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Cargill developing new omega-3 canola for fish

A new groundbreaking type of canola in development by Cargill could give aquaculture farmers a more sustainable way to raise fish rich in eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA) omega-3 fatty acids.

The plant-based source of the nutrients, developed in collaboration with BASF, could provide an alternative to using fish oil in aquaculture feed and could ease harvest pressure on wild fish populations that currently supply much of that oil, Cargill said.

In feeding trials it conducted with salmon in Chile, Cargill was able to completely replace fish oil in feed rations with oil from EPA/DHA canola.

"As a fish feed producer, we need to reduce our dependency on marine resources," Einar Wathne, president of Cargill Aqua Nutrition. "This new canola can create tremendous opportunities across the global food and feed markets, and we believe it is critical for the growth of aquaculture."

Right now, raising fish rich in omega-3s means supplementing their feed with fish oil. This new canola, which is genetically engineered to make long-chain omega-3 fatty acids, will offer a more sustainable alternative as it eases pressure on finite marine resources. Testing and regulatory approval for both the canola and the EPA/DHA enhanced canola oil is underway. The EPA/DHA enhanced canola oil is expected to reach the market sometime after 2020.

"Cargill's EPA/DHA omega-3 plant-based product is the only one we know of with a clear path to commercialization in the industry," said Mark Christiansen, managing director for Global Edible Oil Solutions-Specialties at Cargill.

This innovation may also broaden access to EPA and DHA omega-3s in consumer diets and make important nutrients more available and more affordable to people around the world, the company said. Groups such as the American Heart Assn., Mayo Clinic and Harvard School of Public Health cite the heart health benefits and role in brain formation of EPA and DHA, but studies show that most people are not consuming recommended levels of these omega-3s. As public awareness of the health benefits increases for omega-3s, demand for these nutrients is expected to rise significantly.

Barriers removed for U.S. beef, pork in Costa Rica: Podcast

Although Costa Rica is a relatively small destination for U.S. beef and pork, the market holds strong interest for U.S. meat exporters because of its rapidly growing tourism and hospitality industries. But an unusual technical requirement has made it difficult to ship chilled (never frozen) beef and pork to Costa Rica: the product had to arrive in the country within nine days of its packing date.

This requirement was recently removed, as explained by U.S. Meat Export Federation (USMEF) technical services manager Cheyenne McEndaffer. She noted that USMEF worked with industry partners and U.S. trade officials to address this issue and bring it to a successful conclusion, which will create more opportunities for high-quality beef and pork in Costa Rica. 

Costa Rica also removed a requirement that frozen U.S. beef and pork must arrive in the country within six months of its packing date.

Through September, U.S. beef exports to Costa Rica totaled $10.5 million – up more than 40% from a year ago. Pork exports totaled $9.2 million, up 8%.  

Most of a fish gets discarded

Every year, 340,000 metric tons of usable whitefish byproduct are discarded into the sea, but the fishery industry has now identified ways of halting this practice.

The fishing company Nordic Wildfish has been assisting in the development of a new technology that can make use of the entire byproduct from whitefish such as cod, pollock and haddock.

Instead of discarding the heads, guts and the rest of the fish, they can all be incorporated into a hydrolysis process that separates the bones, leaving a kind of "soup" to which enzymes can be added and valuable oils and proteins extracted.

"The entire process takes place on board the trawler, which has only been at sea for two months," said Anders Bjornerem, research and development director at Nordic Wildfish in Norway. "No-one has done this before, and it's very exciting."

Non-sustainable food production

Nordic Wildfish is located on the island of Valderoya, west of Alesund, Norway, and has been working closely with the research company SINTEF for some time to promote technological development.

"As much as 92% of marine whitefish byproduct is not utilized," Bjornerem said.

"Commonly, it is only the fillets that are processed to become food. This is not sustainable food production. As we approach 2050, the demand for food on this planet will increase by as much as 70% due to high levels of population growth. The industry must make it its goal to utilize the entire fish," added Ana Karina Carvajal, research manager at SINTEF Fisheries & Aquaculture.

According to a report published by SINTEF in 2014, 340,000 mt of whitefish byproducts are discarded annually. SINTEF believes that this material has major commercial potential if it can be processed to produce high-quality end products such as ingredients in animal feed and food for human consumption.

