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Brakke Consulting’s
Animal Health News & Notes for April 30, 2004
Copyright © Brakke Consulting, Inc.
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IN THE NEWS:
earnings news:
Land O’Lakes
Maple Leaf Foods
Pilgrim’s Pride
Tyson Foods
VCA Antech
other news:
AGEN
Agri Labs
Arkion Life Sciences
Aventis
Central Garden & Pet
Epitopix
Excel Corp.
Gateway Beef
Interpet Ltd.
Sanofi-Synthelabo
Synbiotics
Tyson Fresh Meats
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BRAKKE CONSULTING, INC.
Coming Soon: New Report on the US Equine Market
The equine market is often underappreciated as an important part of the animal health market. However, there are approximately 7 million horses in the US, and their owners are willing to spend money on their health care. One of the most explosive new product introductions in the past few years was the launch of Fort Dodge’s West Nile Virus vaccine, which has doubled the size of the entire market for equine vaccines in just two years.
Brakke Consulting’s new report on the US Equine market is a valuable overview of the market, including information on such topics as
– healthcare spending by owner segment
– distribution channels for equine products
– profiles of leading equine healthcare companies
– sales and trends by product category
– recent product launches
– surveys of market participants
The report will be available at the end of May 2004. For more information, email lfondon@brakkeconsulting.com.
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COMPANY EARNINGS RELEASES
> Tyson Foods Inc. posted a 65% increase in second quarter profit, despite trade restrictions that limited poultry and beef sales. For the three months ending March 27, Tyson earned $119 million, up from $72 million in the same period a year ago. Sales were $6.2 billion compared to $5.8 billion in the same period last year. The earnings results were affected by pretax charges of $14 million of costs related to poultry and prepared foods plant closings along with an approximate $50 million net benefit in the chicken segment, stemming from the Company’s ongoing commodity risk management hedging activities and increased grain costs. (AP)
> Pilgrim’s Pride reported second quarter earnings more than double what the company posted for the same period a year ago. For the three months ended April 3, 2004, the company reported earnings of $33 million, compared with $10.8 million in the second quarter of fiscal year 2003. Pilgrim’s Pride reported second quarter net sales of $1.4 billion, compared with $631 million for the same period last year. The company attributed the $754 million increase mainly to the acquisition of the ConAgra chicken division, which was effective Nov. 23, 2003. (Meating Place)
> Land O’Lakes reported net sales of $2.0 billion and net earnings of $46.5 million for the quarter, as compared to sales of $1.45 billion and a net loss of ($0.4 million) for the first quarter of 2003. Company officials noted that $175 million of the sales increase results from the consolidation of MoArk sales (layers/eggs) into Land O’Lakes financials. Factoring out MoArk, sales were up $381 million or about 26%. (PRNewswire)
> Maple Leaf Foods Inc. reported its financial results for the first quarter ended March 31, 2004. Sales for the first quarter of C$1.19 billion compared to C$1.25 billion for 2003, while earnings from operations before restructuring costs increased to C$48 million compared to C$33 million last year. Comparisons of earnings from operations exclude C$7.4 million in restructuring costs in the first quarter of 2003. Meat Products Group sales for the first quarter of 2004 declined to C$679 million from C$721 million last year primarily due to a reduction in the number of hogs processed. Strong sales increases in the Company’s poultry and packaged meats businesses partly offset these sales decreases. (Business Wire)
> VCA Antech, Inc. reported financial results for the first quarter ended March 31, 2004 as follows: revenue increased 14.9% to a first quarter record of $144 million; operating income increased 30.8% to $30.8 million; and reported net income increased to $14.7 million. Laboratory revenues for the first quarter of 2004 increased by 17.9%, while animal hospital revenues for the first quarter of 2004 increased by 13.5%. (company press release)
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COMPANY NEWS RELEASES
> Sanofi-Synthelabo and Aventis SA announced plans to merge after Sanofi increased an earlier hostile bid for Aventis. The cash-and-stock deal was valued at 53.5 billion euros, or $63.2 million. The agreement ends a bitter three month struggle for control of Aventis, which had also been pursued by Swiss giant Novartis AG. Faced with the possibility of a competing bid from Novartis, Sanofi’s board agreed to raise its offer at an emergency meeting. The two companies confirmed Monday that Sanofi had increased the cash part of its offer for Aventis to 16.0 billion euros ($19 billion) from 9.2 billion euros ($10.9 billion). The remainder of the deal is in stock. (AP)
