Tyson warns of U.S. meat shortages as coronavirus shuts livestock plants

By Karl Plume

CHICAGO (Reuters) – Millions of pounds of beef, pork and chicken will vanish from U.S. grocery stores as livestock and poultry processing plants have been shuttered by coronavirus outbreaks among workers, the chairman of Tyson Foods Inc said.

John Tyson warned that the U.S. “food supply chain is breaking” as a growing number of plant closures have left farmers with fewer options to market and process livestock.

Tyson Foods announced last week that it would shutter two pork processing plants, including its largest in the United States, and a beef facility to contain the spread of the virus.

Other major meat processors like JBS USA [JBS.UL] and Smithfield Foods have closed facilities in recent weeks as cases of COVID-19, the potentially lethal respiratory disease caused by the novel coronavirus, have soared among plant workers.

More than 5,000 U.S. meat and food-processing workers have been infected with or exposed to the virus, and 13 have died, the country’s largest meatpacking union said Thursday.

Companies say they are checking workers’ temperatures, working with local health officials and taking other steps to prevent the spread of the virus.

It is unclear how soon meat processing plants may reopen.

“There will be limited supply of our products available in grocery stores until we are able to reopen our facilities that are currently closed,” John Tyson said in a release published on Sunday.

“In addition to meat shortages, this is a serious food waste issue. Farmers across the nation simply will not have anywhere to sell their livestock to be processed, when they could have fed the nation,” he said.

Tyson shares are down more than 34% since the beginning of the year but have recovered from a more than four-year low hit in March.

(Reporting by Karl Plume in Chicago; editing by Jonathan Oatis)

Exclusive: Vomitoxin makes nasty appearance for U.S. farm sector

FILE PHOTO -- Cobs of corn are held at a corn field in in La Paloma city, Canindeyu, about 348km (216 miles) northeast of Asuncion August 7, 2012. Corn export is second only to soybean export in Paraguay. REUTERS/Jorge Adorno/File Photo

By P.J. Huffstutter and Michael Hirtzer

CHICAGO (Reuters) – A fungus that causes “vomitoxin” has been found in some U.S. corn harvested last year, forcing poultry and pork farmers to test their grain, and giving headaches to grain growers already wrestling with massive supplies and low prices.

The plant toxin sickens livestock and can also make humans and pets fall ill.

The appearance of vomitoxin and other toxins produced by fungi is affecting ethanol markets and prompting grain processors to seek alternative sources of feed supplies.

Researchers at the U.S. Department of Agriculture first isolated the toxin in 1973 after an unusually wet winter in the Midwest. The compound was given what researchers described as the “trivial name” vomitoxin because pigs were refusing to eat the infected corn or vomiting after consuming it. The U.S. Corn Belt had earlier outbreaks of infection from the toxin in 1966 and 1928.

A vessel carrying a shipment of corn from Paraguay is due next month at a North Carolina port used by Smithfield Foods Inc [SFII.UL], the world’s largest pork producer.

The spread of vomitoxin is concentrated in Indiana, Wisconsin, Ohio, and parts of Iowa and Michigan, and its full impact is not yet known, according to state officials and data gathered by food testing firm Neogen Corp.

In Indiana, 40 of 92 counties had at least one load of corn harvested last fall that has tested positive for vomitoxin, according to the Office of Indiana State Chemist’s county survey. In 2015 and 2014, no more than four counties saw grain affected by the fungus.

And in a “considerable” share of corn crops tested in Michigan, Wisconsin and Indiana since last fall’s harvest, the vomitoxin levels have tested high enough to be considered too toxic for humans, pets, hogs, chickens and dairy cattle, according to public and private data compiled by Neogen. The company did not state what percent of each state’s corn crop was tested.

Smithfield would not confirm it had ordered the corn from Paraguay, but two independent grain trading sources said Smithfield was the likely buyer. A company source said corn Smithfield has brought in from Indiana and Ohio, to feed pigs in North Carolina, has been “horrible quality” due to the presence of mycotoxins.

TOXIN LEVELS

The U.S. Food and Drug Administration allows vomitoxin levels of up to 1 part per million (ppm) in human and pet foods and recommends levels under 5 ppm in grain for hogs, 10 ppm for chickens and dairy cattle. Beef cattle can withstand toxin levels up to 30 ppm.

Alltech Inc, a Kentucky-based feed supplement company, said 73 percent of feed samples it has tested this year have vomitoxin. The company analyzed samples sent by farmers whose animals have fallen ill.

“We know there is lots of bad corn out there, because corn byproducts keep getting worse,” said Max Hawkins, a nutritionist with Alltech.

Neogen, which sells grain testing supplies, reported a 29 percent jump in global sales for toxin tests – with strong demand for vomitoxin tests – in their fiscal third quarter, ending Feb. 28.

“We’re polling our customers and continually talking to them about the levels they’re seeing. Those levels are not going down,” said Pat Frasco, director of sales for Neogen’s milling, grain and pet food business.

The problem, stemming from heavy rain before and during the 2016 harvest, prompted farmers to store wet grain, said farmers, ethanol makers and grain inspectors.

