In The News This Month – June 2021

 

 

Editorial

When we think of innovation we usually think in terms of complex and expensive technology. However, the definition of innovation is simply the action or process of innovating, a new method, idea, product, etc. We have been reading a lot about how the pandemic has created a need for innovation within the food supply chain. But does innovation really need to be so complex? Take for example an article we highlighted about how innovation is altering the egg industry. During the pandemic, the egg market was hit with a huge spike in retail demand, and a shortage of packaging materials. Using egg trays for consumer packaging allowed egg graders to immediately respond to the increased demand. This was a simple change that brought tremendous flexibility to the egg grading business. In this instance innovation was a simple change.  Although innovation does not need to be expensive or complex, egg companies should be investing in new ways of reaching consumers, responding to new consumer demands, and new product offerings to keep ahead of the competition.

Responding to a world-wide pandemic is one way to bring about innovation quickly. But sometimes companies respond to ongoing concerns, such as the need for sustainability. Sustainable agriculture has been on the forefront of consumers’ minds and many companies are taking note. Tosca has created a reusable plastic container that Fieldale Farms is beginning to use to transport poultry products to retailers. These durable containers can be used instead of single use corrugated boxes. At the end of the container’s life cycle the damaged containers are ground up to create raw material that is used to create new reusable plastic containers. A sustainable packaging option is an innovative way to demonstrate a company’s dedication to reducing plastic waste.

Robotics is certainly an area we consider when talking about innovation. Robotics in food supply? Most definitely a recent hot topic. The largest robotic milking research facility is set to open in North America. While the idea of robotic milking is not new, this facility will set the bar for research dedicated to robotic milking and further advance the entire dairy industry. This type of innovation is set to provide unlimited opportunities for the future.

Whether simple, practical, expensive, or complex, innovation usually results in the introduction of new products or an improvement of existing products. Can a tomato be improved upon? Apparently, yes, if you make it look like chocolate! Tomachoc is the consumer brand of Top Seeds International and has developed a range of five categories of tomatoes, all of which feature an attractive chocolate color. They are available in different shapes and can be enjoyed alone as a snack or in salads.  It’s an interesting innovation and I’m left to wonder if I can add a chocolate tomato plant to my garden.

 

Monica Lizar

Account Manager

Aeros, a Cultura Company

 

Feed and Grains:

Midwestern Drought Conditions Peak as Corn Belt Deals with Moisture Extremes

Drought has had a constant hold on the U.S. this year, still covering more than half the country. Recent rains could be changing the story in portions of the Midwest, as one agricultural meteorologist thinks the drought in the Midwest has peaked. 

The latest U.S. Drought Monitor shows some improvement In Indiana and Illinois. And despite recent rains, the most recent Drought Monitor, posted on Thursday, shows severe drought expanded across portions of northern Iowa and Minnesota.

This week’s monitor acknowledged that the Midwestern storms this past week caused widespread damage from wind and hail, but said the storms delivered beneficial rainfall to areas suffering from moderate, severe and extreme drought. 

It’s a trend that USDA Meteorologist Brad Rippey sees continuing, with some areas even receiving too much moisture, which could change the drought picture in portions of the Midwest. 

See video and read full article here

 

Eggs:

How Innovation is Altering Egg Industry Consumer Relationships

The COVID-19 pandemic has fostered transformation in the egg marketing, be it in distribution channels, product mix or consumer attitudes to eggs. Innovation may always have been a way of attracting and retaining consumers, however the pandemic is likely to result in a number of long-lasting changes in the egg industry.

We certainly saw a lot of innovations early on in the pandemic, when the sector was hit concurrently by a huge spike in retail demand for eggs and a shortage of packaging materials. 

Using egg trays for consumer packaging may, perhaps, be seen as a very simple innovation, nevertheless, it allowed egg graders to immediately respond to increased consumer demand for larger purchases and brought tremendous flexibility to the egg grading business with the same packaging material used for a wide range of brands.  The only change required was for the labels that could also be printed in-house. 

Innovation does not have to be complex and expensive.