On board the trawler Molnes, whitefish byproduct is processed using enzymatic hydrolysis to produce valuable proteins, amino acids and fish oils. Many technologies have been developed and adapted for installation on board the refurbished trawler.

"Excellent teamwork between researchers and the industry will enable many new systems for better exploitation of the fish to be implemented within the next two to four years," Carvajal said. "We're very pleased to see that some segments within the industry have already taken the first steps towards more sustainable food production."

RFS unlikely to meet targets for reducing GHG emissions

The Renewable Fuel Standard (RFS) program is unlikely to meet its targets for reducing greenhouse gas (GHG) emissions and expanding the U.S. renewable fuels sector, a new Government Accountability Act (GAO) report noted. “Advanced biofuels — fuels that achieve the most greenhouse gas reductions — aren't being produced at the necessary levels, and they likely won't be by 2022,” the report stated.

The RFS generally mandates that domestic transportation fuels be blended with increasing volumes of biofuels through 2022, with the goals of reducing GHG emissions and expanding the nation's renewable fuels sector while reducing reliance on imported oil. Annual targets for the volumes of biofuels to be blended are set by statute. EPA oversees the program and is responsible for adjusting the statutory targets through 2022 to reflect expected U.S. industry production levels, among other factors, and for setting biofuel volume targets after 2022.

Less than 5% of the 3 billion gal. advanced biofuel RFS target was produced in 2015, and additional investments for commercialization seem “unlikely,” GAO said.

Further expansion of biofuels use will require increasing cellulosic biofuels, and according to another companion GAO report, the most likely cellulosic biofuel to be commercially produced in the near to midterm will be cellulosic ethanol. “However, reliance on adding more ethanol to the transportation fuel market to meet expanding RFS requirements is limited by the incompatibility of ethanol blends above E10 with the existing vehicle fleet and fueling infrastructure,” GAO said.

Many experts told GAO that uncertainty about the future of the RFS is limiting investment in advanced biofuels. In particular, some experts stated that the possibility of a repeal of the RFS has caused potential investors to question whether the RFS will continue to exist until 2022 and beyond.

Experts cited multiple federal actions that could incrementally improve the investment climate for advanced biofuels, such as reducing uncertainty about the future of the RFS and tax credits.

Some experts stated that the Second Generation Biofuel Producer Tax Credit — an incentive to accelerate commercialization of fuels in the advanced and cellulosic biofuels categories — has expired and been reinstated (sometimes retroactively) about every two years, contributing to uncertainty among cellulosic fuel producers and investors. These experts told us that investment in cellulosic biofuels could be encouraged, in part, by maintaining the Second Generation Biofuel Producer Tax Credit consistently rather than allowing it to periodically lapse and be reinstated.

Specifically, one expert suggested three major changes to the advanced biofuel tax credits:

• Extending the tax credit long term (e.g., 10 years) to provide investors with sufficient investment return certainty for the large investment of building a biofuel plant until a cumulative level of second-generation biofuel has been produced and costs have fallen;

• Making the producer tax credit refundable to guarantee that biofuel producers receive the subsidy in the early years when they are carrying losses, and

• Coupling the producer tax credit with an investment tax credit to decrease capital costs and improve the financial incentives for building cellulosic biofuel plants.

GHG reductions

Corn-starch ethanol plants that were in operation or under construction before Dec. 19, 2007, were not subject to the requirement to reduce GHG emissions by at least 20%. GAO said according to an August 2016 EPA Inspector General report, grandfathered production that is not subject to any GHG reduction requirements was estimated to be at least 15 billion gal., or more than 80% of today’s RFS blending volume.

Specifically, some experts said that the RFS does not incentivize the production of advanced biofuels, which achieve the greatest GHG emission reductions. For example, a cellulosic fuel that reduces GHG emissions by 80% receives no more credit under the RFS than one that reduces GHG emissions by 60%, the baseline for the cellulosic category. As a result, fuels that may be slightly more costly to produce but achieve far greater GHG reductions may not be developed and brought to the market. Further, one expert stated that the RFS design creates a market rebound effect. That is, increasing the supply of biofuels tends to lower energy prices, which encourages additional fuel consumption that may actually result in increased GHG emissions.

Woman admits stealing $3.1m from Cargill

A Greene County, N.Y., woman pleaded guilty Nov. 28 to stealing at least $3.1 million from Cargill Inc. over 10 years and causing at least $25 million in losses. The woman was an accounting manager at Cargill, the country’s largest privately held corporation, based in Minnetonka, Minn.

