction of Ramin Karimpour, a team of engineers and bio-scientists has applied modern detection systems and electronics to produce a multi-patented commercial and practical installation to separate male and female broiler chicks.

 

The WingScan system is modular with each unit capable of processing up to 50,000 chicks per hour with up to 98 percent accuracy.  Chicks are loaded onto the system and are successively separated into a single track by gently transiting a cascade over three conveyor levels.  The system is designed to minimize chick stress and physical handling, contributing to optimum growth and livability during the first week after placement.  By placing multiple 8-lane WingScan units in parallel, it is possible to increase throughput by increments of 100,000 chicks per hour to accommodate required hatchery capacity.

 

Click image to watch video

 

The business model applied by TARGAN is based on an equipment-and-service royalty payment paralleling the situation with in ovo vaccinators.  This is considered essential for an emerging technology since it absolves integrators from making large, initial capital investment before long-term confirmation of functionality and benefits.

 

It is possible to manually differentiate chick gender using feather-sexing strains.  This requires a team of trained workers to handle and inspect each chick before allocation to either male or female chutes on a carousel conveyer.  Although this approach was used by a small proportion of the U.S. broiler industry during the 1980s and 1990s, use was limited by the availability of workers and the incidence rate of ergonomically induced carpal tunnel syndrome.

 

The WingScan system completely automates sorting by gender at a cost equivalent to manual processing. WingScan has a far smaller footprint than carousels and is suitable for retrofitting to existing hatcheries. The rate of processing expedites chick handling to ensure early delivery to farms.

 

TARGAN provides a practical method to differentiate gender at the hatchery.  Integrators derive benefits associated with lower live-bird cost and greater uniformity at processing, but only by reconfiguring placement programs and schedules to achieve desired uniformity.  The potential benefits from separate gender grow-out accrue from a lower live bird cost that can be achieved from precision feeding according to the relative growth rates of male and female broilers in separate flocks.  There is probably less intra-flock competition with single-gender placement and adjustment of feeder and drinker lines is simplified without compromising availability.  Financial benefits can be derived through reconfiguring placement and harvesting schedules, training of contractors and service people to the realities of separate gender grow-out including feeding programs and post placement vaccination.  Separation of male and female chicks at the hatchery does not necessarily guarantee a financial return, but provides the basis for integrators to realize significant financial return  through changes to existing straight-run grow-out.

 

TARGAN has developed an alliance with a major integrator allowing field evaluation of both the operational aspects and financial benefits.  This integrator produces a range of heavy broilers for portioning, conventional weights for whole-bird sales and small birds with a narrow weight range for QSR-portioning.  Clearly, separate-gender grow-out will have benefits at the two extremes of live weight both with respect to live bird production and processing.

 

TARGAN will have a receptive market in Brazil given the structure and export orientation of that industry. Importers in Middle Eastern nations require a narrow range of carcass weights within predetermined fixed-weight categories for bagged birds ranging from 900g to 1,300g. usually in 100g increments.

 

Although male and female chicks are placed separately with an anticipation of standard growth rate for a strain, biological factors including variability in nutrient quality, climatic extremes and disease challenge may result in deviation from standard daily gain. This requires fine-tuning of predicted harvest age to attain a predetermined live weight and uniformity.  A complementary technology to WingScan™ would be a machine-vision system to determine average bird weight in real-time based on continuous scanning of the flock.  Portable units could be placed in grow-out houses within two weeks of harvest to monitor weight and daily gain to optimize the uniformity of flocks delivered to the processing plant.

 

TARGAN has developed a practical method of separating male and female broiler chicks using its patented WingScan system.  Financial benefits to integrators will accrue only if they apply appropriate flock management, nutrition and scheduling of chick  placement and harvest.


 

NTF Announces 2024 Officers

Officers for the 2024 term were elected by the Board of Directors of the National Turkey Federation at the annual convention held in Austin, TX.  John Zimmerman was elected Chairman, Jay Jandrain as Vice-chairman, Thierry Murad as Secretary-Treasurer.  Steven Lykken will serve as Immediate Past |Chairman.

