6 May 2022

9 minute read

By: Jim Wyckoff

US records the first human infection of the highly contagious H5 avian influenza virus

State officials and the Centers for Disease Control and Prevention (CDC) said the first known human case of H5 bird flu in the US was detected in a person in Colorado. The person that tested positive for avian influenza A(H5) virus was involved in the culling of poultry presumed to have had H5N1 bird flu, CDC said.

The Colorado Department of Public Health and Environment (CDPHE) said the man is incarcerated at a state correctional facility and was exposed to infected poultry while working at a commercial farm in Montrose County. The man tested positive for an avian influenza A(H5) virus earlier this week and the CDC confirmed the result on Wednesday, the CDPHE said, though repeat testing was negative for influenza. It’s possible the person may not have actually been infected with the virus, the CDPHE noted, suggesting the virus may have been present in his nose due to close contact with infected poultry but did not cause an infection.

The man—described as younger than 40, “largely asymptomatic” and reporting only fatigue—is now isolating and taking the antiviral drug oseltamivir, also known as tamiflu, the CDPHE said. No other cases have been confirmed in humans in Colorado or the U.S., the CDPHE said.

“We want to reassure Coloradans that the risk to them is low,” said Dr. Rachel Herlihy, a state epidemiologist at the Colorado Department of Public Health and Environment.

USDA pays $146 million in US bird flu indemnities

As bird flu losses topped 35 million fowl, USDA Secretary Tom Vilsack said on Thursday that the USDA has paid about $146 million in indemnities to poultry owners, with an additional $263 million available. “That’s about half of where we were in 2014-2015 with the last outbreak,” he said, referring to the epidemic of highly pathogenic avian influenza (HPAI) that killed more than 50 million egg-laying chickens and turkeys. “Hopefully, with warming temperatures, we will see abatement of this virus,” Vilsack said at a House hearing. “We’re going to continue to focus on rapid detection, quick quarantine, and depopulation and disposal” of infected flocks.US pork exports sales down, beef up in latest week

USDA Thursday morning reported US pork net sales of 23,800 MT for 2022 were down 24 percent from the previous week and 13 percent from the prior 4-week average. Increases primarily for Mexico (11,300 MT, including decreases of 300 MT), South Korea

(3,700 MT, including decreases of 1,000 MT), Japan (3,400 MT, including decreases of 100 MT), Colombia (1,300 MT, including decreases of 200 MT), and Canada (900 MT, including decreases of 500 MT), were offset by reductions for Nicaragua (600 MT) and New Zealand (100 MT). Exports of 32,200 MT were up 8 percent from the previous week and from the prior 4-week average. The destinations were primarily to Mexico (15,600 MT), Japan (4,100 MT), China (3,600 MT), South Korea (2,600 MT), and Canada (1,500 MT).

US beef net sales of 14,600 MT for 2022 were up 28 percent from the previous week and 1 percent from the prior 4-week average. Increases were primarily for Japan (4,100 MT, including decreases of 600 MT), South Korea (3,200 MT, including decreases of 600 MT), Taiwan (1,800 MT, including decreases of 100 MT), China (1,600 MT, including decreases of 100 MT), and Canada (1,200 MT, including decreases of 100 MT). Total net sales of 100 MT for 2023 were reported for Japan. Exports of 20,300 MT were up 16 percent from the previous week and 7 percent from the prior 4-week average. The destinations were primarily to Japan (6,600 MT), South Korea (5,000 MT), China (3,200 MT), Taiwan (1,300 MT), and Mexico (1,100 MT).

China’s sow herd declines

China’s sow herd declined 3.3% in March to 41.9 million head, down 3.1% from last year. China had 422.5 million head of hogs at the end of March, down 5.9% from the previous month but up 1.6% from last year, according to the country’s ag ministry.

US meatpacker CEOs deny market manipulation behind beef price surge

Chief executives of four big meatpacking companies denied conspiring to manipulate beef supplies or prices as they defended themselves in congressional testimony, and under oath, last week against charges of profiteering.

President Joe Biden and some congressional Democrats have targeted the four meatpacking companies, arguing they are leveraging their market share to profiteer from the Covid pandemic and supply-chain shortages.

Cattle producers’ share of the prices consumers pay for beef has recently rebounded a bit, to 39% in March, from as low as 31% in June 2020 when massive Covid-19 outbreaks slowed meatpacking plants during the early phases of the pandemic. But farmers’ share remains well below pre-pandemic levels, when it ranged between 60% annually in 1990 and 43% in 2019, according to USDA data.

House Agriculture Committee Chairman David Scott (D-Ga.) asked each of the CEOs to raise their right hands and swear to tell the truth, a formality congressional hearings often skip. He then asked each to answer whether their companies had ever made an agreement among themselves to raise beef prices or manipulate supply.

Scott released a graph showing the difference between the cost packers pay for cattle and the wholesale prices they receive for beef rapidly rising since 2015. “When you look at this chart, it explains why questions are being raised,” Scott said. “How can it jettison up?” Each of the executives answered the question on price manipulation with a “No,” or “Not that I am aware of.”

