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.
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Featuring
the 2nd Annual
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with Industry Leaders”
• Over 100 exhibitors
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• 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
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