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  • HPAI in Dairy Cattle:  Is Pasteurization Dairy’s Only Reliable Protection? 

    HPAI in Dairy Cattle:  Is Pasteurization Dairy’s Only Reliable Protection? 

    It has been approximately eight weeks since the U.S. dairy industry became immersed in efforts to monitor and potentially control the outbreak of Highly Pathogenic Avian Influenza in dairy cattle confirmed in 63 locations across 9 nine states as of May 28, 2024, from Idaho to North Carolina.  FDA maintains a wealth of on-line data which is updated regularly and appears to be a model of government transparency. 

    On March 25, 2024, the first joint USDA/FDA/CDC public confirmation of  a HPAI outbreak in dairy cattle in Texas and Kansas, along with communication by most federal and state animal health and food safety authorities has contained this by-now familiar public health advisory:

    “The FDA and USDA have indicated that based on the information currently available, our commercial milk supply is safe because of these two reasons:

    1) the pasteurization process and

    2) the diversion or destruction of milk from sick cows.”

    These statements are based upon the standardized dairy production practices and safeguards mandated in the U.S. Department of Health and Human Services, United States Public Health Services’ Grade “A” Pasteurized Milk Ordinance, 2019 Revision (PMO). In its earliest forms, the PMO dates back to 1924 and acts as the comprehensive and uniform national regulation of milk production for human consumption, its pasteurization, and sales in interstate commerce. It is enforced in all 50 states by a system of milk regulatory officials employed in federal and state government and by private industry through cooperative agreements in some jurisdictions. Pasteurization and the destruction of milk from sick cows is required by the PMO.  

    However, these public health statements contain buried and fundamental assumptions about regulatory and disease control processes that should be unpacked for a clearer understanding of why the impact and nature of these HPAI detections are qualitatively different than detections in poultry. Many distinguishing points exist.  

    • Milk production, processing and sale for the vast majority of human consumption nationwide mandates pasteurization, a “kill step” which has proven to be a relatively foolproof regulatory requirement for the prevention of disease transmission through milk. Perhaps no commodity is better situated to deal with the potential of HPAI in its supply chain. 
    • The biological circumstances of both the disease and the host animal—a large mammal of significant monetary value—do not indicate euthanasia as a disease control measure. Widespread cow-to-cow transmission has not materialized. Hopefully, that does not change in the future, or the consequences will be unprecedented and catastrophic. 
    • A dairy herd, its housing, and the land occupied for dairy production is much more difficult to “lock down” from a bio-security standpoint than the precedent established for controlling this disease in poultry.  Dairy production involves a complex daily routine of feeding, multiple milkings, milk storage, and truck transport for processing no less frequent than every 72 hours (a requirement of the PMO). Through this daily process, in order to achieve the immediate and effective disease transmission prevention aspired to in the poultry context would likely require immediate removal from the herd and culling of cows testing positive. Current conditions and pasteurization support a determination that the removal of objectively sick cows from the milking herd is sufficient. The removal and quarantine of sick cows on an individual basis from milk production if detected (or for example those treated with antibiotics) is a common occurrence and required by the PMO.
    • However, if sick cow numbers increase drastically, the logistics of withdrawing from the herd and retaining sick cows under quarantine conditions on-site for ultimate return to production simply may not be within the capabilities of many dairy operations. 

    All of these circumstances mean that quarantine processes, procedures, and movement restrictions on and off the farm are vastly different and comparatively reduced, as compared to poultry. Most important is that thus far, beyond interstate movement testing and restrictions, USDA APHIS federal quarantine orders have been used sparingly in comparison to poultry. Individual states’ animal health officials are presently filling in any void they feel necessary by imposing their own quarantine orders to serve their own perceived needs. However, this 50-state patchwork is not likely sustainable on a long-term basis should this outbreak in this species become more virulent or protracted.  

    Only time will tell if the current approach to disease control is effective in this species and with this commodity’s production methods. The ability to sustain these practices will depend entirely upon the number of HPAI detections.  

