Guitarist Li Jianhong is fairly unknown in the U.S., but he’s one of the most important experimental musicians in China. Like Sonic Youth and Japanese rock collective Ghost, he straddles and/or blasts his way across the line between psychedelic rock and exploratory noise; he also frequently incorporates a spiritual component inspired by Buddhism and traditional Chinese art. The tracks on his latest album, Father, and a Wild Trail Zigzagging Down, were recorded in 2018 at various venues on his first European tour, and together they make for a lovely summation of his range and focus. The track “At Dusk, Man at the Stream” sounds like Li is slicing his guitar apart with pieces of scrap metal—it’s as though an unaccompanied rock musician wandered into an ambush and came out with an instrument stripped of its parts. “At Dusk, Daffodils at the Stream” spins its ominous ambience from feedback, drones, clicks, and warbles, and the 27-minute title track also starts out diffuse and quiet—before building into an ecstatic wah-wah drone. Its thick, harsh, sustained blast of grimy lyricism is equal parts Jimi Hendrix and Iannis Xenakis. Listeners won over by this excellent set of songs are advised to move on to Li’s 2008 magnum opus, the 51-minute, one-track San Sheng Shi—or, for something completely different, D!O!D!O!D!, his early, Ruins-esque punk duo with drummer Huang Jin. v
EU climate plan blows hot and cold on forestry, biomass
While recognising the positive role of forests in mitigating global warming, the European Commission has riled the agroforestry and biomass industries by stating its intention of limiting growth in the sector.
Will the EU impose a cap on the number of trees that can be felled in Europe each year? Judging by the Commission’s 2030 climate plan, presented last week, this is now looking like a distinct possibility.
The capacity of forests to act as a “carbon sink” – absorbing more CO2 than they emit – is decreasing and needs to be reversed, the Commission said in its new climate plan for 2030.
The EU executive argues that “we need a growing sink in order for the EU to achieve climate neutrality by 2050” and calls for improved forest management as well as “re- and afforestation” initiatives to restore degraded land and preserve biodiversity.
“We really have to take care of our forests,” said Frans Timmermans, the EU executive vice-president in charge of climate action. “We need to make sure our forests stay healthy and this is going to be a momentous task,” he told journalists.
Forest owners wouldn’t contradict the Commission on this point. Time and again, they have highlighted the role of “sustainable forest management practices” in environmental conservation and how those can support the EU’s biodiversity and climate objectives.
However, they say the Commission’s 2030 climate plan places too much emphasis on the role of forests as carbon sinks.
“This approach is rather unfortunate as it omits two other major climate benefits provided by forests: carbon storage in EU forests and wood products and carbon substitution with wood replacing fossil-based products and energy,” said Fanny-Pomme Langue, secretary-general of the Confederation of European Forest Owners (CEPF).
For forest owners, the key is to maintain forests as “productive” economic tools providing them with the revenues necessary to take care of their land. And that implies thinning, harvesting and replanting trees as part of “active” forest management practices.
“Forest owners are custodians of forests’ future and their focus is to maintain productive, healthy and vital ecosystems,” said Sven-Erik Hammar, board member of CEPF.
This was the view espoused by the European Parliament’s agriculture committee, which backed a report earlier this month charting “the way forward” for the EU’s upcoming forest strategy, expected to be published in the coming months.
Carbon sink and carbon stock
Ursula von der Leyen, the president of the European Commission, seemed to acknowledge the role forests can play for the climate. In her state of the union speech last week, she said Europe’s buildings could be turned “from a carbon source into a carbon sink if organic materials like wood” are being used.
Because trees absorb CO2 as they grow, harvesting them to make wood products is indeed considered as a “climate positive” economic activity which sequesters carbon in the form of furniture or building materials.
More controversial however is when wood is burned in biomass plants to produce electricity, or as a way of heating people’s homes.
Critics say burning wood immediately releases CO2 which took years or even decades to accumulate during the tree’s growth phase. This, they argue, creates a “carbon debt” for future generations until new trees can grow back and suck an equivalent amount of CO2.
And since time is running out to meet the Paris Agreement goal of limiting global warming to 2°C, they argue urgent action must be taken now to prevent a further increase in biomass burning for energy generation.
The European Commission seemed to pay heed to those concerns when it placed the emphasis on the need to restore carbon sinks in Europe.
“Projected increases in bioenergy use by 2030 are limited compared to today,” the Commission pointed out in its 2030 climate plan, guarding against any “further increases in harvesting” that could see the EU’s carbon sink decline further.
“Any unsustainable intensification of forest harvesting for bioenergy purposes should be avoided,” the EU executive warned, saying “the use of whole trees and food and feed crops for energy production – produced in the EU or imported – should be minimised” in order to limit the impact on climate and biodiversity.
Bioenergy producers dispute this, saying “active forest management” practices “will optimise the carbon flow” and promote carbon sinks in addition to providing much-needed jobs and economic activity for rural areas.
“It is important to stress that bioenergy is not a driving force of forest harvesting,” said Bioenergy Europe, a trade association. In fact, forest cover in the EU increased by 5.8% in 1995-2015 while bioenergy consumption “more than doubled” during the same period, it points out.
“The increase in bioenergy has been possible thanks to a better use of residues from the forest-based industries and increased synergies with the wood-based industry,” said Jean-Marc Jossart, secretary-general of Bioenergy Europe.
Importantly, Jossart said a distinction should be made between “carbon sinks” – the capacity of forests to capture carbon – and the “carbon stock”, which is the total amount of carbon stored in the forest at a certain moment in time.
“A forest management based on maximising the carbon stock will not deliver efficiently against climate change because of maturation of trees and carbon losses” due to fires and insects, which are becoming more frequent because of climate change, he argued.
In reality, “a better managed forest reduces the risks of forest fires as there will be less dead wood on the ground helping the propagation of fire,” Jossart told EURACTIV in emailed comments, saying landowners need to be incentivised to take care of their land.
“Planting, thinning, harvesting and replanting are part of virtuous operations of climate-friendly forests, as well as taking infected trees out of the forests,” he said.
Incentives for ‘sustainable’ biomass
The Commission doesn’t deny this, saying “the promotion of sustainable forest management” combined with strict enforcement of EU green criteria for biomass will help make the sector more sustainable.
But it wants guarantees that biomass used in Europe is genuinely sustainable. Although it keeps the door open to bioenergies in general, the Commission’s 2030 climate plan says “a shift towards growing woody biomass,” and “advanced biogas and biofuels could alleviate the situation” and help restore healthy forests.
“Bioenergy production should come from better use of biomass wastes and residues and sustainable cultivation of energy crops, rather replacing the production of first-generation food-crop-based biofuels,” the EU executive says.
If those solutions are implemented swiftly in the coming years, “this could already reverse the current trend of a diminishing EU land carbon sink by 2030, increasing it again to levels above 300 million tons CO2eq,” it adds.
EU plans sweeping bioenergy review by end 2020
The European Commission intends to push a “transformative approach” to all forms of bioenergy – including biofuels and woody biomass – as part of a biodiversity strategy due to be unveiled on Wednesday (20 May).
By the end of the year, the Commission is expected to publish an extensive review of biomass policies. And much of the debate from now on is expected to focus on the incentives that are needed to support sustainable forestry practices and carbon removals.
“Definitely, we want to recognise the removals that are being done in agriculture and forestry more strongly than what we did in the past,” said a senior EU official who was briefing journalists after the Commission presented its 2030 climate plan last week.
“That will require incentives for those who are responsible – and that’s the farmers and the foresters,” the official said.
In Germany, the government is currently debating a “tree premium” of €125 per hectare as a way to reward forest owners for reducing carbon emissions. The premiums would be linked to the EU carbon market, meaning that if CO2 prices rise, the tree premium would also increase.