Read full article here

 

Conagra Brands Accelerates Transition to 100% Cage-Free Eggs

Conagra Brands (NYSE: CAG) announced today the company’s plans to accelerate its transition to 100% cage-free eggs, converting 100% of its egg usage to cage-free by the end of fiscal year 2024, one year earlier than its original commitment to directly source 100% cage-free eggs by 2025.

Conagra plans to convert approximately 20% of its egg usage to cage-free by the end of fiscal year 2021; approximately 45–50% to cage-free by the end of fiscal year 2022; approximately 60–70% to cage-free by the end of fiscal year 2023; and directly source 100% cage-free eggs by the end of fiscal year 2024.

“Consumers want animals in the food supply to be treated better and we applaud Conagra for accelerating its progress in that direction,” said Josh Balk, Vice President of Farm Animal Protection for the Humane Society of the United States.

“Operating ethically and employing responsible animal welfare practices is important for our customers, our investors, and our company, and we’re proud to accelerate our progress on this important issue,” said Katya Hantel, senior director of sustainability at Conagra Brands.

Read full article here

 

Egg Week

Shell inventory was up by 2.2 percent, following a fall of 2.5 percent last week reflecting only moderate depletion of old flocks against static demand. Wholesale prices have declined since early May to below breakeven given the combined costs of nest-run, grading, packaging and delivery. Chains spread their purchases and preempted anticipated price rises before the Memorial Day Weekend and will do so again before the Independence Day holiday. Industry observers and participants expect buyers to reenter the market guided only by retail demand and inventories in DCs and stores. Since the beginning of 2021 generic eggs have been consistently priced high by many chains to maximize margin but this strategy depressed volume of sales to the disadvantage of the industry. Market data suggests that chains have increased shelf prices for generic white eggs during the past two weeks and are not featuring generic Large and Extra large.

• Currently inventory comprises close to five days of production. Price movement over the past six weeks defies conventional supply to demand relationships and indicates extraneous factors affecting price. This past four weeks wholesale prices for Large and Extra-large were essentially stable with decreases in inventory this past two weeks and a moderate increase during the past week. The commercial shell-egg price discovery system is obviously used by buyers to negotiate lower prices, serving as a self-fulfilling prophecy and a de facto instrument of potential indirect, but not necessarily intentional collusion. The current relationship between producers and chain buyers based on a single price discovery system constitutes an impediment to a free market. The benchmark price amplifies both downward and upward swings and functions to the detriment of the industry. A CME quotation based on Midwest Large, responding to demand relative to supply would be more equitable.

Read full article here 

 

Poultry:

Chicken Consumers Shift Back to Pre-Pandemic Behaviors

The COVID-19 global pandemic had a significant impact on chicken consumer behavior, shifting sales from foodservice to retail and driving interest in online shopping. Don’t expect all of these trends to be long-lasting.

“While some consumer habits changed dramatically during the pandemic (cooking at home all the time, buying groceries online), only some consumers will keep those habits. We won’t ever go back to ‘where we were before,’ but we also won’t be at the same place we were a year ago,” Lynn Dornblaser, director of innovation and insight, Mintel, said.

“Consumers are coming back into grocery stores, especially for those products they want to see and touch before buying (like chicken and other proteins). And while consumers are enjoying going out to eat, they are still going to be eating more meals at home than they were before.”

Dornblaser will discuss how pandemic-driven changes in how, where and what consumers eat have impacted retail and what to expect going forward post pandemic at the 2021 edition of Chicken Marketing Summit.

Read full article here 

 

Fieldale Farms Transitions to Reusable Plastic Containers

Fieldale Farms has begun using a new sustainable packaging option to transport poultry products to retailers.

Developed by reusable packaging and supply chain solution provider Tosca, the reusable plastic containers (RPCs) offer a durable replacement to single-use corrugated boxes. In addition, RPCs can help reduce the amount of labor needed to manage box failures.

“Tosca offers a Pilot Program that enables partners to test out RPCs in part of their supply chain before committing to a long-term contract and rolling new packaging out to their entire supply chain. Tosca worked with Fieldale to identify the perfect solution for their supply chain, running the pilot for a number of months to get it right,” Jon Kalin, CCO at Tosca, said.

“Our RPCs are made of food-grade polypropylene, a strong material designed for durability and food safety. At the end of an RPC’s life cycle (potentially hundreds of trips though the supply chain) damaged RPC are ground up to create raw material that is used to create new RPCs, continuing the cycle of reuse.”