    However, one development has thrown a monkey wrench in the second statement in the two-pronged public health advisory noted above (“. . . diversion or destruction of milk from sick cows.”)  The assumption that such a measure is being reliably taken depends upon every individual dairy herd operator’s 100% accurate determination of which cows may be “sick” with HPAI. We have learned in recent weeks that HPAI in this species is not necessarily able to be routinely or accurately diagnosed.  

    We learned on May 10, 2024, that FDA has engaged in testing of 297 retail dairy products for HPAI virus detection, ostensibly to confirm that the pasteurization “kill step” was 100% effective. 

    “While the FDA collected the 297 samples at retail locations in 17 states, these retail samples represent products produced at 132 processing locations in 38 states.”

    Pasteurization scored a perfect 100% – no active HPAI virus.  However, 59 of the 297 samples tested showed evidence of “dead” HPAI virus components (essentially “killed” by pasteurization). That means 20% of the retail dairy products tested showed evidence that milk from one or more cows carrying HPAI was not diverted from the milk supply. This finding evidences the problems with routinely and accurately diagnosing infected dairy cattle. This result may be through absolutely no shortcoming of dairy operators’ diligence and more likely is caused by the inability to detect this disease’s presence in this species in any way that should be relied upon. The PMO requirement to exclude “sick” cows from the milking herd remains an essential regulatory policy. However, in a crisis of this magnitude, the observational tools of dairy operators for individual cow illness in the herd have proven at least 20% ineffective. Without pasteurization as the tried-and-true backstop, that would be wholly unacceptable and is misplaced if cited as the second most important reason the U.S. milk supply remains safe. 

    These findings illustrate the need for a more robust testing regime of dairy cattle and on-farm milk storage (“bulk tank units”) during this outbreak. Ideally, this should occur at a stage where further contamination can be stopped at the farm gate and before transport for processing as co-mingled milk from multiple premises.  

    Lastly, to boost public confidence, more focus should be on coupling pasteurization with a concentration on the evidence, or lack thereof, that milk can be a transmission medium of HPAI from cows to humans.[1]

    The perceived safety of consumer dairy products[2] is equally a matter of public health as well as economic survival of many in the dairy industry.    

    [1] In terms of disease transmission in mammals by consuming milk containing the live virus, there has been a late-breaking development. On May 24, 2024, the New England Journal of Medicine published a report from research primarily conducted at the University of Wisconsin-Madison concluding that the HPAI virus can infect mice through consumption of milk containing the live virus. At press time, further expert, USDA, or FDA input on the impact of this research was not available. 

     

    [2] As written, this article is strictly limited to the impact of HPAI as a pathogen in milk. However, transmission through the consumption of beef has also been the subject of another very recent development. To date in this outbreak, no HPAI has been confirmed in beef cattle but culled dairy cattle and beef from dairy cattle species increasingly contribute to the U.S. consumer beef supply. On May 1, 2024, USDA-APHIS reported that retail ground beef samples collected in the same states as confirmed HPAI-positive dairy cattle all tested negative for the presence of HPAI. However, on May 24, 2024, USDA’s Food Safety and Inspection Service (FSIS) announced that testing of beef tissue from 96 culled dairy cows sent to FSIS-inspected meat processing plants (but diverted by FSIS staff due to signs of illness) confirmed  the presence of HPAI “viral particles” in beef tissue from one cow. Further information may be forthcoming on the broader implications of this one finding.  Nevertheless, like pasteurization, cooking beef tissue appears to be the reliable “kill step.” On May 16, 2024, USDA’s Agricultural Research Service (ARS) published test results from cooking ground beef heavily inoculated with the HPAI virus.  No active virus was detectable after cooking temperatures of 140 – 160° F.