Another option is to bring agriculture under an EU regulation dealing with land use, land-use change, and forestry (LULUCF).
“For somebody who is responsible for agriculture and forestry, it’s probably much easier to handle that as a policy field and to make the right trade-offs within the sector,” the official explained, saying any EU proposal on the matter would need to be backed by a cost-benefit analysis and fall in line with the Common Agricultural Policy.
For the bioenergy sector, incentives are fine as long as they allow foresters to “actively manage their forests through planting, thinning, harvesting and replanting”.
“If conversely, these subsidies are there to leave the forests untouched, this will have the adverse effects of reducing their resilience,” it argues.
[Edited by Zoran Radosavljevic]
EU must openly discuss Turkey sanctions, says Austria’s EU minister
At the next European summit, Austria wants to speak openly about sanctions against Ankara, including the possibility to break off accession talks with Turkey, the country’s EU Minister Karoline Edtstadler told EURACTIV Germany.
Karoline Edtstadler has been Austria’s Federal Minister for EU and Constitution since January 2020. In the last government, she was a state secretary in the interior ministry. In the 2019 EU elections, she moved into the European Parliament until she was sworn in as minister.
A wide range of topics will be discussed at the EU summit this week: The EU budget, the internal market, Brexit and the situation in the Mediterranean are just some of them. What are Austria’s priorities?
This broad agenda shows that some decisions are now pending. It is important that we are now informed about the state of negotiations on the Multiannual Financial Framework (MFF) {EU’s long-term budget] and on Brexit.
Furthermore, we must strengthen the European internal market and competitiveness by presenting a new industrial strategy and adjusting state aid regulations, because Europe must become independent. The resources of the Recovery Fund should be used primarily for digitalisation and climate protection.
We must also clarify how we as the EU will continue to deal with China and Turkey. Austria advocates discussing all options and breaking off the accession talks with Turkey.
On the positive side, the rule of law proceedings against Poland and Hungary are back on the agenda for tomorrow’s General Affairs Council. The German Presidency plans to hold a hearing with the two countries in November and December.
How can these consultations help make Article 7 procedures more effective?
As Hungary’s neighbour, we know that these procedures are an emotional issue, but we must not make any concessions here. That is why I am strongly in favour of linking EU funds and the rule of law. But of course, all parties involved must be given the opportunity to get out of these proceedings. To find such an exit strategy, you have to listen to all positions.
In fact, the states agreed in July to link EU funds to the rule of law, albeit in a weakened form. Is Austria nevertheless satisfied with this?
I am glad that conditionality is anchored. It could have been stronger, but the important thing is that it is inside. Now it’s a question of whether the European Parliament approves the budget.
The European Parliament is linking its approval to a stricter rule of law mechanism. Do you think it will succeed with this?
This is a point of discussion. There have now been four trilateral meetings, in which the Council and the Commission demand concrete proposals from Parliament. It is important to hear the Parliament’s position and there may be smaller movements.
However, it has been signalled that they do not want to undo the budget again and thus jeopardise the agreement. EU leaders negotiated for five days and four nights in July to reach this result. After that, it is a good tradition to exchange views in negotiation rounds. I appeal to Parliament to approve this huge budget.
One point of contention during these budget negotiations in July was the EU’s own resources. There is a precise timetable for the plastics tax, while only vague approval has been given for the digital tax and CO2 tax, which is to come in 2022. Wasn’t that a bit optimistic?
In politics, optimism and drive are needed. We will do everything we can to ensure that this comes about.
So Austria is in favour of these taxes?
Austria is doing everything it can to contribute to solutions that secure our future cooperation.
Turkey: Can Ankara’s actions in the Mediterranean remain unpunished?
Of course, it is not acceptable for a neighbouring state to break international law and raise warships. It is the unanimous opinion of all member states to rely on de-escalation in this case. But it will be necessary to discuss all possibilities, including sanctions.
Also, we have been in favour of breaking off the accession talks since 2016, because Turkey was already distancing itself from European values back then.
High Representative Josep Borrell said at the end of August that sanctions were in the works if there was no progress in dealing with Turkey. So there has not been any?
It is necessary to openly discuss the whole range of reactions.
Brexit also belongs to the wide range of topics for the special summit. The UK is now threatening not to adhere to the divorce agreement of spring. Did that surprise you?
In fact, I expected Britain to abide by international law. Of course we want an agreement, but we only have six weeks to settle future relations. It is a tense situation.
We are counting on the British to recognise the gravity of the situation. The EU will not be brought to its knees by blackmail.
This Wednesday (23 September), the Commission will also present its plans for a common European asylum system. What are your expectations?
It is time for a pan-European system. From the Austrian point of view, three components must be included: external border protection, cooperation with third countries and flexible solidarity.
“Flexible solidarity” means: No mandatory quota for the admission of refugees?
Exactly, we are against forced admissions. That has always been our red line, which we defend with all our strength.
Since 2015, Austria has taken in the second most refugees of all EU countries. One thing is clear: every country must make a contribution. Either by accepting people, sending officials to support the asylum authorities or by helping on the spot. In doing so, what has been achieved so far must always be taken into account. In the case of Austria, therefore, this cannot mean accepting more refugees.
[Edited by Zoran Radosavljevic]
As covid fatigue fuels infections in Europe, Italy resists the second wave
Ms. Grazioli, a self-proclaimed social butterfly who loves to cook for guests, still hasn’t had friends over for dinner since the virus struck. “Am I overdoing it?” says Ms. Grazioli. “Maybe, but we had a national tragedy of epic proportions and you don’t quickly forget something like that.”
Italy, the first nation outside Asia to suffer a major coronavirus outbreak, had one of the world’s worst death tolls this spring. Overflowing hospitals in parts of northern Italy had to choose which patients got the last intensive-care beds. The Italian army drove truckloads of victims out of the city of Bergamo, which couldn’t cope with the dead.
That shocking experience helps explain why Italy is so far having greater success than many other European countries in limiting the pandemic’s second wave.
Infections in Europe are rebounding partly because millions of people have grown tired of social-distancing rules, mask-wearing and hand-sanitizing, and have relaxed their behavior, health experts said. The public’s fatigue and yearning to get back to normal life are two of the greatest challenges facing governments as they try to keep a lid on infections as winter approaches.
Experts had hoped that mask-wearing and keeping a distance would become everyday habits, at least as long as Covid-19 remains a public-health threat. East Asian societies such as South Korea, Hong Kong or Singapore have been the model for widespread acceptance of such precautions.
That has proved a tougher sell in Western nations with less experience containing viral outbreaks and especially in politically polarized countries where face masks have become another focal point for antiestablishment anger. Protests against mask-wearing and government restrictions have drawn fewer people in Rome than in Berlin or London.
But both Italy’s left-leaning national government and right-leaning opposition, which governs northern Italian regions that were badly hit by the virus, cooperated in containing the worst phase of the pandemic. Across Italy, masks are mandatory in indoor public places, on public transport and outdoors in crowded areas.
In Italy, the new precautions have become a widespread part of everyday life, more than in many other Western countries. Millions of Italians continue to wear masks outdoors, even when it isn’t obligatory, and carry hand sanitizer.
New habits and a relatively effective test-and-trace regime have helped Italy to limit the rise of infections since August. Increases in Europe have been driven by people traveling on their summer vacations and by more relaxed attitudes among young people who wanted to return to socializing.
Over the past week, Italy detected an average of under 1,500 infections a day, compared with about 3,700 in the U.K., 10,400 in France and 10,500 in Spain.
