Livestock

Senate Ag Committee Approves Vilsack Confirmation for USDA

Tom Vilsack enjoyed bipartisan support in his Senate Agriculture Committee confirmation hearing Tuesday as he seeks to return to USDA. The committee voted unanimously to recommend his confirmation as USDA Secretary to the full Senate. Vilsack noted the unusual date of his confirmation hearing paired with his return to the agency he helmed for all eight years of Barrack Obama’s administration. “It's not lost on me, ironically, that this is Groundhog's Day, and I realized that I'm back again,” Vilsack observed. “But I also realized that this is a fundamentally different time, and I am a different person, and it is a different department, and I think we have to recognize that going into this process.” Vilsack appeared via video conference following COVID-19 restrictions, and the hearing was jointly chaired by Sen. Debbie Stabenow (D-Mich.) and John Boozman (R-Ark.) as the Senate has not yet approved rules for operating under a 50-50 split. Vilsack addressed a broad range of issues during the hearing from coronavirus and climate change to Country of Origin Labeling (COOL) and biofuels. Following are key quotes from Vilsack from the hearing on key agricultural issues: Coronavirus recovery:  “Clearly, COVID is on the minds of everyone, as it should be, and the Department of Agriculture has responsibility to aggressively promote the nutrition assistance that you all have provided, and they have begun to do that in the last week, 10 days. We also have to review the additional relief that's been ordered by Congress and try to get that into the hands of farmers, ranchers, producers and those in rural America as quickly, as efficiently, as effectively as possible. We need to make sure that our workers are essential workers on the line in the farm fields in processing facilities and alike are protected and recognized as the essential workers they are. And we certainly need to work collaboratively with Congress and others to build back the real economy in better shape than it was before the COVID crisis.” Addressing climate change:  Vilsack said a number of climate priorities included in a bill sponsored by Stabenow and Sen. Mike Braun (R-Ind.) could be implemented administratively. “For example, putting together an advisory group of farmers that would give us a better understanding and appreciation of how to structure a carbon sequestration or carbon bank effort, making sure that we can, in fact, accurately measure and quantify the results that can be obtained by farmers. Making sure that the benefits of whatever program we devise and develop accrue to the benefit of farmers and not necessarily to third parties. Making sure that we promote the development of ecosystem markets to create those revenue sources for farmers. Making sure that our conservation programs are structured and designed in a way that encourage and incent the kinds of activities we know make a difference. Our soil is precious, we need to make sure we're investing in soil health, and we also frankly need to up our game on research. There are ways in which root systems of crops can potentially be designed in a way that will sequester more carbon. We ought to be exploring that, we ought to be looking at ways in which we can increase market opportunities for greater storage. I think agriculture is probably the first and best way to begin getting some wins in this climate area. I think, farmers are prepared for it, farmers are anxious to do it, if it's voluntary, if it's market based, if it's incentive based. I think you will see farmers, ranchers and producers cooperate extensively.” On discrimination and equity of access: "We need to fully, deeply and completely address the long standing inequities, unfairness and discrimination that has been the history of USDA programs for far too long to a future where all are treated equitably and fairly, where there is zero tolerance for discrimination, where programs actually open up opportunity for all who need help and lift the burden of persistent poverty for those most in need." On using the Commodity Credit Corporation (CCC) to fund climate initiatives: “The first responsibility of the Commodity Credit Corporation is to make sure that the Farm Bill programs are adequately, fully and kindly funded. Having said that, to the extent that that vehicle is available without compromising the ability to fund the Farm Bill programs, it is a great tool for us to create the kind of structure that will inform future farm bills about what will encourage carbon sequestration, what will encourage precision agriculture, what will encourage soil health and regenerative agricultural practices. And to that extent to the extent that there are resources available, I would hope that you all would provide me the opportunity to utilize that in a way, again, that doesn't compromise the Farm Bill programs, but advances and creates additional markets. Secretary Purdue had great flexibility, appropriately so, under the current COVID situation, I would ask for the opportunity to use that flexibility appropriately, effectively and smartly to create the opportunity for you as you put together the next farm bill to understand what works and what would be helpful in terms of programs.” Biofuels: “We need to have the USDA Secretary work closely with his or her partner at EPA to make sure that folks at EPA fully understand or appreciate the benefits of this industry in terms of jobs, in terms of the environment, in terms of lifecycle analysis. This industry has made great strides in becoming much more environmentally friendly than it was at the beginning, and sometimes I fear that we were still working off of old research. New research would indicate that this is an industry that is providing environmental benefits: cleaner air, for example. And making sure that as they make decisions relative to the Renewable Fuel Standard that they are consistent, that they are consistent with the rule, they're consistent with the law. The waiver system was designed for small refineries that were having trouble and difficulty. It was not designed for large scale refineries that are owned by Exxon and Chevron to receive a waiver. So I would hope, and will certainly strongly urge EPA to go back to a day when those waivers are very, very, very infrequently granted. And then finally I think there's a way in which we can utilize USDA resources, and work with Congress to increase those resources, to build out the infrastructure to make it easier for higher blends to be available to consumers. Why? Because at the end of the day, consumers benefit. They have less expensive fuel, they have a cleaner burning fuel, they have a fuel that's better for the environment.” On Coronavirus Food Assistance Program funds currently being reviewed by the administration: “I hope that you understand and appreciate the fact that any new administration needs to have an opportunity to fully understand or appreciate exactly what is taking place with reference to what commitments have been made, what commitments have already been embraced. We just simply need time to have a better understanding of where that is. It is not designed for anything other than to give me, if I'm confirmed, a better sense of that program. Obviously, we're going to follow the directives of Congress, I mean that’s reasonable and appropriate and that's the way it should operate. I would say that we are going to continue to look for ways in which the tools that USDA has can be utilized in the best possible way to provide the assistance that people need to help build the economy back better, to expand opportunities when and if that presents itself, but if there's directive from Congress will obviously follow it.” Livestock price transparency: “There’s no question we need to strengthen the laws that are designed to create more openness and more transparency and more price discovery. No question about that. But that's not enough. I think we need alternative processing opportunities, not just from the competitive standpoint but also from a resilience standpoint. We found that when one or two processing facilities shut down during COVID, that it just created havoc in the market. We can't have that. We have to have a more resilient food system and that, in my view, requires us to look at ways in which we can incent and encourage more processing facilities.” On Country of Origin Labeling: “We [the Obama Administration] made every concerted effort to try to create better transparency, better information for consumers, because we understand and  appreciate that consumers want to know where their food comes from. They want to know when they're buying U.S.  or when they're buying something from someplace else. We attempted on three occasions to sort of strengthen the Country of Origin Labeling, unsuccessfully because of the WTO challenges by our Canadian friends, which would have resulted obviously in retaliation. I am absolutely willing to listen to anybody and everybody who's got an idea about how we can circumvent, or how we can get to a point where the WTO doesn't necessarily slap it down. That creates retaliatory impacts on American agriculture. I'm frank to say I need help in that respect. We can ignore the WTO, but then we’ve got the retaliation and then, you know, that's just not a good thing.”
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Tyson Foods Agrees To Settle In Poultry Price-Fixing Lawsuit