    Duer, Brook, and Paul Goeringer. “HPAI in Dairy Cattle: Is Pasteurization Dairy’s Only Reliable Protection?” Southern Ag Today 4(22.5). May 31, 2024. Permalink

  • U.S. Fresh Fruit and Vegetable Supply

    U.S. Fresh Fruit and Vegetable Supply

    In recent years, fresh fruit and vegetable production in the United States has been on the decline, U.S. production has decreased by 10 and 23.1 percent respectively since 2000. With declining domestic production, imports of fresh fruits and vegetables have grown substantially with some products only being available in the United States due to imports. Since 2020, a larger share of the total supply of fresh fruit in the United States was imported than grown domestically and has increased from 36.6 percent in 2000 to 54.8 percent in 2022 (Figure 1). Vegetable imports in 2022 were 29.3 percent of the total supply up from 9.5% in 2000. The value of imported fresh fruits and vegetables for 2022 was $18.23 billion. After including exports, the total volume of fresh fruits and vegetables available in the United States was 94.65 billion pounds, or 283.63 pounds per capita.

    The United States has gone from being a net exporter of fresh produce in 1980 with 3.25 billion pounds to a net importer starting in 1998 with 1.88 billion pounds (Figure 2). Net trade of fresh produce, excluding bananas, for the United States during 2022 totaled 24.4 billion pounds of trade deficit and has been over 10 billion pounds since 2013. The United States was a net exporter of fresh fruits, excluding bananas, from 1980 to 2002, since then the United States net imports have grown considerably. During 1980 the United States trade surplus of fresh fruits, excluding bananas, totaled 3.11 billion pounds of exports. In 2022, the trade deficit of fresh fruits, excluding bananas, totals 10.4 billion pounds of imports. As for fresh vegetables, the United States has not had exports exceed imports since 1992. During 2022, imports of fresh vegetables were 13.9 billion pounds higher than exports and continue to grow. 

    Young, Landyn, Luis Ribera. “U.S. Fresh Fruit and Vegetable Supply.” Southern Ag Today 4(22.4). May 30, 2024. Permalink

  • Understand the Implications of a Price Slide When Buying and Selling Cattle

    Understand the Implications of a Price Slide When Buying and Selling Cattle

    Everyone who buys or sells feeder cattle regularly understands that in most markets, the price per pound decreases as cattle get heavier. This can create a challenge for pricing cattle in situations where weight is not known with certainty. Final weight is uncertain in forward contracts, internet sales, and when cattle are sold off the farm but hauled to another location to determine pay weight. In these situations, cattle are often sold with a base weight, and the price is adjusted downward as the weight of the cattle exceeds that base weight. As an illustration, let’s consider a backgrounder that sold cattle via an internet auction with an advertised base weight of 800 lbs. and a price slide of $8 per cwt. Let’s further assume that the cattle sell for $240 per cwt in the auction and will be hauled to a weigh station the following week to determine the pay weight.

    If those steers were to weigh exactly 800 lbs, no price adjustment is needed. The pay weight is 800 lbs. and the price is $240 per cwt for a total of $1,920 per head. However, if the cattle weighed 850 lbs., the price is adjusted downward because they are 50 lbs. above the base weight. With an $8 per cwt slide, the price would be adjusted downward by $4 per cwt (50 lbs. is half of a cwt). With a pay weight of 850 lbs. and an adjusted price of $236 per cwt, the per head total is $2,006. Price slides can get much more complicated than this, but this simple illustration captures the process well enough for this discussion. As long as the price slide is not so large as to actually result in a lower value per head, the seller is typically happy to have more lbs. to sell. In the previous example, the cattle sold for $86 more than they would have had they weighed right at the base weight.

    Now, I want to focus this discussion on the difference between the artificial price slide used to adjust the price for cattle weighing above the base weight and the actual market price discount as cattle get heavier. The table below illustrates this point in relatively simple terms. Suppose the market price for an 800 lb. steer is $240 per cwt and the market price for an 850 lb. steer of the same type and quality was $235 per cwt. This would imply that the actual price discount in the feeder cattle market was $10 per cwt and the market value of those 850 steers would be $1,997.50 per head (850 lbs. x $235 per cwt). If a seller advertised that group of steers with a base weight of 800 lbs. and a $10 per cwt price slide, the price slide and the market discount for weight would match perfectly. The final price would be the same even though the pay weight exceeded the base weight. This scenario is shown in the middle row of the table below, but this will not be the case when differences exist between the market discount for weight and the price slide.

