Beef Producers Defend Their Turf Against Meatless Burgers

Last week, Wall Street Journal writers Jacob Bunge and Heather Haddon reported that, “On a rainy September morning, a pair of cattle ranchers browsed the refrigerated meat cases at a Walmart Inc. store in Mandan, N.D., snapping cellphone photos of an unwelcome invader among the shrink-wrapped ground beef: Beyond Meat Inc. patties, made from pea protein and coconut oil. After a separate check at a nearby local supermarket, the ranchers headed to the North Dakota Department of Health. They showed officials the photos and warned of food-safety risks from mixing plant burgers with the traditional beef kind.

Their message: Meatless burgers don’t belong on beef’s turf.

“The impromptu inspection by the ranchers—one of whom was Kenny Graner, president of the U.S. Cattlemen’s Association—is just one front in a growing war against their plant-based rivals. Cattle ranchers and their allies are pushing regulators to scrutinize alternative meat-makers, recruiting food scientists to test plant-based products for potential health risks, and ramping up countercampaigns to highlight beef’s nutritional benefits while comparing their rivals to dog food.”

The Journal article stated that, “Over the past two years, the beef industry has pushed legislation that restricts terms like ‘beef’ and ‘meat’ to the kind raised on the hoof, not products derived from plants or future ones developed using animal cells in labs. Various labeling laws are now on the books in 12 states and were considered this year in 15 others, with a federal bill introduced in October.”

“America’s Cattle Ranchers Are Fighting Back Against Fake Meat,” by Jacob Bunge and Heather Haddon. The Wall Street Journal (November 27, 2019).

Bunge and Haddon added that, “Plant-based alternatives amount to the equivalent of just 1% of the total volume of meat sold in the U.S., according to Nielsen. But some beef producers see an existential threat in the growth of meat-alternative makers like Beyond and Impossible Foods Inc.

“For a hint at the threat they face, they point to dairy farmers’ years-long losing battle against almond, soy and other imitation milks that have captured about 10% of sales, while consumption of traditional cows’ milk has declined.”

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USDA Improves Crop Insurance Policies for Coarse Grains Producers

A news release Wednesday from USDA’s Risk Management Agency (RMA) stated that, “[USDA] today announced changes to crop insurance for coarse grains in 2020. [RMA] made changes to the policy, which take effect in 2020. The changes allow producers more flexibility to choose enterprise units (EU) or optional units (OU) by Following Another Crop (FAC) or Not Following Another Crop (NFAC) cropping practice in select grain sorghum and soybean counties.

“‘We continually listen to producers and other stakeholders in developing our crop insurance policies, and we make adjustments to these policies when necessary,’ said RMA Administrator Martin Barbre. ‘With these changes, we believe grain sorghum and soybean producers will have more flexibility.’

“These changes are important because they:

  • Allow producers to better manage the unique risks of each practice by having separate FAC and NFAC units.
  • Producers may now be indemnified independently by FAC and NFAC units. A gain on one of the cropping practices will not be offset by the loss on the other cropping practice.”

The RMA update added that, “Over 75 million acres of grain sorghum and soybeans worth a total of over $25 billion (liabilities) are covered by crop insurance in 48 states.”

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U.S. Pork Can Reduce Overall U.S. Trade Deficit with China by Nearly Six Percent

A news release yesterday from the National Pork Producers Council (NPPC) stated that, “Securing zero-tariff access to China for U.S. pork would be an economic boon for American agriculture and the country, according to the [NPPC]. Based on an analysis by Iowa State University (ISU) Economist Dermot Hayes, NPPC says unrestricted access to the Chinese chilled and frozen market would reduce the overall trade deficit with China by nearly six percent and generate 184,000 new U.S. jobs in the next decade. NPPC today launched a digital campaign to spotlight the importance of opening the Chinese market to U.S. pork as trade negotiations continue.

“‘Were it not for China’s tariffs that are severely limiting access to American goods and other restrictions, including customs clearance delays, U.S. pork could be an economic powerhouse, creating thousands of new jobs, expanding sales and dramatically slashing our nation’s trade deficit. China’s actions would unleash tremendous benefits to U.S. pork producers, our nation and Chinese consumers who rely on this essential protein,’ said Hayes.

“According to Dr. Hayes’ analysis, U.S. pork sales would generate $24.5 billion in sales if U.S. pork gained unrestricted access to the world’s largest pork-producing nation over 10 years.”

Yesterday’s update added that, “Pork is a staple of the Chinese diet and a major element of the country’s consumer price index. China’s swine herd has been devastated by African swine fever, a disease affecting only pigs with no human health or food safety risks, reducing domestic production by more than 50 percent and resulting in a mounting food price inflation challenge for the country.”