Tyson Foods Inc. has agreed to settle a portion of a class action lawsuit alleging some of the nation’s major poultry companies conspired to fix broiler prices and rig bids. Tyson did not disclose the amount of the settlement in a court filing, but said the agreement is not an admission of the merits of the claims. “Tyson Foods has reached an agreement in principle to settle a class action lawsuit alleging price fixing filed against Tyson and other poultry companies by entities representing direct purchasers of broiler chicken products,” the company said in a statement emailed to Drovers. “Tyson believes the resolution is in the best interests of the company and its shareholders and the settlement does not constitute an admission of liability. This settlement is subject to approval by the U.S. District Court for the Northern District of Illinois. A joint notice of settlement was filed by the direct purchaser plaintiffs Monday, January 11, as a first step in the court approval process.” The agreement was filed the same day that Pilgrim’s Pride Corp. announced it plans to pay $75 million to settle its part in the same lawsuit. Last year the U.S. Department of Justice filed criminal price-fixing and bid-rigging charges against 10 poultry-industry executives. The defendants have pleaded not guilty. Other price-fixing allegations have been made in lawsuits involving the beef and pork processing industries. Nearly 20 processors and affiliated companies were accused of price manipulation in the federal suit filed by such companies as restaurant chains, supermarkets and food distributors.
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Traders Mull USDA Estimates

