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

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)

 

The following table prepared from USDA data circulated by the USAPEEC, compares values for poultry meat exports during January 2024 compared with the corresponding month of 2023:-

 

      PRODUCT

    

      January 2023

       

      January 2024

      

       DIFFERENCE

Broiler Meat & Feet

 

 

 

Volume (metric tons)

        313,629

             301,200

   -12,429    (-4.0%)

Value ($ millions)

            374.6

                 386.8

      +12.2    (+3.8%)

Unit value ($/m. ton)

            1,194

                 1,284

         +90    (+7.5%)

Turkey Meat

 

 

 

Volume (metric tons)

          12,098

               16,648

    +4,550    (+37.6%)

Value ($ millions)

              42.0

                   44.8

        +2.8    (+6.7%)

Unit value ($/m. ton)

            3,472

                 2,691

        -781    (-22.5%)

 

                  COMPARISON OF U.S. CHICKEN AND TURKEY EXPORTS

                                    JANUARY 2024 COMPARED TO 2023

 

                                                       

BROILER EXPORTS

 

Total broiler parts, predominantly leg quarters but including feet, exported during January 2024 compared with January 2023 declined by 4.0 percent in volume but was up 3.8 percent in value. Unit value was 7.5 percent higher at $1,284 per metric ton.

 

During 2023 exports attained 3,635,178 metric tons valued at $4,739 million, down 4.2 percent in volume and down 9.2 percent in value compared to 2022. Unit value was down 9.5 percent to $1,284 per metric ton

 

Broiler imports in 2023 were projected to attain 72,000 metric tons (158 million lbs.)

 

The top five importers of broiler meat represented 51.4 percent of shipments during January 2024. The top ten importers comprised 68.6 percent of the total volume reflecting concentration among the significant importing nations.

 

During January 2024 Mexico was the first-ranked importer by volume with 63,059 metric tons representing 20.9 percent of export volume up 0.1 percent from January 2023. Value at $72.4 million was 18.7 percent of the total for exported broiler products during January 2024 and up 21.0 percent from 2023, but with a 21.2 percent increase in unit price to $1,148 per metric ton. Value was up 21.8 percent to $73.0 million with a 30.7 percent increase in unit price to $1,187 per metric ton.

 

During January 2024 exports to China, 4th-ranked by volume and 2nd-ranked by value represented 6.7 percent by volume and 10.1 percent by value. Exports were down 49.6 percent in volume to 20,302 metric tons and down 40.6 percent in value to $38.9 million compared to January 2023.  Unit price was $1,910.

 

During 2023 exports of all broiler products to China ranked second by volume were 34.3 percent lower by volume to 405,313 metric tons and 34.2 percent lower by value at $711 million compared to 2022. Volume and value of exports to China represented 11.2 percent and 15.0 percent respectively with an average unit price of $1,754 per metric ton. The U.S. average export price during 2023 excluding China was $1,280, demonstrating the weighting of the unit value of feet on average export value.

 

For 2023, 405,313 metric tons of U.S. broiler products were shipped to China, valued at $711,172 with an average unit value of $1,755 per metric ton. A breakdown of product categories and prices was provided by USAPEEC. Paws and feet represented 68.5 percent of volume and 73.1 percent of value with a unit price of $1,871 per metric ton. Legs and leg quarters comprising 22.6 percent of volume and 12.8 percent of value were priced at $990 per metric ton below the $1,302 average for all U.S. exports excluding China. Wings comprised 4.6 percent of volume and 5.7 percent of value with a unit price of $2,190 per metric ton. All other poultry products (including 4 tons of duck meat) amounting to 4.2 percent of volume and 8.4 percent of value attained an average unit price of $3,485 per metric ton

 

During January 2023 exports to Hong Kong increased by 278 percent in volume to 7,517 metric tons and 226 percent in value to $11.3 million with a unit price of $1,503 per metric ton. In 2022 and 2023 unit prices were $1,834 and $1,671 per metric ton respectively. Accordingly consignments comprised a high proportion of feet with presumed transshipment to the Mainland as in past years but not apparently in January 2024.