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Senate Democrats Critique Farm Trade Payments

Earlier this month, Associated Press writer Steve Karnowski reported that, “President Donald Trump’s $16 billion bailout package for farmers hurt by the trade war with China unfairly benefits the South at the expense of the North and wealthy producers over smaller farms, Democratic senators concluded in a report released [on November 12th].

“The report, one of the sharpest congressional critiques yet of the Market Facilitation Program [MFP], said five southern states receive the highest average payments per acre under the program — Georgia, Mississippi, Alabama, Tennessee and Arkansas. The analysis by Democratic committee staffers concluded that farmers in the Midwest and Northern Plains have been hurt the most.

“It also asserted that the U.S. Department of Agriculture has done nothing to target the assistance to vulnerable small, medium and beginning farmers. Instead, it said the agency doubled the payment limits, directing even more money to large, wealthy farming partnerships.”

The AP article noted that, “The USDA said in a statement that payments are based on trade damage, not regions or farm size.

“‘While we appreciate feedback on this program, the fact of the matter is that USDA has provided necessary funding to help farmers who have been impacted by unjustified retaliatory tariffs,’ the statement said. ‘While criticism is easy to come up with, we welcome constructive feedback from any member of Congress with recommendations as to how the program could be better administered.'”

Mr. Karnowski added that, “The agency has set aside nearly $16 billion under MFP for the current crop year, up from the $12 billion inaugural edition for 2018 crops. The agency has paid farmers over $6.8 billion so far in first installments. According to the USDA, the states collecting the highest overall totals as of Tuesday — more than 60% of the total funds — are Iowa, Illinois, Minnesota, Texas, and Kansas.

“A separate analysis by the American Farm Bureau Federation released later [on November 12th] backed up the USDA’s assertion the dollars have flowed mostly to the Midwest, even though the per-acre rates are higher in parts of the South. The Farm Bureau report said that’s because most of the acres planted in crops that are eligible for MFP payments are planted in the Midwest. The group did not address the Democratic senators’ claim that the formula is unfair.”

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Beef Industry Promises Greenhouse-Gas Reductions

Bloomberg writers Lydia Mulvany and Isis Almeida reported yesterday that, “The American beef industry, wary of the vegan-burger craze that’s sweeping the nation, is trying to scrub its image as a greenhouse-gas-emitting machine.

“With big retailers and investors pressing companies to improve their footprints, giants like Tyson Foods Inc. and Cargill Inc. are promising ambitious reductions in emissions, including in supply chains. Chief sustainability officers are popping up all over meat C-suites, and social media ads are touting beef’s misunderstood health benefits.”

“Beef Industry Battles to Scrub Polluter Image as Vegan Burgers Boom,” by Lydia Mulvany and Isis Almeida. Bloomberg News (November 24, 2019).

The article pointed out that, “It’s an uphill battle. For more than a decade, studies have piled on exhorting people to eat less beef for environmental and health reasons. By some measures, agriculture accounts for more global greenhouse gas emissions than transport, thanks in part to livestock production.”

Mulvany and Almeida noted that, “But the industry is pointing to new numbers that show how efficient American production is compared with the rest of the world. A recent government study funded by the industry pinpointed U.S. beef’s footprint at about 3% of man-made greenhouse gases, paltry compared with the 14.5% global number that’s often cited.”

The Bloomberg article added that, “Ermias Kebreab, a professor of animal science at University of California-Davis, said that major reductions in emissions are achievable over the next five years given the promise of imminent feed additives that reduce the amount of methane cattle produce.”

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Start-Ups Shying Away from Consumer Internet, Turning More to Supplying Software for Business

Steve Lohr and Erin Griffith reported in today’s New York Times that, “When Rajiv Ayyangar and two other Yahoo alumni explored start-up ideas, they experimented with concepts directed at the public, like a personal finance app. But making money from consumers was too daunting, they concluded, partly because of the tight grip that digital giants like Google and Apple had over distribution.

“So instead, their San Francisco start-up, Tandem, founded last year, made a product for the business market, a virtual office for remote teams.

“‘The bar is a lot higher in consumer, so we went to the enterprise side,’ said Mr. Ayyangar, Tandem’s chief executive.”

The Times article stated that, “He has plenty of company these days. Entrepreneurs, engineers and venture investors are shying away from the consumer internet, and turning more to the seemingly ho-hum realm of supplying software to business, or so-called enterprise technology.

Venture funding for social media start-ups reached a peak of $3.9 billion in 2011. But by 2018 it had fallen to $400 million, according to Pitchbook, which tracks venture deals. Over the same years, venture backing for start-ups supplying software to businesses more than tripled, to $2.8 billion.

