Ted Jacoby III: Coming up on the Milk Check.

Sarina Sharp: The border is shut, and it doesn’t look like it will open anytime soon, so we just have this vacuum of Mexican beef cattle.

Ted Jacoby III: Welcome to the Milk Check from T.C. Jacoby & Co., your complete guide to dairy markets, from the milking parlor to the supermarket shelf. I’m Ted Jacoby. Let’s dive in.

Ted Jacoby III: Today we are excited to have two special guests. First, we have Jamie Jonker, chief science officer and vice president of sustainability and scientific affairs for the National Milk Producers Association,

And second, we have Serena Sharp, the excellent market analyst who does our weekly market report. Serena, Jamie, thanks for joining us today. We’re excited to have you.

Jamie Jonker: Thank you for having me here. I think we’re gonna have a number of things that are quite timely to talk about today.

Sarina Sharp: Thanks for having me again.

Ted Jacoby III: In addition to those two, we have some of our usual suspects. We have Mike Brown, our VP of dairy market intelligence. We have Jacob Menge, our VP of trading strategy and risk management. We have my brother Gus, president of the dairy fluid group.

We have Josh White, our VP of dairy ingredients. And we have Tristan Suellentrop on our sales and marketing team, and Manuel Polzer, who is part of Jake’s risk management team. Guys, thanks for joining us today. So the topic we’re gonna be discussing today, there are three different diseases that have been gaining news in terms of how it might be affecting milk production and dairy cows.

The first would be screwworm which has come across the border from Mexico, the second is avian flu is back. And of course, the third is Dutton Ranch recently had an episode that talked about foot-and-mouth disease on their cattle farm in Texas.

And so of course, we’re getting questions about that. But we’ll start with the one that’s probably getting the most attention, and that is screwworm coming across the border from Mexico. It is now in Texas, and it is in New Mexico. Jamie, why don’t you just give us a brief background on what is screwworm, and how does it affect dairy cattle versus beef cattle?

Jamie Jonker: Yeah. Great question, Ted. New World screwworm is a fly that, lays its eggs in mammals. It was eradicated from the U.S. in the mid-1960s, and by 2002, it was eradicated all the way down to what’s called the Darien Gap in Panama. That is a forested area about 50 miles wide, where there are no official roads going through it.

And so that was really great news about the many decades process to get it down there. What’s happened is starting in ’23, it started creeping back up through Central America through the movement of people and people moving with their animals. Got into Mexico in ’24. Started really taking off in Mexico in ’25, and then just this past June 3rd, we had our first official case in Texas.

Today there are 27 confirmed cases in the U.S. 25 in Texas. Out of those about 16 are cattle, most of those are calves castrated males. There is at least one adult cattle in that. So far, all of those are beef cattle. What happens is the New World screwworm fly lays its eggs in any open wound.

And when we think about a wound, I want people to understand that can be as small as a tick bite, so it doesn’t have to be a large gash on an animal. It’s very tiny. And what is very unique about the New World screwworm larvae, and also quite devastating, is that the larvae eat live tissue of the So when the eggs start hatching, and the female lays 200 to 300, it very quickly becomes an animal health and welfare issue for that individual animal. Unlike viral and bacterial diseases though, this is not directly transmissible from one animal to another. Obviously, as the larvae mature and become flies of their own, then they can continue to spread it in that area.

But unlike what we’ll talk about in a little bit, the H5N1, which was highly transmissible between cows in an individual herd, this does not necessarily transmit from animal to animal. It’s when the larvae become flies, mate, and then the next generation can lay eggs in new animals So, what happens when it gets into these animals, in particular, newborn calves are highly susceptible because of the open umbilical area,

they get in there, and, if left untreated, the mortality in newborn calves can approach fifty percent. However, highly recoverable if caught early and treated. Out of those twenty-seven animals, so far that have been identified at least one actually has been euthanized because that was the right decision for that animal.

Where we are today, no dairy cattle so far as of June twenty-ninth when this is being recorded. But it is growing in terms of the geography where they’re finding domestic animals in Texas that have it. It’s a growing potential risk for dairy farmers that are in the Southwest.

Ted Jacoby III: Jamie, sticking with beef cattle, does the beef industry handle infected cattle with screwworm right now?

Jamie Jonker: Animals that have an infestation, essentially you have to clean out the larvae, then you treat the wounds. The other thing that you do is you wanna make sure that you do prevention treatment to prevent infestation from happening in other animals.

Because once you have one animal infested, there’s likely a reproducing fly population there, and so there’s a higher risk for other animals in that location. There’s a number of products that are approved for prevention purposes. And they have withdrawal times, ranging, on the beef side, withdrawal times, thirty-plus days in some cases.

Some of those products are also approved for use in dairy cattle. There’s a distinction that FDA does through its emergency use authorization and conditional approval processes that typically breaks between growing cattle and lactating cattle. For FDA purposes, lactating dairy cattle are twenty months of age or older, even if they’re not lactating.

