1913 Beef Prices

Just change the date from 1913 to 2013, and see how it reads.

Price of Beef - 1913

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What’s Ailing America’s Cattle?

wsj1
Scientists Suspect Livestock-Feed Additives Are Behind Distress
By JESSE NEWMAN and KELSEY GEE

Tyson Foods has suspended purchases of animals fed with the additive Zilmax. Shown, workers at a Tyson unit trimmed beef in Nebraska last year.

A growing number of cattle arriving for slaughter at U.S. meatpacking plants have recently shown unusual signs of distress. Some walked stiffly, while others had trouble moving or simply lay down, their tongues hanging from their mouths. A few even sat down in strange positions, looking more like dogs than cows.

“I’ve seen cattle walking down a truck ramp tippy-toed,” said Temple Grandin, a doctor of animal science and consultant to the livestock industry. “Normally, they just run down the truck ramp and jump out. We do not want to see bad become normal.”

Agence France-Presse/Getty Images

Agence France-Presse/Getty Images


With few other changes to animals’ diets that could trigger such symptoms, Dr. Grandin and other scientists involved with the livestock industry began to suspect a tie to weight-gain supplements called beta-agonists that have only recently become widely used.

Cattle at a farm in Iowa

On Friday, drug maker Merck & Co. said it would temporarily suspend sales of Zilmax, one such feed additive, responding to widening animal-welfare concerns within the U.S. beef industry over the use of pharmaceuticals in meat production.

“Over 25 million cattle have been fed Zilmax since it was approved in the U.S., and I’m pretty sure we didn’t miss anything in those safety and efficacy studies, which were reviewed by regulatory agencies,” said KJ Varma, senior vice president of research and development at Merck’s animal-health unit, in an interview.

wsj3Merck said it plans to perform a new study of the drug’s effects on cattle, with an animal-health advisory board made up of company-appointed researchers who will design the study.

The Merck announcement came more than a week after Tyson Foods Inc., TSN -7.34% the largest U.S. meat processor by sales, told cattle suppliers it would suspend purchases of animals fed with Zilmax on account of ambulatory problems that the company observed, and suggestions by health experts that the drug might be the cause.

Originally designed to alleviate asthma in humans, beta-agonists are mixed into cattle feed during the final weeks before slaughter to promote weight gain by stimulating the growth of lean muscle instead of fat. They aren’t hormones, but Zilmax, or zilpaterol, can add roughly 2%—or 24 to 33 pounds—to an animal’s final weight. Its rival, ractopamine-based Optaflexx, can add as much as 20 pounds.

Beta-agonists such as Zilmax and Optaflexx, which is made by Eli Lilly LLY -1.08% & Co.’s Elanco animal-health unit, are products of an expanding business of supplements and antibiotics developed in recent years to help livestock gain weight quickly or prevent illness among the animals.

Since the twin drugs won approval from the U.S. Food and Drug Administration in 2006 and 2003, respectively, they have grown in popularity, and are used in roughly 70% of U.S. cattle sold to slaughterhouses, according to Merck. Zilmax sales in the U.S. and Canada totaled $159 million in 2012.

“While FDA has received a very small number of reports of lameness or lying down in cattle treated with zilpaterol, we are always interested in new information about the safety and effectiveness of approved animal drugs,” said a representative for the agency.

Cattle feeders increasingly adopted beta-agonists as years of severe drought drove prices for corn—the main ingredient in cattle feed—to record highs, before an expected huge crop this year caused the prices to moderate.

As “grain prices accelerated, the margins got extremely squeezed in our business,” said Gerald Timmerman, a third-generation cattle rancher and feeder whose family owns livestock operations in Nebraska and Colorado. “That was the catalyst that drove demand for Zilmax up.”

These days, he said, “you can drive through a feed yard and spot every one [of the cattle] that’s on it. They look like muscle-bound athletes. …From a personal standpoint, I felt it was not the right thing to do.”

The additives have also taken away one of the feed-lot operators’ key bargaining chips, the ability to time when they send cattle to the packing plant to get the best price.

“Now, you only have so many days after an animal has been fed [a beta-agonist] before it’s got to go to slaughter or it becomes so lame it can’t move,” said Mike Callicrate, a cattle producer in Colorado Springs, Colo.