Tyson Foods Inc. CEO Donnie King said the rise in packers’ margins are partly due to the cycle of cattle markets, as higher prices for cattle in 2014 led to an expansion of herds that then drove down livestock prices. He added that the surge in consumer beef prices since the pandemic that has captured public attention is driven by nothing more than “straightforward market forces… Tyson does not set the prices for either the cattle we buy or the beef our customers purchase,” King told the panel. “Instead, the prices are determined by supply and demand.” Tyson Foods reported the profit margin from its beef segment hit 19% in its most recent quarterly results, for the period ended Jan. 1, up from 13% a year earlier. The company said margins would drop to more normal levels later this year.

Dave MacLennan, CEO of Cargill Inc., attributed higher beef prices to “labor constraints, transportation challenges and rising feed costs.” He said his company recognizes the importance of smaller, independent producers. “We can't survive as an industry — this country can't feed itself — without the small family ranchers and farms that we depend on,” he said.

Production slowdowns and labor shortages during and immediately after the pandemic led to a production backlog of approximately one million cattle, said Tim Klein, CEO of National Beef Packing Co. That “negatively impacted cattle prices in 2020 and for much of 2021 before being cleared,” he said. Klein said beef market cycles shift between advantages for cow/calf operators and other producers when cattle supplies are tighter to packers when cattle supplies are near peaks. Rising cattle prices “mean calf prices will go up so the cow/calf producer will get more for his product going forward than he has the last few years.”

JBS USA’s CEO Tim Schellpeper said JBS operates “in an extremely competitive environment” both on the buying and selling side, utilizing AMAs and cash markets. He detailed that in Iowa, his firm participates “in numerous sale barns, we have 14 sale barns, I believe,” adding that the company is supporting producers by procuring cattle through a variety of channels. Schellpeper said “more cash trade today will not help the producer today,” adding that many of the cattle that are bought in AMA's or other agreements are “because the producer wants a guarantee [purchaser] for their cattle.”

Ranking panel member GT Thompson (R-Pa.) slammed the Biden administration and congressional Democrats for “demonizing the packing industry out of political convenience” to shift focus away from “record levels of inflation that are plaguing our economy with skyrocketing input costs across the board, not to mention severe labor shortages and continued transportation supply chain challenges.” He suggested the “decks were stacked” in advance for the hearing to veer towards a predetermined outcome to justify what he called “drastic, unvetted or controversial legislative action,” noting Democrats declined bipartisan efforts to include an ag economist in the session.

Thompson asked whether new Biden administration regulatory moves such as under the P&SA, line-speeds and labor could harm the packing industry’s ability to innovate. Klein said a well-founded regulation is “good for everybody,” but cautioned against unintended consequences, noting his company spends $20 million on regulatory issues annually and he does not want that figure “get out of hand.”

Ranchers were split on cattle market solutions, with a group of cattle producers opening the hearing, with two of them independent cow/calf operators. As with a producer panel in Tuesday’s Senate Ag hearing, the producers agreed on the need for strong market enforcement under the Packers & Stockyards Act (P&SA) but were divided over the best solutions.

Cow/calf producer Coy Young said alleged market manipulation by large meatpackers — including through the use of alternative marketing agreements (AMAs) — has driven up the margin between the prices paid to farmers for cattle and those received by meatpackers for beef in the retail market. “AMA's have killed the cash market and competition within the beef industry making the markets the cow/calf producers have to compete in so depressed,” Young told the panel. “AMAs are legalized market manipulation practices that should not be allowed,” he argued. Young, a fourth-generation Missouri cattle farmer who said he’d considered killing himself as he was financially squeezed by falling prices for his livestock. “The markets are so broken they’re breaking people, breaking them to the point of ending their own lives,” Young said.

Another cow/calf producer, Gilles Stockton, with the National Plains Research Council and Western Organization of Research Councils, shared similar sentiments.

Don Schiefelbein, a producer and president of the National Cattlemen's Beef Association (NCBA), acknowledged the producer-packer relationship “has been a hot topic over a century.” But he argued bigger concerns for NCBA is the shortage of beef packing capacity, inflation and rising labor costs. The group also opposes the Cattle Price Discovery and Transparency Act of 2022 (S 4030) with on new cash cattle trade mandates and the Meat and Poultry Special Investigator Act of 2022 that were examined by the Senate Ag panel.

Julie Anna Potts, President and CEO of the North American Meat Institute, an industry trade group, in a statement urged Congress not to “make radical changes” to rules governing cattle or beef, warning “such changes will upend the markets, increase costs for the entire supply chain, including for consumers.”

Comments: The House Ag hearing on the meat sector again underscored the partisan divide on the panel about who and what were to blame for recent cattle market trends — more so than was seen during the Senate session Tuesday, confirming lawmakers appear split on the root causes and proposed solutions. As for any next step, Chairman Scott closed the hearing by saying the committee will consider legislation addressing cattle market reforms. He provided no details as to the form of the legislative initiative. A forthcoming Democratic package, some sources report, will likely include legislation giving the Federal Trade Commission more authority to go after fuel price gouging along with bills to address meat industry chokepoints.