There’s only one product that’s approved for prevention in lactating dairy cattle at this point in time. That’s DECTOMAX. It’s an injectable product that has a nineteen and a half day milk withdrawal period and a thirty-plus day meat withdrawal period.

Ted Jacoby III: Once these cows are infected and then treated, if it’s beef cattle, for at least 30 days they couldn’t be sold to a slaughterhouse, correct?

Jamie Jonker: That’s correct. And we want to encourage folks to work with their veterinarian and only use those products that have been approved through the FDA processes. Because if you’re using other products, the withdrawal period is unknown; you’re setting yourself up to potentially have a residue issue.

Ted Jacoby III: And how is National Milk right now working with dairy farmers in the United States to prepare for the possibility that we will have a infected dairy cow in the U.S.?

Jamie Jonker: We are pulling together resources. We actually have a resource page on our nmpf.org website. And there’s a big pop-up right, right on top for New World screwworm resources for dairy farmers.

We have some of our own resources. Obviously, there are lots of people putting together really great resources. We don’t need to recreate things that are done well, so we have links to other resources. We’re also keeping a keen eye on what’s happening as we get new detections in Texas, and potentially as the summer goes on, potentially in other states as well, and working with USDA, Texas Animal Health Commission, and others on keeping preparedness top of mind.

Ted Jacoby III: It sounds like if you have a cow infected with screwworm, it’s reportable, and so the U.S.DA is keeping a register of where all the cows are that have been infected. Is that true for dairy as well?

Jamie Jonker: Yes. If A dairy animal is found to have an infestation , the first thing we recommend, if you see something that you think might be New World screwworm in any of your dairy animals, contact your veterinarian.

Because what we wanna have is an official sample taken so that they can determine whether or not it truly is New World screwworm, because some of these larvae and some of these flies, they look pretty similar, and you just can’t tell by a quick glance at them. But we get that official determination from USDA.

What that does is that triggers a response, and that response is important because it’s the response to that individual animal, it’s a response to help mitigate the risk of spread on that farm and spread in that area. And when you have one or more animals that are found to have an infestation, a 20-kilometer zone is set up around them.

That’s called the infested zone. There’s strict requirements on the ability for moving animals out of that zone. Then beyond that is another 20-kilometer surveillance zone. And the Texas Animal Health Commission has a great map that shows the zones in Texas, and as they’ve had an increasing number of domestic animals found to have infestations, some of those areas are starting to merge into a pretty large geography there close to the border.

Ted Jacoby III: Is my understanding correct that if a beef cattle were to get infected within a 20-mile radius of a dairy farm, you couldn’t move the cattle out of that dairy farm either?

Jamie Jonker: You would be able to move the animals, but you have to move them under permit. There’s inspection of the animals to ensure that they don’t have any infestations.

Depending upon where they’re moving, there could be requirements for prevention treatment. That’s not necessarily that it happens 100% of the time. If they’re moving within the state of Texas, there might be requirements that are different than if the animals are moving, say, from Texas to elsewhere.

And we certainly know that a lot of dairy animals spend part of their life in Texas and move elsewhere. We saw that starting in March of 2024 with the H5N1.

Ted Jacoby III: So Jamie, is there a protocol set up for exactly how the milk from a dairy cow that would be infected with screwworm is handled, and how that herd would be managed if that were to happen, and what is that protocol?

Jamie Jonker: Yeah, so if you have a dairy animal that is infested, you wanna get that animal isolated. You wanna have that wound where the larvae are cleaned out and then treated. There are a couple of additional products that are approved for lactating dairy cattle for treatment of the infestation itself, so Dectomax is the only one approved for prevention purposes.

There’s a topical spray and a topical gel that are approved for an animal that has an infestation. You clean it out, you treat it with that, you isolate them and then, if you’re not doing additional treatments of animals in the herd, if the determination is you’ve got an isolated case and you don’t need to do a broader prevention process, that milk from all those other animals continues to flow.

You wanna make sure that you’re not incidentally transferring flies in the cab of the milk truck because that is one way that you can move these flies quite a long distance by just accidentally trapping them in your vehicle. But unless the requirement is to do a broader prevention treatment in the herd, any animal that is not treated with an animal health product, its milk is perfectly sellable, so long as they’re continuing to meet the having no residues from other antibiotics.

Ted Jacoby III: So, to be clear, milk from a cow that might be infected with screwworm, the milk itself is still absolutely fine and healthy

unless You’re treating the cow with a medicine to get rid of the screwworm.

Jamie Jonker: An infestation is an animal health and welfare issue. It’s not a food safety issue for meat or milk.

Ted Jacoby III: Do you anticipate that we are going to have issues with screwworm in dairy cattle soon?

Jamie Jonker: Soon is difficult to define. I would say that we have an elevated risk that it will occur at some point in time on a facility with dairy animals, a commercial dairy facility.