“People were very afraid in March and April and that has an effect on short-term behavior, but it’s not clear how long it will last,” said Guendalina Graffigna, a psychology professor at Milan’s Catholic University. “We’re a Mediterranean country and often we act on our emotions more than in other countries.”
Giovanni Ferrante, a 30-year-old building manager from Rome, is among those who are being extra careful. When he visited his family in southern Italy over the summer, he self-quarantined for two weeks on arrival to avoid potentially infecting them, though it wasn’t required by Italy’s rules and he had no symptoms.
“There is a bit of fear and because of that we behave appropriately,” said Mr. Ferrante, who was walking in central Rome wearing an N95 face mask, which provides more protection than a surgical mask.
Nearby, a bank put up a sign telling clients to stop applying hand sanitizer to its ATM keyboard because it was causing damage.
About 85% of Italians said they wear a mask in public places, more than anywhere else in Europe except for Spain, which is now battling Europe’s biggest outbreak, according to a coronavirus behavior survey by Imperial College London and YouGov. Italians are also more likely to say they avoid crowded public places than most other Europeans, according to the survey, which was updated last week.
It isn’t just about individual behavior. Italy has done a better job than most at detecting infected people through its testing and tracing regime. Over two-thirds of Italians who tested positive for the coronavirus in recent weeks were identified not because they had symptoms, but through contact tracing and widespread screening tests, according to the National Health Institute.
The percentage of tests that come back positive—a measure of whether testing is sufficiently comprehensive—is 2.1% in Italy, higher than it was in June but lower than in most of Europe, according to official data. A low positivity rate indicates that testing is widespread and not restricted to people who show symptoms. The World Health Organization recommends a positivity rate of 5% or less as a condition for reopening.
The percentage of positive tests is lower still in Lombardy, the epicenter of Italy’s pandemic, according to the regional government.
In Spain, by comparison, government data shows 11.9% of tests are positive, suggesting many infections go undetected.
Italian authorities fear infections could rise more strongly as a result of the reopening of schools on Sept. 14, and as fall weather leads Italians to spend more time indoors again. Italy was the first Western country to close its schools and was among the last to reopen them.
Italian schools have reorganized their classrooms to ensure social distancing, sometimes splitting up classes or moving them to other buildings.
In the Milan school attended by Ms. Grazioli’s two sons, some classes are held in the cafeteria, where there is more space, and lunch is served in the classrooms. Face masks are required except when students are seated. There is no interaction between classes, so that if a student tests positive for the virus, their class is quarantined at home, but the school stays open.
Despite the precautions, several classes were quarantined across Italy in the first week after reopening. Administrators at Ms. Grazioli’s school are waiting for test results from several students who turned up with fevers and coughs.
As schools reopen and children begin to socialize again, scientists say a priority for Italian families should be to keep the young away from the old. Ilaria Capua, an Italian virologist at the University of Florida, warned that big family dinners—part of the fabric of Italian life—are especially risky.
“Families need to organize themselves differently: grandparents are still vulnerable,” she said. “Intergenerational segregation is key.”
That has placed many Italian parents in a pickle as they manage the interactions between their elderly parents and school-age children. After school hours, many Italian grandparents look after children whose parents are working. Three-generation households are common.
But there are signs that Italy’s grandparents have absorbed the lessons of the pandemic.
“I hear lots of grandparents saying, ‘If you don’t really need me, I think I won’t pick up the children for now,’ ” said Ms. Grazioli. “I still have to see what my parents are comfortable with.”
Young adults are much less attentive to the rules than their parents and grandparents, a problem that came to light this summer as infections surged among people in their 20s and 30s. The generational divide continues in September as balmy weather draws crowds of mask-free 20-somethings to bars and restaurants.
On a recent Saturday evening, Mirko Marin, who works in corporate relations at Milan’s Polytechnic University, headed out to the city’s trendy Navigli canal district for a stroll with his wife and three children. They quickly returned home when they saw the crowds.
“During the day the rules are respected, and then at night the young people suddenly forget what happened in March and April,” said Mr. Marin. “We have to remember so we never live that nightmare again.”
Write to Eric Sylvers at [email protected] and Margherita Stancati at [email protected]
Book Fair Directors Say Live Shows Must Go On
On the eve of the opening of the Gothenburg Book Fair, which runs September 24-28, fair director Frida Edman, along with Frankfurt Book Fair director Juergen Boos, co-signed an editorial in Dagens Nyheter, Sweden’s largest newspaper, called “Why we need book fairs more than ever.” The piece offers their perspective on the role of book fairs in fostering the literary community and asserting the need to for live, in-person fairs to persist.
Edman supplied PW with a translation of the editorial, which reads as follows:
Today, the Nordic region’s largest cultural event, the Book Fair in Gothenburg, begins, and in a few weeks, the Frankfurter Buchmesse, the world’s most important book fair for the industry will launch its virtual Special Edition and its festivals BOOKFEST city and digital. By writing these words, we want to emphasize how important book fairs are – not only for publishers, authors and readers, but also for our communities.
Book fairs nourish our communities because they put stories and storytelling in the spotlight. They bring together authors, spark debates and literary conversations, they organize readings and provide first-hand information on book markets. Moreover, they are an immense tribute to free speech, a concrete manifestation of literature and public discourse. And, of course, our fairs are big festivals for the publishing industry and for all book lovers.
In 2020, the coronavirus has forced many book fairs to cancel or go completely digital. In doing this, we embrace a new experience: we learn a lot and develop, make new collaborations and reach new (and broader) target groups. But we also hear questions about the book fairs’ future existence. Has the physical meeting played its role now that everything is going digital?
Our answer is crystal clear: absolutely not. The physical encounter between people will always be a cornerstone of a democratic society – it is essential for driving one’s business and for maintaining successful business relations. Plus, book fairs around the world are a strong engine for the international literary economy.
Every year, more than a hundred Nordic and international agents participate in the Book Fair in Gothenburg, and a few thousand exhibitors from around 100 countries attend Frankfurter Buchmesse. It is not possible to describe in numbers the value that is lost by agents not meeting and negotiating international rights – often the first bids are placed in Gothenburg, stressed during intensive negotiations in Germany and then sold in the world.
Göran Wiberg, Sales Manager, Bonnierförlagen, believes that 50% of book sales at the Gothenburg Book Fair are dependent on the meeting between authors and readers. At Frankfurter Buchmesse last year, for the first time, publishers were allowed to sell their books to the public on Saturday and Sunday of the fair, making a significant amount of revenue. This is indicative of the importance of book fairs for publishers’ financial position in the future.
A prerequisite for this to remain the case is that book fairs take place and that publishers, agents, readers and not least politicians realize how important the book fairs are, and that in the future they secure their participation, visit or support. This year, their participation shows by each group taking part in and getting involved in supporting these book fairs.
Book fairs around the world remind us every year of the importance of literature, reading, and free speech. Book fairs are a prerequisite for the story’s survival and future. Without book fairs, there will be fewer publishers and authors. With fewer authors, we lose readers. Without readers, there is no strong democracy.
The world would be poorer without book fairs. This year we try to cater to the needs of publishers, authors, the industry and the audience with as many formats and offers as we possibly can. But in the uncertain future, we think that for us, as organizers of book fairs, it’s absolutely crucial that we take additional responsibility to create conditions for physical meeting. Together with the industry. And with the support of politics.
Signed
Frida Edman, Gothenburg Book Fair
Juergen Boos, Frankfurter Buchmesse
COVID-19: MEPs call for measures to close the digital gap in education | News | European Parliament
, https://www.europarl.europa.eu/news/en/press-room/20200918IPR87428/
Artificial intelligence: threats and opportunities
Artificial intelligence (AI) affects our lives more and more. Learn about the opportunities and threats for security, democracy, businesses and jobs.
