Stable corn prices, lower production seen as poultry’s best hope for rebound

Poultry — Mississippi’s top agricultural commodity – is weathering economic storms by responding quickly to shifts in demand, and economists at Mississippi State University predict 2012 will be a year of recovery.

Whether it sees the expected rebound could hinge on corn prices keeping steady and production levels remaining stable, poultry officials say.

In 2011, Mississippi ranked fourth in the nation in broiler production, with more than 765 million birds produced on 1,478 farms. The broiler industry represented more than $2.21 billion in value for the year.

Mark Leggett of the Mississippi Poultry Association said broiler production has been reduced by an average of 4 percent in 2012. The reduction is starting to make up for 2011′s challenges.

“I heard someone say that 2010 was the best year ever, and 2011 was the worst year ever — they went from peak to trough in one year, in terms of profitability, because of overproduction and high feed costs,” Leggett said. “From what I’ve been told, all of the companies have moved back to profitability and 2012 is looking better, as long as corn prices don’t spike and production is tightly controlled.”

The U.S. Department of Agriculture reported that hatcheries in the state set 17,689,000 eggs for broiler chicks during the week ending April 28, a figure 5 percent below the same week in 2011. The overall number of chicks placed in 2012 is down 6 percent.

“The industry began to pull back production by placing fewer chicks in late 2011 to combat increasing input costs and mostly flat demand,” said John Michael Riley, agricultural economist with Mississippi State University’s Extension Service. “For 2012, the focus has been on demand. Consumers continue to view poultry as an economical protein, but producers struggle to overcome the high cost of feed in this economy.”

Riley is cautiously optimistic about the months ahead.

“Broiler production in Mississippi could be consistent with 2011, at 4.6 billion pounds,” Riley said. “Egg sets thus far in 2012 have been increasing slightly across the nation and similar numbers should be expected in Mississippi. It is tough to know for sure because the industry can make adjustments so quickly, but the current trend is showing at least steady growth in 2012.”

Mary Beck, head of the poultry science department at MSU, said the number of birds processed during the last week of April is slightly higher than previous weeks.

“For the week ending April 28, more than 31 million birds were processed, an increase of about 3 percent from the week before and an increase of 0.61 percent over last year’s numbers,” she said. “This suggests that market stabilization may have begun. In addition, prices of poultry meat in stores have risen slightly, particularly for dark meat, which is gaining in popularity.”

Beck said MSU scientists are researching a variety of ways to help the poultry industry, including reducing feed costs.

“With the high price of corn, driven in large part by the use of corn for ethanol, MSU scientists are investigating alternative feed ingredients to determine optimum inclusion into diets for growth and cost effectiveness,” she said.

During the past year’s economic difficulty, increased prices for eggs buoyed the industry.

“Egg production was valued at nearly $201 million in 2011, about 12 percent higher than in 2010,” Riley said. “The higher value is completely attributed to higher prices, up 14 percent in the latter part of 2011, because production was down 2 percent.”

Jackson is the headquarters of Cal-Maine Foods, the largest producer and distributor of fresh eggs in the United States. Cal-Maine sells most of its eggs in 29 states across the Southwestern, Southeastern, Midwestern and mid-Atlantic regions.

Leggett said Cal-Maine’s Mississippi facility represents about 5 percent of the company’s total production.

“Most of Cal-Maine’s eggs produced in Mississippi are sold within the state and to neighboring states,” Leggett said. “They continue to grow their specialty egg market, which includes brown, cage-free, organic and enhanced-nutrition eggs. These are steadily increasing areas of demand in the egg market.”

STODDER: Natural gas vehicles, like Toyota Prius, face chicken-and-egg syndrome

While the push is under way in some states to provide roadside battery-charging for the thousands of electric cars on the highways, another alternative, the natural-gas-powered vehicle, mostly sits idle.

Anyone who has watched television in the past decade knows about the Chevy Volt and hybrids like the Ford Fusion or the Toyota Prius. But only Honda sells a natural-gas-powered car in the U.S., and it generates little of the kind of buzz reserved for the cars that run on electric power.  Meanwhile, the trucking industry, which could realize enormous fuel savings, is expressing little confidence that natural gas will play a role in its future.

Natural gas vehicles represent less than one-tenth of 1 percent of all vehicles on U.S. roads.  Observers of the energy industry say the scarcity of fueling stations has hampered the market for natural gas cars and trucks. There is also a general lack of awareness that natural gas could be significantly cheaper than conventional fuels.

The investment website Seeking Alpha wrote that natural gas vehicles “on a grand scale is indeed a dream.”