 

In his inaugural comments Zimmerman noted challenges in the coming year including HPAI, food safety policies and expanding international trade.

 


 

NTF Appoints Leslee Oden as CEO

The National Turkey Federation has announced that Leslee Oden has been appointed as the president and CEO of the producer association.  This action follows the retirement of Joel Brandenberger after a 17-year tenure.

 

Ms. Oden has worked at the NTF for 15 years and was named Senior Vice President of Legislative Affairs in 2018.  Leslee earned baccalaureate and master’s degrees in poultry science from Texas A&M.

 

John Zimmerman, Chairman of the NTF stated “It was clear that Leslee was the candidate with in-depth knowledge needed to help navigate our industry through challenging issues.”  He added, “Her tenure at NTF brings a wealth of knowledge, key industry relationships and an understanding of legislative and regulatory priorities that will continue to lead the turkey industry into the future.”


 

Tyson Foods Comments on Employment of Legal Asylum Seekers

Tyson Foods has come under criticism for offering employment to legal asylum seekers for open positions. The company is a participant in the Tent Partnership for Refugees that has as its goal, placing in employment 181,000 migrants sent to New York City. Tyson has pledged to hire 2,500 refugees over a three-year period.

 

The Tyson workforce of 120,000 currently includes 35 percent non-native born legal workers.  Tyson Foods along with other packers and integrators encounters a 40 percent turnover of line workers each year necessitating recruitment and hiring of about 50,000 people to fill vacancies.

 

Garrett Dolan, Associate Director of Human Resources, for Tyson Foods pointed to the need to employ migrant labor despite the search for qualified domestic candidates. 

 

The company offers a $1,000 initial relocation bonus, six days of temporary housing and a $4,000 payment after permanent housing is obtained, Spanish-speaking community liaison, assistance with enrolling children at school and other needs are provided. Tyson Foods has committed $1.5 million for legal and citizenship service to immigrant workers.

 

Criticism of Tyson Foods and other companies participating in the Tent Partnership for Refugees is based on xenophobia.  The U.S. needs immigrants to fill available positions.  More important will be the second generation who will benefit from U.S. acculturation, schooling and universities to become productive members of society. Our nation is aging and requires a large and active young workforce to sustain social security programs. 

 

It must be remembered that irrespective of our heritage, we all have immigrant antecedents, even those who walked across the land bridge over the Bering Strait millennia ago.


 

Foster Farms Appoints new CEO and CFO

Foster Farms has announced that Jayson Penn will serve as CEO effective March 18th.  He succeeds Donnie Smith, previously CEO of Tyson Foods after retiring in 2016.  Smith was appointed as CEO, presumably as a caretaker in 2022, following the acquisition of the family-owned company by Atlas Holdings.

 

Penn was most recently President of John Soules Food having served previously as CEO of Pilgrim’s Pride Corp. and gaining experience at Case Foods, Marshall Durbin Company and Sanderson Farms.

 

James Richards was named CFO.  His experience includes two decades at General Electric Company in senior financial positions and, most recently, participating in turnaround of businesses including Kodi Collective.

 

A spokesperson for Atlas Partners, Sam Astor, Ed Fletcher and Mike Sher, stated, “We are excited to have Jason on board to lead the transformation journey now underway.  He brings immediate strength to the leadership team from his industry experience and commitment to operational excellence.”


 

Beyond Meat Reports on Q4 and FY 2023

In a press release dated February 27th Beyond Meat Inc. (BYND) announced results for the 4th Quarter ending December 31st 2023.     

 

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

 

 

4th Quarter Ending December 31st

2023

2022

Difference (%)

Sales:

$75,679

$79,938

-5.3

Gross profit /(loss):

$(83,859)

$(2,931)

-2,761

Operating income/ (loss):             

$(160,803)

$(65,721)

-144.7

Pre-tax Income/ (loss)

Net Income/ (loss)

          $(155,072)

          $(155,110)

$(58,757)

$(66,867)

-163.9

-132.0

Diluted earnings per share:

$(2.40)

$(1.05)

-128.6

Gross Margin (%)

-110.8

-3.7

-2,895

Operating Margin (%)

-212.5

-82.2

-159.5

Profit Margin (%)

-205.0

-83.6

-145.2

Long-term Debt: Dec. 31st

$1,213,464

        $1,189,931

          +2.0

12 Months Trailing:

 

 

 

           Return on Assets    (%)

-17.3

 

 

           Return on Equity    (%)

N/A

 

 

           Operating Margin   (%)

-97.6

 

 

           Profit Margin          (%)

-98.5

 

 

Total Assets: Dec. 31st

$774,450

        $1,062,224

         -27.2

Market Capitalization  March 12th.