The announcement was made by U.S. Attorney Richard Hartunian of the Northern District of New York; special agent in charge Andrew Vale of the Federal Bureau of Investigation's (FBI) Albany Division, and special agent in charge Shantelle Kitchen of the Internal Revenue Service-Criminal Investigation (IRS-CI) New York field office.

Diane Backis of Athens, N.Y., pleaded guilty to mail fraud and filing a false income tax return. Backis was responsible for accounting functions in Albany related to Cargill’s grain operations, including creating customer contracts, generating and mailing invoices and receiving and processing customer payments. As part of her plea, Backis admitted that she defrauded Cargill while working in its Port of Albany facility, which receives, stores and sells grain products.

“Ms. Backis stole millions of dollars from her employer in a decade-long scheme to enrich herself so she could live beyond her means,” Hartunian said. “She stole money by diverting customer payments to her personal bank accounts and sold grain products for millions less than her employer paid, causing enormous financial losses. Her guilty plea today sends a strong message that crime does not pay.”

Vale said Backis repeatedly victimized her employer. “This kind of fraud is a sinister act that involves not only criminality but a willingness to cause Cargill Inc. millions in losses," he said. "The FBI will continue to work together with its law enforcement partners to ensure people like Ms. Backis are held accountable.”

Kitchen noted that the investigation demonstrated the resolve of the government to investigate and prosecute financial crimes. “Ms. Backis stole millions of dollars from Cargill Inc. for a 10-year period while committing tax fraud in the process.  Today, she is held accountable for the financial harm she inflicted on Cargill Inc. and the law-abiding American taxpayer.”

Backis admitted to stealing hundreds of customer payments sent to Cargill totaling at least $3.116 million and deposited them into her personal bank accounts. Backis also regularly created fraudulent invoices and mailed them to Cargill’s customers. The fraudulent invoices charged Cargill’s customers prices substantially less than what Cargill paid to acquire the grain products, causing Cargill significant financial losses. The fraudulent invoices also directed Cargill’s customers to send payment directly to Backis, thereby bypassing Cargill’s corporate controls.

To hide her activities, Backis made false entries into Cargill’s accounting software to make it appear that customers were paying prices higher than those in her fraudulent invoices and that customers owed Cargill millions of dollars for delivered grain products, only to reverse those false entries. As a result, Cargill lost at least $25 million.

Backis also admitted that she filed a false 2015 individual income tax return because she declared only $61,208 in total income and omitted more than $450,000 in additional taxable income she received by stealing customer payments intended for Cargill in 2015.

Backis faces up to 20 years in prison, a three-year term of supervised release and a fine of up to $250,000 when she is sentenced on March 28, 2017, by U.S. district Judge Mae D’Agostino in Albany. As part of her guilty plea, Backis has agreed to pay Cargill at least $3.5 million in restitution and agreed to forfeiture of her house in Athens, an investment brokerage account and her Cargill pension benefits.

A defendant’s sentence is imposed by a judge based on the particular statutes the defendant is charged with violating, the U.S. Sentencing Guidelines and other factors.

The case was investigated by FBI and IRS-CI and is being prosecuted by assistant U.S. attorney Wayne Myers in the Northern District of New York.

Adoption of GE alfalfa still lags

After their commercial introduction in 1996, genetically engineered (GE), herbicide-tolerant (HT) varieties of corn, soybeans and cotton were rapidly adopted by U.S. farmers. The success of these GE crops led to the deregulation that enabled the commercialization of HT canola in 1998 and HT alfalfa and sugar beets in 2005.

Although legal and regulatory issues limited the spread of GE sugar beets and GE alfalfa during the first decade of the 21st century, adoption rates for these crops have increased rapidly in recent years, according to a new report from the U.S. Department of Agriculture’s Economic Research Service (ERS).

Since 2000, USDA has included survey estimates of the shares of acreage planted using GE corn, cotton and soybeans with insect-resistant and HT traits. ERS researchers added questions to USDA’s 2013 "Agricultural Resource Management Survey" (ARMS) to support similar estimates for alfalfa, canola and sugar beets.