Average estimates for next Tuesday's important USDA reports have U.S. corn ending stocks at 1.599 billion bushels, soybeans 0.139 bb, and wheat 0.859 bb. All three would represent a decrease from last month's data. Quarterly Grain Stocks is expected to show corn stocks of 11.951 billion bushels as of December 1, soybeans 2.920 bb, and wheat 1.695 bb. All Winter wheat is expected to be reported at 31.528 million acres, consisting of 22.140 Hard Red, 5.884 Soft Red, and 3.514 million acres of white wheat. All three of the above mentioned reports will be released on Tuesday at 11:00 AM CST. Weekly export sales had corn sales of 748,910 metric tonnes reported, within the 500,000 – 1,000,000 trade expectation. Soybean sales were reported at 116,764 tonnes (36,964 for 2020/21 and 79,800 for 2021/22), below the 200,000 – 700,000 expectation. Wheat export sales of 281,313 tonnes were noted, 275,313 for current crop. That was within the 200,000 – 600,000 trade expectation. Argentina's government said on Thursday it would review a decision to temporarily suspend corn exports after a meeting between the farming minister and the leaders of the country's main agricultural associations. (Reuters) The Buenos Aires Grains Exchange raised their estimate of Argentina's wheat harvest from 16.8 million tonnes to now 17.0. USDA's most recent estimate was 18.0. Through the most recent week of reportable trade (through January 5th), managed money funds were estimated to be buyers of 50,000 corn contracts, 55,000 soybean contracts, and 33,500 wheat contracts. The actual data will be released today at 2:30 in the weekly CFTC Commitments of Traders report. Steer weights fell 8 lbs. in this specific week to 913 lbs. Heifers were down by 8 also in just this one week. That dropped weights from +1.9% year/year to +0.9% for steers. Heifers fell from +1.6% to +0.2%. Weekly beef export sales ran -1,228 for the expired old crop, normal for the last week of the year, and only 9,003 tonnes for new. Pork export sales showed -8,593 for the expired 2020 and 23,268 for 2021. Hog weights from two weeks ago fell 1 lb. to 215 lbs. This dropped weights from +1.9% to +0.9%. Dressed beef values were higher with choice up 0.54 and select up 0.51. The Feeder cattle index is 135.35. Pork cut-out values were up 2.17.  
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NCBA’s Lane Discusses Relief Payments, Transition In D.C.

The COVID-19 pandemic hit cattlemen – like all of agriculture – hard. Ethan Lane, vice president of governmental affairs for the National Cattlemen’s Beef Association (NCBA) says the group has been pleased with the financial relief provide to cattlemen through the Coronavirus Financial Assistance Program (CFAP). Speaking to AgriTalk host Chip Flory on Tuesday, Lane said, “for not having played this game before, I think we’ve been relatively pleased with the results.” The CFAP program paid cattlemen more than $4 billion in the first round of relief, and almost $2.8 billion through CFAP2. “It’s not something we wanted to do, but boy it’s been a lifeline for many producers,” Lane said. Lane noted that producers were paid $200-plus per head for cattle they owned prior to April 15, 2020, which “could have been a game-changer” for some. Lane also said NCBA is working to clarify what producers need to do to be eligible for an upcoming package of financial relief that will pay on the April 16 to May 14, 2020, window. Cutting CFAP off at April 15 was detrimental to many stocker and backgrounding operators, and Lane said the next package helps with producers who incurred losses in the weeks following the April 15 cutoff. The presidential transition occurring this month will also create turnover in the agencies, and “USDA is going to have to juggle that transition,” Lane said. “But we do know there are resources left. So we hope that USDA follows through on Congressional intent and pushes those resources out to the country.” Lane is optimistic the Biden administration will work with cattle producers. He expects the new administration will be “more focused on issues like climate change, but they also recognize the importance grazing plays in being a solution to climate change, which is music to our ears.” Lane also acknowledged there will be some difference in perspective on land use and private land rights, “age old clashes that we’ve been working on” for years. The beef industry is “a massive industry that has a tremendous impact and employs a lot of people. And we need to help (the Biden administration) understand how we can fit into that equation. And I think they are open to having that conversation.” Regarding the presumptive new director at the EPA, Michael Reagan, Lane said many of the cattlemen that have worked with him previously have been outspoken about the fact he is willing to work with cattlemen. We’re going to engage with him and see where he wants to take EPA and some of those rulemakings that have been so pivotal over the last few years.”
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Court Rejects Meat Institute’s Prop 12 Appeal