 

During January 2024 nations gaining in volume compared to the corresponding period in 2022 (with the percentage change indicated) in descending order of volume with ranking indicated by numeral were:-

        

2. Cuba (+5%); 3.Taiwan, (+57%); 5, Guatemala, (+1%); 6. UAE, (+88%); 7. Philippines, (+62%); 8. Viet Nam, (+55%) and 10. Hong-Kong, (+278%).        

 

Losses during January 2024 offset the gains in exports with declines for:-

1. Mexico, (-0.1%); 4. China, (-50%); 9. Canada, (-7%);  11. Haiti, (-29%); 12. Congo-Brazzaville, (-18%); 13.Angola, (-51%)

 

 

 

TURKEY EXPORTS

 

The volume of turkey meat exported during January 2024 increased by 37.6 percent to 12,098 metric tons from January 2023 and value was 6.7 percent higher to $44.8 million compared to January 2024. Average unit value was 22.5 percent higher to $2,697 per metric ton.

 

Imports of turkey products were projected to rise to 38,640 metric tons in 2023.

 

For the entire year of 2023 export volume increased by 20.2 percent to 221,098 metric tons compared to 2022 and value fell by 2.0 percent to $620 million reflecting an 18.5 percent decrease in unit value to $2,829 per metric ton.

 

Mexico was the leading importer of turkey products during January 2024 with 11,766 metric tons representing 70.7 percent of total volume of 16,648 metric tons. Value at 31.5 million was 67.8 percent of the total with a unit price of $3,285 per metric ton. Volume was 40.9 percent higher and value was 3.6 percent higher than for January 2023.

 

The regions of the Caribbean, East Asia, Middle East and sub-Saharan Africa comprising five nations collectively imported 2,138 metric tons of turkey products in January 2024 representing 12.8 percent of volume and 10.7 percent of value amounting to $44.8 million. Unit price was $2,245. Regional unit prices per metric ton ranged from $1,363 for the Leeward-Windward Islands to $3,418 for the Canada.

 

During January 2024 nations increasing volumes of purchases, albeit over a small base, compared to the corresponding month in 2023 with ranking comprised:-

  1. Mexico, (+41%); Leeward-Windward Islands, (+37%); Dominican Republic, (+430%)

2. Canada reduced imports by 21 percent.

       

 

PROSPECTS FOR 2024

 

The March15th 2024 Livestock, Dairy and Poultry Outlook Report, retained the projection for 2023 exports of broiler products to 3.302 million metric tons (7,265 million lbs.). This value represents 15.7 percent of the projected production of 21.083 million metric tons (46,383 million lb.) of broiler RTC by the U.S. industry.

 

For 2024 exports of broiler products were forecast at 3.256 million metric tons (7,165 million lbs.), equivalent to 15.3 percent of forecast annual production of 21,307 million metric tons (46,875 million lbs.)

 

Projected export of turkey products in 2023 will be 222,272 metric tons, (489 million lbs.) or 9.0 percent of annual production of 2.481 million metric tons (5,457 million lbs.).

 

For 2024 exports of turkey products were forecast at 236,400 metric tons (520 million lbs.) equivalent to 9.7 percent of forecast annual production of 2.441 million metric tons (5,370 million lbs.)

 

 

It is important to recognize that exports of chicken and turkey meat products to our USMCA partners amounted to $1,264 million in 2021 and $1,647 million during 2022 and $1,696 in 2023. It will be necessary for all three parties to the USMCA to respect the terms of the agreement since punitive action against Mexico or Canada on issues unrelated to poultry products will result in reciprocal action by our trading partners to the possible detriment of U.S. agro-industries.

 

 The emergence of H5N1strain avian influenza virus with a Eurasian genome in migratory waterfowl in all four Flyways during 2022 was responsible for sporadic outbreaks of avian influenza in backyard flocks and serious commercial losses in egg-producing complexes and turkey flocks but to a lesser extent in broilers. The probability of outbreaks of HPAI over succeeding weeks appears unlikely until spring migration of waterfowl. Incident cases will be a function of shedding by migratory and domestic birds and possibly mammals. The extent of protection of commercial flocks at present relies on intensity and efficiency of biosecurity, representing investment in structural improvements and operational procedures. These measures are apparently inadequate to provide absolute protection suggestion the need for preventive vaccination in high-risk areas for egg-producing, breeder and turkey flocks.