> A federal judge threw out a jury’s $1.28 billion verdict against Tyson Fresh Meats Inc., ruling that it did not illegally manipulate cattle prices. US Senior District Judge Lyle Strom said the cattlemen who sued the company failed to produce evidence at trial to support the verdict “with respect to both liability and damages.” Strom granted a motion filed by Tyson, which had denied using its contracts with a select few ranchers to drive down cattle prices for other producers. (AP)
> Agenix Limited and its subsidiary AGEN Biomedical Limited announced that a US Judge denied Synbiotics’ preliminary injunction motion against AGEN, ruling that Synbiotics had failed to demonstrate a probability of success on the merits of its patent infringement allegations. Agenix Limited’s Managing Director said the court ruling would enable AGEN Biomedical to get back to business, and the company would be resuming supply of the STATScreen CHW test in the US. Synbiotics had been granted a temporary restraining order on March 15, 2004, that prevented AGEN from selling its canine heartworm kit in the US pending the outcome of the preliminary injunction motion. Synbiotics claims that one of its patents is infringed by the STATScreen CHW test distributed in the US. (company press release)
> Central Garden & Pet Company announced that it has completed the previously announced acquisition of substantially all of the assets of Interpet Limited, a division of Lawrence PLC. Based in Surrey, England, Interpet is a leading manufacturer and supplier of branded aquatic, pond, pet book and pet supplies products in the United Kingdom and the continental European Union. Annual sales are approximately $30 million. (Business Wire)
> Agri Laboratories and Epitopix, subsidiary of Minnesota-based Willmar Poultry Co., are working together to produce a livestock salmonellosis vaccine. The vaccine will be developed using Epitopix’s SRP technology, which uses purified bacterial proteins rather than whole bacterial cells in vaccine formulations. Epitopix, a developer of veterinary vaccines for bacterial diseases, reports that the technology has been used effectively in the poultry industry since 1996 and the company expects similar results in beef and
dairy applications. (Veterinary Practice News)
> The FDA approved the new N-Sure brand of natamycin as a feed additive to stop the growth of mold in broiler feeds. N-Sure is designed to prevent the formation of Aspergillus parasiticus, a mold that produces aflatoxin. Natamycin has been used for many years in human foods as a natural food additive to protect cheese, sausage and certain drink mixes from molds, but this approval marks the first application for the compound in animal feeds. N-Sure is produced by Arkion Life Sciences. (Meating Place)
> Gateway Beef Cooperative board of directors is taking a page from the Creekstone Farms playbook, as it plans to petition the USDA requesting permission to voluntarily test all of their cattle for BSE. “It is costing us $60,000 per month based on the order we had with Japan before BSE hit,” said the president of Gateway Beef. Gateway says it has the only prime Certified Angus Beef plant in the nation and completed a $250,000 cooling and cutting room in its plant eight days before a single case of BSE was found in a Washington state cow. Gateway had just inked its first orders with Japanese consumers before the country closed its borders to US beef. (Meating Place)
> Excel Corp., a division of Cargill Meat Solutions, is voluntarily recalling about 45,030 pounds of ground beef as a precautionary measure because of concerns of potential contamination by E. coli O157:H7. The product was produced April 9 and tested negative for E. coli O157:H7 as part of Excel’s test-and-hold program for ground beef. This week, the USDA notified Excel of a positive test sample taken from a business that had reground some of the product. Excel packaged the ground beef in 10-pound cylindrical tubes, which listed a “use or freeze by” date of April 29, 2004. The product was likely repackaged by retail grocers, and Excel has provided signs to its customers for use in retail stores. (Meating Place)
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National Institute for Animal Agriculture’s
ID/INFO EXPO
May 18 – 20, 2004
Chicago, IL
The National Institute for Animal Agriculture (NIAA) announced ID/INFO EXPO 2004, a conference and trade show devoted to the subject of animal identification and information systems.