Europe’s growth and wealth are closely connected to how it will make use of data and connected technologies. AI can make a big difference to our lives – for better or worse – and the European Parliament established a committee on artificial intelligence in digital age that examined the impact of the technology and proposed a long-term EU Roadmap to AI. MEPs have also called for a future-proof AI regulation. Below are some key opportunities and threats connected to future applications of AI.
Read more about what artificial intelligence is and how it is used
175 zettabytes The volume of data produced in the world is expected to grow from 33 zettabytes in 2018 to 175 zettabytes in 2025 (one zettabyte is a thousand billion gigabytes)
Advantages of AI
EU countries are already strong in digital industry and business-to-business applications. With a high-quality digital infrastructure and a regulatory framework that protects privacy and freedom of speech, the EU could become a global leader in the data economy and its applications.
Benefits of AI for people
AI could help people with improved health care, safer cars and other transport systems, tailored, cheaper and longer-lasting products and services. It can also facilitate access to information, education and training. The need for distance learning became more important because of the Covid-19 pandemic. AI can also make workplace safer as robots can be used for dangerous parts of jobs, and open new job positions as AI-driven industries grow and change.
Opportunities of artificial intelligence for businesses
For businesses, AI can enable the development of a new generation of products and services, including in sectors where European companies already have strong positions: green and circular economy, machinery, farming, healthcare, fashion, tourism. It can boost sales, improve machine maintenance, increase production output and quality, improve customer service, as well as save energy.
11-37% Estimated increase of labour productivity related to AI by 2035 (Parliament’s Think Tank 2020)
AI opportunities in public services
AI used in public services can reduce costs and offer new possibilities in public transport, education, energy and waste management and could also improve the sustainability of products. In this way AI could contribute to achieving the goals of the EU Green Deal.
1.5-4% Estimate of how much AI could help reduce global greenhouse emissions by 2030 (Parliament’s Think Tank 2020)
Strengthening democracy
Democracy could be made stronger by using data-based scrutiny, preventing disinformation and cyber attacks and ensuring access to quality information . AI could also support diversity and openness, for example by mitigating the possibility of prejudice in hiring decisions and using analytical data instead.
AI, security and safety
AI is predicted to be used more in crime prevention and the criminal justice system, as massive data sets could be processed faster, prisoner flight risks assessed more accurately, crime or even terrorist attacks predicted and prevented. It is already used by online platforms to detect and react to unlawful and inappropriate online behaviour.
In military matters, AI could be used for defence and attack strategies in hacking and phishing or to target key systems in cyberwarfare.
Threats and challenges of AI
The increasing reliance on AI systems also poses potential risks.
Underuse and overuse of AI
Underuse of AI is considered as a major threat: missed opportunities for the EU could mean poor implementation of major programmes, such as the EU Green Deal, losing competitive advantage towards other parts of the world, economic stagnation and poorer possibilities for people. Underuse could derive from public and business’ mistrust in AI, poor infrastructure, lack of initiative, low investments, or, since AI’s machine learning is dependent on data, from fragmented digital markets.
Overuse can also be problematic: investing in AI applications that prove not to be useful or applying AI to tasks for which it is not suited, for example using it to explain complex societal issues.
Liability: who is responsible for damage caused by AI?
An important challenge is to determine who is responsible for damage caused by an AI-operated device or service: in an accident involving a self-driving car. Should the damage be covered by the owner, the car manufacturer or the programmer?
If the producer was absolutely free of accountability, there might be no incentive to provide good product or service and it could damage people’s trust in the technology; but regulations could also be too strict and stifle innovation.
Threats of AI to fundamental rights and democracy
The results that AI produces depend on how it is designed and what data it uses. Both design and data can be intentionally or unintentionally biased. For example, some important aspects of an issue might not be programmed into the algorithm or might be programmed to reflect and replicate structural biases. In adcition, the use of numbers to represent complex social reality could make the AI seem factual and precise when it isn’t . This is sometimes referred to as mathwashing.
If not done properly, AI could lead to decisions influenced by data on ethnicity, sex, age when hiring or firing, offering loans, or even in criminal proceedings.
AI could severely affect the right to privacy and data protection. It can be for example used in face recognition equipment or for online tracking and profiling of individuals. In addition, AI enables merging pieces of information a person has given into new data, which can lead to results the person would not expect.
It can also present a threat to democracy; AI has already been blamed for creating online echo chambers based on a person’s previous online behaviour, displaying only content a person would like, instead of creating an environment for pluralistic, equally accessible and inclusive public debate. It can even be used to create extremely realistic fake video, audio and images, known as deepfakes, which can present financial risks, harm reputation, and challenge decision making. All of this could lead to separation and polarisation in the public sphere and manipulate elections.
AI could also play a role in harming freedom of assembly and protest as it could track and profile individuals linked to certain beliefs or actions.
AI impact on jobs
Use of AI in the workplace is expected to result in the elimination of a large number of jobs. Though AI is also expected to create and make better jobs, education and training will have a crucial role in preventing long-term unemployment and ensure a skilled workforce.
14% of jobs in OECD countries are highly automatable and another 32% could face substantial changes (estimate by Parliament’s Think Tank 2020).
Competition
Amassing information could also lead to distortion of competition as companies with more information could gain an advantage and effectively eliminate competitors.
Safety and security risks
AI applications that are in physical contact with humans or integrated into the human body could pose safety risks as they may be poorly designed, misused or hacked. Poorly regulated use of AI in weapons could lead to loss of human control over dangerous weapons.
Transparency challenges
Imbalances of access to information could be exploited. For example, based on a person’s online behaviour or other data and without their knowledge, an online vendor can use AI to predict someone is willing to pay, or a political campaign can adapt their message. Another transparency issue is that sometimes it can be unclear to people whether they are interacting with AI or a person.
Read more about how MEPs want to shape data legislation to boost innovation and ensure safety
Tourism Committee MEPs: EU must act, 22 million jobs are at stake | News | European Parliament
, https://www.europarl.europa.eu/news/en/press-room/20200918IPR87420/
EU summit postponed after president quarantined – as it happened
Influenza or seasonal flu is a perennial public health burden that, like Covid-19, causes most severe problems among elderly people and those with underlying health conditions.
During the winter of 2018-2019, about 35.5 million people in the US got sick with flu, almost half a million were hospitalized and 34,200 died, according to the Centers for Disease Control and Prevention (CDC):
Neogen Corporation (NEOG) CEO John Adent on Q1 2021 Results – Earnings Call Transcript
Neogen Corporation (NASDAQ:NEOG) Q1 2021 Earnings Conference Call September 22, 2020 11:00 AM ET
Company Participants
John Adent – Chief Executive Officer and President
Steve Quinlan – Chief Financial Officer
Conference Call Participants
David Westenberg – Guggenheim Securities
John Kreger – William Blair
Mark Connelly – Stephens, Inc
Jon Braatz – Kansas City Capital
Operator
Good day, and welcome to the NEOGEN First Quarter Fiscal Year 2021 Earnings Results Conference Call. [Operator Instructions] Please note this event is being recorded.
I would now like to turn the conference over to John Adent, President and CEO. Please go ahead.
John Adent
Thank you, Matt. Good morning and welcome to our regular quarterly conference call for investors and analysts. Today, we will be reporting on the first quarter of our 2021 fiscal year which ended on August 31.
As usual, some of the statements made here today could be termed as forward-looking statements. These statements of course are subject to certain risks and uncertainties. The actual results may differ from those that we discuss today. The risks associated with our business are covered in part in the company’s Form 10-K as filed with the Securities and Exchange Commission.
