Editorial

 

Safety of Organic Foods from Non-Commercial Producers Questioned

Nov 21, 2014
    

The USDA Certified Organic Program lays down rules relating to non-GMO cultivars, preventing the use of insecticides and petroleum-based fertilizers and other requirements.  The numerous and frequently onerous restrictions on production and required segregation in the storage and distribution system results in foods costing at least double that of conventional counterparts.

A recent study from Academics Review representing scientists evaluating scientific claims determined that organic foods are four to eight times more likely to be recalled over safety issues than conventional foods. Most frequently this is due to microbial contamination. This is understandable given the small size of many production units and the use of animal waste as a “natural fertilizer”.  A number of smaller organic food processors manage to fly below the FDA radar. Compared to generic foods inspection of facilities is less stringent and frequently is ignored.

Organic certification is completely separate from any form of assurance of safety or superiority in nutritional content.  The USDA Certified Organic Program is based on evaluation of paperwork and does not involve any laboratory assays to demonstrate, freedom from antibiotics, “hormones” steroids, insecticides or other claims made by producers. 

 Organic foods produced by small-scale “family farms” beloved by the USDA-AMS and certain boutique food stores, are more likely to be contaminated than products from commercial operations which apply HACCP systems in plants operating with the advantages of high technology and scale. This is true of table eggs produced in accordance with the FDA Rule to prevent Salmonella applicable to farms with more than 3,000 hens. There has already been a reported trace-back associated with Salmonella Enteritidis from a free-range Certified Organic production unit in California. Unfortunately the small output of “family” or subsistence farms makes it difficult to identify a relatively mild foodborne infection among a small number of consumers. It is equally difficult to trace an infection to source especially with deficiencies in product identification and records associated with purchases at Farmer’s Markets. 

   

Egg Industry News

 

Whole Foods Helps Start-ups

Nov 18, 2014
    

The Whole Planet Foundation provides a market conduit for producers in developing countries.  Madecasse which sources ingredients for chocolate in Madagascar has achieved sales of over $4 million annually following introduction of their product line in up to 400 Whole Foods stores since 2010.

Whole Foods Market represents potential sales volume for artisanal and specialty food products in the U.S. The company employs “foragers” responsible for identifying, evaluating and sourcing local products especially those packed with sugar-free and USDA Certified organic specifications. Getting shelf space at Whole Foods Market may represent the difference between success and failure for an entrepreneur with a novel food or cosmetic product.

   
 

Unilever Sues Hampton Creek Foods

Nov 18, 2014
    

Hampton Creek Foods which produces a plant-derived mayonnaise supplement under the trade name “Just Mayo” is being sued by multinational Unilever for misrepresentation.  As reported in the Wall Street Journal, the action brought by Unilever, owners of the Hellmann’s brand will ultimately benefit Hampton Creek Foods.  Unilever is demanding that Hampton Creek Foods change the name by eliminating “mayo” which they characterize as deceptive, remove existing product from shelves and pay treble damages and legal fees.

   
 

Outbreak of HPAI in the UK

Nov 18, 2014
    

According to press reports and a posting on ProMED,  on November 17th authorities in the UK have commenced depleteting a focal outbreak of highly pathogenic avian influenza in a flock of 6,000 breeding ducks located in Driffield, East Yorkshire . The strain was characterized as H5N8 according to a statement from DEFRA (equivalent to the USDA). Additional molecular assays are in progress to establish whether there is any common epidemiological relationship with German and Dutch outbreaks and the possibility of free-living birds as the common source of infection.

Early detection of HPAI in commercial anseriformes can be difficult since flocks may be initially asymptomatic. In this case it is presumed that a drop in egg production occurred resulting in submission of specimens for laboratory diagnosis. Obviously epidemiologic investigations are in progress but as yet there is no indication of the source of the virus.

   
 

Vons Opens Upscale Stores

Nov 18, 2014
    

Vons, a subsidiary of Safeway has opened a supermarket in Carlsbad, CA. which will compete with specialist organic and “natural” specialty stores.

The 60,000 square foot facility includes a national coffee chain, a pharmacy and embraces the attributes of higher-priced competitors.

