Will beef production plummet with Zilmax suspension?

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Amid all the discussion and debate around the issue of Zilmax (zilpaterol hydrochloride) over the past two weeks, one thing is clear: The product performs as advertised in terms of boosting carcass weights and lean-meat yield. So when Tyson announced on August 7 it would place a moratorium on purchasing cattle fed Zilmax due to animal-welfare concerns, followed by Merck Animal Health temporarily suspending sales of the product on August 16, speculation arose as to how the reduction in beef production would affect markets.

Questions And indeed, fed-cattle futures and boxed-beef prices have moved higher, with anticipation of shorter beef supplies probably playing a role.

However, industry reports suggest the impact of removing Zilmax from finishing programs, while significant, might not be as dramatic as some have speculated.

In USDA’s Livestock, Dairy and poultry Outlook report last week, the agency speculates that impacts on beef supplies could be mitigated by feeders switching to the alternative beta agonist product – Optaflexx (ractopamine hydrochloride) – and by lower corn prices allowing feeders to cost-effectively feed cattle to heavier weights. The USDA report was issued after Tyson’s decision but before Merck announced its suspension of sales.

In Monday’s Daily Livestock Report, authors Steve Meyer and Len Steiner note average fed-cattle carcass weights in 2012 increased by about 19 pounds, or over 2 percent, compared to those during 2011 – a relatively large jump after five years with little to no increase. That increase in carcass weights corresponds with widespread adoption of beta agonists.

The authors also note that many cattle feeders currently using Zilmax likely will switch to its competitor Optaflexx during the suspension. They estimate the switch would reduce carcass weights by six to eight pounds.

The USDA report points out that before Tyson’s letter to cattle feeders, the five-day moving average for beef cutout values had begun to seasonally increase from a low of $180.54 per hundredweight on August 5, 2013. On Monday, August 19, the Choice cutout averaged $195.22 per hundredweight. The increase is consistent with seasonal patterns, and the authors say any boost in wholesale cutout values if beef supplies are tightened as a result of Tyson’s Zilmax ban will likely be relatively small. As noted, their analysis came before the Merck decision to temporarily suspend sales of the product.

Nevertheless, it seems likely that lower corn prices and the option to use another beta agonist will help moderate any decline in beef production.



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Brad Kooima    
Sioux Center IA  |  August, 20, 2013 at 01:16 PM

It is time to make some decisions based on principle rather than short-term profit.

maxine    
SD  |  August, 20, 2013 at 06:45 PM

Isn't it correct that a profit is necessary for a cattle producer to stay in business? Isn't it also correct that due to consumers wanting a leaner product, use of beta agonists was pioneered, with research as to safety, in order to let cattle add more muscle and less fat? I believe there are no residues allowed in beef. One reason cited in more comprehensive stories of this decision is that some cattle have been lame at time of processing. Whether that is due to use of Zilmax or not, lameness is not conducive to profitable animals, therefore it makes sense to stop the use until the problem is solved. Why is profit considered a bad thing when it is absolutely necessary for people in business to remain in business, and the profit from the cattle business supports many oher businesses in the communities involved?

Brad    
August, 21, 2013 at 09:46 AM

I am referring to Packers who seem to have disregard for potential public perception that are making decisions based on short term profits. The reason the use of Zilmax took off is because you get 30 extra lbs of meat by feeding it for 20 days. I feed cattle, I understand clearly the challenges of making a profit feeding cattle, in fact I have fed since 1975...this is not my first rodeo.

MikeS.    
Kansas  |  August, 24, 2013 at 06:14 AM

Great Job Brad! Some will argue it is all about profit at all cost.. Doping of cattle is not a good deal when you see them. If those who support it just ask "would you injest it yourself if you feel it it that good of a deal". Many like you operate with higher morals and values. Some you just can't educate and they are the ones who support the checkoff that is too "make beef better and consumers want to buy it". Zilmax evens talks about the loss of flavor, tenderness etc. But oh no we need to produce more red meat that is tough and no flavor.. I feed too and I don't use any hormones or agonist. My buyers/consumers always comment on the beef flavor, tenderness and quality vs what the buy in the BIG retail stores. Keep producing what the consumers want and tell the others good luck and we don't need them in the business if you give us a bad rap/name.. Bigger isn't always better!


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