In addition to those of you who are joining us by live telephone conference, I also welcome those of you joining us via the Internet. Following our prepared comments this morning, we will entertain questions from participants who’ve joined this live conference. I’m joined this morning in an appropriate social distance by Steve Quinlan, our Chief Financial Officer who will provide financial detail on our results for our quarter.
We’re pleased to report increased revenues and net income compared to our prior year’s first quarter in a very difficult operating environment. While we are developing and marketing products and services to help protect and enhance the global food supply, we continue to take extraordinary measures to protect our business and employees. We remain vigilant with our COVID-19 safety measures, but we continue to see cases around the world affect our business. Through it all our employees have done an outstanding job of adapting to these constant challenges to deliver these excellent results for the quarter. They worked extremely hard, and I’m very proud of them.
But this is far from over. And it’s not time to let up. We will continue to implement safety measures we’ve had in place since the beginning of the pandemic and refine and develop new best practices. We are constantly adding to our list of alternate suppliers of essential raw materials as well as seeking even more efficiencies with our production facilities. Everyone is feeling the effects of COVID-19. We’ve had numerous customers go out of business, while others have dramatically cut staff and output. Adaptability is vital now as customer demands and raw material supplies are impacted daily. The food and livestock industries continue to be adversely affected by the supply chain disruption that started months ago.
Let me give an example. The National Restaurant Association recently did a survey of its members after six months of the pandemic and found one in six restaurants in the US were either closed for an extended period or closed permanently. That means more than 100,000 restaurants in the US alone that will close at least temporarily with an associated estimate that the domestic restaurant industry will lose $240 billion in sales by the end of 2020. Just think about those 100,000 closed restaurants and the $240 billion in lost sales and their effects on our pre pandemic food chain. Then add the countless food service, catering and similar businesses that have been devastated by the pandemic and the restaurant shift to customers eating a far greater percentage of their meals at home. Economic Recovery to pre pandemic levels is going to take many months, if not years.
The immediate future is further clouded as the northern hemisphere begins to enter its flu season. As we face these challenges, we will continue to develop contingency plans across our businesses to prepare for what may come and while the future is unclear due to COVID-19 what is clear is the future of NEOGEN. We will find opportunities for growth and development in all of our markets. Later on, we’ll address some of those opportunities that have arisen for NEOGEN due to the pandemic, as well as some of the very encouraging developments from a global R&D groups. But before I do, I’m going to pass it over to Steve to run down the numbers for you.
Steve Quinlan
Well, thanks, John, and welcome to everyone listening this morning. Before I talked about the numbers, I’d like to echo John’s comments about how proud we are of our global team for how seriously they’re taking the responsibilities to keep their fellow employees safe during this pandemic, and for the results they’ve been able to produce in this very difficult operating environment. Earlier today, we issued a press release announcing the results for our first quarter, which ended on August 31. Revenues for the quarter were $109.3 million, compared to $101.4 million in the same quarter a year ago. Net income for the quarter was $15.9 million, or $0.30 a share, compared to $14.7 million or $0.28 a share a year ago.
In the next few minutes, I’ll give you some color around the numbers. And I’ll start by talking about the currency impacts to the business in the first quarter, which were mixed. The pound and the euro were each up 3% against the dollar compared to the first quarter of fiscal 2020, which provided a bit of tailwind for our European results. The Brazilian real and the Mexican peso, on the other hand, were 27% and 14% lower on average than in last year’s first quarter. Revenues would have been $2.1 million higher for the first quarter in a neutral currency environment. Almost all of that impact was felt in the food safety segment as the majority of our international businesses report in through this segment.
Revenues for the Food Safety segment were $54.2 million in the first quarter of fiscal 2021, an increase of 6% compared to $51 million even in last year’s first quarter. The revenue gains in the segment were driven by a $2.4 million increase in our England based manufacturer of cleaners and disinfectants on sales of hand sanitizer products to the UK National Health Service and a $1.2 million increase in sales in China with gains across the product portfolio and particularly in cleaners and disinfectants to combat the African swine fever and COVID-19. At our Brazilian operations, 2021 first quarter sales increased 38% in local currency, and included a large non recurring insecticide sale to a government health organization in Nicaragua.
Additionally, sales were strong across our entire portfolio of products, including a 16% increase in dairy drug residue test kits, continued market penetration in aflatoxin test kits and growth in rodenticides and genomic services. However, negative currency translation resulting from the real devaluation lowered the growth reported from Brazil to 1% in US dollars. At NEOGEN Latino America 13% growth in revenues in local currency in the first quarter, resulted primarily from increased sales of cleaners, disinfectants and sanitizers mostly in Mexico. Adjusting for the devaluation of the peso relative to the dollar resulted in a revenue decline of 2% in US dollars compared to last year’s first quarter. Combined revenues at our UK operations increased 21% primarily resulting from a large order of hand sanitizers to the UK government’s health organization, and strong cleaner and disinfectant sales to Asia Pacific, Africa and the Middle East. Histamine test kit sales also contributed to the growth due to increased business from tuna producers, as did our Raptor test system for mycotoxin.
Our domestic Food Safety business grew 2% for the quarter. As we discussed on our year end call there is still significant amount of disruption in the food processing and food production markets, with certain of our customers serving the grocery markets doing very well, while other customers serving bars, restaurants and other commercial food service are struggling. But there were areas of growth within the business. We introduced our next generation Soleris system in late July to US markets and had strong positive reactions and great initial demand for the system, which is used to detect spoilage organisms such as yeast and mold in processed foods.
On a worldwide basis, our test to quickly detect environmental Listeria in food processing plant Listeria right now continues to gain acceptance in the market with revenues up 9% in the quarter. Revenues for our industry leading product line to detect allergen contamination in foods were down 3% in the quarter, and our AccuPoint line which is used to detect general sanitation and cleanliness in food processing environments declined 7%. Each the result of lower end market demand reflected as a continued disruption in our customers and in our markets.
Natural toxin product sales increased 1% compared to last year’s first quarter, as continued market share gains on aflatoxin kit sales in Brazil were largely erased by the real to dollar currency conversion. Higher DON sales in the prior year in Europe from an outbreak did not repeat. And similarly domestic sales were flat due to clean crops so far this year. Revenues for our test to detect the presence of antibiotics in milk declined by 33% in the quarter as customers in Europe work through distributor inventory. Recall that in January, we announced that we terminated the exclusive rights to distribute these products with our European distributor, and we’re now ramping up our direct sales force for that product line.
The animal safety segment recorded revenues of $55.1 million for the quarter, up 9% over the $50.4 million achieved in last year’s first quarter. The growth was led by a $3 million increase in sales of rodenticides resulting from rodent pressures across the US particularly in the Pacific Northwest. Revenues at our Australian operations rose $1.2 million on the strength of increases in sheep and cattle genomic testing, and the incremental revenues resulting from our acquisition of Cell BioSciences in March of this year.
Revenues at our domestic genomics testing and bioinformatics business located in Lincoln, Nebraska increased $1 million and continued market share gains in the companion animal parentage and wellness testing space and sales from our recent launch of a chip for shrimp testing, which offset lower sales to a large poultry customer as it moves to one of our lower density, lower cost chips. Domestic commercial beef and dairy sales were also sluggish in the quarter the result of the COVID outbreaks in our customer supply chains and continued poor economic conditions in dairy markets. Worldwide, our genomics revenues increased 11%, with some additional growth in China and increased testing in the swine market.
Animal Care Products sold out of our Lexington, Kentucky based manufacturing and distributing center, such as vitamin injectables, equine and small animal supplements, wound care and antibiotic products were up 8%. These increases were somewhat offset by a 25% decrease in sales of dairy supplies, which we’ve distributed for a number of years for a large manufacturer of dairy equipment. Our distribution agreement with that manufacturer ended in June of this year.
