'Shock wave' follows change in Tyson's beef policy

The meat producer decides to stop buying animals receiving a drug that helps cattle bulk up in the last weeks of their lives.

By Kim Peterson Aug 8, 2013 1:33PM
File photo of a Tyson Beef Pot Roast in the frozen food section (© Andrew Harrer/Bloomberg via Getty Images)Tyson Foods (TSN) sent what one commodities broker called a "shock wave" through the meat industry Thursday by announcing it will stop buying cattle fed with the growth-enhancing drug Zilmax.

The result for consumers is that the prices of steaks and other beef products will likely go up. On the plus side, their meat may have one less additive in it.

Controversy has surrounded the industry's use of Zilmax, which is sold by Merck Animal Health, one of the fastest-growing units of Merck (MRK). Zilmax was originally created to help people with asthma, Christopher Leonard writes on Slate. But researchers found that it makes animals produce more muscle and less fat.

The drug causes cattle to bulk up dramatically in the last few weeks before slaughter. That produces more meat for consumption, and it was embraced by food producers, who could suddenly get more revenue from a single animal. Merck Animal Health says that Zilmax doesn't cause the quality of steaks to suffer and that people can't tell the difference between beef that has and has not been treated with the drug.

But Tyson noticed a curious change in its cattle: They couldn't walk, and in some cases they couldn't move at all. The company said Thursday that while it couldn't directly point to Zilmax as the cause, it was going to stop buying any animals fed Zilmax anyway.

"Our evaluation of these problems is ongoing, but as an interim measure we plan to suspend our purchases of cattle that have been fed Zilmax," the company said in a letter sent to U.S. cattle feedlots and obtained by Reuters. Merck responded by saying that Zilmax is safe and that it has been working with Tyson to figure out what's happening to the cattle.

Dennis Smith, a commodities broker who publishes a daily livestock report for the industry, said Thursday that cattle companies are in shock after Tyson's announcement. Cattle futures on the Chicago Mercantile Exchange rallied sharply on the news as traders expected cattle weight and production to drop -- and, as a result, the price of beef to rise.

Smith said in his daily report that he doesn't think Tyson is motivated by health concerns over cattle. He thinks Tyson wants to beef up its export business, and overseas customers simply don't like Zilmax and other additives in their meat.

"I suspect that Tyson is in the process of negotiating with China specifically to export more beef overseas, and while Zilmax is not specifically banned, I think a lot of our export customers do not want animals that are fed feed additives," Smith said. "This is a negotiation process on behalf of Tyson to open the door for additional beef export business."

The larger question for Merck now is whether other beef producers will follow Tyson's example. Four major meat companies control 85% of the market, Slate writes, and they reportedly all had used Zilmax. In addition to Tyson, they include JBS SA (JBSAF), Cargill and National Beef Packing Co.