The boxes are designed to handle heavy weights, eliminating compression and reducing damage to poultry products during transportation.

Read full article here 

 

Strong Demand Drives Jobs, Opportunities in U.K. Poultry Sector

In recent years, farming and meat processing companies in the U.K. have recruited ever more staff for their operations from Europe and further afield. Local job-seekers were put off joining the sector by perceptions of low pay and poor working conditions. 

That has all changed as a result of Brexit — the U.K.’s leaving of the European Union — and the coronavirus COVID-19 pandemic. While these factors disrupted the market for poultry products, it also led to a decline in the overall workforce. Many of the sector’s former employees returned to their home countries. Some of them are unlikely ever to return. 

Read full article here 

 

Turkey:

Agtegra to Add Turkey Feed Production to Portfolio

Cooperative says demand for turkey feed has increased in South Dakota.  Agtegra Cooperative will add turkey feed production to its feed mill in Herreid, South Dakota, it said in a press release.

The feed mill has produced feed for ruminants since February 2020, but said demand for turkey feed has increased.

“The Agtegra Herreid team has implemented a few changes to accommodate mixing another species’ feed in the mill,” Agtegra said in the release. “In addition to more load-out spouts for the dedicated turkey feed bins, a hand-add scale and other small measuring instruments were also implemented to track feed ingredients. A larger addition included a system used in applying Sal-Curb, a formaldehyde product used to reduce bacteria when mixing turkey feed ingredients. Other small upgrades to the mill were made to comply with turkey feed milling regulations.”

Weekly Turkey Production and Prices June 22nd, 2021

Poult Production and Placement:

The June 16th 2021 edition of the USDA Turkey Hatchery Report, issued monthly, documented 26.6 million eggs in incubators on June 1st 2021 (25.4 million eggs on May 1st 2021) and down 6.9 percent (2.0 million eggs) from June 1st 2020.

 A total of 20.6 million poults were hatched during May 2021 (22.6 million in April 2021), and representing a decrease of 4.4 percent (0.9 million poults) from May 2020.

 A total of 19.4 million poults were placed on farms in the U.S. in May 2021, (21.6 million in April 2021), and 1.0 percent less than in May 2020. This suggests disposal of 1.2 million poults during the month (1.0 million in April 2021). Assuming all tom poults were placed, up to 11.7 percent of May-hatched hen poults or 6.3 percent of all May-hatched poults may not have been reared. This is an unsubstantiated estimate with a fluctuating demand for processed toms and hens in a post-COVID affected market. (See relative numbers of hen and tom poults processed under Production Data below).

Read full article here

 

Pork:

Supreme Court Denies Review of Prop 12

The Supreme Court of the United States announced Monday it had denied a petition filed by the North American Meat Institute to review California’s Proposition 12, an initiative enacted in November 2018 after California voters approved it. The initiative implements space requirements for laying hens, sows and veal. However, the Meat Institute argued that it created a barrier to trade by imposing obligations on out-of-state competitors in an effort to assist local producers of pork and veal.

Prop 12 reaches beyond the state’s borders by prohibiting the sale in California of uncooked pork or veal from animals housed in ways that do not meet California’s requirements. Essentially, it sets confinement standards for how pigs and veal calves are raised anywhere in the U.S. or in any foreign country in order to sell into the Californian market.

 

Read full article here

 

Prop 12 may create pork shortage in California

California economist and former Secretary of California Technology, Trade and Commerce Agency Lon Hatamiya has released a white paper detailing the impacts Proposition 12 may have on California consumers – exploring pork price changes against an anticipated 50% reduction of pork supply, as estimated by independent market expert Rabobank.

“Market access restrictions from Proposition 12 will further limit available supply into California, thereby driving up pork prices for all consumers,” said Hatamiya. “The negative financial burden falls largely on the diverse ethnic consumers and communities that make up California, with pork being an important source of protein for African American, Asian American, and Hispanic households, businesses, and restaurants.”