Sales of veterinary instruments and disposables such as needles and syringes declined 8% for the quarter, and lower sales to our larger Animal Health distributors. Life Science product revenues declined by $400,000 the result of lower forensic kits sales to commercial labs, as they process fewer samples due to Covid related slow downs.
Our Domestic Cleaner and Disinfecting business benefited from a 31% increase in hand sanitizers and wipes resulting from COVID-19 demand somewhat offset by lower sales of water treatment products. And our insecticides revenues in the US rose 6% boosted by our purchase in July of the StandGuard product line. Gross margins were 46% for the quarter compared to 47.5% in last year’s first quarter. The lower margins are primarily the result of the shift in product mix and the food safety segment toward products which have lower gross margins. The impact of the stronger dollar on our product costs in Mexico and Brazil and increased duties, freight in and other overhead costs in our Lansing operations, partially offset by the increased sales rodenticides, a higher margin product and increased efficiencies that are Australian operations due to increased throughput in the animal safety segment.
Overall, our operating expenses drop 2% compared to last year’s first quarter, primarily the result of a 6% reduction in our sales and marketing spend. Lower global travel, trade show and other on site customer facing activities caused by travel restrictions from the COVID pandemic drove the decrease in expense here.
General administrative expenses rose 3% for the quarter, due primarily to increased compensation and legal and professional fees. Our R&D expenses increased 5% over the prior year quarter on outside services related to the launch of the next generation Soleris product, which as I said was launched in July and has been receiving very positive reviews.
Operating income for the first quarter was $18.9 million, compared to $16.3 million in last year’s first quarter, with the increase the result of the higher sales and gross margins and reduced operating expenses, expressed as a percent of revenues operating income was 17.3% compared to 16% even in last year’s first quarter. We recorded $722,000 in interest income for the quarter and this compares to $1.5 million last year. The lower amount recorded despite increased cash balance reflects the tremendous decline in yield in fixed income investments. As an example, the rate on one year treasury bills which was 1.8% in last year’s first quarter declined to 12 basis points this year, as the financial markets reacted to the pandemic.
Our effective tax rate for the first quarter was 19.9% compared to 17%, even in last year’s first quarter. Last year’s effective rate was low due in large part to $769,000 in tax benefits recognized from the exercise of stock options. This year that comparable number was $421,000. I’ve mentioned on previous calls that the volume of option exercises and the gain on those exercises can result in significant fluctuations in the effective tax rate for the comparative period. Another factor impacting the higher tax rate for this year’s first quarter was a lower benefit recognized from foreign derived income due to the timing of full year estimated income from our international operations.
On the balance sheet, our net receivable balances declined by $7 million compared to year end, and our collection period dropped from 68 days at year end to 61 days for the first quarter. And we feel good about those strong collections, particularly in this environment. Inventory increased by $2.5 million or 3% primarily due to increases in the UK for long lead time items. As discussed on a year end call, given the uncertainty around the supply chain caused by COVID, and potential Brexit disruptions, we believe it’s prudent to carry a little bit more inventory than we normally might. We continue to generate cash nicely, and produce $25 million in cash from operations during the quarter.
Our strong cash position gives us the flexibility to pursue just about any of the many growth opportunities that we have in front of us.
I’ll stop here and again emphasize that we’re proud of the team and their overall performance of what continues to be a very challenging operating environment. We capitalized on a number of market opportunities during the quarter. And we continue to be excited about both our current business and the new products that we’re launching this year. And as always, we appreciate the support of our shareholders, and all those listening on the call today.
At this point, I’ll turn it back to John for the moment.
John Adent
Thanks, Steve. As I’ve previously said, our mission matters today more than ever, as the world fights through this crisis to eventually recovery. There are few things more important than a continuing safe and plentiful food supply. NEOGEN was built to respond in times of crisis and may have responded. We’ve done our best again to assist the broader civic efforts to combat COVID-19 making by our sanitizers and disinfectants available outside of our traditional agriculture and veterinary markets. Another example of an opportunity for NEOGEN that was created by the pandemic is sales of our test to detect histamine that Steve talked about. It’s a spoilage indicator and some fish and especially used in tuna. Sales of canned tuna have spiked as consumers have sought less expensive sources of protein to consume at home, and sales of our test kits for histamine increased by 20% compared to the prior year quarter. We’ve also benefited from the now well documented increase of spending on pets, especially dogs and cats during the COVID era.
Our genomic operations recently marked the 2 million tests performed on companion animal samples, mostly for dog breed identification, but now expanding into canine wellness tests. As we respond to the pandemic, we’ve also recently launched some significant new products from our R&D pipeline.
As mentioned before, in July, we launched our new Soleris next generation, which is an automatic test system that detects micro organisms such as yeast and mold in a fraction of the time of traditional test methods. As Steve mentioned, we’ve had a tremendously positive market reaction to this product launch, especially to the nutraceutical and cosmetic industries. Just last week, we launched an improved test for gluten, which has been one of our major food allergen tests. The improved test rapidly detects gluten in food products, raw ingredients and environmental samples. What that means is companies can now use the same method to test for allergens and food and environmental samples, as opposed to using different methods for different sample types. We believe that this is a major advancement from one of our core product lines. And we’re in the final stages of development for similar improvements to more of our food allergen tests.
We also expect that other major product launches in the coming months are going to be very successful. We’re encouraged by many of our other developments in the quarter; for example, our revenues in China more than doubled for the quarter. Our management team there is experienced and is working under an improved operating structure and growing our revenues across all of our product lines.
Our Animal Safety and Genomics revenues have more than doubled in China. And we’ve had really solid broad base gains in the food safety side. We’re also encouraged by the initial performance of the companies we acquired within the past year that are now under NEOGEN management.
In Australia, we added our food safety line to our animal safety genomics offerings, and are providing very promising results.
In Italy, we’re starting to see the benefits of NEOGEN’s ownership of our previous distributor there, as we are in Argentina, Uruguay, and Chile. Through it all, we’ve made gains where we can as we work to protect our employees and business. And once again, I’m extremely proud of how our team has acted and reacted to this unprecedented business and social environment. I’m sure that a lot of you have questions. So at this point, I’m going to stop and open it up to those of you who have joined the call.
Question-and-Answer Session
Operator
[Operator Instructions] Our first question comes from David Westenberg with Guggenheim Securities.
DavidWestenberg
Hi and thanks for taking my question. Good job executing on a — in a really challenging environment. So I’m going to start with the rodenticides sales. I know we’re getting news articles about rodents taking over New York City. I’m just trying to kind of understand whether or not this pickup in sales is something that you think can increase. And if you can maybe quantify what the rodenticides were versus — because we also kind of want to figure out that disinfectants and sanitizers and rodenticides did very well in the quarter. So we are trying to understand contribution from rodenticides, if that could be recurring? And then if there’s a way to quantify that in order to understand also in terms of what the sanitation products that might be a COVID lift are? I get that’s a long question. Sorry about that.
JohnAdent
That’s all right. Yes, well, the big lift for us on the rodenticides was really as Steve talked about in the Pacific Northwest and the Ag market. So we had a really — there was a really strong outbreak kind of out there. We are seeing in our worldwide markets a lift in our PCO, which is to the more metropolitan areas. But that’s a market that is relatively new to NEOGEN. But it’s one that we’re pretty excited about and see some long term growth opportunities in. In the cleaners and disinfectants, as Steve mentioned, you saw we had increases in hand sanitizers in the UK where we were working with the UK Government. We continue to look for opportunities there. I think when we stepped up at the beginning of the outbreak and provided sanitizers outside the market there’s a lot of new customers we picked up, everybody else have kind of gotten their supply chain in order.