   
 

Meijer Expands into Wisconsin

Nov 18, 2014
    

Meijer which currently operates stores in Michigan, Indiana, Ohio, Illinois, and Kentucky will make its first foray into Wisconsin.  Hank Meijer, Owner-Co-owner Chairman and CEO of the chain opined “it’s a big deal for us, we have been in five states for twenty years now”.  He added “it’s been a long time since we’ve opened up a new frontier for our company”.  Currently Meijer operates 213 stores and employs 60,000.  According to J.K. Symancyk, president of Meijer, the company will invest $750 million in the new stores in Wisconsin and will provide 7,000 work opportunities.

   
 

4th Quarter Results for Tyson Foods Beats Estimate

Nov 18, 2014
    

 

             
Quarter Ending September 27 2014   2013   Difference  
             
Sales $10.105 B $8.894 B +13.6 %
Operating Income $0.306 B $0.416 B -31.6 %
Net Income $0.137 B $0.261 B -47.5 %
Net Earnings per Share $0.35   $0.70   -50.0 %
Adjusted Earning pre Share $0.87   $0.70   +24.3 %
Operating Margin 3.0 % 4.7 % -36.2 %
Profit Margin 1.4 % 2.9 % -51.7 %
             
Fiscal Year Sales $37.580 B $34.375 B +9.3 %
Fiscal Year Net Income $0.864 B $0.778 B +11.1 %
Total Debt $10.3 B Debt:Equity = 27    
             

 

   
 

USDA Crop Progress Report

Nov 18, 2014

     

The November 17th USDA- National Agricultural Statistical Service, Crop Progress Report reflecting the week ending November 16th, documented the harvest of both corn and soybeans.

Approximately 89 percent of the corn crop has been harvested compared to 80 percent last week and an average of 88 percent over five years.

Approximately 94 percent of the soybean crop has been harvested compared with 90 percent last week and a five-year average of 96 percent.

   
 

Upturn in Prices during Current week

Nov 14, 2014
    

The approach of Thanksgiving, onset of cold weather and high prices of competitive proteins has raised the prices of Large and extra Large by at least 10 cents per dozen over the previous week and about 20% above the $1.34 U-B Midwest average October price.

A review of prices in past years confirmed a 2 percent increase between October and November in 2011, 4 percent in 2012 and 31 percent in 2013. The trend in the past year appears to be repeating in 2014 even though October prices were on average 8 percent higher than in October 2013.

It is calculated that each 10 cent per dozen incremental revenue for Extra Large and Large extending over a week, generates an additional $7 million contribution to fixed costs for U.S. producers of shell eggs.

   
 

Sam’s Club Expanding Organic Items

Nov 14, 2014
    

In a call to financial analysts on November 13th Roz Brewer, president and chief executive officer of Sam’s Club confirmed that her company, an operating segment of Wal-Mart Stores Inc., intends widening the range of organic products offered. Brewer opined “We have significantly expanded our organic portfolio this quarter and plan to more than double it by the end of next year,”  She added “Other new items, such as chia seeds, breakfast bars and squeezable fruit pouches hit on key trends… and members have responded.”

Sam’s Club has 644 locations in the U.S. and generated a 2.3 percent improvement in revenue including fuel sales to attain $12.7 billion during the 3rd. Quarter of Fiscal 2015. Comparative same-store traffic and sales increased by 0.3 percent reversing the trend of previous quarters.

(See report on Wal-Mart Stores financial performance in this edition)

   
 

Wal-Mart Stores Inc. Post results for 3rd Quarter of  Fiscal 2015   

Nov 14, 2014
    

In a press release dated November 12th Wal-Mart Stores Inc. announced results for the 3rd   Quarter of Fiscal 2015 which exceeded analysts’ projections.

The following table summarizes the results for the period and compares the values with the corresponding quarter of the previous fiscal year.

             
Financial Performace of 3rd Quarter Ending October 31st    
             
  2014   2013   Difference  
             
Sales $119.0 B $115.7 B +2.8 %
Gross Income $6.265 B $6.310 B -0.7 %
Net Income $3.711 B $3.727 B -0.4 %
Earnings per Share $1.15   $1.14   +0.8 %
Gross Margin 33.3 % 25.1 % +32.7 %
Operating Margin 5.3 % 5.5 % +3.6 %
Profit Margin 3.1 % 3.2 % -3.1 %
             
Total Debt $54.2 B Debt/Equity = 65.5    
             

 

   
 

WhiteWave Foods Posts results for 3rd Quarter of Fiscal 2014   

Nov 14, 2014
    

In a press release dated November 10th WhiteWave Foods announced results for the 3rd  Quarter of Fiscal 2014. The company is involved in production of organic dairy products, plant-based foods and Horizon™ brand eggs

The following table summarizes the results for the period and compares the values with the corresponding quarter of the previous fiscal year.

