Written by: Victoria Broehm | July 27, 2020
Last week, we all settled into our home office chairs to listen to industry experts discuss important issues affecting the animal food industry. As a former Seattleite, I was looking forward to seeing industry colleagues in the Emerald City this past March for the American Feed Industry Association’s Purchasing and Ingredient Suppliers Conference, which was canceled due to the coronavirus pandemic, but the webinar series that replaced it did not disappoint!
Overall, one theme that emerged throughout the weeklong presentations is this: the animal food industry is open for business! Vital research and development to support the industry’s biosecurity protocols continue. The industry continues to buy and sell ingredients, despite market fluctuations and shifts in consumer attitudes and purchasing behaviors. And, politics still drives the day.
On Monday, Kansas State University’s Cassandra Jones, Ph.D., discussed the latest research on how the African swine fever (ASF) virus spreads. Like COVID-19, she said that the “virus is spreading faster than the speed of research,” but that some vaccines on the horizon are looking “promising,” while not commercially available yet. Of note, she said that feed continues to pose a low risk for the ASF virus to enter the United States, but it is more likely to arrive through illegal means – such as smuggling pork products in through Newark, N.J., or Houston, Texas, airports. She provided a captivating overview of some of KSU’s current research in Vietnam, which is looking at farm-to-mill-to-farm transmission, with early data showing that transient surfaces (e.g., workers’ boot bottoms) continue to pose a concern. She reiterated that feed mills could continue to limit high-risk ingredients, consider mitigation and biosecurity measures and provide information to assist in research.
On Tuesday, Richard Brock of Brock Associates provided a commodity outlook. He said the balance sheet for soybeans will be friendlier than corn this year; dried distillers grains probably will not come back to the levels seen six to eight months ago; and that he would not “chase the market” if he was a cotton buyer. On China – he said, “One thing the virus has taught us, and a lot of us have worried about for years, is that we cannot rely on getting a lot of our products from China.” For the phase two agreement, he cautioned that the industry needs to protect import prices of what they are buying from China as well as exports going to the Asian country. He also posited that the “whole protein market is going to benefit” from the United States-Mexico-Canada agreement in the next six months. In the near-term, he expects organic ingredients to see a boost, food prices to remain volatile and the outcome of the presidential election to slightly impact the industry, in terms of future investments in infrastructure.
On Wednesday, Purdue University’s Jayson Lusk, Ph.D., provided his insights into how the COVID-19 pandemic is impacting how consumers shop and what they will demand in the future. During the pandemic, he saw a big spike in mid-March of people visiting grocery stores compared to last year, followed by a decrease in foot traffic due to e-commerce and grocery delivery services. He also detailed how food price changes depend on exposure to food away from home, saying for example, that round and chuck beef prices increased dramatically during the pandemic “because it goes into ground beef and is affordable and not hard to cook at home;” whereas, pork belly and ham prices went down “because bacon is mostly eaten as food-away-from-home.” Lusk speculated that there will be an accelerated trend toward: e-grocery, i.e., more food-at-home will bypass the traditional grocery stores in favor of Amazon, Walmart and others delivering food straight to doorsteps; a rising interest in local food and direct farm delivery; and more ghost kitchens, which are restaurants that do not have a customer-facing store-front where people dine-in and focus instead on delivery.
One thing we know for sure now, he said, is that “this pandemic has shown that consumer preference matters a lot.”
On Thursday, Joseph Kerns of Kerns and Associates discussed the current economics of the animal agriculture industry. He predicted that the slowdown on slaughter capacity seen in late spring due to COVID-19 illnesses at meatpacking facilities may return by the end of the year, with 3 million animals backlogged for processing. If the U.S. were to revert to stay-at-home orders, Kerns believes the markets would be able to respond better a second time around. “The industry got caught flat-footed, [if it happens again] we will be in a situation where the industry will be much more nimble; we will be able to adjust - it won’t be as abrupt as we saw,” Kerns said. He expressed the most optimism when discussing the dairy markets, stating, “Milk is the immediate winner in the protein market right now.” For the pork industry, he said three things that are paramount for maintaining bottom lines: “You must have good production, a pricing mechanism that has a cutout component and a banker willing to hang with you,” said Kerns. “If you do not have at least two of these three things, your future is in jeopardy.”
AFIA’s President and CEO Constance Cullman wrapped up the week, providing attendees a preview of the upcoming election in the fall and what is happening in Washington, D.C. Already the year has seen a crisis with Iran, the impeachment of a sitting president, trade tensions and trade agreements, COVID-19, ongoing campaigns for the Democratic presidential candidate, stock market decline, civil unrest and a worsening relationship with China. She discussed the success the feed industry received from the China phase one deal and looked ahead at possible trade deals with the U.K. and Kenya. Cullman discussed the upcoming election, including how the industry can advocate in the “new normal.” She said, “Moving from rallies to a virtual campaigning has really changed the overall complexion of the campaigns in 2020.”
When asked what people can do during this election season, she reiterated “have conversations with both parties – they need to understand the importance of what we do.”
Thank you to all who joined AFIA at PISC last week. For those who missed it, if you would like to purchase the recorded proceedings, you can contact Veronica Rovelli, AFIA’s senior director of meetings and events.
Just a reminder that we’re planning for next year’s PISC to be held March 9-11 in Orlando, Florida. Hope to see you there!
Comments See our policy on comments