Despite the drought, average carcass weights have risen during recent years. Two weeks ago, the average live-steer weight at the time of slaughter was 1,409 pounds. For the same time in 2010, the average was 1,329 pounds. In 2007, it was 1,302.

Meatpackers, who face low head counts for cattle and are looking for another way to expand the amount of meat they can sell, are simultaneously encountering a growing global demand for drug-free meat.

In June, Smithfield Foods Inc., SFD -0.12% the world’s largest hog farmer and pork processor, dedicated half of its slaughter capacity to processing hogs that were never fed ractopamine, a beta-agonist that was banned in Russia in 2012, and also prohibited from use in hogs destined for China or the European Union.

“The company is leveraging its integrated platform to address the growing demand for ractopamine-free pork, primarily in export markets,” said a Smithfield spokeswoman, of the company’s ownership of both its hog-production and processing units.

Removing Optaflexx from cattle and hog feed would require that producers on aggregate use an additional 91 million bushels of corn a year, said an Elanco spokeswoman. It would also require 10 million more head of cattle on a yearly basis to produce the same amount of meat without beta-agonists and other commonly used growth-enhancing technologies, including steroid implants.

Tyson said in an email that its recent ban on Zilmax-fed animals isn’t motivated by a desire to access export markets, but rather “our own, recent animal welfare observations, as well as input from independent veterinarians and outside cattle research and animal welfare experts.”

Since Tyson’s announcement, National Beef Packing Co. of the U.S. and JBS SA JBSS3.BR -3.13% of Brazil, two major meatpackers, have said they don’t plan to change their own cattle-buying practices.
JBS spokesman Cameron Bruett said the company, the world’s largest meat processor, has also noticed ambulatory problems in cattle arriving at its slaughter facilities, but hasn’t been able to determine a direct cause. If a link to beta-agonists becomes clear, he said, JBS “might take a different approach.”

Cattle feeders say beta-agonists affect animals unevenly, and more acutely in hot weather than cold. Some have reported respiratory issues or increased aggression in animals fed with beta-agonists. Many have seen no adverse effects at all.

Guy Loneragan, a veterinary epidemiologist and professor of food safety and public health at Texas Tech University, has found a 70% to 90% greater incidence of death in animals fed with beta-agonists. Still, death among cattle in the final stages of feeding is rare.

“We’re at a stage now where we’ve collected a number of adverse events that seem to be related to their use,” Dr. Loneragan said. “The onus is upon the industry, particularly the drug manufacturers, to identify the specific causes of what we’re seeing, and find solutions to prevent it from happening.”
Some opponents of beta-agonists suggest the drugs pose concerns beyond animal welfare, and could have environmental and human health effects that have yet to be closely studied.

“It’s not good for anyone for animals to be showing up at the slaughter house that aren’t 100% healthy,” said Frank Garry, a veterinarian and professor in clinical sciences at Colorado State University. “Whether it’s the drug or not, that’s what we need to find out.”

Write to Kelsey Gee at kelsey.gee@dowjones.com
A version of this article appeared August 18, 2013, on page B1 in the U.S. edition of The Wall Street Journal, with the headline: What’s Ailing America’s Cattle?.

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“I really want to talk about Zilmax!”


October 19, 2012: “I really want to talk about Zilmax” – Mike Callicrate

View Full Video and Related Post:
Edible Education 103: The Politics and Economics of Meat by Mike Callicrate and Bob Martin with Michael Pollan at UC Berkeley

As Beef Cattle Become Behemoths, Who Are Animal Scientists Serving?

Zilmax Related Articles

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It’s Called Stealing – What Big Retailers and Meat Packers are Doing to Cattlemen

Earl Sale Barn low res
Fifteen years ago, in responding to the question of why producers were receiving so little for their livestock, Dr. John Helmuth (economist, meat industry expert, and longtime critic of meat industry consolidation) said, “There is an economic term to describe this phenomenon: It is called stealing.”