             
Financial Performace of 3rd Quarter Ending September 30th    
             
  2014   2013   Difference  
             
Sales $857 M $639 M +34.1 %
(organic Proportion) 83.6 % 100.0 %    
             
Gross Income $82 M $54 M +51.9 %
Net Income $47 M $34 M +38.2 %
Operating Margin 9.6 % 5.3 % +81.1 %
Profit Margin 5.5 % 5.3 % +3.7 %
Total Debt $1,360 M        
             

 

   
 

ADM Posts results for 3rd Quarter of 2014   

Nov 14, 2014
    

In a press release dated November 4th Archer-Daniel-Midland Company (ADM) announced results for the 3rd Quarter of Fiscal2014. ADM is a multinational with extensive interests in processing corn and oilseeds, commodity trading and related activities.

The following table summarizes results for the period and compares values with the corresponding quarter of the previous fiscal year.

             
Financial Performace of 3rd Quarter Ending September 30th    
             
  2014   2013   Difference  
             
Sales $18.117 B $21.393 B -15.3 %
Gross Income $1.470 B $1.560 B +20.1 %
Net Income $747 M $476 M +56.9 %
Earnings per Share $1.15   $0.72   +58.3 %
Gross Margin 8.1 % 5.4 % +50. %
Profit Margin 4.1 % 2.2 % +86.4 %
             
Total Assets $28.2 B $28.2 B    
Total Debt $27.4 B $27.4 B    
             
   
 

Land O’ Lakes Inc. Posts 3rd Quarter Financials

Nov 14, 2014
    

A release on November 5th documented 3rd Quarter results for the period ending September 30th  2014. The Cooperative attained net sales of $3.13 billion, 5 percent more than the $2.98 billion for the corresponding 3rd Quarter of Fiscal 2013. Net earnings declined from $49.46 million in the 3rd Quarter of 2013 to $6.29 million for the most recent Quarter.  Gross and profit margins for the most recent quarter were 8.5 percent and 0.2 percent respectively compared with 9.0 percent and 1.7 percent for the 3rd Quarter of 2013.

   
 

Rail Congestion Imposing Significant Costs

Nov 14, 2014
    

Rail congestion affecting shipments of corn and soybeans is imposing additional costs to producers according to a report published in Feed Grain Market on November 7th.  The 2014 corn crop of 14,400 million bushels and the soybean crop of 3,960 million bushels have been harvested.  A high proportion will be conveyed at some stage in the distribution chain by rail, competing with shale- oil, ethanol, consumer goods and other commodities, reflecting an improving economy.

   
 

Task Force on Antibiotic Resistance Formed

Nov 14, 2014
    

Following the release of the report entitled Combating Antibiotic Resistance by the President’s Council of Advisors on Science and Technology  and the subsequent Executive Order from President Obama, the Association of Public and Land-Grant Universities  (APLU) and the Association of American Veterinary Medical Colleges have created a Task Force on Antibiotic Resistance in Production Agriculture.  This entity will advise the Federal Government on research and will issue releases on aspects of the use of antibiotics.

   
 

Restaurant Sales and Traffic Improve in October

Nov 14, 2014
    

A study undertaken by Black Box Intelligence, a subsidiary of TDn2K, shows an improvement in both sales and traffic in U.S. restaurants during October.  The survey included 20,000 restaurants representing  combined annual revenue of $45 billion.  For October, growth in same-store sales attained 2.8%, representing the fourth consecutive month of positive growth. Growth in same-store traffic rose by 0.4% in October reflecting three consecutive months of improvement.

   
 

Unintended Consequences of Bans on Neonicotinoids  

Nov 14, 2014
    

The Guardian, an influential newspaper in the UK has reported on the effect of replacing neonicotinoid seed treatments, prematurely banned in the EU, following allegations of toxicity to bees.  The alternatives to the banned chemical class comprise a range of pyrethroids which are regarded as being more deleterious to insects than the compounds subject to removal from the market. Fields that would have had one seed treatment followed two sprays now requires at least five applications of insecticide.

   
 

Delhaize Downsizes

Nov 14, 2014
    

Belgian supermarket company Groupe Delhaize SA has announced that their Food Lion subsidiary in the U.S. will sell 66 Bottom Dollar discount food stores to German-based ALDI.  The purchase consideration will be $15 million in cash and Delhaize will take a charge of $118 million from the sale.

