Tyson Fresh Meats dropped a “Dear John” bombshell on the industry last week. In an open letter to cattle feeders, the nation’s largest processor of fed cattle announced that, effective Sept. 6, it would no longer accept cattle fed the beta agonist Zilmax™. Live cattle futures surged on the news, as traders anticipated less beef volume in the coming months, but the big question was whether other packers would follow suit.
It didn’t take long for the remainder of the top four – Cargill, National Beef and JBS – to weigh in, announcing they didn’t intend to follow Tyson’s move. That might just take some of the heat off the beef tonnage concerns that rocked traders earlier, but the situation is fluid, says Kansas State University economist Glynn Tonsor. After all, nothing guarantees that Cargill, National and JBS won’t change their policies down the road, or that Tyson will change its policy, for that matter.
But Tonsor says the Tyson announcement makes less beef volume a certainty in the coming months. “We’ll produce less but how much less depends on how many people disadopt the use of Zilmax. Will Tyson be alone, and to go further, what portion of their recent suppliers will simply switch processing plants or move from Zilmax to Optaflexx™?” he says. Optaflexx is a competing beta-agonist made by Elanco Animal Health.
If such a switch occurs, Tonsor says the beef industry likely won’t see a huge reduction in beef volume. “At the margin, there’s said to be a better gain for Zilmax, but if Tyson’s suppliers just move to Optaflexx, I don’t think we’ll see aggregate projections impacted all that much,” he adds.
Merck Animal Health, maker of Zilmax, has been on offense since Tyson’s announcement. The firm released a statement last week underscoring the importance of animal well-being to the company. Merck said the benefits and safety of the product are well-documented in a 30+ year history of research and development and rigorous testing.
And this week, a news release stressed Merck’s policy to “vigorously pursue all reported adverse events, whether or not they are deemed related to the product.” Merck also announced its “Five-Step Approach to Ensuring Responsible Beef.” They include:
• Immediately begin to recertify every feeder, nutritionist, or veterinarian that feeds Zilmax to cattle, with special attention to feed mixing and determining which cattle are good candidates for the use of beta-agonists.
• Within 30 days, reach out to packers and suppliers to initiate a scientific audit focusing on the feeding of Zilmax. Cattle will be tracked from the feedyard to the packing plant to determine potential causes of lameness and other mobility issues during feeding, transportation, offloading and staging at the processing facility.
• Based on those findings, Merck will enforce appropriate management practices for feeder customers to include overall nutrition and feeding objectives, animal handling, low-stress environments and transportation.
• Merck will form a health advisory board within the next 30 days. This group of small, medium and large feeders, packers, cow-calf operators, and animal health and nutrition experts will review available data and recommend any needed management practices.
• Merck will share all findings.
Merck says these steps are in addition to the technical assistance – both internal and external – it’s offered to help Tyson “understand what is behind the instances at its facility.”
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Zilmax's active ingredient, whichis zilpaterol hydrochloride, is fed for 20-40 days in the feedlot, and increases animal weight up to 21 lbs., with a 14-21% increase in feed efficiency. It’s been particularly useful in the face of higher grain prices. A competing product called Optaflexx, from Elanco, utilizes the active ingredient ractopamine hyperchloride, and is fed for 28-43 days, with resulting weight-gain increases of 10-21 lbs. and 14-21% improved feed efficiency.
While the products increase live weight, the main effect is to increase carcass weight. For cattle sold on a grid, this increases the total pounds and the wholesale and retail value of the carcass.
Tonsor speculates that the effect of the Tyson pronouncement will be felt heaviest in the Southern Plains. “Part of that is due to the fact of where Tyson’s plants are located, the proximity of feedyards to multiple plants, etc. Of course, the extent of use of beta agonists varies across the country, but I do think there’s a greater use in Southern feeding regions of the feeding industry. However, these kinds of things don’t happen in a silo, as additional adjustments are bound to develop. The effect will be industry wide and we’ll learn a lot more on this in the next 20 days.”
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