The North American Meat Institute’s challenge to California’s Proposition 12 has been rejected for a second time. The U.S. Court of Appeals for the Ninth Circuit rejected the Meat Institute’s challenge to California’s 2018 ballot initiative that imposes new standards for animal housing. The Court’s Dec. 23 decision confirms an initial decision in October. After the October decision, the Meat Institute appealed for the challenge to be heard by the full panel of judges, but the panel “unanimously voted to deny appellant’s petition for panel rehearing.” California voters approved the Prevention of Cruelty to Farm Animals Act with 63% of the vote. The law creates minimum requirements to provide more space for veal calves, breeding pigs, and egg-laying hens. By 2020, the law requires farmers to give egg-laying hens at least one foot of floor space, and to completely eliminate cages by 2022. Farmers must now give veal calves 43 square feet and sows 24 feet of space. Challenges by the Meat Institute and others, however, centered around the fact the law applies to out-of-state producers of meat and eggs who want to sell products in California. Both the federal Department of Justice and 20 states joined the Meat Institute’s challenge, arguing the law will contribute to higher food prices for consumers. “Prop 12 is unconstitutional and not only hurts consumers with higher prices for pork, veal and eggs, it is costly for the federal government’s programs designed to help those facing hunger, including the Emergency Food Assistance Program and the Supplemental Nutrition Assistance Program,” said the Meat Institute’s President/CEO Julie Anna Potts.
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Tyson Reports “Misappropriation” Of Funds By Beef Supplier

Tyson Foods filed corrected financial results on Monday with the Securities and Exchange Commission for its beef segment for fiscal years 2017 through 2020. The report to the SEC – in Form 8-K – specifies that Tyson is reporting “misappropriation of company funds” by one of its beef suppliers. An internal review of the supplier’s accounts is underway, Tyson said, with assistance of outside advisors. That review determined the supplier made “misrepresentations regarding the number of cattle the supplier purchased on behalf of the company’s beef segment.” Tyson said in the Form 8-K that its live cattle inventory for the year-end fiscal 2020, for instance, was overstated by $285 million, and that the cumulative four-year inventory was overstated by $645 million. However, Tyson’s investigations indicate the resulting losses on their books is isolated to one cattle supplier who represented about 2% of the cattle supplied to Tyson each year from 2017 to 2020. Further, Tyson stated in the Form 8-K the losses do not have a material impact on Tyson’s financial results for the years examined. The internal review is ongoing. Tyson also said in the filing its investigation found “no evidence that the company benefitted from the supplier’s unlawful conduct or that anyone at the company took steps to alter financial statements to hide the transactions resulting from the supplier’s unlawful acts.” Tyson also expects to pursue restitution for losses to date. "The Company anticipates that, despite the corrections to previously issued financial statements, general trends in growth and operating profit metrics will remain unaltered, operating cash flow will be largely unaffected, liquidity will not change and the Company will remain in compliance with all debt covenants," it said. Tyson’s independent registered public accounting firm is PricewaterhouseCoopers LLP. As a publicly traded company, Tyson is required to make quarterly earnings reports to the Securities and Exchange Commission.
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Flush with Cash, Chinese Hog Producer Builds World’s Largest Pig Farm

