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UEP Chairman Dolph Baker opened the board of directors meeting at the Airport Hilton at 8 a.m. on Jan. 24.
on January 2, 2007

United Egg Producers meeting — Atlanta

Following a year of record losses for producers, UEP focuses on controversial animal welfare responses and industry business issues.

The United Egg Producers (UEP) Board of Directors met at the Airport Hilton Atlanta on January 23 and 24. Committee meetings were held on Monday, Jan. 23 in preparation for the Board meeting. UEP Chairman Dolph Baker opened the Board of Directors meeting at the Airport Hilton at 8 am on Tuesday, Jan. 24. Baker stated in his opening remarks that 2005 had been a very good year for UEP, with much accomplished and the financial position in good shape. However, the year was very poor for producers, who suffered the greatest losses in history. He called for a review of individual operations as well as a review of the price discovery methods. On the upside, 2006 is off to a better start with hopes to keep it going in that direction.

Al Pope, UEP President, in his opening remarks stated that animal welfare is a lightning-rod issue. He congratulated the Board on the high attendance at the meeting – a record of 180 people. He said that 80 percent of egg producers have signed the Air Consent Agreement; a scientific committee has been created to start coming up with solutions. Marketing and price discovery are still frustrating issues and need to be addressed. Pope also commented on the successes of the Egg Nutrition Center (ENC) and the Egg Safety Center (ESC) and these offices are stars for UEP and the American Egg Board (AEB).

UEP Certified Program Discussion

Chairman Baker called for an open discussion on the animal welfare issue and the UEP program that addresses it. The Animal Welfare committee had a long and controversial discussion on the subject the day before and this session was called to discuss some of the sticking points. One producer stated that he sees the UEP Certified program as a franchise, almost a branded egg type effort. He feels the animal welfare program should be outside the UEP structure and should not have marketing concepts tied into it. Another producer, who has been very vocal regarding the UEP Certified program, feels that the scientific committee’s findings and implementation are questionable. He compared the auto industry’s agreements with labor which resulted in poor profits and reductions in manufacturing to the egg industry’s agreeing to demands of animal activists. This is resulting in additional costs and other producer problems. He added that he feels the egg industry has indeed created a monster. Next up was a producer who saw the animal welfare issue coming and also saw UEP addressing it, which prompted him to join UEP. He feels the industry must accept the scientific findings and, if not, there is nothing to stand on when facing the activists. Even though we may not like some of the new standards, we must accept them.

Commenting at the start of the open discussion, the UEP’s Gene Gregory reminded the group that, in Europe, the producers, consumers and retailers had no say in the events that were so devastating to the industry there. He again outlined the expertise and international recognition of members of the scientific committee that established the UEP Certified standards. He also stated that the producers’ committees will continue work to preserve this industry. Another producer remarked that this industry must remain as one voice. Another producer, who has worked on this project from its beginning, stated that he is excited to see where the project is currently. He felt that the UEP has stayed ahead of the issues and that it has impacted the activists. The program protects the industry as well as its customers. We need to remember the core purpose of the program and although there are some minor issues that have crept into it, there is no need to kill it. The egg industry needs to remain united as an industry.

UEP Immediate Past Chairman Roger Deffner commented to the Board and guests that he felt it’s healthy to have an open discussion on the pros and cons of the program. He stated that he was initially against the program but later saw that the scientific approach was the correct way to go and feels it is successful. As someone who has been involved very closely, Deffner feels now is not the time to change the program dramatically and to keep the discussion positive. Deffner made several points: The program is based on science, not emotion; it was developed by producers, not the courts or government.

International Egg Commission (IEC) Chairman Julian Madeley remarked that Europe did not have a united position, and that activities such as we have in this country will insure it will not be a government or mandated effort.

Another producer remarked that he and his company have been supportive of the committee and the program. He felt that the industry must continue to be united and support the UEP. He would like to see the original licensing agreement reestablished and back in force. Dolph Baker addressed this and said the licensing agreement will be discussed in the weeks ahead. Animal Welfare Committee Chairman Mark Oldenkamp thanked the entire group for the support and input to the committee since he has taken over the chairmanship. He feels there are some changes coming to the program but that we need to stay focused and united in our efforts. In addition, he referenced customers’ input into needs of the program. He assured the group the Animal Welfare Committee is receptive to all comments.

