Image provided by: University of Oregon Libraries; Eugene, OR
About Capital press. (Salem, OR) 19??-current | View Entire Issue (Dec. 29, 2017)
December 29, 2017 CapitalPress.com 3 Report: Disruptions inhibit cage-free egg conversions Disease outbreak leads to shortage, then overproduction By MATEUSZ PERKOWSKI Capital Press Recent economic shocks have likely convinced U.S. egg producers to back off from aggressively converting their operations to cage-free production, according to a major farm lender. About 72 percent of the egg industry’s layer flock would have to be raised cage-free by 2025 to meet commitments made by major food buyers in recent years, according to Co- Bank, a member of the Farm Credit System. Volatile swings in egg sup- plies and prices have reduced the chances egg producers will meet the ambitious target, said Trevor Amen, CoBank’s protein economist who wrote a report on the issue. “The conversions are still happening but the expectation is it’s going to be a more cau- tious approach,” Amen said. Due to pressure from con- sumers and animal activists, more than 200 major food companies have promised to switch to cage-free eggs with- in less than a decade, accord- ing to the CoBank report. Those commitments have spurred conversions in the egg industry, which has seen the cage-free proportion of the na- tional layer flock go from 4.4 percent in 2010 to 15.6 per- cent in 2017, the report said. The trend particularly be- gan accelerating in 2015, but it coincided with a major disrup- tion to the egg industry — an outbreak of highly pathogenic Capital Press File Perch pipes, nesting areas and the chickens’ ability to walk about, scratch and socialize define their eggs as “cage free” — although the hens may never leave the henhouse. Egg producers are likely to proceed with caution when converting to cage-free production due to recent market volatility. avian influenza caused major losses of layers that same year. Egg producers who weren’t affected by the disease saw their profits surge due to the resulting egg shortage, spur- ring more production. At that point, conventional prices were so high that the tradi- tional premium for cage-free production was erased. “The industry as a whole overshot the supply,” which then caused conventional prices to crater, said Amen. Cage-free eggs have typ- ically commanded a premi- um of 120 percent over con- ventional eggs, but the price plunge brought the premium to about 250 percent, he said. However, the benefit was only felt by producers who contracted to sell cage-free eggs at a fixed price or under a cost-plus agreement, under which they’re reimbursed for expenses plus earn additional money to make a profit, Amen said. Egg producers who con- verted to cage-free on spec, on the other hand, were forced to sell into the conventional spot market at low prices, he said. It’s tough to compete with higher-priced cage-free eggs when conventional eggs are so cheap, Amen said. “It re- ally hampered the demand for cage-free.” This turmoil has caused egg producers to re-evaluate their strategy. While producing “special- ty eggs” — organic or cage- free — may still be their long- term plan, over the short term, egg producers are more likely to respond to actual increases in demand, he said. For cage-free production to keep rising, major buyers will need to live up to their com- mitments and consumers must show an appetite for more expensive cage-free eggs as well, Amen said. Converting existing laying houses and building new ones to be cage-free is conserva- tively estimated to cost the egg industry $10 billion, he said. “Ultimately, those costs will be passed on to the con- sumer.” U.S. hops set multiple records Idaho passes Oregon for No. 2 By DAN WHEAT Capital Press Lamb Weston Lamb Weston recently made a $200 million investment in this potato processing plant in Richland, Wash. A similar investment is planned for the Lamb Weston potato plant in Hermiston, Ore. Lamb Weston announces Hermiston fry factory expansion Project expected to add 170 jobs within region By GEORGE PLAVEN Capital Press To feed the world’s grow- ing appetite for french fries, Lamb Weston announced Dec. 21 it will build a new, state-of-the-art processing line at its Hermiston, Ore., facility on Westland Road. The $250 million expan- sion will add capacity for 300 million pounds of fries per year, while also creating approximately 170 full-time jobs, according to the com- pany. Tom Werner, president and CEO of Lamb Weston, said demand for french fries around the world has chal- lenged the industry’s ca- pacity to keep up in recent years. “This investment in a new french fry processing line in the Columbia Basin reflects Lamb Weston’s con- tinued commitment to sup- port our strategic partners as they continue to grow their businesses in North Amer- ica and abroad,” Werner said. Elsewhere around the basin, Lamb Weston fin- ished a similar $200 million expansion at its Richland, Wash., french fry factory, which opened in October. The company also spent $200 million to expand its Boardman, Ore., facilities at the Port of Morrow in 2014. All potatoes are sourced from local farms. Shelby Stoolman, spokeswoman for Lamb Weston, said the Hermiston facility was established in 1972 and has 450 employ- ees. The new line is expect- ed to be running by spring 2019, supporting growth in North America and overseas exports to Asia. “It’s really to keep up with demand,” Stoolman said. Mark Morgan, Hermis- ton assistant city manager, said the project is the larg- est ever investment in the Greater Hermiston Enter- prise Zone, both in terms of capital investment and annual payroll. “We’re very happy that Lamb Weston is choosing to make this investment in the Hermiston area,” Morgan said. “This is an advanced operation, so these are not your run-of-the-mill pro- cessing jobs. We anticipate these full-time jobs to pay an average of at least $18 per hour, plus benefits.” Oregon Gov. Kate Brown also approved an award from the state’s Stra- tegic Reserve Fund to move the project forward, which she said is part of her focus to boost the statewide econ- omy. “In addition to support- ing our rural economies and booming agriculture indus- try, this investment provides critical workforce training opportunities in well-pay- ing jobs in Eastern Oregon,” Brown said. Nathan