The report notes that some 95% of U.S. canola acres and more than 99% of sugar beet acres harvested in 2013 were planted with GE seeds containing HT traits. Only 13% of U.S. alfalfa acres were planted using GE seeds in 2013, but this slower adoption rate is expected because alfalfa is a perennial crop, and only about one-seventh of the alfalfa acreage is newly seeded each year.

In 2013, approximately 18 million acres of alfalfa, with a production value of $10.7 billion, were harvested in the U.S. Only three crops -- corn, soybeans and wheat -- are grown on more acreage or have more aggregate production value than alfalfa.

In 2006, the Center for Food Safety and other organizations sued USDA's Animal & Plant Health Inspection Service (APHIS), arguing that APHIS’s environmental assessment of GE HT alfalfa was not sufficiently comprehensive and that an in-depth environmental impact statement (EIS) should be conducted. On Feb. 13, 2007, the U.S. District Court for the Northern District of California ruled that APHIS had not adequately assessed the environmental and economic impacts of GE HT alfalfa, as required by the National Environmental Policy Act (NEPA). Consequently, the court vacated APHIS’s deregulation decision and ordered that a NEPA-compliant EIS be prepared (USDA/APHIS, 2010a). The court determined that growers who had already planted GE HT alfalfa would be permitted to harvest, use and sell it. However, new seed sales and new planting were no longer permitted under the court injunction.

APHIS released the EIS for glyphosate-tolerant alfalfa in December 2010. On Jan. 27, 2011, under the authority of the Plant Protection Act of 2000, glyphosate-tolerant alfalfa was fully deregulated. Planting resumed in February 2011.

Although the legal actions did not prevent the deregulation of GE HT alfalfa, “they did slow its adoption,” the report stated. Plantings of GE HT alfalfa were suspended from 2007 to 2010.

Approximately 3.5 million acres of alfalfa were newly seeded in 2013 (14% of the acres that were harvested that year). Nearly one-third of this newly seeded alfalfa acreage was a GE HT variety. Data from ARMS indicate that GE HT alfalfa constituted 13% of the alfalfa acres harvested in 2013.

GE HT alfalfa adoption rates were highest in New York, where approximately 37% of the acres harvested in 2013 were GE HT varieties. Adoption rates were also relatively high in Washington and Colorado.

ARMS data from 2013 suggest that farmers who planted GE HT alfalfa had higher yields than farmers who planted conventional seeds; their yields were 0.53 ton per acre, or approximately 17% higher, on average.

Alfalfa that is genetically engineered to have low lignin content was deregulated in November 2014 after a petition from Monsanto Co. and Forage Genetics International.This trait increases the digestibility of the alfalfa, thereby enhancing the nutritional quality of the derived feed and directly benefiting the consumer (as opposed to HT traits that benefit the producer). ERS noted that this alfalfa varietal has been reported to increase yields by 10-20%, “which may lead to further adoption of GE alfalfa in the near future.”

Read the full report.

Management of feral horses an ongoing challenge

Feral horses are free-ranging descendants of once-domesticated horses. All free-ranging horses in North America are feral horses, and between 2014 and 2015, the feral horse population in the U.S. increased 18% according to the Bureau of Land Management (BLM). In 2015, the number of feral horses in the western ranges of the U.S. alone was estimated at 58,150. With few natural predators, populations will continue to rise, doubling every four years; thus, managing populations of feral horses represents a unique challenge in the U.S.

"The ever-expanding population of feral horses is a critical but not simple problem to solve," said Lori L. Ward, lead author of a recent review of the feral horse issue in The Professional Animal Scientist. "Any solution to this problem must have an understanding of current populations of horses in each ecosystem, the carrying capacity of the ecosystem and consideration of how these numbers will naturally vary."

In the 1950s, to combat rising populations, many feral horses were slaughtered by various means, including poisoned watering holes. This solution was met with public outrage and led to congressional action in the form of the Wild Free Roaming Horse & Burro Act of 1971, which protected feral horses as a link to our national heritage. This act protected horses on federal land and kept them from slaughter, prompting new efforts at population control.

Since that time, BLM has herded animals into holding locations where they can be managed and adopted-out. Many horses do not get adopted, however, and are labeled unwanted; likewise, the process of rounding-up feral horses is expensive and costs to maintain captive feral horses are estimated to exceed $1 billion by 2030. Such rising costs may end the adoption practice in coming years, according to the BLM.