With an unworkable implementation timeline of Proposition 12, Hatamiya analyzed data from a pork pricing study conducted by Kansas State researcher Glynn Tonsor and Purdue researcher Jayson Lusk. The Tonsor-Lusk research sought to determine how sensitive consumer pork purchasing behavior is to price changes for six pork products (loin, ribs, shoulder, breakfast sausage, dinner sausage, and bacon).

Read full article here

 

Cyberattack on JBS, Acquisition has Aussies Concerned

Between the recent cyberattack and a pending acquisition of a major pork producer, JBS is undoubtedly on the minds of people in Australia more than it ordinarily would be.

The Brazil-based food company has operations in multiple protein sectors, and in multiple continents. In Australia, its business has been primarily focused on beef and lamb, but a recent deal was reached for it to acquire one of Australia’s largest pork producers, Rivalea.

A couple of weeks ago, I wrote about U.S. Sen. Jon Tester’s concerns that the meat industry becoming too consolidated and how incidents like the cyberattack could put the U.S. food system in peril. Now, those concerns are spreading in Australia.

Since the cybersecurity attack involved the information technology systems for JBS USA, which also oversees JBS operations in Australia, both country’s protein supplies were compromised. This resulted in the idling of some plants, including six plants in Australia.

Not long after JBS confirmed the cyberattack, it announced its plans to acquire Rivalea, as well as Oxdale Dairy Enterprise. The deal has not cleared all regulatory hurdles, but more often than not, these proposed acquisitions are finalized in just a matter of weeks.

Read full article here

 

Beef:

Beef Supply Chain Emissions can be Reduced by More Than 30% by 2030

Beef supply chain contributions to global GHG emissions need to go down, and they can. Rabobank anticipates the market will be the most effective driver of GHG emissions reduction and believes that beef supply chain emissions can be reduced by more than 30% by 2030 in major markets. But in order to unlock the opportunities, leadership is needed.

All sectors and supply chains need to reduce emissions, and the beef supply chain is no exception. Beef supply chains account for about 6% of global greenhouse gas (GHG) emissions, of which about half are accounted for by the beef production stage of the supply chain.

Read full article here

 

Dairy:

U.S. Dairy Exports to Southeast Asia can Expand

U.S. milk production continues to increase faster than domestic demand, raising the need for export market growth. And Southeast Asia, with an expanding population and rising middle class, remains the biggest growth opportunity for U.S. dairy exporters. However, matching ample U.S. milk supplies with increasing demand in Southeast Asia will require U.S. processors to invest in manufacturing technology to meet the product needs of an ethnically and economically diverse consumer base.  

According to a new report from CoBank’s Knowledge Exchange, rapid urbanization across Southeast Asia has raised per capita incomes and will lead to increased protein consumption as consumers seek healthier foods and beverages, including an array of dairy products and ingredients.

Read full article here

 

Largest Robotic Milking Research Facility in North America to Open

The University of British Columbia (UBC) Dairy Education and Research Center will become the largest robotic milking research facility in North America with the addition of six GEA DairyRobot R9500 box robots. This partnership between GEA and UBC will open research opportunities, attract more students and provide new educational experiences.

“We’re excited to partner with UBC as they set a new bar for research dedicated to robotic milking that will further advance the entire dairy industry,” said Stuart Marshall, GEA AMS business development manager. “Robots provide an immense amount of data and we’re only beginning to scratch the surface of understanding and using it in daily cow management.”

The UBC Dairy Center is a world leader in dairy cattle welfare and behavior, reproduction, and nutrient recovery research, attracting students from around the globe.

Read full article here

 

Miscellaneous:

Read full article here

 

Fresh Fruit Prices Running Hot at Retail

Restaurant food prices increased 0.6% in May and now are running 4% higher than a year ago, a new U.S. Department of Agriculture report says.

Supermarket grocery prices rose by 0.3% in May from April to May 2021 and now are 0.7% higher than May 2020, according to the USDA Food Price Outlook report.

So far this year, grocery food prices have increased 1.4% and restaurant food price have risen 2.5%, according to the report. Inflation for all food so far this year increased an average of 1.9%, according to the report.

Read full article here

 

 

The information in this newsletter is intended to update our readers of current events.  Any third-party publications are presented for informational purposes only and the views presented in such publications are those of the respective authors.  The views therein are not necessarily representative of Aeros or any other CULTURA company’s views on any particular topic.