 

The application of restricted county-wide embargos following the limited and regional cases of HPAI in broilers with restoration of eligibility 28 days after decontamination has supported export volume for the U.S. broiler industry. Exports of turkey products were more constrained with plants processing turkeys in Minnesota, the Dakotas, Wisconsin and Iowa impacted.  Most nations have now lifted embargos that were previously placed on entire states or counties as the WOAH mandated post-decontamination period has expired. The challenge will be to gain acceptance for vaccination coupled with surveillance. Recognition that H5N1 HPAI is panornitic in distribution across six continents and is now seasonally or regionally endemic in many nations with intensive poultry production, suggests that vaccination will have to be accepted among trading partners as an adjunct to control measures in accordance with WOAH policy.

 

The live-bird market system supplying metropolitan areas, the presence of numerous backyard flocks, fighting cocks and commercial laying hens allowed outside access, potentially in contact with migratory and now some resident bird species, all represent an ongoing danger to the entire U.S. commercial industry. The live-bird segments of U.S. poultry production represent a risk to the export eligibility of the broiler and turkey industries notwithstanding compartmentalization for breeders and regionalization to counties or states for commercial production.


 

House of Raeford Planning New Plant in Aiken, SC.

The City Council of Aiken, SC. voted 6-1 to approve a processing plant to be built by House of Raeford.  There was general acceptance of the project, but with some concern over the volume of water required and the treatment of effluent.  Final approval will depend on passage of a water ordinance and approval of a tax agreement with Aiken County.

 

Predictably, the project has the support of the State of South Carolina since it will create employment opportunities for contractors and potential sales for farmers producing corn and soybeans.

 


 

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.


 

COVID Wrongful Death Lawsuit Dismissed

A lawsuit alleging wrongful death was filed with a U.S. District Court for the Eastern District of Texas in April 2021 by the Estate of an employee that died from COVID while working in the Mt. Pleasant, TX plant operated by Pilgrim’s Pride Corp. The Plaintiffs claimed that the company acted “with fraudulent misrepresentations, gross negligence and incorrigible willful and wanton disregard for worker safety.” 

 

During May 2020, COVID was prevalent in all meat and poultry processing plants with workers in close proximity and operating under conditions of low ambient temperature and high humidity that encouraged persistence of the airborne virus.  At this time, little was known of the epidemiology of COVID and the routes of infection.  Based on recommendations by the Centers for Disease Control and Prevention based on influenza, separation of workers using partitions, masking and decontamination were introduced by the industry.  According to evidence submitted, the decedent was not provided with a mask or facial shield until late May 2020 prior to his death in mid-June 2020 from COVID as confirmed by the Titus County Medical Examiner.

The court dismissed the case without prejudice, allowing the Plaintiffs 21-days to amend their complaint with specific reference to alleged negligence on the part of the employer.


 

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.

 


 

Transition of JBS From PSSI Proceeding

Packers Sanitation Services Inc. (PSSI) has issued a warning notice to the state of Colorado that employees would be laid off following termination of the contract to clean plants for JBS including Greeley Co.  JBS established an internal company cleaning service following the PSSI debacle over employment of under-aged workers.  It is understood that the displaced PSSI workers will be engaged by JBS subject to eligibility.

 

PSSI paid a fine of $1.5 million and entered into a consent agreement with the Department of Justice.  The CEO was replaced and the company appointed a qualified Compliance Officer.  Notwithstanding these changes PSSI has lost revenue and it will take years to rebuild image and credibility in the industry.


 

Ministry of Agriculture in China to Regulate Sow Numbers

To prevent overproduction and to limit the importation of feed grains and soybeans, the Agricultural Ministry of China will place a cap on the number of sows in the national herd and the expansion of farms producing pork. Overproduction has reduced prices resulting in a sharp decline in imports.

 

The Ministry statement included, “the normal retention and fluctuation in the range of fertile sows in production, capacity reduction and other measures set in the previous regulatory plan are no longer well adapted to ensure stable feed production under the new situation.”  The national target for breeding sows will be reduced from 41 million to 39 million.