So there’s a lot of sanitizer pressure, there’s not a run on it like there was but we’re seeing pretty good retention rate for the customers that we picked up early in the year.
DavidWestenberg
Got it. Okay. And then another — asking to kind of quantify. You got contribution in StandGuard, but it was only about a month. And I know you give an organic revenue number, and it’s — we could subtract what the top line is and kind of figure out what acquisitions did. But if there’s a couple of pieces; I can probably just try to get at for — in terms of trying to model out. Would you be able to call out StandGuard and if one month — just times that by 12 to get kind of the run rate for StandGuard? And then kind of the distributor acquisition contributions, if you can’t give a specific, if you can maybe give us a qualitative kind of way to think about it, so our models next year look correct?
JohnAdent
Okay, Steve will handle that one.
SteveQuinlan
Thanks, John.
JohnAdent
You’re welcome, Steve.
SteveQuinlan
So David, on the StandGuard product, we had about $160,000 of revenue for that product. Remember, we just bought it right near the end of July; we just kind of launched it into our market. So it’s just starting off. But we’re really encouraged about the prospects for the product line. And the distributors that we purchased, I think it’s important to note that we were doing business with a number of those distributors already – and those numbers were already somewhat in our food safety numbers. So you’re really seeing incremental revenues there. So it’s really tough to call out and say, well, Chile was x, because it was already — we’re doing the incremental margin there. But as John said, we’re excited about the opportunities in those markets. We’re staffing them up, we’re kind of putting that NEOGEN infrastructure in, and we’re just excited about the future of those businesses. I think I’d probably stop there on that.
DavidWestenberg
Got it. And just further on that question, is it responsible to times that $160,000 by 12 to get the year run rate? Or is there just too much kind of noise and you just got the asset and —
JohnAdent
Yes, it’s a little early. There’s seasonality in that product. And that’s a little early. I wouldn’t do that as a straight run rate. W will have a little bit more clarity after next quarter, probably. But we [are] [ph] happy with it so.
DavidWestenberg
Got it. All right. I’m going to ask just one more question before I hop into queue. I don’t want to hog all the questions here. Just lastly on competition are you see anything differently from maybe some of the players in the life science tools, traditional ones, like Waters or PerkinElmer? I know PerkinElmer I think they launched a micro toxin test. Are you seeing that in your — in kind of impact on the market, and then as a follow up to that, when do you see competitor products is that kind of one of the things where you step on the gas in terms of R&D or is that one of the things where you maybe step on the gas in terms of acquisitions?
JohnAdent
So the answer is yes. So we have seen competitors and they continue to launch, right, you saw Hygiena launch a new ATP reader, you saw PerkinElmer buy the business in China before the COVID. And you see others that are buying up smaller, maybe a small portfolio of allergen testing or others. So there’s continued competition. And that’s why our strategy is like we’ve talked about; we continue to invest in R&D. So I think that goes right hand-in-hand with what we just launched with the gluten test, where before you were having to do a test to test for raw materials for gluten and then a separate test to test environmental samples, two separate test on two separate ways. And now we have one test, that’s going to be much simpler for the customer when they want to buy one gluten test, and they can do it across the markets. So yes, we’re continuing to invest in R&D to stay ahead. We do think there are opportunities for acquisitions. We’ve got a very nice pipeline that we’re looking at. We’ve got things that were in different stages of the pipeline, and we’re going to keep executing on that strategy.
Operator
Our next question comes from John Kreger from William Blair.
JohnKreger
Can you hear me, John?
JohnAdent
Yes, I can hear you now, John.
JohnKreger
Okay, great. So my question was trying to get at your view of how the markets are going to play out in the coming months. You talked about the fact that there’s still a lot of uncertainty. But you guys were able to really show some nice, sequential improvements in the momentum of your business as we move into the colder season. From your perspective, can the momentum continue, particularly in the food service side? Or are you thinking that maybe things may even slow down a little bit as restaurants have to deal with the fact that they can’t just rely on outdoor seating anymore?
JohnAdent
Yes, I think I think it’s going to be tough. I mean, it seems like every quarter is a year, right? I mean, the way that the team has to react in, and change to the adapting environment, and it’s from a standpoint of not only what’s happening with the customers, but raw materials, supplies, I mean, there are many cases where we have something that is a minuscule raw material to us, where all of a sudden, they have an COVID outbreak, and they’re shut down for two months. And then it’s we didn’t realize that was that critical because it’s so far down the list. But we’ve done a really good job of quantifying alternative suppliers. So no, I’m optimistic. And I’m not optimistic on the market. I’m optimistic on NEOGEN. I think the market is going to continue to be tough, I think we’re going to continue to see some challenges. I don’t know what’s going to happen in a flu season, but I’m nervous about it. Oddly enough, we’ve seen a bigger impact in this quarter on employees COVID related than last quarter. And you wouldn’t think that because with all the news and the talk at around the world, I just think it’s a couple of things that the weather was nice, and people want to get outside and I’m like everybody else I am worn out of COVID. I’m worn out of being by myself in my office and all the video conferences. But we have to stay vigilant because that social distancing is going to protect our employees and protect the business. So we’re really doing everything we can to make sure everybody’s still on point here. We think there are opportunities to help customers; we think that we’ve got things that are going to help them run their business better. So as they are approaching opportunities and they can’t be in the plants. That’s a great opportunity for NEOGEN analytics to be able to show them what they need without physically being in the facility and show them what they need across multiple sites.
So we think we’ve got a technology platform that’s going to allow us to only accelerate in this type of environment, and I think that goes to a lot of things that are happening. I don’t know if you guys saw that Frank Yiannas just put out the FDA rule to advance traceability on certain foods under the new Smarter Food Act. So that plays into what we’re doing. I mean, I’m so glad we started down that path over a year ago and developing out our analytics and our blockchain because now the industry is coming to where we’re going. And I think it’s going to be a real opportunity for us.
JohnKreger
That’s helpful. Thank you. Can you give us an update on African swine fever and how it’s impacting your swine business and your customers in that species?
JohnAdent
Yes, so John, that’s something everybody seems to be forgetting about with COVID. But it is still a major issue. And if COVID wasn’t around, this is what we’d be talking about. You saw the out — they found one dead boar on the border of Germany and Poland and China banned German imports of pork. And that’s $867 million of exports for Germany, which why you saw our kind of pork futures bump. The hog guys were getting killed in April and May; they were losing, the producers were losing almost $50 a head. Now that coincides with record profits for the processors at the same time because the raw materials are so cheap. But that’s been paradigm and they’re still losing money, but it’s only down to $10 a head. So I’m hopeful that those markets are going to strengthen. And we saw that across a lot of the markets, John, the boiler price, the boiler prices have come off their lows in April.
In May, they’re making about $0.52 cents a pound. And now it’s up to about $0.63. And the five year average is $0.88. So we’d like to see them get back to historical averages, the layer guys are making money today. Class III milk has come off its lows, it was $12. And now it’s you know, it was up to $21 in July is now at about $17 in August. But that’s enough of that group to make money. The beef guys were losing money about $10 a head through April, May, June; they’re now at breakeven or a little better. So I think the initial shock on the food supplies kind of worked its way through. So I’m pretty optimistic. It’s not — let me put it this, it’s nice to see the majority of our customers on the animal safety side making money rather than losing money.
JohnKreger
Great, thank you. One last one, Soleris, is you still in a backorder position? Or have you been able to catch up with the initial orders?
JohnAdent
We are still in a backorder for a few products. But we’ve been able to trim that tremendously. But we’ve had great demand on our new product launch.
Operator
Our next question comes from Mark Connelly from Stephens.