$574,410

           $784,670

         -26.8

 

NOTES:

R&D expenditure declined 29.0 percent from Q4 2022 to $9.2 million or 12.5 percent of revenue

S&G expenditure increased 44.5 percent from Q4 2022 to $67.7 million or 91.7 percent of revenue  

 

For FY 2023 net loss was $(338.14) million on sales of $334.38 million with a diluted EPS of $(5.26). Comparative values for FY 2022 were a net loss of $(342.77) million on sales of $418.93 million with a diluted EPS of $(5.75).

 

For FY 2023:-

52-Week Range in Share Price:  $16.13  to  $8.31    50-day Moving average  $7.59

Forward P/E: Neg.                  Beta 2.5

Insiders hold 8.7 percent of equity, Institutions 38.7 percent.

 

 

Comments:-

For the 4th Quarter of 2023:

          U.S. sales represented 58.0 percent and International 42.8 percent

         Of U.S sales 75.0 percent were through retail channels, up from 70.8 percent in

            Q4 2022. The remainder of sales was to the food service sector.

            Of International sales 42.9 percent were through retail channels, down from

            45.1 percent in Q4 2022. The remainder of sales was to the food service sector

  

Average unit revenue in Q4 2023 for all sales attained $4.23/lb. compared to $4.96/lb.

          during the corresponding quarter of 2022.

 

Guidance for FY 2023 included:

      Net revenue of between $315 and $345 million, approximately 2.5 percent below

           FY2022

      Gross margin mid to high teens

      Operating expenses $180 million

      Capital expenditure $20 million

      Continued negative cash flow

In commenting on results Ethan Brown president and CEO stated:- “Though we are encouraged by pockets of growth, particularly in the EU where we saw double digit gains in net revenues on a year-over-year basis, we are disappointed by our overall results as we continue to experience worsening sector-specific and broader consumer headwinds. As we shared last week, we are conducting a review of our global operations for purposes of further and significantly reducing our operating expense base as we seek to accelerate our transition to a sustainable and, ultimately, profitable business. And while we expect current headwinds to persist in the coming quarters, we have confidence in the long-term trajectory of our business, its central relevance to the intensifying health, climate and natural resource challenges facing our global community, and our ability to emerge as a stronger, leaner organization as a result of the decisive measures we are undertaking to fit the current macroeconomic reality and business environment.”

 

Despite this optimistic commentary the reality includes:-

  • An accumulated deficit of $1,081 million.
  • Trailing 12-month negative operating cash flow of $108 million
  • Inventory valued at $130,336 representing 1.8 times Q4 sales
  • Effective February 29th 38.1 percent of float was short
  • Share price off 47.9 percent over past 12 months
  • Institutional holdings declined from 63 percent to 39 percent over past year.

 

Welcome to Vencomatic Group

CHICK-NEWS welcomes the Vencomatic Group as a sponsor.  The Company was founded in 1983 by the van de Ven family in their Eersel, location in the Netherlands.  The Group has expanded to include major operating segments comprising Agro Supply, Prinzen, Van Gent and Vencomatic.  Vencosteel is a dedicated supplier of metal components including stainless and specialty steel with an output of 6,500 tons annually.  The Vencomatic Group operates subsidiaries in the U.S. (Adel, IA), in Sao Paulo State (Brazil) and in France, Spain, the U.K., China and Malaysia.

 

The company posted revenue of $175 million worldwide in 2023 and has 500 employees interacting with 100 suppliers and strategic partners worldwide. The Headquarters Complex in Eersel is uniquely shaped to resemble an egg, recognizing the focus of the company.