Compared to a competitive time in the industry in the 1970’s, the monopoly power of the big retailers and meat packers has left today’s cattle producers nearly $600 per head short of their share of what consumers spend for beef at the retail meat counter. According to USDA data, there has been nearly a 20% loss of the consumer dollar at the farm gate since 1975. The economies of scale and efficiency arguments that enabled today’s unprecedented concentration have destroyed the competitive marketplace while removing nearly half of our ranchers from the land. The market power gained through concentration and consolidation has provided the big retailers and meat packers the ability to extract record unfair profits from both producers and consumers.

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“A modern plantation system is what it is,” said Robert Taylor, a professor of agriculture economics at Auburn University as quoted from Obama’s Game of Chicken

CLICK READ COMPLETE PAPER

READ COMPLETE PAPERPublished July 23, 2004

Weapons of Market Destruction:
Unregulated concentration and consolidation
– Cooperation replacing competition among biggest packers
– Price leadership by dominate packer
Captive supplies including:
* Packer ownership of livestock
* Forward Contracts
* Formula contracts (equiv: nuclear warhead)
– Allocation of territory
– Manipulation of futures market
– Talking the market lower (mentally conditioning seller – bidding not-to-buy)
Agency capture – USDA shields big packers from P&S Act

At an average slaughter weight of 1,350 lbs., and the average retail price of $5.35/pound, a finished animal is worth around $3,033 per head at Walmart, King Soopers and Safeway.

Retail yield is approximately 42% of the live weight on the typical slaughter animal. 1,350 lbs. x 42% = 567 pounds of retail meat at $5.35 cents per pound equals $3,033 value per head at the retail meat counter.

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Additionally, the packer is making approximately $190/head ($14.11 x 1,350 lbs.) on the By-Product Drop Value.

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The producer of cattle invests over 85% of the capital, nearly all the labor, nearly all the management, takes nearly all the risk – and today, while consumers pay record high prices for beef, they go broke – it’s called stealing:

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Mike Callicrate

Posted in Beef Checkoff, General Advocacy | Tagged , , | 6 Comments

RE: Cheaper Feed Comes too Late for Some Cattlefeeders – It wasn’t the drought that put cattle feeders out of business

Mr. Duff has experienced all the risks inherent in the business, from weather risks, including killing winter blizzards; times of low prices for cattle and high feed costs. What Mr. Duff and the other thirty-five thousand feeding operations that have gone out of business also mostly remember is when there was a fair and competitive market. Thirty some years ago the market worked. Risk, along with capital and good management was rewarded. Today everything on the supply side of Walmart is a cost to be reduced. No one within the Walmart (and other multinational corporations) supply chain will survive their crushing market power without antitrust law enforcement. The food monopoly must be broken.

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The Obama administration promised they would fix the market – they lacked the courage

It would help the remaining few survive, or at least understand, if the real reason for the demise of cattle producers was told.

Mike Callicrate


August 13, 2013 By Jesse Newman

Great Plains Feedlot Operators, Battered by Losses, Are Closing at a Rising Rate

SCOTT CITY, Kan.— David Duff, a cattleman nearly all his life, is selling the last of his steers and heifers this summer, a casualty of a drought that has extended into a third year in Kansas, Texas and other major cattle-producing states.

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Mr. Duff and other feedlot operators, who fatten cattle for slaughter, have been squeezed by rising prices for young cattle and high feed costs that have outstripped prices paid to them by meatpackers. U.S. beef consumption last year was 15% lower per person than 10 years earlier, as declining production and growing international demand have pushed up retail prices.

David Duff, part owner of Beef Belt Feeders, stands in front of an empty cattle pen. The feedlot, which will soon close, is the latest casualty of a record drought that is roiling the beef industry.
Even though the price of corn, a main feed ingredient, has fallen this year from last year’s record highs as more-normal weather returned to the Midwest corn belt, it comes too late for many feedlot operators struggling to stay solvent.

About 2,000 of the nation’s 77,120 feedlots exited the business last year, up from 20 a year earlier, federal figures show. Mr. Duff is expected to be one of many who close their operations this year as losses mount.

“It’s the end of an era,” said the 69-year-old Mr. Duff, wearing jeans and scuffed cowboy boots one recent morning at his western Kansas feedlot. “There have been four generations of Duffs at Beef Belt Feeders. Makes you kind of sad to close up shop.”