ID/INFO EXPO 2004 is scheduled for May 18-20, 2004, in Chicago, Ill. This event follows a similar national gathering facilitated by NIAA in 2002 and will focus largely on the US Animal Identification Plan that has been proposed by a team of industry representatives and government officials working on a national system for animal identification in the US. Topics will include premises identification, group/lot ID, ID distribution, ID devices/methods, governance, security, confidentiality, and many more.
To register or for more details, visit http://www.animalagriculture.org.
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ANIMAL HEALTH NEWS
> THAILAND – AVIAN INFLUENZA A new outbreak of avian influenza has forced Thai officials to delay for the fourth time an announcement that the country is free of the disease. The latest case of was discovered in northern Uttaradit province. Now Thailand must wait to make an all-clear announcement until a new 21-day monitoring period expires May 10. Thailand has slaughtered at least 36 million chickens and other poultry and placed quarantines on affected zones to help contain the disease, which has hit 41 of 76 provinces. The country has reported 12 human cases of bird flu, including eight deaths. (Meating Place)
> US – ANIMAL ID PLAN USDA Secretary Ann Veneman unveiled the framework for implementation of a National Animal Identification System designed to identify any livestock production facility exposed to a foreign animal disease so that it can be more quickly contained and eradicated. The NAIS plan consists of three main phases. Under Phase I, USDA will evaluate current federally funded animal identification systems and determine which system or combination of systems should be used for a NAIS. In addition, Phase I will further dialogue with producers and other stakeholders on the operation of a NAIS, identify staffing needs, and develop regulatory and legislative proposals needed for implementing the system. Phase II will involve the implementation of the selected animal identification system at regional levels for one or more selected species, continuation of the communication and education effort, addressing regulatory needs and working with Congress on any needed legislation. In Phase III, the selected animal identification system(s) would be scaled up to the national level. The first step in the process is to select an interim data repository to handle incoming national premises data. USDA has commissioned an independent analysis of repositories that are currently part of various USDA-funded animal identification projects around the country. Once the system is identified that shows greatest potential for use on a national level, USDA will enter into cooperative agreements with states, Indian tribes and other government entities to assist them in adapting their existing systems to the new system. Veneman said $18.8 million would be transferred from the USDA Commodity Credit Corp. to provide initial funding for the development and implementation of the program during fiscal year 2004. Other private and public support will be required to make it fully operational. The Administration’s proposed 2005 budget includes another $33 million for the effort. (Wattnet Meatnews)
> EU – MEAT ORIGIN LABELING The European Commission adopted a report on the implementation of Council and European Parliament Regulation No.1760/2000. The regulation introduces rules to ensure origin labeling reliability by the application of a global traceability system, based on national individual bovine identification systems and beef traceability requirements applicable from the slaughterhouse to the point of sale to the consumer. The Council and Parliament will evaluate the report in the coming months. (Wattnet Meatnews)
> US – BSE REGULATIONS Fewer than 100 of about 14,000 livestock companies have violated regulations meant to prevent the spread of BSE, according to federal regulators. The FDA inspected 14,037 businesses in the last five months and found 12 that warranted its most serious action, according to its online database. Another 80 firms had minor violations and were recommended for voluntary action; two were referred to state regulators. The FDA’s most serious action typically includes a warning letter and follow-up visit within six months. If improvements aren’t made, the agency could recall products or obtain an injunction but has no authority to fine firms. All of the dozen firms in nine states had violations that had the potential for mixing prohibited material or had serious labeling or record-keeping problems. (AP)