More on moneyNOW

Aug 8, 2013 2:59PM
Look, I don't want that crap in my beef, either.  But, I find it amusing that the Chinese, with their smog, lead paint and countless other healt hazards in their country that they ignore, are getting hung up on feed additives.
Aug 8, 2013 2:03PM
As many of you Know I am in the Hospitality industry.
If you knew what was in the food you consume YOU WOULD think Twice about what you EAT
Aug 8, 2013 2:52PM
Makes you wonder why anyone gave an asthma drug to steers in the first place?
Aug 8, 2013 4:59PM
It's amazing the rest of the world is sooo much smarter than the dumbed-down USA and don't want artificially enhanced cattle but the USA will kills it's own people just for a buck...
Aug 8, 2013 3:14PM
Will one of you smart people please explain to me why whenever something is removed from a food product the price must automatically go up?  Example sugar-free products, now this.  Are there no beef producers that currently don't use these drugs?  Should be a boon for them and hopefully encourage other producers to return to natural breeding and feeding of livestock.
Aug 8, 2013 3:04PM
Since China owns Tyson,  I would never buy anything with their name on it....disgusting
Aug 8, 2013 6:08PM
you know America would probably have less sickness if they would stop putting chemicals and additives  in our food supply.  I mean they even put sugar in milk so children will drink it, and don't even get me started on meat glue.
Aug 8, 2013 6:33PM
I wonder if the same drug being fed to animals to "help them bulk them up" is the same drug that is causing the obesity epidemic? Eat the beef with the drug in it and the beef eater gets "bulked up" too. 
Aug 8, 2013 5:19PM
Organic beef and grass fed beef don't have the drug.  However, that meat is already nearly  twice the price per lb of drugged beef.
Aug 8, 2013 5:19PM
Cows taste so good, I could never be a Hindu.
Aug 8, 2013 3:45PM
Tyson really needs to make available boneless, skinless, chicken that is not totally freezer burnt.  Can't find it anywhere.  Tears apart like wet newspaper before cooking.  Dark red with arc shaped white stripes.  Don't just grab it, look first.  You will see.
Aug 8, 2013 5:44PM
If countries overseas don't want it doesn't it make you wonder why?  I'm pretty sure that if asked people here wouldn't want additives either.  I'm curious as to whom of us have been asked.  Wait!  Maybe it's the stock holders of companies that have the greatest "steak" in the last minute gain this particular drug has on these animals?  Probably nothing to do with greed........
Aug 8, 2013 8:48PM
I don't want the junk in my beef, either.

When I was studying to become a chemist in the early 1970's, a dark joke that went around college research labs was:

How many chemists does it take to synthesize a chemical which, when added to cattle feed, will make cattle grow 20% heavier?

Answer:  51. 1 to synthesize diethylstilbesterol and 50 to find a cure for cancer.

Aug 9, 2013 9:21AM
Stop the insanity already. Just to make a few extra bucks the meat industry is juicing our food? I find it amusing that my legislators from WI do not want to handcuff those job creators by subjecting them to silly rules imposed by the FDA and EPA. My RWNJ legislators do not believe in science, yet they let science run rampant 'juicing' our food sources and polluting our water just so a few extra dollars go to their corporate 'no jobs created' cronies. We are what we eat and drink America, start raisin' hell with your legislators to stop this insanity. 
Aug 12, 2013 7:45PM
Like the price of beef has been going down lately, right, I applaud Tyson, and I don't need a reason. Typical drug company commercial, talk to you doctor, our product might cause death, your ears to grow, your n*ts to fall off, maybe blindness, who knows, but go talk to your doctor anyway, get started on a regiment of this and when thousands of people die, we'll pay the lawyers to whittle it down to a few that get compensated, and then we'll take it off the market. I'm with my bank, who the hell gave a cow an asthma drug in the first place?
Aug 8, 2013 7:30PM
pops2013,  Where do you get your misinformation from?? 
Aug 8, 2013 4:28PM
Classic Lady: As many of you Know I am in the Hospitality industry.======================

ROTFLMAO Thanks for the laugh classic. 

Aug 9, 2013 8:38AM
golly, the drug is used as a cheap way to bulk up the animals, less feed consumed, more profit. Take the drug away and you go back to the old fashioned way, still not a really solid excuse for big price hikes.  Sugar and fat are cheap, take them out and you have to add other ingredients to make them taste good,  Plus fat is a majpr ingredient in many processed food, take it out and you have to add more expensive ingredients to take it's place.  Heck I could make anything,  put a picture of a farm or some veggies on the label, name it Harmony Acres or something like that,  jack up the price 30%, people will buy it. Beef is jam packed with growth hormones, antiobiotics, etc, I pretty much avoid it anyway.  Most meat is, the animals are so crowded that they are given antibiotics on regular schedules needed or not because disease would be rampant in the filthy conditions. Salt free-you got me on that one, lol it's going to just need a lot of extra spices, and they aren't expensive.
Aug 8, 2013 4:42PM
Just one tiny step toward a completely meat-free world. Go vegan, my friend, go vegan. I mean really. It's 2013, for cryin' out loud. We don't need to eat meat anymore.
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