JOHN STODDER, MBJ blogger

Natural gas vehicles have two great virtues over conventional gas-powered vehicles: less polluting emissions, and an abundant domestic fuel supply that has driven prices significantly below that of conventional gasoline – $1.50 to $2 less per gallon.

But you can’t drive a natural-gas truck or car very far unless you can find a place to fill it up. And that means not just one place, but a network of places. To serve truck fleets, it has to be a network that will keep a long-distance hauler supplied with fuel.

The capital to set up such a network has not been assembled, although new efforts are underway.  Meanwhile, on a much smaller scale, a few entrepreneurs are building local fueling stations, designed primarily to allow their own businesses to benefit from the fuel cost savings.

Some want to change that situation by building their own infrastructure, on whatever scale they need. Both small entrepreneurs and large companies are yielding to the temptation to compete for drivers’ dollars by offering a fuel that, at current prices, would save $1.50 to $2 a gallon.

In Kenner, La., a local plumber, Steve Chambers, bought off of Craigslist a fleet of used natural-gas trucks and some gas compressors. He built his own natural-gas compressor station to fuel his fleet, now up to 15 vehicles, according to New Orleans City Business.

Finance & Commerce of Minnesota reports that four local waste haulers are replacing diesel trucks with compressed natural gas (CNG) vehicles. Matt Walter, the president of MacNeilus, the nation’s largest manufacturer of garbage- and cement-hauling trucks, told Finance & Commerce that he expects half of the vehicles made by MacNeilus will run on CNG.

Larger companies are also signaling a desire to tap into the natural gas glut. General Electric Co. and Chesapeake Energy Corp. recently announced that they will collaborate on projects to improve access both to CNG and liquefied natural gas (LNG), which can be used by the trucking industry.

That project will include building 250 modular CNG compression stations, which the joint venture has trademarked as “CNG in a Box.” According to the firms’ announcement, installing these modules at existing fueling stations and other locations “will provide the core infrastructure to enable expanded access to CNG.”

Clean Energy, co-founded by T. Boone Pickens, is raising money to build “America’s Natural Gas Highway,” a network of 150 LNG fueling stations along U.S. interstate highways and in major urban areas. By comparison, as of 2002, according to the Census Bureau, there were 117,000 gasoline stations in the U.S. But 150 stations would at least be a start.

Two Detroit manufacturers plan to roll out CNG-burning pickup trucks in 2012. Chrysler will sell a version of its Ram truck, while General Motors will sell CNG versions of two pickups, the Chevrolet Silverado and GMC Sierra 2500 HD.

However, to many energy market watchers, this activity won’t be enough to overcome the chicken-and-egg syndrome.

“If there are no cars, then why would there be refueling stations? And if there are no refueling stations, then why would there be cars?” said HIS Cambridge Energy Research Associates researcher Tiffany Goode in the Fuel Fix blog.

According to a survey commissioned by PLS Logistics, a freight-management firm, executives at freight carriers are aware of the potential for LNG to be used to fuel their trucks, with nearly 30 percent reporting they were “actively researching” the technology. However, of the 100 executives surveyed by PLS, none said they were planning to purchase an LNG-powered vehicle in 2012.

The primary barrier the study found was “the inadequacy of the LNG fueling infrastructure,” which was mentioned by more than half the executives. The cost of an LNG truck, estimated at $30,000-$50,000 higher than for a conventional truck, was mentioned by a quarter of the respondents.

Pain may finally break through such barriers. Gas prices might be high now, but perhaps they aren’t high enough. As Seeking Alpha wrote, “Perhaps the onus rests on a consistently high gasoline price – as much as it is on a low-cost natural gas environment – to push on development going forward.”

– John Stodder

Yuki Northington to star in “HGTV Design Star”

Yuki Northington

Gulf Coast businesswoman Yuki Northington, a celebrated artist and owner of the Social Chair boutique in Bay St. Louis, will star in the upcoming next season of “HGTV Design Star.”

Since 2006, the reality competition show has highlighted talented interior designers, stylists and artists as they compete to win their own HGTV show.

The 12 competitors must create inventive designs and display their star quality on-camera to avoid elimination.

Judges for the competition are renowned designers Genevieve Gorder and Vern Yip. They will be joined by celebrity guests, which will include “Keeping Up with the Kardashians” star Kris Jenner and former recording artist Vanilla Ice.

Northington’s business was recently profiled in the MBJ and she was interviewed by MBJ-TV.

The seventh season of “HGTV Design Star” premiers May 29.

>> Read more about Northington here.