Swine Flu & Pork Industry Information

Even though health officials have denied that the "swine flu" came from pig farms, the media seized on the Smithfield plant in Mexico because of its proximity to the initial outbreak. Despite the fact that plant workers or the pigs are still healthy, Smithfield stocks dropped earlier in the week. With fear of losing even more profit in an already tough economy, the pork industry fought back to change public perception and remind people that according to the Center for Disease Control:

Can people catch swine flu from eating pork?
No. Swine influenza viruses are not transmitted by food. You can not get swine influenza from eating pork or pork products. Eating properly handled and cooked pork and pork products is safe. Cooking pork to an internal temperature of 160°F kills the swine flu virus as it does other bacteria and viruses.

Today the Pork Producer's Council released this statement:

“The restrictions should be short lived because U.S. and international authorities have made it clear that the H1N1 virus is transmitted through human contact and that pork is 100 percent safe to consume,” said NPPC Vice President and International Trade Counsel Nick Giordano. “NPPC has been in constant contact with U.S. trade officials, and U.S. Agriculture Secretary Tom Vilsack and U.S. Trade Representative Ambassador Ron Kirk have been busy working the phones with our trading partners. It is imperative that our trade officials stop the export bleeding now.”

The World Health Organization (WHO) today named the virus “Influenza A,” and the World Organization for Animal Health (OIE) said the H1N1 influenza should never have been named “swine” flu and there is no justification for the imposition of trade measures on the importation of pigs or their products. The U.S. Department of Agriculture, Centers for Disease Control and Prevention and the U.S. Department of Homeland Security all confirm there are no food safety issues with the virus and that it is not in the U.S. hog herd.

Swine Flu (or Influenza A) still has no vaccine, but as of this post only 109 confirmed cases have been found in the US, with only one death occuring in the country.

Further Reading:

A Brochure from the CDC about Swine Flu and pigs. (opens a PDF)
Reuters on pork farmers urged to reduce flu risk.
MeatInfoUK on the rejection of claims that pig farms have caused the flu.
BNet on the flu's impact on the pork industry

How are the chains doing now?

We have begun to see little glimmers of hope on the economy from the news outlets, but is any of that translating into sales? Are chains still recession proof- and if so, does it make a difference if it is sit down or drive through?

We've talked before about how Mc Donald's was doing well in the economic climate, but this week Forbes reported on some sit down restaurants actually posting profits.

P.F. Chang's China Bistro Inc. said before the market opened that its profit rose 33 percent in its first quarter, far higher than analysts expected. The company, which operates the P.F. Chang's China Bistro chain and the smaller Pei Wei chain, also increased its guidance for the year.

Meanwhile, Brinker International Inc., which operates the Chili's Grill & Bar chain, also reported a profit in its fiscal third quarter, matching analyst expectations by controlling costs.

But it isn't all good news; Yum! Brands, who includes Pizza Hut and Taco Bell in its family of companies, saw a decline in first quarter profit. CNN Money has more:

Yum Brands Inc. (YUM) vows to "slug it out" with competitors in 2009 after reporting a 14% dip in first-quarter profit amid a decline in U.S. sales from increasing pricing competition and slumping dinner sales for its KFC and Pizza Hut brands.

Fast-food chains have been more resilient in the economic slowdown than casual-dining restaurants due to their lower-priced food and convenience. But the higher-priced chains are cutting prices to win back customers, leading some to believe that the quick-service industry may resort to a "zero sum industry" highlighted by intense competition for fixed pool of customers.

Thinking about opening a restaurant? This article from the Portland Small Business Examiner has some great advice in this article.

Corn: Back in the News

After we spent last summer concerned with a corn shortage, and every major weather event had people in a panic that we would run out of food, the crop has taken taken a dip on the commodity roller coaster. Due to falling demand, farmers are planning on planting less corn and more soybeans this season. Bloomberg has more:

Farmers are planting more soybeans because they cost about 32 percent less to raise than corn, according to a University of Illinois study. Informa Economics, a private forecaster in Memphis, Tennessee, told clients on March 13 that soybean acres may exceed corn for the first time ever.

Analysts in the Bloomberg survey on average expected farmers to plant soybeans on 79.11 million acres, up from 75.72 million last year. The increase is equal to the state of Connecticut, plus 279 square miles.

To make room, growers probably will use less land for corn, the most-valuable U.S. crop. Planting will drop to 84.7 million acres from almost 86 million last year, the Bloomberg survey shows. Corn stockpiles at the beginning of March probably totaled 7.012 billion bushels, up 2.2 percent from a year earlier and the highest for that date since 1988, analysts in the survey said.

Naturally any talk of less corn prompted futures to rise. From the WVGazatte.com:

May corn added 8.5 cents to $4.045 a bushel and May soybeans leaped 29 cents to $9.81.

Those prices are still much lower than they were last year, and farmers are feeling the hit in the sagging prices. Also from Bloomberg:

Patrick Solon, 45, who farms corn and beans on 1,200 acres near Streator, in northern Illinois, said his costs for seed, fertilizer and machinery will jump at least 25 percent this year. He plans to plant 720 acres of corn, down 14 percent from about 840 last year.

“My income is going to fall this year and I’m putting aside some of last year’s profit for next year,” Solon said by telephone.

But some argue that the decline is more of a balancing out of the industry:

“Farm income has to come down,” said Michael Swanson, a senior agricultural economist at Wells Fargo & Co. in Minneapolis. “We don’t need any more wheat, soybeans or cotton, and corn supplies should be adequate with the drop in demand.”

The consensus seems to be that barring any major weather catastrophes, we have enough corn. We will have to wait and see if this translates into lower food prices.

Further Reading:

Des Moines Register on the impact of corn prices in Iowa.

The Capital Times on less corn being planted.

Recordnet.com on an ethanol company running out of cash.