A case of New World screwworm (NWS) was confirmed in South Texas near La Pryor, on June 3. As of June 30, 27 cases have been confirmed in Texas and New Mexico.
Since the announcement, the feeder cattle futures markets reacted, initially falling more than $5 cwt. across contracts on the day of the announcement but rallied the next day. There was no detectable impact on the cash market. Most economists agree the bad news had already been priced into the market.
“I would characterize it that it almost was a sigh of relief — it was a sigh of relief not that it’s a good thing that we got it, but that we finally have it,” explains Derrell Peel, Oklahoma State University Extension livestock marketing specialist. “We finally got it over with. The anticipation and the uncertainty of when it was going to happen was probably worse than the reality of it happening.”
The latest Farm Journal Ag Economists’ Monthly Monitor polled ag economists on how they think NWS will impact the economy if confirmed cases continue to increase. Farm Journal regularly reaches out to a vetted list of 80 ag economists from across the industry who provide directional insights. Here’s how they responded to NWS-focused questions in June:
Screwworm Economic Impact: High Concern, but Not Yet “Catastrophic”
A significant majority of agricultural economists expect NWS to impact the bottom line if it spreads beyond its current footprint.
75% of respondents anticipate at least a “moderate” (50%) or “significant” (19%) to “severe” (6%) economic impact. However, none of the respondents currently view it as a “catastrophic” threat (0%), suggesting they believe the risk is manageable if contained. This points to the fact producers should remain vigilant but focused on containment rather than panic.
The day after the announcement, Peel predicted NWS would not have much impact on cattle markets and beef markets. “We’re not talking about any change in the supply fundamentals. It’s just not going to have that kind of impact, so it’s really not going to have that much market impact.”
Peel says he still agrees with his statement nearly a month later. He does admit NWS is a huge management issue for the producers who are in an infested zone, as well as agencies and government trying to deal with it. “It’s very costly, but it’s not an overall market impact,” he summarizes.
David Anderson, Texas A&M professor and Extension specialist for livestock and food product marketing, agrees the economic impact will occur in areas where NWS is confirmed because of the increased costs of checking cattle, treating any infested cattle and just the time and effort dealing with the pest.
He predicts the severity and duration of the outbreak will determine how big an impact it is. “I think it’s also important to recognize that it is regional in nature,” he adds. “The whole Southern tier of states could be susceptible.”
Mixed Reviews on USDA’s Response
Confidence in the federal government’s handling of the NWS outbreak is fragmented. While 33% rate the USDA’s response as “adequate” and 7% say it is “more than adequate,” a notable 20% view it as “somewhat inadequate.”
The largest single group (40%) says it is “too early to assess,” indicating the industry is in a “wait and see” mode regarding the effectiveness of current mitigation strategies.
Anderson says he is a little surprised by the response on current mitigation strategies.
“Sterile flies work. We know how to control this pest,” he says. “If I had to fault anything, I think it was a real mistake not getting started on a new sterile fly production facility as soon as the flies started moving north in Mexico.”
Support for Reopening the Mexican Border — With Strings Attached
Despite the entry of NWS into the U.S., there is a strong consensus on how to handle trade with Mexico.
71% of ag economists support reopening the border for cattle imports. Crucially, 64% of respondents specify that this should only happen with “enhanced inspection and treatment protocols.” Only 29% believe the border should remain closed entirely.
These statistics point to the fact trade remains vital, but biosecurity at the border is the top priority.
Anderson says he would not have closed the border to begin with, adding the closure had bad consequences for the cattle industry on both sides of the border.
“Cattle feeders and meat packers lost an important supply of cattle and that has contributed a little bit to higher prices by cutting supplies,” he explains. “It has resulted in sharply lower cattle prices to ranchers in Northern Mexico. Those feeder cattle have stayed there, been fed there, and are part of increasing Mexican beef production and our imports of beef from Mexico are increasing. We have exported some beef production from the U.S. to Mexico and have lost some value-added agriculture here.”
Kenny Burdine, University of Kentucky livestock agriculture economist, adds, “U.S. feedlots depend on Mexican cattle imports and U.S. harvest capacity is larger because of those imports. It is also important to note that Mexico is increasing the number of cattle they finish and process as a result of the import ban. This means that they will likely continue to increase domestic production and be a more significant competitor going forward as the border remains closed.”
Peel says when the border opens, he does not expect many cattle to come across initially. “I would not expect to see very many cattle come before fall,” he predicts, due to the time to re-open the ports and the time for producers to get their cattle ready plus July and August are a terrible time to ship cattle.
Ranking the Threats: Weather and Markets Still Outpace Pests
When asked to rank threats to sustainability and profitability, NWS is a serious concern but currently ranks below other economic and environmental drivers.
The Top Threat: Drought/Weather (Mean: 2.13) remains the undisputed king of concerns.
Market Pressure: Retail beef prices/demand (3.33) and Input costs (4.07) are seen as more immediate threats than biological ones.
Pest Pressure: NWS and other pests (Mean: 4.60) rank in the middle of the pack — more concerning than wildfires (5.27) or wolves (7.40), but less pressing than the immediate financial health of the market.
“While NWS is a threat and will be a challenge for operations impacted, I agree that dry conditions in much of the county are likely a larger threat,” Burdine says. “I also am concerned about how consumers will respond to retail price levels, especially as we push through the summer grill season.”
Anderson agrees drought is the big threat. “If we had not had a series of droughts over the last few years across cattle producing areas, we would have more cattle and higher beef production today,” he stresses. “Drought is a significant factor in slowing herd expansion. Beef demand has been very good and is the reason prices are so high today — we would have higher prices based on tighter supply alone but in combination with growing demand we sit at record highs.”
He does not predict NWS will have an impact on consumer beef prices.
“Don’t forget the wildlife side of this,” Anderson adds. “Deer hunting is a big economic activity. NWS has the potential to be devastating to wildlife populations and that could have a huge impact including on ranchers who gain a significant part of their revenue from hunting leases.”