> US – CANADIAN IMPORTS A federal judge in Montana has ordered a temporarily halt to the shipment of bone-in cuts of meat to the US from Canada, agreeing with the Ranchers-Cattlemen Action Legal Fund (R-CALF), United Stockgrowers of America, which argued the USDA decision to allow more beef across the border puts the health of US consumers at risk. Last week, the USDA announced it would allow Canadian processors to resume shipment of bone-in cuts, banned since last May when Canada announced it had discovered a case of BSE. While the US began accepting some Canadian beef last August, it had to be boneless cuts from animals younger than 30 months. R-CALF accused USDA of acting without public comment in its April 19 decision. In a written opinion, the federal judge stated that “Since there are no requirements that imports of Canadian beef products be labeled to indicate the country of origin, once those products cross the border, they become virtually impossible to recover or segregate if additional cases of BSE are discovered in the Canadian herd.” The judge agreed to temporarily halt the new imports until May 11. Less than a month after a single case of BSE was found in an Alberta animal, R-CALF lobbied for a seven-year waiting period before any Canadian beef was accepted. (Meating Place)
> US – MEAT CONTAMINATION DECLINES A new study by the Centers for Disease Control shows significant declines in the numbers of infections from foodborne pathogens from 1996 to 2003, including a 36% drop in E. coli O157:H7 infections. In its annual report on foodborne pathogen-caused illnesses, the CDC, noted a decline in Salmonella of 17%, a 28% decrease in Campylobacter and a 49% decrease in Yersinia. Illnesses caused by Salmonella Typhimurium decreased during the reporting period by 38%. While the report tallied major decreases in most foodborne pathogen categories, the data found that the incidence of Listeria, which had been decreasing the previous four years, did not decline in 2003. (Meating Place)
> CHINA – AVIAN INFLUENZA TEST Chinese scientists say they have successfully developed a new fluorescent test reagent kit that is able to test for multiple subgroups of the bird flu virus simultaneously. The reagent kit, named RT PCR, is able to test for H5, H7 and H9 subgroups of bird flu at the same time. It is believed to be the first kit ever developed to test for more than one subgroup of the bird flu virus at once. Experts from the appraisal team for the new test approach say the test reagent kit is easy and efficient to use and is suitable for poultry quarantine, human disease control and epidemiological investigation. (Meating Place)
> SPAIN – SALMONELLA TEST Scientists in Spain are developing a new system to detect Salmonella within 24 hours. The University of the Basque Country, Laboratorios Bromotologicos Araba and the LEIA Technological Center have teamed up on the project. Their research is targeting the 100 or 200 specific genes of Salmonella. They’ve acquired a new device that not only works rapidly, but also provides information about the number of species of Salmonella present in a sample. Results are analyzed through various graphical representations and then interpreted. Conventional microbiological culture growth techniques have been used to detect Salmonella, but it often took up to a week to receive results. (Meating Place)
> US – PRRS INITIATIVE The National Porcine Reproductive and Respiratory Syndrome Initiative got a $4.4 million boost from the USDA’s National Research Initiative. The grant was awarded to the North Central 229 multi-state PRRS project, which is an 11-state cooperative project that focuses on PRRS. The National Pork Board is collaborating with the NC 229 project through the checkoff-funded PRRS Initiative. As part of the project, the NPB has developed a Web site to provide information on PRRS projects, ongoing and completed PRRS research, PRRS research funding opportunities and ways to identify PRRS research collaborations. (Pork Alert)
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BRAKKE CONSULTING VIEWPOINT
A great deal of this week’s news centers around food safety. Several new programs for tracking and controlling the flow of animal protein were announced by one organization. It appears to us that all the supplier organizations have realized that we must continue to provide the consumer with a reliable, verifiable supply of safe and nutritious animal protein. There are strong indications in the marketplace that consumers are willing to pay for some of the additional costs associated with producing that kind of product. Those companies developing products that will improve efficiency in the production process will be rewarded.
Have a great weekend.
Ron Brakke
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