“That overall trend — less a sudden surge than a steady migration — is a subject of scrutiny today as federal agencies, states and Congress investigate whether the country’s largest tech companies violate antitrust laws. With Facebook, some of the officials are looking into whether the company bought some emerging competitors to protect its dominant position in the market for social networks.”

Lohr and Griffith added that, “Some start-ups are breathing new life into old categories of business software. Superhuman, an email service founded in 2014, is growing rapidly, offering fast, engaging and personalized service.

“The start-up migrants from the consumer internet are often engineers. Their stories vary, and their motivations are nuanced. But they are all entrepreneurs fully engaged in pursuing opportunity, which they see in the enterprise marketplace, a door far more open than on the consumer side, for whatever reasons.”

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Kroger Explores “Farm-to-Aisle” Grocery Shopping

Earlier this week, Bloomberg writers Deena Shanker and Matthew Boyle reported that, “Visitors to Seattle-area Kroger supermarkets next week will be able to walk out with fresh parsley, cilantro and other greens grown in the store, the latest example of grocers bringing the farm right to their aisles.

“Kroger’s deal with German startup Infarm includes two stores with plans for 13 more to come online by March of next year. It’s part of a broader push by the nation’s biggest traditional supermarket chain to improve sluggish sales by amping up its fresh-food offering, while also enhancing its environmental cred. The greens—including crystal lettuce and Nero Di Toscana kale—only need tending once or twice a week and will sell for no more than Kroger’s existing store-brand organic produce, according to Suzy Monford, Kroger’s group vice president of fresh.

“‘We’re removing touches in the supply chain, which is more economical and allows us to pass those savings along to customers,’ Monford said in an interview. ‘We know that fresh food drives shopping trips and it’s a real differentiator.'”

The Bloomberg article stated that, “In 2013, vertical farming startups received $4.5 million in venture funding, according to AgFunder, an investor in food and ag tech companies with an active media and research arm. In just the first half of 2019, they raised $140 million. Infarm, for its part, raised $100 million in a Series B round in June.

As these new forms of farming gain steam, the companies behind them are looking for ways to appeal to major customers and, ultimately, the consumer at the store. Brooklyn-based Square Roots builds farms inside of refurbished shipping containers, and recently announced a new partnership in Grand Rapids, Michigan, putting the containers at the headquarters for food distributor Gordon Food Service. Gotham Greens, a Brooklyn-based greenhouse grower, has six locations in New York and Chicago, including on the rooftop of a Whole Foods. Indoor vertical farming company Plenty, which raised $200 million in a Series B round in 2017 from the likes of Jeff Bezos, recently announced a soccer-field sized farm planned for Compton, California.

“While farming models differ, the basic pitch remains the same: Growing food closer to the urban shopper, in computer-controlled micro-climates, means less transport, less water usage and less pesticides, fertilizer or food safety concerns, if any at all, all while delivering more shelf life, more flavor, and overall, a better eating experience.”

The Bloomberg article added that, “Kroger’s Monford admits that the company still has ‘a lot to learn’ about in-store farming, but says the venture’s environmental footprint is pretty minimal. ‘It’s just water and light.'”

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A Growing Concern for Indoor Farming: Lightbulbs

Laura Reiley reported on the front page of today’s Washington Post that, “The next big thing is here, all girders and concrete pads, glass roofing and gravelly dirt. Viraj Puri, co-founder of one of the nation’s largest indoor farm companies, walks through the construction site, and even without the luminous frills of thousands of butter lettuces, it’s easy to see that the building going up where Bethlehem Steel once stood is something ambitious in the world of food.

“The Sparrows Point steelworks in Baltimore, once the largest steel-producing facility in the world, was shuttered in 2012, leaving no trace of what once supported 30,000 families with Bethlehem Steel wages. Now the vacated land is dominated by a FedEx distribution center, an Amazon fulfillment center, an Under Armour warehouse.

“And by the beginning of December, Puri’s Gotham Greens farm will join them, part of a global craze for decentralized indoor food production.

The Post article stated that, “Food and agriculture innovation have sucked up remarkable amounts of investor capital in recent years and could become a $700 billion market by 2030, according to a Union Bank of Switzerland report.

“Millions are being invested globally in indoor urban farms because of their promise to produce more food with less impact, with two dozen large-scale projects launching in Dubai, Israel, the Netherlands and other countries.”

Ms. Reiley noted that, “And for indoor urban farms, especially those that rely solely on artificial light, there’s another concern: lightbulbs.

“In September, the Trump administration announced it would roll back Obama-era energy efficiency standards that would have effectively phased out the standard pear-shaped incandescent variety. The step is expected to slow the demand for LED bulbs, which last longer and use less electricity than many other types but are more expensive.”