In commenting on the transaction, CEO of Delhaize, Frans Muller, cited by Ely Portillo in the November 7th edition of the Charlotte Observer stated “Bottom Dollar Food was an unproven concept which required time and capital to make further progress.”  He added “We believe these resources can be better used elsewhere.”

   
 

Presidential Order on Antibiotic Resistance

Nov 14, 2014
    

The Executive Order issued in September to reduce the impact of antimicrobial-resistant bacteria is undergoing implementation.  It is clear that the emphasis will devolve on the medical community given that drug-resistant infections may result in 23,000 deaths annually and incur healthcare costs amounting to $20 billion in addition to lost productivity estimated at $35 billion annually.

   
 

Choline to Receive Attention as a Critical Nutrient

Nov 14, 2014
    

Eggs are a significant potential source of choline in the U.S. diet. A large egg contains 230 mg of choline, slightly higher than a three-ounce serving of smoked salmon and approximately three times the level in the same quantity of roast chicken.  The U.S. Department of Agriculture estimates the choline requirement for infants at 125 mg per day, a teenager, pregnant woman or adult should ingest 550 mg per day.  It is estimated that 25% of the U.S. population including six million children are deficient in their choline intake.

   
 

Sysco Posts First Quarter Results

Nov 14, 2014
    

According to a release on November 3rd, Sysco Corporation with a market capitalization of $21.94 billion, posted results for the First Quarter of Fiscal 2015 ending September 27th.

For the quarter, sales attained $12.445 billion compared with $11.714 billion for the corresponding first quarter in fiscal 2014.  Gross margin was 17.6%. Net profit was $278.8 million compared to $285.6 million.  Earnings per share attained $0.47 compared to $0.48 in the corresponding quarter of 2014. The adjusted operating income for the 2015 Quarter was $455 million representing an operating margin of 5.9%. 

   
 

Health Status of U.S. Egg Flocks

Nov 14, 2014
    

Dr. Eric Gingerich recently compiled the results of a survey among member of the American Veterinarians in Egg Production.  The data was summarized and presented at the 2014 Annual Meeting of the U.S. Animal Health Association in Kansas City, MO.

Essentially there are no major disease problems affecting either pullets or flocks producing table eggs. Diseases and conditions were ranked on an ascending scale of severity from 0 to 5 with respect to both prevalence and importance,

   
 

House Opposes EPA WATUS Rule

Nov 14, 2014
    

The House will soon consider H.R. 4012, the Secret Science Reform Act of 2014 introduced by House Majority leader Kevin McCarthy (R-CA).  This legislation is intended to amend the Environmental Research, Development, and Demonstration Authorization Act of 1978.  Effectively the Administrator of the Environmental Protection Agency will be restrained from issuing proposed rules without disclosing scientific and technical information relevant to the intended restrictions. 

The Bill is aimed directly at the Waters of the U. S. Rule. (WATUS).  Cited in the UEP United Voices Newsletter of November 6th, McCarthy stated “the House Science Committee recognizes that if the EPA is committed to making rules on the best-available science they generally make regulations based on science that is transparent and reproducible”.  A parallel Bill S.2613 is progressing through the Senate.  If not adopted in the 113th Congress, it will certainly achieve a favorable reception in a Republican-dominated body.

   

Shane Commentary

 

EU to Establish Policy on GM Crops

Nov 18, 2014
    

The EU has decided that individual member nations can establish their own policies relating to cultivation of GM crops based on socio-political, environmental and other criteria.

In announcing the new approach, Frederique Reis a representative from Belgium stated, “this vote shows we have secured a broad consensus between the political groups in the European Parliament on this sensitive issue” He added “the measures approved today will secure flexibility for member states to restrict, ban the cultivation of GMO crops as they so wish.  At the same time, we have secured a clear process for the authorization of GMOs at the EU level, with improved safeguards and a key role for the European Food Safety Authority, which is important”. 

   

Visit our Companion Website
www.Chick-Cite.com


Dr. Simon M. Shane
Simon M. Shane
Contact     C. V.

Industry Prices: Thu Nov 13
 Corn3.87 $/bu
 Soybeans10.57 $/bu
 Soybean Meal393.50 $/ton
 Eggs, Producer166  ¢/doz
 Eggs, Warehouse 145-148 ¢/doz