 

For the meat industry, the Vencomatic Group designs and manufactures an extensive line of nest systems, Vencoslat plastic units with oval or rectangular openings, lighting systems and egg-conveyors.  The Prinzen line includes automation for hatching eggs, including the Ovo-Set automated transfer system to setter trays and the Ovo-Grader to process eggs.  The Vencomatic Group also manufactures specialty products for the turkey and duck industries including nests and slats that contribute to optimum poult and duckling production.

 

The Vencomatic Group maintains close contact with research institutions and customers and maintains a library of resources available to the industry.  Technical specialists are available to advise on selection and operation of equipment to optimize production of hatching eggs, broilers, turkeys and ducks.


 

Ongoing Outbreaks of Salmonella Mbandaka in Europe

An ongoing outbreak of Salmonella Mbandaka infection commencing in 2021 has resulted in 300 diagnosed and confirmed cases through March 2024.  Outbreaks have been recorded in the U.K., Finland, France, Germany and the Netherlands.  Extensive, epidemiologic investigations including whole genome sequencing have identified the source as steam-cooked chicken breast  and other products from Ukraine.

 

According to the European Commission, corrective measures have been implemented in the implicated plant with enhanced surveillance and upgrading of food safety.

 

The persistence of one strain for over four years suggests vertical transmission that should be evaluated.  It would be interesting to learn whether producers in Ukraine and specifically the single largest integrator and exporter have implemented preventive vaccination at either or both the breeder and grow-out levels.


 

USPOULTRY 2024 Poultry Processor Workshop

The annual Poultry Processor Workshop for 2024 will be held May 15-16 at the Embassy Suites by Hilton Downtown, in Nashville, TN.

 

Featured speaker will be Dr. Jose Emilio Esteban, Undersecretary of the USDA for the Food Safety and Inspection Service.  Other speakers will include Clint Rivers, CEO of Wayne- Sanderson Farms, with his perspectives on leadership.  Topics will comprise animal welfare, reduction of Salmonella contamination, adapting to a changing workforce, process safety, automation and a series of case studies in plant management.

 

For additional information including the agenda, registration and booking access <www.uspoultry.org>.


 

Retirement of USAPEEC China Representative Ms. Sarah Li

The March 18th edition of USAPEEC MondayLine includes a tribute to Sarah Li who has retired after 38 years representing our poultry export promotion organization in China and Taiwan.  Appointed as the Director for Market Development for the region in 1989, Sarah opened the first USAPEEC office in China in the city of Shanghai in the early 1990s followed by the Beijing office in the early 2000s.

 

She notes as significant career achievements the opening of both the China and Taiwan markets over a 20-year period following her appointment.  This required representation and negotiation with officials in China including the General Administration of Quality Supervision, Inspection and Quarantine and also Customs Agency over the years.  Apart from long-term market development, Sarah has been instrumental in firefighting when consignments were embargoed or situations required urgent resolution through her abilities and contacts.


 

USDA Awarding Grants for Local Meat Production

On March 11th, USDA announced grants totaling $9.5 million to 42 projects under the Local Meat Capacity Grant Program.  This tranche is part of the $75 million available as announced in April 2023.  The intent is to “build resilience in the meat and poultry supply chain by providing producers with more local processing options and strengthening their market potential”.

 

The USDA Agricultural Marketing Services administering the program has entered into an agreement with the New Hampshire Community Loan Fund to process grant awards. These will range from $10,000 to $250,000 to purchase processing equipment including mixers, smokers and packaging installations.

 

It is questioned whether awards with an average of $226,000 will make any impact on national production although most individual recipients in various localities will benefit. As with all “giveaway” programs implemented under the present Administration it is questioned how the USDA AMS will evaluate increased productivity and improved financial performance given that taxpayer funds are involved. Do we anticipate an accounting in four years’ time? Naah!


 

Tyson Foods and JBS USA Settle Wage Lawsuit

Tyson Foods has agreed to pay $72 million and JBS $55 million to the worker class alleging wage fixing.  Settlements have already been negotiated by Perdue Farms and Seaboard Foods and others amounting to $139 million.  The Plaintiffs claimed collusion in establishing wage rates in areas where the packers operated and agreed to ‘no-poach’ agreements restricting employment options for potential hires.