For indoor urban agriculture, especially indoor vertical farms, the reversal represents a threat to an already narrow path to scalability and profitability, according to Irving Fain, chief executive of Bowery Farming. The indoor vertical farming company has raised $122.5 million from celebrity chefs Tom Colicchio, José Andrés and Carla Hall, Amazon worldwide consumer chief executive Jeff Wilke and Uber chief executive Dara Khosrowshahi,” the Post article said.

Today’s article explained that, “Indoor vertical farming became economically viable when LEDs became plentiful, cheap and efficient. Before that, indoor growing lights produced enormous amounts of heat — heat mapping was frequently how police identified illegal marijuana growing houses — and thus cooling costs and electricity bills were astronomical.”

Ms. Reiley pointed out that, “Indoor urban farmers, especially those farming vertically, have built their profitability models on projections that LEDs will continue to get exponentially brighter and less expensive, will run cooler and will become more efficient.

“Chris Granda, senior researcher/advocate at the Appliance Standards Awareness Project, says rolling back the efficiency standards will hamper the expansion of LEDs and their continued march toward greater efficiency.”

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Some Tech Start-Ups Starting to Hoard Cash, Something That Was Unpopular in Boom Times

New York Times writer Erin Griffith reported this week that, “Mark Frank, who runs a health technology start-up called SonderMind, had planned to wait until the end of 2020 to raise more money for his company.

“But after Uber and Lyft stumbled when going public and WeWork ousted its chief executive and pulled its initial stock offering, Mr. Frank changed his mind. With so much disappointment clouding start-up land and an economic slowdown looming, he decided that having more cash on hand was the better course.

“SonderMind, which raised $3 million in April, has 80 percent of that money left, Mr. Frank said. To increase the start-up’s ‘runway,’ or the amount of time before it runs out of cash, he decided to spend less than planned, and to be extra safe, he began informal conversations with investors for a new round of fund-raising early next year.”

The Times article noted: “‘The question is now, ‘Do we push that timeline up even further?” said Mr. Frank, 41, who is based in Denver.”

Ms. Griffith stated that, “Tech start-ups, which have enjoyed years of easy money and fast growth, are preparing for a potential downturn by doing something that was unpopular in boom times: hoarding cash. Many young companies are spending less and raising more than they planned, said Scott Orn, chief operating officer at Kruze Consulting, a San Francisco firm that provides accounting and human resources services to more than 200 start-ups.

“In the first three months of the year, Kruze’s clients had an average cash balance of $3.5 million. By September, that had increased to $4.5 million, he said. And start-ups that began the year burning $260,000 a month had, on average, reduced that to $230,000, he said.”

The Times article added that, “Stockpiling cash is at odds with the model of most venture capital-backed start-ups, which typically raise piles of money to spend on growing faster. Many investors are now pushing their companies to turn a profit.

“Joe Horowitz, an investor at Icon Ventures, a venture capital firm in San Francisco and Palo Alto, Calif., said he had recently met with two companies in one day that were raising unplanned ‘interim’ rounds of funding to safeguard against a difficult environment next year. He said those were prudent moves.”

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USDA Issues Second Tranche of Market Facilitation Program

An update Friday from USDA’s Farm Service Agency (FSA) stated that, “U.S. Secretary of Agriculture Sonny Perdue today announced the second tranche of 2019 Market Facilitation Program (MFP) payments aimed at assisting farmers suffering from damage due to unjustified trade retaliation by foreign nations. The payments will begin the week before Thanksgiving. Producers of MFP-eligible commodities will now be eligible to receive 25% of the total payment expected, in addition to the 50% they have already received from the 2019 MFP.

“‘This second tranche of 2019 MFP payments, along with already provided disaster assistance, will give farmers, who have had a tough year due to unfair trade retaliation and natural disasters, much needed funds in time for Thanksgiving,’ said Secretary Perdue. ‘President Trump has shown time and again that he is fighting for America’s farmers and ranchers. While we continue to have confidence in the President’s negotiations with China, this money shows President Trump following through on his promise to help and support farmers as he continues to fight for fair market access.'”

The FAS update noted that, “MFP signup at local FSA offices will run through Friday, December 6, 2019.”

This is the second of up to three tranches of MFP payments. The third tranche will be evaluated as market conditions and trade opportunities dictate. If conditions warrant, the third tranche will be made in January 2020. The first tranche was comprised of the higher of either 50 percent of a producer’s calculated payment or $15 per acre, which may reduce potential payments to be made in tranche three. USDA will begin making the second tranche payments the week before Thanksgiving,” the release said.

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