Behind the walls of a hulking industrial compound in rural China, top pig producer Muyuan Foods is trying to raise more hogs on a single site than any company in the world - a risky investment with deadly African swine fever lingering. The new farm, which began construction in March and started operations at the first of its 21 buildings in September, epitomises the breakneck pace at which huge, industrialised hog breeding facilities are replacing small, traditional farms, many of which were wiped out by the worst animal disease outbreak in recent history. The shift, under way for years, has accelerated sharply, fueled by huge profits at corporate producers since African swine fever ravaged the country's herd and sent pig prices soaring to double the previous record. Corporate farms weren't spared by the epidemic, but as prices jumped, they quickly recouped their losses. Muyuan's profits grew 1,413% in the first nine months of 2020 to 21 billion yuan  ($3.21 billion). "We have hit a very favourable period for development. Pig prices are very high, our profits are really good, and cash flow is really ample," Qin Jun, Muyuan's vice general manager, told Reuters at the company's headquarters in Nanyang city in central China. In the race to take share, companies like Muyuan are designing higher-density automated farms, betting they can keep disease out while increasing efficiency to satisfy the country's huge appetite for pork. Muyuan's new mega farm near Nanyang, which will eventually house 84,000 sows and their offspring, is by far the largest in the world, roughly 10 times the size of a typical breeding facility in the United States. It aims to produce around 2.1 million pigs a year. If it works as planned - and other producers follow suit - the world's top pork consumer could reduce purchases from the global market, upending a booming meat trade that has supported farmers across the world.
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JBS Parent Company Pleads Guilty to U.S. FCPA Violations, to Pay $256 Million Fine

Brazil's J&F Investimentos, parent company of the world's largest meatpacker JBS pleaded guilty to violations of the U.S. Foreign Corruption Practices Act (FCPA) and agreed to pay $256 million in criminal fines, prosecutors said on Monday. The amount of the bribes paid by J&F officials to high-level government officials exceeded $150 million and the company made $178 million in profit, U.S. prosecutors said in open court. Lucio Martins, J&F’s director of compliance, pleaded guilty on behalf of the company in a video conference proceeding before U.S. District Judge Margo Brodie in Brooklyn. Between 2005 and 2017, the company conspired to bribe officials to get the Brazilian government and other entities to arrange financing and equity transactions benefiting J&F, according to a U.S. charging document.
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U.S. Indicts Six More Chicken Executives Over Alleged Price Fixing

The U.S. government has indicted six more chicken-industry executives over alleged price-fixing, expanding antitrust prosecutions in its probe of the $65 billion poultry sector, according to court documents. In June, the Justice Department indicted Pilgrim's Pride Chief Executive Jayson Penn and three others in its first charges in the criminal probe involving broiler birds, which account for most U.S. chicken meat. Court documents filed on Tuesday show that former Pilgrim's Pride CEO William Lovette has also been indicted. Lovette could not immediately be reached for comment on Wednesday, and a company spokesman did not immediately respond to a request for comment.   Pilgrim's Pride, mostly owned by Brazil-based meatpacker JBS SA, last month said Penn was exiting the company and would be replaced by Chief Financial Officer Fabio Sandri. Penn succeeded Lovette as CEO in 2019. The documents allege that industry executives conspired to fix prices from 2012 through 2019. Also indicted was a sales executive named Timothy Mulrenin, court documents show. Mulrenin's LinkedIn page says he is Perdue Farms' director of national account sales and was formerly Tyson Foods' director of sales. He did not immediately respond to a message sent through LinkedIn. A Perdue spokeswoman had no immediate comment. A Tyson spokesman did not immediately respond to a request for comment. Tyson in June said it was cooperating with the Justice Department's investigation under a program that could protect the company from criminal prosecution. The indictments come after grocers, retailers and consumers filed a lawsuit accusing Pilgrim's Pride, Tyson and other poultry processors of conspiring to inflate prices for broiler chickens. The companies have denied the allegations.
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Big Supplies Lower Prices

By mid-September, steady improvement in cattle harvest levels over the summer had nearly erased the backlog of cattle created at the onset of the COVID-19 pandemic. With beef packers finding steady profit margins north of $300 per head, cattle prices rallied for seven weeks in July and August. Increasing production, however, brought the eventual pressure on prices. In September, USDA revised its projections for beef production up 23 million pounds compared with August. That would leave total 2020 beef production at just 0.4% lower than 2019 — despite the disruption. Smaller 2020 slaughter numbers have been offset by heavier carcass weights, a lingering effect of the cattle stranded in feed yards. The final week of August saw steer carcass weights average 916 lb., up 32 lb. from the same week in 2019. USDA projects per-capita beef consumption to be 58.2 lb. in 2020, up slightly. But the supply pressure will tend to subside throughout the fall. Seasonally, beef demand improves approaching the holidays, which will support prices in the $110 to $117 per cwt range.
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