In an unprecedented move, U.S. packers stopped buying cattle fed Zilmax, a product cleared for use by the U.S. Food and Drug Administration.
Merck voluntarily pulls beta-agonist from U.S. market after Tyson refuses to purchase Zilmax-fed cattle
Cattle futures prices surged higher in early August on news that Tyson Foods Inc. would stop buying cattle fed Zilmax, a beta-agonist marketed by Merck Animal Health.
Indeed, Tyson’s announcement rocked the cattle and beef industries to the point where Merck pulled Zilmax from the market within 10 days. Initial bullish reactions by traders in Chicago were driven by ideas that beef production would plummet significantly as cattle feeders stopped feeding Zilmax.
Tyson executives claimed animal welfare concerns were behind their unprecedented move to ban cattle fed a product approved and deemed safe by the U.S. Food and Drug Administration.
Some Zilmax-fed cattle displayed ambulatory problems in packing plant holding pens, which led to the animal welfare concerns. Within a few weeks, several other major packers—including Cargill, JBS and National Beef Packing—also stopped accepting Zilmax-fed cattle.
The incident left a laundry list of unanswered questions for both cattle feeders and ranchers. At the top of that list are animal welfare concerns and how continued use of Zilmax or other technologies might be perceived by consumers. Cattle feeders have become keenly focused on animal welfare and best-management practices in order to polish their image with consumers. But some question whether the Zilmax ban was indeed an animal welfare issue.
Marketing ploy? "We never saw an ambulatory problem" from Zilmax-fed cattle, says Ki Fanning with Great Plains Livestock Consulting Inc. in Eagle Neb., a nutrition consulting firm whose clients have a total of 1 million cattle on feed. "I believe it was strictly politics" that Tyson banned Zilmax-fed cattle. "I think they wanted to preserve their export markets."
China, Russia and several countries in the European Union have banned beef produced with growth-enhancing products such as Zilmax. Many in the U.S. beef industry speculate that banning Zilmax-fed cattle is simply a marketing ploy by Tyson and other packers to help ship products overseas. Further, if packers are successful in pulling one product off the market, will they seek to do the same with other growth-enhancing products?
Animal welfare and export issues aside, the cattle industry continues to grapple with the production and marketing impact of losing, at least temporarily, the use of Zilmax.
"The markets tended to overreact to the initial Tyson announcement," says Glynn Tonsor, Kansas State University livestock economist. While there is no doubt Zilmax-fed cattle produce heavier carcasses and that removing Zilmax from the market will have an impact on tonnage, he says beef production was already lower due to smaller cattle supplies and a reduction in cow slaughter, and it remains to be seen how cattle feeders will adjust production in the absence of Zilmax. Many cattle feeders will simply switch to using Optaflexx, a competing beta-agonist made by Elanco Animal Health.
Through mid-September, as the number of Zilmax-fed cattle began winding down, recorded carcass weights were already running slightly under last year, suggesting that the spread in carcass weights compared to last year would widen further.
"Beta-agonists will not be disadopted," Tonsor says. "It’s hard to leave money on the table (from the additional carcass weight), and there is a packer benefit from these products, too, in additional red meat yield."
While the Zilmax saga forced the industry to further examine animal welfare, marketing and consumer issues, the role animal health companies play in industry success should not be overlooked. For instance, Merck Animal Health is likely frustrated at the loss of an approved product that provides benefits to both feeders and packers. However, the company was widely applauded for its prompt and decisive actions to pull the product from the market and commit to further research into animal welfare and food safety. The company will identify feeders and packers to participate in a third-party audit.
- October 2013