 

Olymel Transitions to Profit

Following restructuring and radical reduction in operating costs, Canadian Cooperative, Olymel LB posted a profit of $101 million for Fiscal 2023 compared to a loss of $329 million in FY2022.

 

According to Pascal Houle, CEO of the holding company, Sollio Cooperative Group, by closing unproductive plants, reducing headcount and adjusting production to balance sales contributed to the turnaround.

 

Houle commented, “The pork industry is in a major crisis around the world.”  He added, “We all want a strong, dynamic pork sector that is a goal of the robust recovery plan we implemented.”

 

The improved profitability attained by Olymel is a model for companies producing livestock that are obliged to trim expenses and unprofitable facilities in accordance with market realities. It is apparent that the major broiler integrators are evaluating efficiency and productivity as evidenced by Tyson Foods closing broiler plants in Missouri and Arkansas and a large hog plant in Iowa. Smithfield Foods has closed sow operations and plants. Companies are consolidating production to achieve cost efficiency.


 

Six Integrators Settle with Direct Purchasers

Six integrators and Agri-Stats recently reached a settlement with plaintiffs in the broiler chicken antitrust lawsuit before the U.S. District Court for the Northern District of Illinois.  Companies that recently settled comprise:

 

  • Foster Farms

 

  • Perdue Farms

 

  • Case Farms

 

  • Claxton Poultry Farms

 

  • Wayne Farms

 

  • Sanderson Farms

 

  • Agri-Stats

 

The plaintiffs alleged collusion among integrators based on electronic communications and conservations at association gatherings and also indirectly by subscription to Agri-Stats an industry cost benchmarking system.  Settlements attained $284 million prior to the latest agreements.


 

USDA-AMS Purchases

On March 5th, the USDA Agricultural Marketing Service announced purchase of chicken products for child nutrition and related food assistance programs to be delivered over the second quarter of 2024.

 

Purchases to be delivered July through December 2024 included:

 

  • 1,215,000 cases of boned chicken in cans at an average price of $2.17 per lb.
  • 44,800 cases of boned chicken in pouches at an average price of  $43.40 per case.

 

The total value of the purchase was $4,565,333

 

On March 6th the USDA Agricultural Marketing Service announced purchase of 860,000 cases of chicken to be delivered July through December 2024 comprising:

 

  • 480,000 cases of boned chicken in pouches at an average price of $42.31 per case
  • 190,000 cases of frozen leg quarters at an average price of $30.20 per case
  • 190,000 cases of frozen drumsticks at an average price of $31.48 per case

 

The total value of the purchase was $32,294,194

 

The two purchases amounted to $36,294,194 million.

 


 

Trader Joe’s Recalls 30 Tons of Dumplings

According to a March 4th announcement, Trader Joe’s has recalled close to 30 tons of steamed chicken soup dumplings.  The product, contaminated with plastic particles was manufactured on December 7, 2023, and has been distributed nationwide.  The dumplings were produced by CJ Foods Manufacturing Beaumont Corp. in California.  Since the source of the plastic was apparently a permanent marker, at least 59 tons of product will have been wasted if not already consumed. This suggests imperfect documentation relating to specific batches produced.

 

This incident is the latest in a series of recalls by Trader Joe’s that suggest that their suppliers are deficient in quality control.  The Company should exert pressure to attain and maintain acceptable standards of manufacture and inspection.  This might require paying more for the product.


 

USAPEEC Actively Involved in Trade Issues

According to the February 19th edition of USAPEEC MondayLine, the Trade and Technical Services Team has been active in attempting to resolve recent trade issues.  These include an unjustified closure of the market in Columbia, the Certificate of Conformity issued by the Republic of Congo and interpretation of changes in import regulations especially with respect to Mexico.

 

USAPEEC is also active in arranging and hosting visits by officials of importing nations to evaluate health and food safety procedures in U.S. plants.  A visit during early May is anticipated from the Republic of South Africa that recently rescinded some duties on imported chicken.