The issue was compounded by farmers and grain elevators storing corn on the ground and other improvised spaces, sometimes covering the grain piles with plastic tarps. Grain buyers say they will have a clearer picture of the problem later this spring, as more farm-stored grain is moved to market.

Iowa State University grain quality expert Charles Hurburgh said the sheer size of the harvest in 2016 – the largest in U.S. history – complicates the job of managing toxins in grain, especially in the core Midwest.

“Mycotoxins are very hard to handle in high volume,” he said. “You can’t test every truckload, or if you do, you are only going to unload 20 trucks in a day.” By comparison, corn processors in Iowa unload 400 or more trucks a day.

BIOFUEL IMPACTS

Ethanol makers already are feeling the impact. Turning corn into ethanol creates a byproduct called distillers dried grains (DDGs), which is sold as animal feed. With fuel prices low, the DDGs can boost profitability.

But the refining process triples the concentration of mycotoxins, making the feed byproduct less attractive. DDG prices in Indiana fell to $92.50 per ton in February, the lowest since 2009, and now are selling for $97.50 per ton, according to USDA.

Many ethanol plants are testing nearly every load of corn they receive for the presence of vomitoxin, said Indiana grain inspector Doug Titus, whose company has labs at The Andersons Inc, a grain handler, and energy company Valero Energy sites.

The Andersons in a February call with analysts said vomitoxin has hurt results at three of its refineries in the eastern U.S. “That will be with us for some time,” Andersons’ chief executive Pat Bowe said.

Missouri grain farmer Doug Roth, who put grain into storage after last year’s wet harvest, has seen a few loads of corn rejected by clients who make pet food after the grain tested positive for low levels of fumonisin, a type of mycotoxin.

Roth said he paid to reroute the grain to livestock producers in Arkansas, who planned to blend it with unaffected grain in order to mitigate the effect of the toxins.

“As long as this doesn’t become a widespread problem, we’re all fine,” said Roth, who said toxins have shown up in less than 1 percent of the grain loads he has sold.

U.S. farmers with clean corn are reaping a price bump. A Cardinal Ethanol plant in Union City, Indiana, is offering grain sellers a 10-cent per bushel premium for corn with less than one-part-per-million (ppm) or less of vomitoxin in it, according to the company’s website.

(Additional reporting by Karl Plume and Julie Ingwersen in Chicago; Editing by Matthew Lewis)

Alabama waits for U.S. verdict on bird flu; importers limit trade

By Tom Polansek

CHICAGO (Reuters) – U.S. trading partners on Friday limited shipments of poultry from Alabama, a top producer of chickens for meat, over bird flu concerns as the state’s wait for federal confirmation of two suspected cases stretched past a week.

The European Union, Kazakhstan and French Polynesia restricted shipments from Alabama counties with presumed cases of the disease, according to the U.S. Department of Agriculture’s website. The moves came a day after the state reported the agency’s national animal-health laboratories had confirmed a separate case of bird flu there.

Belarus blocked shipments from the entire state.

Alabama officials and poultry producers have been waiting since March 8 for the National Veterinary Services Laboratories (NVSL) to confirm the two suspected cases, which involve a commercial chicken farm and a backyard flock, according to the state. The facility in Ames, Iowa, is the only one in the United States that officially confirms cases of avian flu.

Swift confirmation is important for U.S. trading partners, some of which restrict shipments from geographic areas with infected flocks, and for state officials, who want to know which strain of the virus they are battling.

Highly pathogenic, or lethal, bird flu led to the deaths of about 50 million birds, mostly egg-laying hens, in the United States in 2014 and 2015.

Another widespread outbreak could be a financial blow for poultry operators, such as Tyson Foods Inc or Pilgrim’s Pride Corp, because it could kill more birds or require flocks to be culled.

The national labs must determine the strain and pathogenicity of the disease in order to officially confirm an infection, according to the USDA. The process often takes just a day.

A rapid test can be made when poultry samples contain sufficient genetic material, USDA spokeswoman Lyndsay Cole said on Thursday. But the samples from Alabama’s two suspected cases contained low levels, meaning scientists had to start a testing process that can take 14 days, she said.

Tests by a USDA-approved lab in Alabama and the national labs have already identified the H7 subtype of the virus from samples in the two suspected cases, she said.

“Our department respects the science behind the testing and is patiently waiting for accurate results,” said Amy Belcher, spokeswoman for Alabama’s agriculture department.

Alabama authorities presume the suspected cases are not highly lethal, or pathogenic, bird flu because the animals did not show signs of being sick. Still, officials have been checking birds at nearby farms for infections and the owners of the suspect flocks culled the birds, according to Alabama’s state veterinarian.

The United States must alert the World Organisation for Animal Health (OIE) if Alabama’s suspected cases are confirmed as positive, a step that could trigger more trade restrictions.

The OIE said “it is more important for the laboratory to be sure of its analysis than to be fast with it.”

(Additional reporting by Sybille de La Hamaide in Paris; Editing by Matthew Lewis)