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Eli Lilly unit raises prices on ractopamine, farm animal drugs

By P.J. Huffstutter

CHICAGO (Reuters) - Eli Lilly & Co.'s Elanco Animal Health unit will raise the price of its beta-agonist feed supplements by 2 to 3 percent on November 26 amid strong demand from beef feedlots, a company spokeswoman told Reuters on Wednesday.

The price increase - which the company said will apply to all of Eli Lilly's products for cattle, hogs and other food animals - comes amid strong demand for its Optaflexx ractopamine-based feed additive for cattle, which helps bulk up the amount of meat on a beef carcass prior to slaughter.

The move is part of a review of its agricultural product pricing, market conditions and production costs that Elanco regularly conducts for all products, said company spokeswoman Colleen Parr Dekker. The price increase, though, will not apply to newer non-betagonist products released in 2012 or this year, she said.

Sales of Elanco's cattle feed additive Optaflexx in the United States began surging in late August, after rival Merck & Co. announced its decision to temporarily suspend sales of its Zilmax beta-agonist additive. Merck's announcement came after meat processor Tyson Foods said it would stop buying Zilmax-fed cattle amid concerns the livestock drug was potentially causing health problems for some cattle.

Elanco's price increase will likely not have much of an impact on meat producers, nor cool demand for the drug-maker's beta-agonist feed products - particularly among cattle feedlot owners. Retail beef prices remain at record highs, while the nation's cattle herd is the lowest level in more than 60 years.

Elanco "is clearly taking advantage of the lack of competition" for beta-agonists," said Jim Robb, director of the Livestock Marketing Information Center in Denver, Colorado.

(Editing by Bob Burgdorfer)

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