May 30, 2015

Due to bird flu epidemic, egg prices rise for food makers & shoppers

ChickensConsumers in Nebraska are seeing some grocery prices rise as the price of eggs used by food manufacturers has more than tripled in recent weeks due to the avian influenza outbreaks in Nebraska and 15 other states.

Bird flu has affected more than four-million egg-laying hens at three major operations in northeast Nebraska’s Dixon County.

USDA poultry economist Alex Melton says food company officials are worried about supply.

Melton says, “When there is a scare in any sort of national market for any commodity, you often see a sharp increase in price followed by a tapering as people are able to take more stock and get more information.”

Melton says it’s hard to say how high costs will eventually climb, since no one knows when the avian flu outbreaks will stop. Eggs used in food processing cost 64-cents a dozen back in April, but now the price is over $2.25 a dozen.

Melton says prices have started to taper, but stabilizing costs depend on the egg industry’s ability to replace and sustain the current flock. He says, “Egg producers can take different actions to try to extend their productivity by either keeping a laying hen in action longer and speeding up repopulation of barns with new pullets.”

Roughly 10% of the egg-laying hens in the U.S. have been affected by avian flu. In Nebraska, the poultry industry is worth $1.1-billion dollars a year. Next door in Iowa, the nation’s top egg producer, more than 66 outbreaks of bird flu are reported and more than 19-million hens and pullets have been euthanized.

 

Move toward corporate hog production stalls in Unicameral

HogsA bill that would allow meat packers to own hogs and contract with Nebraska producers has stalled in the Unicameral.

The Unicameral advanced the bill after first-round debate, but a filibuster prevented it from advancing from second-round debate. It is dead for the legislative session.

At present, corporate ownership of livestock is banned in Nebraska.

Senator Ken Schilz of Ogallala, the sponsor of LB 176, argued during legislative floor debate that state law is holding Nebraska pork producers back.

“Nearly every state that surrounds us are seeing significant growth in their hog industries,” Schilz told legislators as he opened on the bill. “Nebraska is not keeping pace with those leading hog-producing states.”

Schilz got the needed 33 votes to overcome the first filibuster. But opponents prevailed during the second round, when Schilz fell two votes short of the total needed to overcome the second filibuster.

State law, at present, prohibits meat packers from owning livestock. Under the bill, the prohibition would be lifted for hogs and kept in place for cattle.

Sen. Dave Bloomfield of Hoskins is one of a number of rural senators opposing the bill.

“This bill is not good for small Nebraska producers. The independence of the Nebraska farmer is renowned,” Bloomfield said during legislative floor debate. “This bill, if passed, eliminates that independence.”

But, Sen. John Stinner, a banker in Gering, said the arrangement between a corporation and a contract producer would promote stability and profitability in the hog industry.

“I will tell you that the family farm has now morphed into thousands of acres of production, technology has been incorporated throughout their organization and many times these family farms and farms have now morphed into trucking organizations, cattle feeding, hog production, and so on,” Stinner stated. “So, they are looking for ways to continue to diversify, continue to expand, and continue to build.”

Sen. Kate Sullivan of Cedar Rapids doesn’t see it that way.

Sullivan argued allowing meat packers to own the hogs and contract with producers isn’t a good bargain.

“Well, I would suggest to you that this bill makes those producers nothing more than serfs,” Sullivan said. “Yes, I fully agree, ownership is something. Ownership is quite a lot. Ownership of the land, taking the risks to build that facility, but if you don’t own the livestock, what do you put in those facilities?”

Supporters argue Nebraska must change to meet the changes of the hog industry.

 

Banks become cautious as farm income falters

corn field 2Farm income is falling across the region as credit conditions weaken.

Nathan Kauffman, the Omaha branch executive with the Federal Reserve Bank of Kansas City, says lower crop prices and high input costs have cut profit margins and raised concerns about the ability of farmers to repay loans down the road.

“In the last several years, profits have been so good in agriculture that a lot of people have been making pretty good money,” Kauffman says. “Now, a lot of bankers and other lenders are looking at where the risks are, wanting to understand what level of working capital do their borrowers have, is it sufficient to get them through these times?”

Recent years have brought many producers across the Midwest severe droughts and flooding while commodity prices rebounded only slightly after dramatic drops, while facing higher costs for seed, fertilizer and chemicals. It’s left many farmers short on cash.

“Operating loans have picked up because of lower incomes,” Kauffman says. “There has been a need for more financing of some of those short-term expenditures and I think we’re seeing more lenders that just want to be cautious and recognizing things are still pretty good overall and they have been very good, but being cautious about what that means for the next year or so.”

Kauffman says cropland values edged down in the first quarter this year while pastureland values held firm.

“The land that’s very high quality still does seem to be selling quite well,” Kauffman says. “The land that is maybe not quite as good, we do see some variation there. There are stories of no sales at auctions, we see other weaknesses in that side of the land market but overall, there has been a bit of downward pressure because of the lower incomes.”

Profit margins in the livestock industry have remained stable, but he says most bankers don’t think farm income or credit conditions will improve in the next three months.

By Jerry Oster, WNAX, Yankton

 

Sec. of Agriculture Vilsack says feds responding to avian flu outbreak (AUDIO)

ChickenFederal agriculture officials say they are responding to stop avian flu, which has now spread to Nebraska.