Running a feedlot has long been risky because of volatility in cattle and grain prices. Participants in the $35 billion-a-year feedlot industry buy roughly one-year-old cattle that weigh about 750 pounds and feed them a corn-heavy diet for as long as six months. When the animals are ready to be sold to slaughterhouses, they weigh as much as 1,400 pounds.

Ranchers across the High Plains have culled their herds of young cattle, which are sold to feedlots, to the lowest levels in six decades as prolonged drought has parched grazing pastures. That has shifted the industry north, where there has been more rain.

Now the woes are moving up the food chain, with feedlot operators from Texas to Nebraska bearing the brunt of dwindling supplies. Last year, feedlots with 1,000 or more cattle sold 24.95 million animals, down from 28.29 million in 2000.

Drought Dries Up Profits at Plains Feedlots

A prolonged drought in the southern Great Plains has hit ranchers hard and now is moving up the food chain.

Cattle in a pen at Grant County Feeders.

Click to Enlarge

Click to Enlarge

On average, U.S. feedlots have lost money for a record 27 straight months, said Rich Nelson, chief strategist with Allendale Inc., an agricultural-advisory company in McHenry, Ill. The losses equal an average of about $141 per head of cattle over that period, he said.

“This is probably the worst two-year period we’ve had in the history of the High Plains cattle feeding industry,” said Jim Robb, director of the Livestock Marketing Information Center, an industry group in Denver.

The number of feedlot operators has fallen 20% in the past decade. The biggest impact has been on smaller operators with fewer than 1,000 cattle. “The industry is overbuilt now,” said Jerry Bohn, general manager of Pratt Feeders, which recently closed one of its four feedlots. “There are too many feed yards chasing too few cattle.”

Ranchers won’t be able to expand their herds until the drought subsides. Even once the dry weather eases, it will take years to rebuild herds.

During last summer’s drought, corn prices surged to record highs of more than $8 a bushel. This year’s wet weather in the Midwest helped push down corn-futures prices last week to roughly $4.65 a bushel in anticipation of a big fall harvest. On Monday, the U.S. Department of Agriculture tempered its estimate for the size of this year’s crop, while maintaining predictions for a record harvest. Still, lower corn prices alone won’t be sufficient to rescue some feedlots.

A recent decision by meat giant Tyson Foods Inc. to stop buying cattle fed with a popular weight-gain supplement, Zilmax, could further strain balance sheets if feedlot operators have to buy more corn to fatten cattle longer, or sell animals that weigh less.

Losing feedlots, many of which are locally owned, is tough on the region’s small towns, said Katie Eisenhour, executive director of the Scott County Development Committee. “To have them in the community, that’s the difference between thriving and just surviving,” she said. Scott County, which lost its distinction as the leading cattle-feeding county in Kansas over a decade ago, has struggled to maintain its population of roughly 5,000.

Mr. Duff and his father opened their business in 1969, just as feedlots were migrating west from the central Midwest. Thanks to a drier climate—more amenable to raising cattle—the advent of irrigated cornfields and the arrival of meatpackers seeking steady supplies, the industry enjoyed a boom period through the 1970s. “It was like a gold rush,” Mr. Duff said.

At its peak, his business fed more than 10,000 cattle and bison, a lucrative niche animal that helped keep the company profitable for years. On a recent day, Mr. Duff’s feedlot sat largely empty, the cattle pens swept of manure and feeding troughs cleared of grain. Only a few hundred cattle and a herd of bison remained, their shaggy, hulking figures towering on the horizon.

Last year, Mr. Duff lost more than $200 per head of cattle, compared with profits of as much as $150 per animal in better years. By the end of the summer, the cattle and most employees, who once totaled 12 full-timers, will be gone. “It was heartbreaking to let people go after 20 or 25 years,” he said. “It’s like there’s been a death in the family.”

Mr. Duff has experienced all the risks inherent in the business, from weather risks, including killing winter blizzards; times of low prices for cattle and high feed costs. What Mr. Duff and the other thirty-five thousand feeding operations that have gone out of business also mostly remember is when there was a fair and competitive market. Thirty some years ago the market worked. Risk, along with capital and good management was rewarded. Today everything on the supply side of Walmart is a cost to be reduced. No one within the Walmart (and other multinational corporations) supply chain will survive their crushing market power without antitrust law enforcement. The food monopoly must be broken.

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