 

Columbia to Resume Importing U.S. Poultry Products

Following intensive negotiations motivated by USAPEEC, authorities in Columbia have lifted the ban on importation of poultry and egg products from the U.S. Trade ceased in August 2023 as a result of outbreaks of HPAI in various states.

 

Critical to the restoration of trade was the facilitation by USAPEEC for a visit by representatives of Columbia to verify surveillance and control measures.

 

In 2023, Columbia imported 44,164 metric tons of broiler products from the U.S. before the embargo, valued at $53.8 million.  Prior to termination of shipments in September  2023 Columbia imported 36 percent less product compared to the corresponding months in 2022 with value down 46 percent.


 

Protection for Producers Under the Packers and Stockyards Act

Senators Jon Tester (D-MT) and Chuck Grassley (R-IA) are urging the relevant House and Senate committees to oppose policy riders and to resist lobbying pressure in the FY 2024 Agriculture Appropriations Bill that might restrain the USDA from protecting suppliers.

 

The Senators point to the 85 percent control of the domestic beef packing segment by four companies and the domination of hog packing with four companies controlling approximately  75 percent of capacity.  The top four broiler integrators represent 55 percent of production but contracts and the unique relationship between the parties mitigates against exploitation.

 


 

Welfare Organizations Urge Implementation of Proposed Packers and Stockyard Rules

Approximately seventy organizations representing small-scale farmers, activists, trade unions and environmental groups have addressed a letter to the President urging implementation of “Rules to revitalize the Packers and Stockyards Act as a critical pro-competition law designed to protect family livestock producers from abuse in the marketplace”.

 

The collective groups urge stronger protection for individuals considered to be vulnerable in the marketplace. The letter supported other Administration anti-trust enforcement.  The organizations expressed concern that the Fiscal Year 2024 Agriculture Rule Development and the FDA Appropriations Bill would delay or inhibit USDA action on proposed rules.


 

Activist Organization Petitioning FSIS over Welfare Jurisdiction

Animal Partisan has petitioned the Food Safety and Inspection Service to allow intervention by state personnel to enforce welfare in federally-inspected plants.

 

The Animal Partisan petition filed in early September 2023 requires FSIS to “publish a notice clarifying that federal law does not necessarily prevent state government officials from bringing animal cruelty charges when farmed animals are abused in slaughter plants”.

 

Subsequent to the filing, the Animal Welfare Institute issued comments supporting the Animal Partisan petition noting that “it could significantly improve the welfare of animals at slaughter”.

 

If granted, the petition would create a problem of divided jurisdiction and encourage activists in state agencies to intervene and bring legal action against processing plants that function under federal jurisdiction.

 

If there are deficiencies in handling live animals and poultry before slaughter, it is the responsibility of federal inspectors to enforce provisions of the Humane Methods of Slaughter Act and the Poultry Products Inspection Act.


 

Dissent in the E.U. Over Cell-Cultivated Meat

The E.U. Food Safety Authority has yet to make a decision on the acceptability of cell-cultured meat. There is clear division among nations of the E.U. with opposition based on narrow concerns supporting existing agricultural systems contrasted with environmental considerations.  Twelve E.U. nations consider cultivated meat to “represent a threat to primary farm-based approaches and genuine food production methods that are the heart of the European farming model.” 

 

This approach is exemplified by Italy and France among other nations that have enacted legislation banning the sale of cell-cultivated meat although of questionable acceptance by the E.U. Some nations including Germany, the Netherlands, Spain and the U.K. have promoted cell-cultivated meat based on environmental motives and promotion of technology.

 

The entire question of whether cell-cultivated meat should be banned or promoted may be moot.  There is growing evidence that consumers may sample cell-cultivated meat provided it is available at a price that is competitive compared to the real product but there is evidence that potential buyers view the entire technology with suspicion.  The second and most important restraint to extensive production and consumption of cell-cultivated meat is the fact that no company has successfully transitioned from pilot scale to commercial production using bioreactors.  The likelihood of companies producing sufficient quantities of product with the organoleptic qualities of pork, beef, chicken and lamb is unlikely even in the intermediate term.  Cell-cultivated meat is not going to reverse deforestation to produce beef or reduce greenhouse gas emissions from animal waste despite the hype. Currently broilers and eggs have the smallest environmental footprint among animal products and contribute to the availability of inexpensive and nutritious protein.