MarkConnelly
Thanks. What part of the appeal of the Listeria right now was that — was a huge gap between what the old test could do and the new one, which not only increased demand, but it changed the incentive, some users had to begin testing where they didn’t before. Is there anything in this gluten test that has the kind of characteristics that could actually change the audience for your testing the way that one did?
JohnAdent
I think, Mark, a better analogy might be Soleris, or Solaris next gen, traditional methods for Soleris is to test for that yeast and mold is five to seven days. And we can do it in 28, or 24 to 48 hours. So just like you’re talking about with LRN, where it — that was a traditional tests that took five days, and we did it in less than 24. It kind of changed the way that they looked at it and moved it more to an environmental test. And it could, I see that same type of opportunity for Soleris, right, so that it’s fundamentally different.
MarkConnelly
So we should think about Soleris that way but the gluten test, we really then should probably just think of as building out the reveal portfolio then.
JohnAdent
I do. And I think it is a major convenience for the customer to not have to have two separate tests, whether they’re going to do environmental or ingredient or environmental ingredient or finished product; they just have to put one test off the shelf for all their needs.
MarkConnelly
Okay, that makes sense. So just one — well, two related questions. Are you starting to see any COVID-19 changes that your customers that you think are going to be permanent in terms of protocols that maybe they’ve learned a little bit in this process? And on a related note, has COVID-19 driven any change in your thinking about what you want to acquire?
JohnAdent
Yes and yes. So not only with our customers but also with us, like we — what we — we talked about this earlier and Steve, what was the number? What percent of our kind of back office group went remote?
SteveQuinlan
70%.
JohnAdent
And if you think about that and how many are still remote?
SteveQuinlan
30% -40%
JohnAdent
Yes. And we didn’t come back to pre Covid looking, we’re looking at saying; there are certain jobs within our business that they were here that can work remotely. And they’ve been very successful working remotely. So we really challenged the team and say, what have we learned, or what’s the best practice coming out of COVID that we can take forward, and some of it is the remote workforce. The other is how we interact with the customers, I think, like I’ve talked about customers have changed in the way we interact, you’re going to have less face-to-face meetings going forward, right for a while. And we’ve been able to really develop an adapt because if you think about even our new Soleris equipment installs, a lot of those we’re doing remote, we have set up our virtual labs, we’ve got virtual installations, we have training materials; YouTube based training materials, it’s really changed the way we’ve talked about interacting with the customers. And it’s made us very efficient, and I think made us better, right?
And so I think that’s going to continue to be a positive. Now on the acquisition side; I think we have to look at those types of opportunities. We’ve talked about the FDA rule on traceability; I think that’s going to continue the USDA just put out a plan, Mindy Brashears, put out a plan yesterday, the day before about how to reduce salmonella in the food chain. And we’re getting ready to launch our salmonella test. So I think we’re heading down the right path. We’re moving in sync with the industry in the government. And I think we’ll continue to find new ways to address customer needs that we haven’t done in the past. That’s going to keep us on the front end of things.
Operator
Our next question comes from David Westenberg from Guggenheim Securities.
DavidWestenberg
Hi. Thanks for taking the follow up. So can you just talk about potential additional government contracts? I believe that you called out some in the prepared remarks. Should we be expecting more maybe contract wins if they’re in the hopper for this year? And I don’t know if you can quantify or give us a ballpark on what kind of a contribution from that kind of thing could look like.
JohnAdent
Yes, a lot of those tenders are international tenders. And what’s challenging with some of those, David, is they may be a three year tender and you win the tender, but they don’t take the product for six months, or seven months, depending on the government they have any money or not. So even though we win the tender, we don’t get to recognize any revenue for a time period after we win the tender. So they’re a little bit, they are great when you get them, they’re hard to forecast. But we do see it as an opportunity. Because as a large player in the marketplace, we’re able to efficiently supply those customers in a way that they really appreciate. So we continue to push on those types of opportunities around the world. I can’t really do a good job. And I don’t think, Steve, can do it either forecasting what that’s going to look like just because the way that they pay in the way that they come in.
DavidWestenberg
Got it. Okay. And then can you just maybe comment on what might be a little bit more color on the drags on margin. You called out a little bit of stuff, but I think you called out the rodenticides are a higher-margin product, and they did really well in the quarter. Maybe I heard that wrong. And then I traditionally have thought of genomics as being a higher-margin product, so — but that was the only account that did miss me in the quarter. So I was thinking if there’s anything to call out that I need to worry about.
JohnAdent
No, I mean, I think Steve called on genomics, we had one big customer and it was really an internal product mix that changed the way that they were using our product to a lower density chip, which was unfortunately for us it’s higher volume, lower margin, but it’s a lower density chip. So it really was a change by the large poultry customer that affected the margins in genomics. No, I mean, we just saw that. I think the big challenge is you got people that are tightening their belts, like everybody else; business is tough, environment is tough, and but we’re going to continue to grow and find opportunities and keep pushing forward.
DavidWestenberg
Perfect. Okay. So just to clarify, genomics is not necessarily a margin benefit. I know I’m sorry; I had that wrong because I thought it was a margin benefit.
JohnAdent
So within genomics there was a switch; genomics is a margin benefit within the total mix of the company.
DavidWestenberg
Got it. Okay. And then just lastly in terms of growth rate expectations, maybe next year, or you still see yourself as traditional — in Neogen, where you guys kind of say we’re a high single-digit growing business. Is it that still the expectation for the business maybe near term and long term? Put another way, we’re past COVID and —
JohnAdent
Yes, look, I’d love to get a little help from the industry. I think like we talked about last year; the market, last quarter the market was down 11 and we were relatively flat. I think the market was down 2 to 3 on food safety and we were up 8. So we’re outperforming the market. I’d love to get a little tailwind from the market, but I don’t think that’s going to happen for the next couple quarters, but that doesn’t stop us from growing.
Operator
Our next question comes from Jon Braatz from Kansas City Capital.
JonBraatz
Good morning. John, if there was a significant outbreak of African swine fever in Europe, how might that compare to the impact the African swine flu fever had on in China in terms of maybe sales of just your disinfectant products and cleaning products? I’m sort of trying to get an idea what — how Europe might be same or different than China?
JohnAdent
Yes. I think the — thanks, Jon. Thanks for the question. The difference is the type of farming, swine farming between the two regions. So when you think of China; there — even though there’s large industrial farms there’s so many backyard farms that when the disease spreads it’s just spread like wildfire because it was all those backyard hogs nose to nose touching the fences just spread through the whole country. Europe is going to have much better biosecurity measures, so while the outbreak will be could be severe and devastating for the industry; I don’t think it will be as big a ramification from an economic standpoint as it did in Asia. Now that still benefits us from a standpoint of increased hygiene protocols and increased cleaning and frequency, right? So if you were — if your process was you’re going to clean out that barn between lots of hogs and you may clean it disinfect it and then bring the next load. I can see very easily where they would clean it disinfect it; clean it disinfect and use our APT test to make sure there was nothing left over, clean it again and then bringing hogs.
JonBraatz
Okay. Is the biosecurity protocol in the hog farms in Europe as you know up to the U.S standards? I’ve been to a couple of them.
JohnAdent
Oh, yes.
JonBraatz
Okay.
JohnAdent
Yes, especially in Western Europe. I mean they’re very sophisticated, yes.
Operator
This concludes our question-and-answer session. I would like to turn the conference back over to John Adent, President and CEO for any closing remarks.
John Adent
Great. Thank you, Matt. And thank you all for joining us today. And if you haven’t already, please make sure that you return your proxy votes via mail and whether you vote via mail or not you’re certainly welcome to attend our Virtual Annual meeting which is going to be Thursday, October 8th. So if you’d like to attend, please contact Rod Poland, if you have any questions on how to participate. So thank you all very much. We appreciate your support.
Operator
The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
