National Beef Packing, JBS Won't Ban Feed Additive Shunned by Tyson Foods

By Ian Berry and Jesse Newman

CHICAGO--National Beef Packing Co. and JBS SA (JBSAY, JBSS3.BR) said Monday they would not change their cattle-buying practices after rival Tyson Foods Inc. (TSN) announced last week it would stop processing animals fed with a widely used animal supplement.

Tyson sent a letter to cattle suppliers on August 7 saying it would stop accepting cattle fed with Zilmax--which promotes weight gain--after receiving animals at some of its beef plants that had difficulty walking, or unable to move. The announcement sparked a rally in CME live-cattle futures as traders said the move could lead to tighter beef supplies.

After days of silence, National Beef Packing, a private company based in Kansas City, Mo., and one of the country's largest meatpackers, issued a brief statement Monday afternoon.

"National Beef places a high priority on animal welfare with cattle in our facilities and we do not plan to change our cattle-procurement practices," the company said.

Meanwhile, Brazilian-based JBS, the world's largest meat processor, said it has noticed similar problems to those cited by Tyson, and added it will continue its current approach of "extensive monitoring" of animals at its plants.

JBS hasn't been able to identify a cause, JBS spokesman Cameron Bruett said in an interview. He said the company has a "heightened interest" in the matter, but would continue to accept animals fed with the supplement.

"It has caught our attention and it's not something we want to happen," Mr. Bruett said. "We're always concerned with the well-being of animals."

The companies follow a move by rival Cargill Inc., which on August 8 said it would continue to accept cattle fed with Zilmax.

Although Tyson's move to ban Zilmax, produced by Merck & Co. (MRK), initially led to a rally in cattle futures, analysts said the ultimate impact on cattle and beef prices could be limited unless Tyson and its competitors announce broader bans. Some feedlot operators are likely to switch to a competing product named Optaflexx, which is less potent than Zilmax but strong enough to mitigate the impact on supplies, analysts said. Optaflexx is made by Eli Lilly & Co.'s (LLY) Elanco unit.

--David Kesmodel contributed to this article.

Write to Ian Berry at [e-mail] and Jesse Newman at [e-mail]

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