 

K&N’s Wins Federation of Pakistan Chamber of Commerce Achievement Award

K&N’s an integrated producer and processor has once again received an Achievement Award from the Federation of Pakistan Chamber of Commerce and Industry.  This recognizes outstanding service to the poultry and frozen food industries of the Nation.  Other considerations include meritorious service to the business community and contribution to the industry and to national economic development.

 

K&N’s is a second-generation enterprise founded 60 years ago. The company is integrated from parent stock multiplication, through production and sale of broilers, feed production and processing. The Company pioneered distribution of branded products in Pakistan with a wide range including whole chickens, premium cuts, further-processed breaded portions and ethnic dishes including kabobs and samosas.



 

R-CALF Requesting Exemption from EPA Environmental Reporting Regulations

In 2021, the White House issued a Presidential Executive Order directing the EPA among other federal agencies to intensify action to mitigate climate change.  Accordingly, all concentrated animal feeding operations (CAFOs) were required to determine and report on emissions, a demand considered both impractical and burdensome.

 

R-CALF (Ranchers-Cattlemen Action Legal Fund-United Stockgrowers’ of America) has requested the EPA to define and classify feedlots according to capacity ranging from family farms to CAFOs with up to 50,000 head. R-CALF has requested exemption for family farms and operations using grazing, irrespective of the presence of corrals or other structures required for handling livestock.

 

R-CALF called on EPA to “refrain from imposing any additional regulatory burdens on America’s family farmers and ranchers.”  The organization makes a valid case that if small family farms are driven out of production by onerous regulations, their capacity would inevitably be replaced by even larger feedlots.

 

Environmental reporting requirements for CAFOs are an important consideration for poultry production complexes with the potential to impose expense and require time to provide data that will ultimately be applied to the disadvantage of the industry


 

Courts Rule Against HSUS in Line Speed Lawsuit

The U.S. District Court for the Northern District of California has ruled against the Humane Society of the U.S. and co-petitioners concerning line speeds in poultry processing plants.  At issue is the USDA New Poultry Inspection System allowing up to 175 birds per minute.

 

The Court ruled that the animal rights groups lacked standing on the issue dismissing the case without prejudice.  This will allow the petitioners to return with an amended complaint.

 

The lawsuit filed in 2020 has little to do with welfare of either birds or workers.  Progressively higher line speeds are now possible due to advances in equipment design. Lawsuits verging on the frivolous are filed purely on the basis of opposition to all forms of intensive livestock production. Innovation that increase efficiency and hence the prospect of enhanced profitability inevitably becomes a targets for legal challenge.

 


 

USDA-AMS Purchases

On February 23rd, the USDA Agricultural Marketing Service announced purchase of of chicken products for child nutrition and related food assistance programs to be delivered over the second quarter of 2024.

 

Purchases included:

  • 20,800 cases of boneless breasts at an average of $72 per case
  • 133 tons of frozen cut-up chicken at $1.91 per lb.
  • 21,850 cases of frozen drumsticks at $29.82 per case
  • 1,861 tons of whole frozen chicken at $0.99 per lb.

 

The total value of the purchase was $6,295,329

 

On February 28th the USDA Agricultural Marketing Service announced purchase of 6,984 tons of chilled large chicken in bulk, also for child nutrition and related food assistance programs.  Product was purchased at an average of $1.58 per pound with deliveries during April 2024.

 

The two purchases amounted to $26,656,018 million.


 

Hormel Foods Reports on Q1 FY 2024

In a February 29th release, Hormel Foods Corporation (HRL) reported the results for the first quarter of FY 2024 ending January 28, 2024.

 

Hormel Foods no longer identifies Jennie-O Turkey Store as an operating segment.  Turkey products are now incorporated into the financial results for the Retail, Food Service and International segments.

For the quarter, Hormel Foods Corporation earned $218.86 million on net sales of $2,997 million with a diluted EPS of $0.40.  These figures compared to the corresponding first quarter of        FY 2023 ending January 29th.  Net earnings amounted to $217.72 million on net sales of $2,971 million with a diluted EPS of $0.40.