Another means to limit populations is contraceptive use. The practice is controversial, as animal welfare activists often do not agree with the use of contraceptives, but The Humane Society of the United States is in support of such measures. Contraceptives, such as porcine zona pellucida vaccine, castration or vasectomy, have not been without side effects, however. These methods may only slow growth, or in the case of vasectomy have no effect on foal rates; likewise, they may disrupt seasonal patterns within the herds among other changes.

Perceptions of feral horses in the U.S. are numerous and multifaceted, which creates a unique challenge when it comes to managing their populations. In order to determine the most effective management practices, knowledge of horse population dynamics as well as public political views are necessary. Any solution to such an issue can only be gained by continued research.

The review article can be found at this link: http://www.professionalanimalscientist.org/article/S1080-7446(16)30080-8/abstract.

USDA's first look at 2017 crops shows few surprises: Podcast

USDA releases its first take on 2017 production, supply and demand of major crops, part of its budget process for the coming year. Though the estimates use statistical guesses to figure acreage and yields, they still set something of a starting point for the discussion. While USDA sees less corn and wheat acres and more soybeans, the agency forecasts burdensome supplies to continue.

Bryce Knorr of Farm Futures reporting. Farm Futures is a sister publication of Feedstuffs.

LIVESTOCK MARKETS: Positive signs on horizon for pork demand

The U.S. economy is growing, and a growing economy is generally good for meat demand, according to Len Steiner, pork industry economist with Steiner Consulting Group. Some positive indicators include a stock market that has hit an all-time record high in the last few weeks and consumer confidence that remained good during a brutal presidential election, he said.

“Now that we know who the next President will be, we expect consumer confidence to be further increased. The American public likes certainty and dislikes unknowns. With certainty should come good meat demand,” Steiner said, adding that unemployment is also down.

The increased corn supply also means more meat availability for U.S. consumers, Steiner said. Corn production in the 2012-13 marketing year was 10.7 billion bu. In the three years after this, average corn production was 13.9 billion bu. This year, U.S. farmers are going to harvest more than 15 billion bu., and “most is in the bin at this time,” Steiner said.

Corn prices peaked at $8.00/bu. in 2012, but they currently are in the $3.00-3.50 range around the Corn Belt. “You can see the impact of lower corn price in total meat protein output as producers convert the mountains of corn into meat,” Steiner said.

Total meat production in 2014 following the corn price spike was 90.9 billion lb. “By 2018, we expect beef, pork and poultry output to exceed 101 billion lb. You have to go back to the mid-1990s to find a similar four-year jump in meat production,” he noted.

In 2016, U.S. pork production will set an all-time record at 24.96 billion lb. “With more pork expected in 2017, we're currently estimating that at 25.6 billion lb.,” Steiner said.

Sticky retail prices have also affected wholesale pork prices and hog values in the short term, according to Steiner, and as “much as we would like prices at retail to adjust quickly so consumers can increase their meat consumption at least when prices are coming down, history tells us that those adjustments take time.”

Steiner said the average retail price in October this year was about $3.74/lb., 5.8% below a year ago but still 8% higher than where it was five years ago. The value of the pork cutout is currently down about 16% from a year ago and 26% lower than five years ago.

Why this rotten price? Steiner said retailers have learned over the years that consumers do not make abrupt changes to their eating patterns. “Retailers will initially focus on special holiday promotions and then, over time, lower the overall base price of the various items they sell in the meat case,” he explained.

For foodservice operators, the decline is even slower, Steiner added. “Due to printed menus and fixed menu boards, it takes several months for larger foodservice operators to develop new menu items and coordinate with their marketing,” he said.

The good news, according to Steiner, is that both retailers and foodservice operators feel more secure about the supply prospects in the medium term, which “means continued declines for meat prices at retail and broad promotion activity.”

Steiner estimates per capita meat consumption for pork, beef and poultry to be about 262.3 lb. per person in 2017 and 264.6 lb. in 2018.

A challenge for producers is that processing capacity has not kept pace with the supply growth, Steiner said.

Last year and this year, U.S. pork production will once again exceed beef production levels. “As supplies have expanded, processing capacity has lagged a bit behind," he said. "In the short term, that has put downward pressure on hog prices this fall, but new plants are scheduled to be opened in the next 18 months, which should alleviate some of the pressure and help narrow the gap between hog prices and the price of pork at wholesale and retail."