Another producer said that the scientific process could change and that he was disappointed that some major players in the industry have chosen to go another direction. He also asked why there are two standards for shell and breaker eggs. At this point in the open discussion Al Pope reviewed the entire program including the important fact that the Food Marketing Institute (FMI) has bought into the UEP Certified program. He again appealed to the remaining 20% of producers not in the program to join with the others. UEP Attorney Kevin Haley remarked that the activists hate the UEP Certified program and it makes it harder for them to operate. It is a safety valve in conversations with consumers and the government. Another producer encouraged the members not to lose the united front and that the 100% rule is essential.

Relevant to this open forum on the animal welfare issue was the committee report by Mark Oldenkamp. He reminded the producers and packers that March 31 is the deadline for the use of the old ACC logo. Gene Gregory updated the members and guests on recent activities by the animal rights activists. Two farms in Pennsylvania have been targets. Espenshade Farms, in a nationwide media report, was the victim of an employee imposter in the operation from the group, Compassion over Killing (COK). In another incident, Kreider Farms customers received letters from the group, Hugs for Puppies, threatening pickets. There are many legal suits going on at university campuses to force their dining rooms to buy non-caged eggs. Gregory emphasized that anyone is vulnerable to these people and that UEP will continue to fight them. It must be remembered that the ultimate goal of many of these groups is to convert everyone to vegetarianism. UEP will continue to hear open dialogue on the problem and continue to address it.

Committee Reports

Following the open forum and the many comments regarding animal welfare, committee reports were presented. Wayne Mooney, Chairman of the Marketing Committee, discussed the recent price discovery meeting that took place in Chicago and the just-published PCT study from Agri Stats. He reported that in the past several months there has been a small drop in consumption. A market news report is on the way, which discusses the effect of egg-promotion on consumption.

Chad Gregory presented a report on the Environmental Committee’s activities. He mentioned that 880 layer farms have signed the air consent agreement, which represents about 286 million birds, including layers and pullets. This is 80% of the industry. Chad presented a detailed report on the timetable and responsibilities of the study. The actual two-year study will begin in November 2006. Other issues were discussed at the presentation such as the CAFO water rule. Concerning the 2nd Circuit Court’s ruling on the National Pollutant Discharge Elimination System (NPDES), Gregory said that it looked to be favoring the US egg industry at this point in time, since it only affects operations that directly discharge waste into a waterway, which egg operations do not do. In addition, Chad presented a list of the newly appointed members of the UEP Environmental Scientific Panel, with Dr. Hongwei Xin, from Iowa State University, as chairman.

Government Relations Committee Chairman Ron Truax noted that Avian Influenza (AI) is the main issue now confronting the worldwide industry. Randy Green discussed the national AI testing program from the USDA. Also addressed in this part of the meeting were the state programs for surveillance of AI in the future. Howard Maguire from the UEP Washington staff commented on the fact that there will most certainly be a 2007 farm bill. There has not been a farm bill since 2002.

As part of the Executive Committee report UEP attorney Kevin Haley said that the logo for the UEP Certified program has been copyrighted and trademarked. Committee Chairman Dolph Baker commented that the UEP Balance Sheet is in good order and that fees are on schedule.

Speakers

The first speaker at the meeting was John Scholl, Counselor to the Administrator for Agricultural Policy, EPA. He thanked the egg industry for their activities regarding the consent agreement and other environmental issues. It is showing agriculture that the egg industry is taking a leading, positive approach to the problems. He indicated that the EPA has long been seeking ways to better work with the agricultural sector and the egg industry has shown how to logically do it. In the past, much has been handled through the courts, which is not the way to do it. Scholl also said that 2,700 firms have signed up for the consent agreement on clean air. He emphasized that engagement in these issues makes a big difference.

The second speaker was Phil Lobo, Communications Director of the Animal Agriculture Alliance, which represents all animal agriculture. It is not a lobbying group, and is anti-PETA and animal activists groups. The Ag Alliance is monitoring animal rights activities and is an advocate of responsible solutions. Their latest achievement is working all species of animal welfare issues and acting as a liaison between USDA and the industry to insure industry input. In addition, they acted to inform agricultural industries of activist’s activities. Lobo reported that the animal rights groups have a combined budget of over $300 million annually. Comments also included where we might be in five years on this subject and how the Ag Alliance could be beneficial to the industry in the future.

The third speaker was Matt Shilling, Confidential Assistant with the Ag Marketing Service. Shilling reviewed the role of AMS and stated it is an aid in the marketing of America’s vast agricultural products. He cited many statistics relative to the egg and poultry industries and discussed the many services that AMS provides the industry. EI

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Al Pope, UEP President, in his opening remarks stated that animal welfare is a lightning-rod issue.
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