China Customs Authority Impose Added Restrictions on Food Imports
China is ramping up restrictions on food imports to stave off a resurgence of the coronavirus, but efforts are meeting resistance from government agencies of major food exporters. China’s customs authority last week asserted that companies sending meat, dairy and other food products to China must sign documents stating that their food has not been contaminated by the virus. The country recently suspended imports from a Tyson Foods chicken plant in Arkansas severely impacted by a coronavirus outbreak among employees in early June.1
Congress Takes Action to Support Climate Change
Climate change has caused issues for farmers by creating uncertain weather conditions significantly impacting harvesting windows. Congress has recently taken steps to reward farmers for engaging in the solution for climate change. The Growing Climate Solutions Act would better define how environmental credits would be certified and measured. This public policy would encourage farmers to use environmentally friendly practices by removing disincentives.2
Demand for Local Meat Could Be Too Much for Small Meat Processors
The disruption in the meatpacking industry owing to the pandemic has led to an increase in demand for small, independently owned meat processors. While large companies have benefited from the current administration’s efforts, smaller ones continue to struggle. The increased demand could possibly do more harm than good if these businesses do not receive government assistance. Legislation has been pushed to provide smaller processors government assistance.3
Pandemic Reduces Variety of Consumer Food Products
According to a study, the average number of different items sold in a grocery store decreased by 7.3% in the four weeks ending June 13. Variety in some categories, such as baby care, bakery and meat, fell around 30% earlier in the pandemic. Factories and stores have been tested during this time, and fewer items will ease supply chain issues that have come about. Wide varities overburden factories and stores leading some executive to say they plan to continue with fewer choices after the pandemic ends.4
COVID Steers Meatpackers to Invest in Automation
Meatpackers affected by Covid-19 have accelerated investment in technology and automation. Companies hope to avoid shutdowns by having fewer laborers in their plants. JBS is among the largest meat companies and has working to automate parts of their operations around the world for the past few years.5
USDA Estimates Less Corn in 2020
The USDA June Acreage and Quarterly Grain Stocks Report shows that U.S. farmers planted less corn and more soybeans this year. The decline in corn exports follows a trend seen in the first quarter of 2020. The USDA sees soybean acreage on par with trade expectations. Since the planted area for corn is below estimates, analysts expect the price of corn to rally.6
Automated Palletizers Increase Efficiency for Beverage Industry
The beverage manufacturing and distribution markets are investing heavily in automation. Palletizing robots will help streamline the process of shipping products from distribution to centers to retail locations. Palletizer machines play an important role in the food and beverage industry. Consistency in the machine packaging of products improves margins for companies.7
Largest Transactions Closed
- Rockstar, Inc.
- PepsiCo, Inc.
- Smart Foodservice Stores LLC
- US Foods, Inc.
- Assets of Dean Foods Company
- Dairy Farmers of America, Inc.
- Flavors Holdings Inc.
- Whole Earth Brands, Inc.
- Five Production Facilities and Ledbetter Branded Retail Products of Empire Packing Company, L.P.
- JBS USA Food Company, LLC
- 8 Additional facilities, 2 distribution branches, and certain other assets
- Prairie Farms Dairy, Inc.
- 5 New York City stores and Distribution Center of Fairway Group Holdings Corp.
- Village Super Market, Inc.
- Three Dispensaries of Arrow Alternative Care in Connecticut
- Curaleaf Holdings, Inc.
- McArthur Dairy Assets in Florida of Dean Foods Company
- Moishe Mana
- Business of Provide Commerce, Inc.
- Farids & Co.LLC
Source S&P Capital IQ as of 7/6/2020 and PCE Proprietary Data
This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.
EBIT - Earnings Before Interest and Taxes