 

For fiscal 2024 Hormel projects diluted EPS in the range of $1.43 to $1.57.

 

The only reference to Jennie-O for the quarter was a note that “retail volume and sales of    Jennie-O turkey items increased including above-category performance in the fresh ground turkey category.  Jennie-O branded items in food service delivered double-digit volume and net sales growth.”


 

Missouri Beef Packing Plant to Close Over Defective Discharge Treatment

Missouri Prime Beef will close the Pleasant Hope facility in April.  This will impact 335 workers.  At issue was the treatment of effluent to be discharged into the Pomme de Terre River.  The Department of Natural Resources for the state of Missouri denied the company a water discharge petition.  The application elicited over 1,000 negative comments from citizens of the state.  Missouri Prime had a capacity of 750 head of cattle per day and was acquired in 2023 by SDX Beef Company based in Texas. According to press reports the new owners are now reviewing alternative treatment solutions to allow the plant to reopen and restore production and jobs.

 


 

Shane Commentary

South Africa Reconsidering Protection of the Domestic Broiler Industry

According to a February 20th USDA-FAS-GAIN Report (SF2024-0004) the Competition Commission of South Africa functioning under the Department of Trade, Industry and Competition will investigate the broiler industry in South Africa.  The terms of reference are to determine whether the industry is “impeding, distorting or restricting competition in a way that violates the South African Competition Act.”  In a statement on February 6th the Competition Commission believes that “There are market features within several markets in the poultry sector that may undermine competition with material implications for the industry and consumers.”

 

The Competition Commission recognizes the ongoing demands for bail outs and requests for tariffs and anti-dumping duties.  The Commission noted, “while acceding to these demands may protect the domestic industry, it may create negative consequences for consumers generally and low-income consumers in particular that are dependent on chicken for protein.”

 

The Commission’s Terms of Reference will be to determine whether current policy on protection restricts competition from breeding through to distribution.  The Commission review will consider the impact of integration and control over feed and day-old chicks and the situation of small and medium-sized enterprises many of which are owned by “historically disadvantaged persons.” As in the U.S., the Commission will review the relationship between contract growers and integrators and will address “imbalances in bargaining power and information asymmetry”.

The public has been invited to submit comments to guide the investigations and deliberations of the Commission.  It is anticipated that a final report will be completed within 18 months in accordance with statutory requirements.

 

In 2023, South Africa was ranked 18th among importers of U.S. broiler products with shipment of 44,324 metric tons valued at $42.4 million with a unit price of $957 per metric ton.  Imports were 20 percent down on volume and 22 percent lower in value compared to 2022.  Removal of tariffs and dumping duties would make the U.S. and other exporters more competitive to the disadvantage of the domestic industry.  High costs of labor, ingredients and power have resulted in domestic production costs exceeding the landed cost of leg quarters from the U.S. and MDM and whole chicken from Brazil and the E.U. despite the transport differential.

 

The announcement of the Competition Commission inquiry coincides with a decision by the Trade Administration Commission to introduce rebates on boneless and bone-in chicken to increase supply and reduce cost to consumers.

 

The decision by the Government to establish an inquiry by the competition commission confirms that the political and lobbying power of the South African Poultry Association is waning.

 

Effectively the Government of South Africa has essentially thrown the broiler industry under the bus. This reality is based on the Senator Huey Long political principle of a “chicken in every pot”.  The African National Congress government is facing extreme opposition from the left based on its inability to govern, the deteriorating economic situation, interruption in power and water supplies and rampant crime.  The Government is expected to lose its majority in Parliament following the national election to be held at a yet to be announced date in coming months with the prospect of a coalition among parties.

 

Recent economic statistics for South Africa suggest a deteriorating situation with gross domestic product down 0.7 percent in 2023, consumer prices up 5.2 percent, an acknowledged unemployment rate of 32 percent, 10.1 percent interest rate on 10-year government bonds and a six percent deterioration in the exchange rate of the SA Rand against the U.S. Dollar

 

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