BEEF bits

Nov 13, 2009
by WLJ



Humane Slaughter Office proposed

Sen. Dianne Feinstein, D-CA, said she plans to propose legislation that would, among other things, create an Office of Humane Slaughter within USDA’s Food Safety and Inspection Service (FSIS). In a letter to Agriculture Secretary Tom Vilsack, Feinstein lamented the recent Humane Society of the United States’ video of inhumane treatment of veal calves at Grande Isle, VT-based Bushways Packing Co. Feinstein said her planned legislative proposal would authorize new funding to hire additional FSIS inspectors and close any loopholes that allow the slaughter of downed calves. It would also direct USDA to develop standards for treating and transporting calves to be sold as bob veal. She said creating an Office of Humane Slaughter within FSIS would “elevate the important responsibilities of the HMSA [Humane Methods of Slaughter Act] inspectors.”

Tyson Foods downgraded

Last week, Wall Street analysts at J.P. Morgan downgraded shares of Tyson Foods to “neutral” from “overweight” due to increasing corn and hog prices and concerns about competition from Sanderson Farms and Pilgrim’s Pride, which was recently acquired by JBS SA. “We emphasize that this is not a short call and we still believe (Tyson) will beat the Street in 3Q 2009; we just think that upside is priced in,” analyst Ken Goldman wrote in a note to investors. He stated that higher grain prices are likely to cut into production margins. The cattle futures prices have moved higher, but not enough to offset concerns in pork and poultry markets. Competitive concerns include Sanderson Farms’ scheduled plant opening in Kinston, NC, which would add about 3 percent to 4 percent capacity to the nation’s supply of retail chickens. While not expecting Kinston to run at full speed until 2012, Goldman said chicken prices are already down on weak demand and even a 1 percent to 2 percent increase in supply “will further depress prices, thus hurting Tyson’s margins down the road.”

USMEF warns packers on Taiwan

Now that USDA’s Food Safety Inspection Service (FSIS) is preparing to certify shipments of boneless beef from cattle under 30 months of age for the Taiwanese market, the U.S. Meat Export Federation (USMEF) is urging packers to closely monitor shipments. Two weeks ago, FSIS put a hold on any shipments until Taiwanese officials clarified some discrepancies about which products could be shipped under the newly expanded trade protocol. “[The] Taiwan government has stressed that the old EV [export verification] program for Taiwan is no longer valid for cattle slaughtered on or after Nov. 2, [therefore] export of any products from cattle slaughtered on or around this date must be very carefully managed,” USMEF said in a notice to its members. Beef products from cattle harvested on or after Nov. 2 are eligible for shipment to the country. However, USMEF also urged exporters to mind slaughter date range. Taiwan likely will reject or detain product whose certificate indicates a slaughter date range that overlaps Nov. 2, 2009.

Hog producers still struggling

One of the nation’s largest hog producers filed for bankruptcy protection last week, indicating that the tough times for producers of competing proteins aren’t over yet. Clinton, NC-based Coharie Hog Farm, the nation’s 22nd largest producer, will likely be forced to liquidate its 30,000-head herd as a result of the filing. According to court documents, the company lost $13.3 million in 2008 and has lost $17 million so far in 2009. The competition from lower priced competing proteins is holding back significant advances for beef products and is likely to continue to do so for some time, according to analysts.

Per capita consumption in decline

According to the latest USDA World Agriculture Supply and Demand Estimate for November, total per capita beef consumption by U.S. consumers continued its downward trend in 2009, with continued declines forecast for next year. USDA projects that 2009 consumption will decline to 61.3 pounds per capita, a decrease from last month’s estimate of 61.5 pounds. For 2010, USDA expects that number to fall to 60 pounds per capita, 10 percent lower than the prior 10-year average from 1998-2007. The figures are based on a decline in U.S. imports and an increase in projected exports next year which will decrease domestic supply by 140 million pounds. U.S. domestic production is expected to increase 69 million pounds to 25.976 billion pounds, offsetting some of the decline. Total per capita consumption of all proteins is projected to decline to 205.2 pounds on a retail weight basis, the third consecutive decline and the lowest level since 1993.