Steiner also emphasized that exports remain key for the U.S. pork industry outlook. In 2016, more than 20% of the pork produced in the U.S. will go to export markets, he said, which compares to about 16% for chicken and less than 10% for beef and turkey. “As the pork industry expands, robust exports remain key for a healthy and profitable pork industry in the U.S.”

Steiner said there are certain headwinds for U.S. exports, including a strong U.S. dollar, weaker demand in some emerging markets and increased 2016 competition from Europe. The competition from Europe is expected to subside somewhat in 2017.

“The reality is that U.S. hog producers are some of the most efficient and low-cost producers in the world and should be able to successfully compete in the global marketplace with their internationally recognized safe and nutritious products,” Steiner said.

While the high value of the U.S. dollar and competition from other countries in key export markets have curbed U.S. pork export demand, there are positive signs on the horizon.

“About 25% of U.S. pork production goes overseas, and we need to keep moving product to keep producers profitable,” said Becca Nepple, vice president of international trade for the National Pork Board. “Mexico, China, Japan, Korea and Canada are our big five buyers, and the pork checkoff — through the U.S. Meat Export Federation — continues to invest in pork promotions overseas.”

Patrick Fleming, director of market intelligence for the National Pork Board, said the fourth quarter is consistently the strongest quarter for pork sales.

“In 2015, fourth-quarter pork sales totaled $3.6 billion, with the 1.125 billion lb. representing 28% of the sales for the entire year," he said. "The industry is prepared for a similar situation in 2016.”

Fleming added that in foodservice, pork is on trend to be the fastest-growing protein.

Pilgrim's Pride purchasing GNP from The Maschhoffs

Pilgrim's Pride Corp. announced Nov. 29 a definitive agreement to acquire GNP Co., a leading provider of chicken products in the Upper Midwest, from The Maschhoffs in an all-cash, $350 million transaction. The proposal has the unanimous support of the Pilgrim's board of directors as well as the support of JBS S.A., the majority owner of Pilgrim's.

It is anticipated that the proposed transaction will close during the first quarter of 2017, subject to regulatory review and approval and customary closing conditions. The Maschhoffs had purchased GNP in November 2013 for an undisclosed amount.

"The Pilgrim's team is excited to combine the collective strengths of Pilgrim's Pride and GNP Co.," Bill Lovette, Pilgrim's chief executive officer, said. "GNP Co. boasts outstanding, state-of-the-art assets in geographic areas where Pilgrim's is not currently present, providing Pilgrim's the opportunity to expand our production and customer bases while maintaining our high standards for quality service and great-tasting products."

Pilgrim’s said GNP's operational competencies and use of innovative technologies, including gas stunning, aeroscalding and automated deboning, will enable the company to significantly increase the rate of adoption of new technologies in existing facilities, enhancing the company's production efficiencies and operational excellence.

The addition of the GNP's portfolio of Just BARE certified organic and natural/American Humane Certified/no-antibiotics-ever (NAE) product lines to Pilgrim's existing NAE and organic production capabilities will further position Pilgrim's as a leading provider of high-quality products in the fastest-growing chicken segments.

The $350 million enterprise value of the transaction reflects an expected earnings before interest, taxes, depreciation and amortization (EBITDA) multiple of 5.2x, excluding any potential synergy gains. The acquisition complements Pilgrim's existing business both in geography and differentiated branded products, presenting an opportunity to immediately strengthen the company's position in fast-growing and higher-margin branded retail product categories, such as natural and organic.

"Today's announcement is a clear demonstration of Pilgrim's commitment to our growth strategy of disciplined acquisitions that enhance both our portfolio of value-added products and our ability to provide key customers with the high-quality products demanded by consumers," Lovette said. "We look forward to welcoming GNP Co.'s team members and family farmer partners to the Pilgrim's team as we continue to position Pilgrim's as the preferred choice of consumers and retail and foodservice partners across the country."

Pilgrim's expects to achieve approximately $20 million in annualized synergies, primarily from the optimization of production and distribution and cost savings in purchasing, production, logistics and selling, general and administrative expenses. In addition to operational synergies, the company anticipates capturing an estimated present value of approximately $28 million in tax savings and a post-synergy EBITDA multiple of 3.9x. Pilgrim's expects the acquisition to be accretive to the company's diluted earnings per share in 2017 and believes that the combined company will have a strong financial position, improved capital structure and substantial cash flow generation capability.