Buehler, spokes- man for Business Oregon, said the state is indeed fi- nalizing the contract on a half-million-dollar loan to Lamb Weston. That loan will include requirements for job cre- ation, workforce training and building a wastewater system at the site. YAKIMA, Wash. — U.S. hop growers set records in acreage, volume and value in 2017 and for the first time Ida- ho surpassed Oregon in annu- al production. While the rate of growth of craft breweries has been slow- ing and inventories of hops have been increasing, the 2017 totals may not be peaks. Acreage likely will in- crease slightly in 2018, more fields planted in recent years will come into production and some acres will shift from aro- ma into high alpha varieties at generally much higher yields, said Pete Mahony, vice presi- dent of supply chain manage- ment and purchasing for John I. Haas, a major processor and grower in Yakima. “It’s simply difficult to slow a fast moving train. It might take a couple of years yet for the brakes to engage,” Mahony said. Growth of craft brewer- ies has fueled the increase of aroma variety hops in recent years but inventories have been increasing reflective of supply catching up with demand as the rate of craft brewery growth has slowed. On Sept. 1, U.S. hop stocks were 98 million pounds, up 15 Dan Wheat/Capital Press Hops grow outside the John I. Haas building in Yakima. Washing- ton leads the nation in hop production and 2017 was a banner year in acreage, volume and value. percent from a year earlier. In 2017, U.S. hop pro- duction totaled a record 104 million pounds, up 20 percent from the 2016 crop of 87.1 million pounds, according to a USDA National Agricultural Statistics report issued Dec. 19. Acres harvested were a re- cord 53,282, up 5 percent from the prior record of 50,857 in 2016. Value of production was a record $618 million, up 24 percent from the record high of $498 million in 2016. Harvested acres increased 24 percent in Idaho, 3 percent in Washington and 1 percent in Oregon. U.S. yields were 1,959 pounds per acre, 246 pounds higher than a year ago. The industry anticipated a large crop given June acreage estimates and good growing conditions and ample water contributed to above average yields in most varieties, Ma- hony said. Acreage in 2016 increased 17 percent and came into full production this season, boost- ing the crop, he said. The 104-million-pound record surpassed No. 2 Ger- many which grew 91 million pounds and below average yields, he said. Washington remains the U.S. hop gorilla with 75 per- cent (78.6 million pounds) of production, 38,438 acres and $498 million in production value, according to the NASS report. Idaho accounted for 13 percent (13.7 million pounds) of production, 6,993 acres and $68.7 million in value. Oregon grew 11 percent (11.9 million pounds) of pro- duction, still led Idaho in acres at 7,851 but trailed in value at $59.5 million. “The U.S. crop was nearly all contracted at good prices still in place from the craft bull market,” Mahony said. While production costs, par- ticularly labor, continue to rise, 2017 contract prices re- mained strong, he said. A tight supply of high al- pha hops resulted in high pric- es on high alpha on the spot market while there was virtu- ally no spot market for some aroma varieties due to over supply, he said. A minor shift from aroma to high alpha production is be- ginning to occur, he said. Prices of some aroma va- rieties that are oversupplied will soften in the next round of contracting, Mahony said. “The key in the near term will be how quickly the indus- try can rebalance and adjust the supply base to the chang- ing market conditions heading our way,” he said. Cascade, Centennial, Zeus, Simcoe, Citra and Mosaice were the six leading varieties in Washington, making up 54 percent of the crop, according to NASS. In Idaho, Zeus, Cascade, Amarillo, Mosaic, Citra and Chinook accounted for 69 per- cent of production. In Oregon, Nugget, Cascade, Willamette and Citra were 53 percent of production. Federal forecast confirms La Nina’s chilly sway NOAA updates seasonal outlook By DON JENKINS Capital Press La Nina conditions, her- alding cool and wet weather in the Pacific Northwest, are expected to persist all winter, the National Oceanic and At- mospheric Administration re- ports. Climatologists, in a new three-month outlook, noted that sea-surface temperatures are below average along the equator off the coast of South America. The temperatures aren’t likely to rise to normal until mid- or late spring, ac- cording to NOAA’s Climate Prediction Center. The cool ocean, or La Nina, and its effect on the atmosphere shaped the seasonal forecast. The report was similar to last month’s three-month outlook, Conditions favor snow accu- mulating in the mountains to supply Northwest irrigators. NOAA predicted be- low-average temperatures and above-normal precipitation in Washington, most of Western Oregon and the Idaho panhan- dle. To the immediate south — central Idaho, Southern Ore- gon and Northern California — there is no strong signal to what the winter will be like. The southern half of the U.S., including most of California, is more likely to have a rela- tively warm and dry winter, according to NOAA. La Nina has strengthened over the last two months. Be- tween September and Novem- ber, the average sea-surface temperature along the equator between Ecuador and the in- ternational dateline was 0.7 degrees Celsius below normal. SPONSORED BY: TRAC Center, Pasco, WA • Visit us at: www.easternwaagexpo.com • C&E Trenching $6.00 at the door to attend, $5.00 with a donated can of food Featuring the 2nd Annual Cattleman’s Connection: “Where Cattlemen Connect with Industry Leaders” • Over 100 exhibitors • Franklin PUD • Pesticide recertification credits (English & Spanish) • Irrigation Specialists • 6th Installment of the Baker Boyer Series: “Family Legacies Grown Locally” • Baker Boyer Bank • Rascal Rodeo: Monday, January 8th, 4:00PM-6:00PM • Hands on livestock handling demonstrations • Follow the Food: Showcasing samples of locally grown food. • Precision Ag Day: Wednesday, January 10th: Focus on the latest & greatest in Precision Agriculture 8th Annual Lyle Holt Scholarship Competition • Townsquare Media Group • Signs by Sue • Capital Press • Agri NW • Basin Business Journal ROP-51-3-2/101