    If the artificial price slide is less severe than the market discount as cattle get heavier, then the seller is actually better off if the pay weight exceeds base weight because the lower artificial price slide would result in a smaller price discount due to the additional lbs. This is illustrated below with the $8 per cwt price slide and note that the final price is higher for these steers. Previous research has found evidence that sellers tend to underestimate weights in these situations (Brorsen et al., 2001). Conversely, if the market discount is greater than the price slide, the seller would actually receive a lower final price than had they advertised the cattle with the higher base weight to begin with. Note that the $12 per cwt price slide below, which exceeds the market discount, results in a lower final price. In situations such as this, sellers have no incentive to overestimate weight (Burdine et al., 2014).

    In theory, price slides used for selling cattle with weight uncertainties should evolve with the market. But my experience has been that they are often slow to adjust, whereas market conditions change very quickly. The key point from this discussion is that a price slide is most efficient when it is roughly equal to the market discount as cattle get heavier. In those situations, there is no incentive for sellers to underestimate weight when selling cattle on a slide and there is little true penalty if they do. Buyers and sellers both need to understand the implications when prices slide and market weight discounts diverge, as this can have an impact on both parties.


    Base weight
    Sale Price
    Pay Weight
    Price Slide    		Final Price
    per cwt    		Final Value
    per head
    800$240850$8 per cwt$236$2,006.00
    800$240850$10 per cwt$235$1,997.50
    800$240850$12 per cwt$234$1,989.00

    References:

    Brorsen, B. W., N. Coulibaly, F. G. C. Richter, and D. Bailey. 2001. “Feeder Cattle Price Slides”. Journal of Agricultural and Resource Economics. 26: 291-308.

    Burdine, K.H., L. J. Maynard, G.S. Halich, and J. Lehmkuler. 2014. “Changing Market Dynamics and Value-added Premiums in Southeastern Feeder Cattle Markets”. The Professional Animal Scientist. 30:354-361.

    Burdine, Kenny. “Understand the Implications of a Price Slide When Buying and Selling Cattle.” Southern Ag Today 4(21.3). May 22, 2024. Permalink

  • Fewer Cattle on Feed, Higher Prices

    Fewer Cattle on Feed, Higher Prices

    USDA released their May cattle on feed report on Friday, May 24th.  For the first time in 8 months the total number of cattle on feed declined below last year’s level.  The 11.5 million cattle on feed were the fewest since September 2023.  The number of cattle in feedlots has been pumped up by placing more heifers, some pulling of feeder cattle ahead, and a few more cattle from Mexico compared to the year before.

    Due to when holidays fell this Spring and weekends there were 2 fewer slaughter days in March compared to last year and 2 extra days in April.  This large swing in days has not happened since the mid-1990s.  The 2 extra days in April meant that feedyard marketings were more than 10 percent larger than April last year.  Placements were almost 6 percent fewer than last year and were the smallest since 2020.  

    The combination of large marketings and light placement numbers pulled down cattle on feed below a year ago.  There are still more cattle on feed for more than 90 days and 120 days than a year ago so that should keep dressed weights high.  

    The wholesale beef market, as measured by the Choice beef cutout, has jumped more than $16 per cwt in the last 2 weeks.  Remember that the cattle on feed report is a little bit backward looking.  It contains marketings and placements in April and the number of cattle on feed on May 1.  In the ensuing couple of weeks prices have jumped higher.  Whether that increase reflects some packer cut back in processing to try to boost prices, some Memorial Day summer bump in buying, or fewer cattle on feed, or a combination of all three (most likely) the end result is higher wholesale beef prices.  Fed cattle prices are increasing also.  Fewer cattle on feed promises to cut beef supplies that have actually been larger than last year over the last 8 weeks.  Tighter supplies will work to boost prices for calves, feeders, and feds.

    Anderson, David . “Fewer Cattle on Feed, Higher Prices.” Southern Ag Today 4(22.2). May 28, 2024. Permalink

  • Battlelines Are Being Drawn: Comparing Current Farm Policy Proposals

    Battlelines Are Being Drawn: Comparing Current Farm Policy Proposals

    On May 1, 2024, Rep. G.T. Thompson, Chairman of the House Committee on Agriculture, and Sen. Debbie Stabenow (D-MI), Chairwoman of the Senate Committee on Agriculture, Nutrition, and Forestry, released summaries of their respective farm bill proposals (see here and here).  