 

Overproduction of pork, the preferred animal protein in China, with correspondingly low prices is deleterious to domestic broiler production and imports. Rationalizing production should level the playing field to the benefit of processors and exporters.


 

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.


 

Mineral Oil Contamination Leads to Recall

MF Meats located in Falconer NY. has recalled 46 tons of raw meat products contaminated with mineral oil disallowed by FSIS.  Over the period November 26, 2023, through February 16, 2024, the Company used a nonapproved mineral oil in the place of food-grade lubricant due to an error made by a supplier.

 

The problem was recognized following complaints of abnormal taste leading to an investigation that disclosed the misapplication of mineral oil.  It is evident that a proportion of the recalled meat has been consumed although there have been no reports of adverse reaction.  As with all major recalls, FSIS will verify procedures relating to notification of customers and removal of affected the product from the market.

 


 

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.


 

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!


 

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.


 

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.


 

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.


 

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.


 

Child Labor Persists in Contract Cleaning Sector

The U.S. Department of Labor has filed for a temporary restraining order on Fayette Janitorial Services, LLC to prevent employment of minors in plant-cleaning operations.  According to documents submitted to the U.S. District Court for the northern district of Iowa, the company has employed minors in sanitation activities at plants in Iowa and Virginia.

 

A spokesperson for Perdue Farms that terminated the contract with Fayette prior to the Department of Labor action, stated, “Underage labor has no place in our business or in our industry.  Perdue has strong safeguards in place to ensure that all associates are legally eligible to work in our facilities and we expect the same of our vendors.”

 

The Department of Labor is intent on enforcing federal law relating to employment of children in dangerous occupations and generally safeguarding workers.

 

Fayette Janitorial Services, LLC, based in Somerville, TN, operates in 30 states with 600 employees.

 

In addition to contravention of child labor laws, the investigation will also include possible trafficking and exploitation. If documented, cases will be referred to the Department of Justice.


 

Ukraine Chicken Industry Resilient During War

According to USDA-FAS GAIN Report, UP2024-0004, released February 22nd, chicken production in 2024 will expand by 3.1 percent to 1.340 million metric tons.  Total imports will attain 52,000 metric tons and exports 440,000 metric tons with net exports representing 29 percent of production.  Of the 952,000 metric tons for domestic use, per capita, will attain 26kg (57 lbs.) assuming a population of 37 million.

 

Despite the invasion of Ukraine by the Russian Federation in 2022, the chicken industry has survived and expanded.  This, in part, is due to the location of facilities in the central and western regions of the Nation together with the availability of grains at relatively low cost.

 

Production in Ukraine is dominated by MHP SE, responsible for 70 percent of output.  This public-traded company has received loans through recent critical periods and enjoys the benefits of full integration from cultivation of feed ingredients, oil seed crushing, live production, processing and distribution.  In addition to MHP, medium-sized producers include Agrooven, Dniprovskyi, Volldymyr-volynsk, PTA Hofabryka, Hubyn and Ular.  Collectively, MHP and these companies are responsible for 90 percent of production.

 

Following the 2022 invasion, supply chains were disrupted and the Black Sea export route was closed.  Labor availability was impacted by workers who volunteered for military service and as a result of conscription.  During late 2022 and through 2023, infrastructure was repaired and the front line in the east of the nation was stabilized.  Following the collapse of the Black Sea Grain Initiative, Ukraine established export capability through the coast-hugging Humanitarian Corridor and by rail transport. Currently exports are restrained by a shortage of refrigerated containers.

 

The E.U. is the main importer of chicken from Ukraine based on tariff-free and quota-free market access granted by the European Commission. Other factors favoring Ukraine include proximity to E.U. markets and a favorable production cost relative to Eastern Europe.

 

Europe intends to impose tariffs above a level of 160,000 metric tons although below exports to the E.U. in 2023. In the event that Ukraine becomes non-competitive above the free-trade level as a result of tariffs, the nation will explore export opportunities for exports to the Middle East.

 


 

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 module 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-as-service  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 without 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, 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 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 their 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.  In addition, 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. 

 

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 derive as they work on  appropriate flock management, nutrition and scheduling of placement and harvest.


 

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 over 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.


 

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.


 

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.

 


 

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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