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Sunday, April 8, 2012

Markets spooked by rise in yields

Tony Paradiso

Rising yields on Spanish bonds spooked the markets last week, and as I pointed out in January, Spanish and Italian bond yields would be critical to whether the equity markets sustain their upward momentum.

The March jobs report was disappointing. Only 120,000 jobs were created last month when over 200,000 were expected. The retail sector took a big hit losing 34,000 jobs. Seasonal and weather effects may still be skewing the numbers so the jury remains out as to whether the jobs market will maintain its momentum.

But it’s a holiday and who wants to read about the state of the economy. I haven’t done a fluff piece in some time, although given my slant on Easter, an economic update might be more uplifting.

I’m not much on holidays, and Easter – like many holidays – has morphed from the religious to dyed eggs and chocolate bunnies. So be it. I’ll run with eggs and bunnies but with a slight variation: eating them. I warned you that an economic update might be more uplifting.

Consuming eggs is commonplace and generally non-controversial. Sure, in our politically correct world there is some debate over the treatment of chickens. No one suggests that any animal should be “tortured,” but they’re chickens. What purpose do they serve other than to lay eggs and sit on a plate beside some mashed potatoes and peas? But to avoid creating too much fervor, I’ll stick to the egg side of the chicken world.

Like all fluff pieces this one comes with the standard disclaimer: I do zero research. I go with the first website that has interesting data. In the case of eggs it was the United Egg Producers Web site.

The first thing that struck me was that egg consumption hasn’t changed much over the last 20 years. In 1998 the average American consumed 240 eggs a year or about five a week. In 2011 our annual consumption was estimated to be 246 eggs. Not eggs-actly a growth business.

Any guess as to where most eggs are laid? It’s not Hollywood or Washington although if this were Jeopardy I believe they would have to award you a correct answer. At 52 million, Iowa far egg-ceeds all others in egg production. The next closest state – Ohio – produces only a little more than half that amount.

In 1987 there were about 2,500 companies in the industry.

Despite going through a period of consolidation, the industry remains fairly broad-based. Sixty-five companies have one million layers and 14 companies have greater than 5 million layers.

There are 180 egg-producing companies with flocks of 75,000 or more hens. In all, these companies are responsible for approximately 95 percent of all layers in the United States.

In 2010 there were about 281 million hens in the U.S. or almost one hen for every person. The average chicken lays three eggs every four days. Makes the octo-mom look like a virgin. In total, these hens produced 218 million cases of shelled eggs. Here’s the controversial part: during the 2009-2010 period cage-free production only amounted to 3.7 percent of the total flock.

Japan imports over half of all U.S processed eggs product exports. The EU is second followed by Canada and South Korea. But when it comes to table eggs, Hong Kong is our largest export market. In the first nine months of 2011 Hong Kong imported 27 million dozen, an almost 30 percent increase over the previous year.

Fascinating stuff, huh?

That brings us to the business of bunnies. I had a pet rabbit when I was a kid but as an adult I prefer my rabbit served in a stew. Like everything these days, bunnies have a lobbying group: the Rabbit Industry Council.

The goal of this group is to promote all aspects of rabbit ownership and use, educate upon those aspects, and by doing so, enable better communications on all rabbit topics.

Really? Taking the little varmints a bit too seriously don’t you think? I mean what is there to know about rabbits other than that they breed like rabbits and are tasty in a wine sauce? Well, according to RIC there are myriad markets for rabbits including being raised for pets, show, meat, wool, fur, and laboratory use. Not bad.

It appears rabbits have a 50/50 chance for a decent outcome. That beats being a mink.

In 1994 there was an estimated 1.5 million tons of rabbit produced globally. Italy, Russia, France, China and Spain topped the list of global producers. More recently, third world countries have entered the rabbit fray.

It turns out that rabbits take up less space and are less labor intensive then many farmed meat producing livestock.

They also don’t eat the same stuff humans eat, and well, they breed like rabbits. This makes them a relatively economical meat to raise. Some believe rabbit meat is the most cost-effective and sustainable source of meat for the developing world.

Not surprisingly, the biggest barrier to increasing the demand for rabbits isn’t the quality of the meat or the cost. It’s the psychological barrier of seeing rabbits as pets. I’ve overcome that barrier.

Happy Easter.

Author, professor, entrepreneur, radio and TV commentator, Tony Paradiso is a marketing and management expert. His website can be found at