    On May 17, 2024, Chairman Thompson released text of his bill.  Very early this morning, the House Committee on Agriculture finished marking up its version of the 2024 Farm Bill – the Farm, Food, and National Security Act of 2024 – and passed it out of Committee on a bipartisan vote of 33 to 21. 

    While there will be a lot of chatter about the path forward in the full House, attention is now turning to the Senate. To help set the stage, we have compiled a side-by-side comparison of the major farm safety net features of the House Ag Committee-passed bill and the Senate majority proposal – the Rural Prosperity and Food Security Act of 2024.  Importantly, no bill text has been released for the Senate proposal, so the comparison is compiled from the summary materials linked above. Further, while Table 1 compares the proposals currently on the table, we leave it to the reader to draw their own conclusions about which approach they prefer. It is also important to note that Sen. John Boozman (R-AR), Ranking Member of the Senate Committee on Agriculture, Nutrition, and Forestry, announced earlier this morning that he will weigh in with his own framework “in the coming weeks” but highlighted that the House Ag Committee-passed bill “mirrors much of what Senate Republicans are seeking to accomplish with our framework.”

    Key FeaturesHouse Ag Committee-Passed BillSenate Majority Proposal
    Title 1 Provisions
    Statutory Reference Prices (SRPs)Increases ranging from 10-20%… 