Secretary of Agriculture Tom Vilsack says sloppiness might well contribute to the spread of avian flu, hitting hard the Iowa poultry industry and now in Nebraska.

Some producers have used pond water for their flocks, pond water that has been exposed to wild birds which might be carrying the disease. Workers might have skipped a shower or two before entering facilities.

“We will absolutely focus on making sure that producers are very clear about what the bio-security measures are and need to be taken in order to minimize the impact and effect of this in the future,” Vilsack tells Radio Iowa.

Clean-up has become a problem, especially trying to get landfills that not only will take the dead birds from the chicken and turkey operations affected, but will take them at a reasonable cost.

So far, avian flu has hit 16 states, killing 33 million birds.

Vilsack says the USDA has spent $30 million in indemnity payments to producers, all in an effort to help them survive the devastation of having whole flocks destroyed. The Agriculture Secretary expects that total to eventually top $100 million.

Gov. Peter Ricketts has declared a state of emergency in wake of the discovery of avian flu in northeast Nebraska, authorizing the use of state resources to stop the spread of the disease here.

Officials emphasize avian flu is not a threat to human health, but is a very real threat to the $1.1 billion poultry industry in Nebraska.

Nebraska officials discovered a case of avian flu in a commercial layer flock in Dixon County. According to the governor’s office, the flock of 1.7 million chickens is located within the central flyway where this strain of avian flu has previously been discovered.

The operation has been quarantined in accordance with USDA protocol and the birds have been killed.

Radio Iowa contributed to this report.

AUDIO:  Brent Martin reports [:45]

 

From Gov. Ricketts’ office:

The state of emergency declaration is effective immediately. It will provide resources to help state agencies with appropriate response functions such as:

· Tracking, monitoring and rapidly responding to instances of confirmed HPAI cases throughout the state of Nebraska;

· Containing the spread of HPAI within Nebraska through employment of biosecurity protocols, depopulation of affected birds, disinfection practices, and disposal of bird mortalities; and

· Engaging in surveillance and early detection activities and other investigatory efforts to stop the spread of the disease within the state.

State agencies are working through the Emergency Support Function 11, which is the agriculture section of the State Emergency Operations Plan. Activities at present of key involved state agencies include:

Nebraska Department of Agriculture

· Serving as the lead on coordination of state response;

· Working as the liaison with owners of affected farm(s);

· Enforcing the quarantine of affected farm(s);

· Working with other state and federal agencies on humane depopulation of, and disposal of, infected birds;

· Establishing quarantines for farms with poultry within a 6.2 mile radius of affected farm(s) and coordinate testing efforts;

· Issuing permits for movement of materials such as feed, other supplies, and eggs and egg products outside of the 6.2 mile perimeter in accordance with national biosecurity measures;

· Coordinating communications.

Nebraska Emergency Management Agency

· Conducting coordination meetings of state agencies as per the State Emergency Operations Plan, and serving as liaison with the Governor’s Office;

· Serving as the liaison with county and other local emergency response coordinators;

· Providing resource support as requested, including coordinating with and directing the efforts of other state agencies.

Nebraska Department of Environmental Quality

· Assisting with determining environmentally safe disposal options for bird mortalities, including sending a team to farm site(s). The goal is to determine best options to protect ground and surface water resources and air quality, and to manage disposal in a way that does not propagate further spread of the disease. The USDA has lengthy protocols for mortality disposal that also must be considered.

Nebraska Department of Roads and Nebraska State Patrol

· Coordinating access to affected areas through road closures and traffic control.

New Siouxland pork plant to bring 1,100 jobs

HogsTwo companies are announcing plans to build a $264 million pork processing plant in Sioux City, Iowa.

Officials with Triumph Foods and Seaboard Foods say the venture will create 1,100 jobs. But, the city manager for Sioux City, Bob Padmore, says the economic benefits for the area extend far beyond the new jobs.

“The project will generate approximately $3.5 million in annual property taxes following the fulfillment of incentives provided to the project,” Padmore said. “The demands for supplies and services from the Seaboard/Triumph plant will increase business for existing businesses in our community.”

Construction on the plant, to be located in an industrial park north of Sioux Gateway Airport, will begin later this year.

Seaboard Foods President and CEO Terry Holton is originally from Cherokee, Iowa and lived in South Sioux City for 13 years while working at the IBP beef plant in nearby Dakota City, Nebraska. Seaboard is based in Kansas.

“To really bring this project kind of home, for me, is really exciting and I really look forward to it,” Holton said. “I think the community of Sioux City is the best community for us to have this project…and the city has done a fantastic job of making sure there is a viable site.”

The plant will cover about 250 acres and will process around three-million hogs annually.

Triumph Foods CEO Mark Campbell noted the facility will be similar to their St. Joseph, Missouri plant, with an “environmentally friendly design” and technology to cut down on odor.

“We expect to incorporate the most modern technologies in food safety, animal handling, and technologies in the food processing industry known today,” Campbell said.

The plant is expected to be up and running by summer 2017. Plant officials are seeking tax incentives from Sioux City, as well as state tax breaks. The Iowa Economic Development Authority Board is scheduled to consider an incentive package for the plant on May 22.

By Woody Gottburg, KSCJ, Sioux City