     Corn: $3.70/bu to $4.10/bu
    Sorghum: $3.95/bu to $4.40/bu
    Barley: $4.95/bu to $5.45/bu
    Oats: $2.40/bu to $2.65/bu
    Soybeans: $8.40/bu to $10.00/bu
    Wheat: $5.50/bu to $6.35/bu
    Seed Cotton: $0.367/lb to $0.42/lb
    Rice: $14.00/cwt to $16.90/cwt
    Peanuts: $535/ton to $630/ton
    Other Oilseeds: $20.15/cwt to $23.75/cwt
    Dry Peas: $11.00/cwt to $13.10/cwt
    Lentils: $19.97/cwt to $23.75/cwt
    Small Chickpeas: $19.04/cwt to $22.65/cwt
    Large Chickpeas: $21.54/cwt to $25.65/cwt     		5% increase “for commodities such as seed cotton, rice, and peanuts”… 
    Corn: unchanged at $3.70/bu 
    Sorghum: unchanged at $3.95/bu 
    Barley: unchanged at $4.95/bu 
    Oats: unchanged at $2.40/bu
    Soybeans: unchanged at $8.40/bu
    Wheat: unchanged at $5.50/bu 
    Seed Cotton: from $0.367/lb to $0.385/lb
    Rice: $14.00/cwt to $14.70/cwt
    Peanuts: $535/ton to $562/ton
    Other Oilseeds: unchanged at $20.15/cwt
    Dry Peas: unchanged at $11.00/cwt 
    Lentils: unchanged at $19.97/cwt 
    Small Chickpeas: unchanged at $19.04/cwt
    Large Chickpeas: unchanged at $21.54/cwt
    Effective Reference Prices (ERPs) No change from current law.“Changes the definition” of ERPs by “updating the formula…”  Details TBD.
    Maximum PLC Payment  NOTE: these estimates illustrate the maximum possible PLC payment (assuming the ERP is at 115% of the SRP).Except for seed cotton and corn, the maximum possible PLC payment is the difference between the Effective Reference Price and the Loan Rate:
    —Corn:  $1.42/bu
    —Sorghum:  $2.64/bu
    —Barley:  $3.52/bu
    —Oats:  $0.85/bu
    —Soybeans:  $4.68/bu
    —Wheat:  $3.58/bu
    —Seed Cotton:  $0.183/lb
    —Rice:  $11.74/cwt
    —Peanuts:  $335/ton
    —Other Oilseeds:  $16.21/cwt
    —Dry Peas:  $8.20/cwt
    —Lentils:  $13.01/cwt
    —Small Chickpeas:  $15.05/cwt
    —Large Chickpeas:  $14.10/cwt     		The maximum possible PLC payment is equal to 20% of the Effective Reference Price.
     —Corn:  $0.85/bu
    —Sorghum:  $0.91/bu
    —Barley:  $1.14/bu
    —Oats:  $0.55/bu
    —Soybeans:  $1.93/bu
    —Wheat:  $1.27/bu
    —Seed Cotton:  $0.089/lb
    —Rice:  $3.38/cwt
    —Peanuts:  $129/ton
    —Other Oilseeds:  $4.63/cwt
    —Dry Peas:  $2.53/cwt
    —Lentils:  $4.59/cwt
    —Small Chickpeas:  $4.38/cwt
    —Large Chickpeas:  $4.95/cwt
    Loan RatesCotton:  0.45-$0.52/lb to $0.55/lb
    Dry Peas:  $6.15/cwt to $6.87/cwt
    ELS Cotton:  $0.95/lb to $1.00/lb
    Graded Wool:  $1.15/lb to $1.60/lb
    Non-Graded Wool:  $0.40/lb to $0.55/lb
    Mohair:  $4.20/lb to $5.00/lb
    Honey:  $0.69/lb to $1.50/lb
    Corn:  $2.20/bu to $2.42/bu
    Sorghum:  $2.20/bu to $2.42/bu
    Barley:  $2.50/bu to $2.75/bu
    Oats:  $2.00/bu to $2.20/bu
    Soybeans:  $6.20/bu to $6.82/bu
    Wheat:  $3.38/bu to $3.72/bu
    Rice:  $7.00/cwt to $7.70/cwt
    Peanuts:  $355/ton to $390/ton
    Other Oilseeds:  $10.09/cwt to $11.10/cwt
    Lentils:  $13.00/cwt to $14.30/cwt
    Small Chickpeas: $10/cwt to $11/cwt
    Large Chickpeas: $14/cwt to $15.40/cwt
    Sugar (Raw):  $0.1975/lb to $0.24/lb     		No change to statutory Loan Rates from current law but potential to increase (up to 10%) if estimated cost of production in a given year (from 2025 to 2029) is higher than the 5-year average cost of production from USDA’s Economic Research Service. For sugar producers, “increases sugar loan rates and adjusts the relationship between raw sugar and refined sugar to reflect more recent production and transportation costs.”
    ARC Guarantee Increase from 86% to 90%.Increase from 86% to 88%.
    Maximum ARC PaymentIncrease from 10% to 12.5%, raising the maximum possible payment by 25%. No change from current law of 10%.
    Base AcresAdds up to an additional 30 million acres for farms where planted acres exceed base acres on the farm. “Limited opportunity” to update base for “underserved producers” only.
    Payment Limit AmountsIncrease from $125,000 to $155,000 for producers with >75% of income from farming/ranching/silviculture. No change from current law.
    Payment Limit IndexingFor producers with >75% of income from farming/ranching/silviculture, payment limits indexed for inflation (CPI-U) going forward. No comparable provision.
    Legal EntitiesEliminates the LLC penalty. Pass-thru LLCs would join General Partnerships and Joint Ventures in having the number of payment limits parallel the number of stakeholders in the entity. No comparable provision.
    Means TestingNo change from current law of $900,000, except that means testing would not apply to disaster programs in Title 1 and the Noninsured Crop Disaster Assistance Program (NAP) for producers with >75% of income from farming/ranching/silviculture.  NOTE: this is consistent with the original means testing requirements from the 2002 Farm Bill. Reduces AGI threshold from $900,000 to $700,000 for row-crop producers and makes tenants ineligible if landowners do not meet AGI threshold. Increases allowable AGI from $900,000 to $1,500,000 for specialty crop and “high-value” crop producers.
    Title 11 Provisions
    Supplemental Coverage Option (SCO) Trigger Increase from 86% to 90%Increase from 86% to 88%
    SCO Premium Support Increase from 65% to 80%Increase from 65% to 80%