And I say that because New World screwworm grows well in temperatures like we’re experiencing throughout a lot of parts of the U.S. right now. It’s very cold intolerant, and if you get three or four days at twenty degrees Fahrenheit, that kills most of the flies, so that’s great.

But we are just at the end of June, so we have many months yet with temperatures that are very conducive for the flies to be active. And I think the other thing is that as we look at a growing geography in Texas of where we are finding screwworm infestations in domesticated livestock we probably don’t have enough New World screwworm sterile flies being produced today to respond to that.

That is why USDA has worked with Mexico in renovating a fruit fly production facility there to produce New World screwworm sterile flies. I believe it was just announced late last week. That facility is up and running and at full production capacity probably towards the end of the year.

That’s another hundred million flies to complement the hundred million that are being produced at the facility in Panama. And then there was, in April of this year, the announcement of a domestic plant being built on a military base in Edinburg, Texas. The target date for that is to be November of next year to produce three hundred million flies once it’s fully operational .

You’ve heard Secretary Rollins discuss they are looking at ways to move that timeline faster. But I think when you consider we started off with a hundred million in Panama, we’re gonna be another hundred million sterile flies in Mexico by the end of the year, and then another three hundred million in Texas when that is up and running.

That’s a realization that this is gonna be a multi-year process, and that it’s unlikely that it’s just gonna stay in a geography near the border. So, long way of saying, yes, I think it’s probably a matter of when it gets to a dairy facility

and not if.

Ted Jacoby III: Serena, do you think screwworm, if and when it starts to affect dairy cows, is going to materially affect milk production in the U.S.?

Sarina Sharp: I guess it depends how widespread it is, but I generally don’t think so. I think that it’s gonna be a huge headache at the very least for an individual dairy producer who has to deal with it and for his livestock. But it’s not gonna be material in terms of how many dairies in the U.S. it’s likely to impact.

And especially, if you look at where the beef cattle are and the typical temperatures in those areas versus where dairy cattle are in the United States, three days of cold is very common in a lot of dairy areas. And then thirdly, a lot of the beef cattle that have it now are in ranch country. They’re not in an operation where the cattle grower is hands-on, up close with these animals every single day.

And on a dairy, that’s not the case. When you are milking cows every day, and bottle-feeding calves, and checking on your heifers, that’s a very hour-to-hour interaction with your livestock, and so it’s a lot easier to contain an infestation in that environment than it is on this vast ranch country with scrub brush in the southern plains.

Ted Jacoby III: That makes a lot of sense ’cause you can go days without inspecting beef cattle, but you rarely go hours without inspecting a dairy cow.

Sarina Sharp: Yeah. So, when I look at the market impact of screwworm on the dairy industry, I’m not focused on milk production at this point at all. I’m looking at its impact on beef prices and how that changes economics on the dairy farm

Ted Jacoby III: How do you think it’s gonna change beef prices?

Sarina Sharp: It has already changed beef prices because the United States closed the border with Mexico to live mammal imports. And so, the primary way that’s impacted us is we typically take hundreds of thousands and slightly over a million Mexican feeder cattle. So, that’s young beef livestock from Mexico into the United States, feed and finish them in the United States, and then they help increase our beef cattle supplies.

That border has been shut for quite a while now, and for the first months of this screwworm infestation in Mexico, when it was not in the United States and not in northern Mexico, then there was a constant hope, “All right, they’ll get this under control, and we’ll reopen the border, and those feeder cattle imports, we’ll be able to bring them in again.”

The border is shut, and it doesn’t look like it will open anytime soon, so we just have this vacuum of Mexican beef cattle. That means that the U.S. dairy industry is positioned to continue to supply beef crossbred calves to the beef cattle industry. That’s beef on dairy calves. At times when we have extra heifers, which is not right now, we’ll just place true dairy animals in feedlots.

The price might incentivize us to consider that, although right now they’re so valuable as dairy animals, that’s not happening, at least not at scale. And then, it impacts the dairy cull cow price as well. So, I was talking to a producer last week who sold one full truckload of dairy cull cows at an average price of $3,500 per animal.

That’s just an unheard-of price in the past, and it is really adding up to a lot for dairy producers’ bottom lines. For several days here, we were looking at $15, $16 milk and $4.30 corn, and the math wasn’t working out, but when you add a beef crossbred calf check and a dairy cull cow check into that mix, things are looking a lot better when you talk to your banker.

Ted Jacoby III: So, it sounds like to me that even though from a public relations standpoint this is going to be a bit of a headache and we have to make sure we get the word out of exactly how screwworm is affecting the dairy industry and how we have protocols in place and plans to make sure that it doesn’t affect the milk supply, for the dairy farmer from a cashflow perspective, at the end of the day it’s probably a positive.

Sarina Sharp: It is a positive. I do want to stress that there’s no less beef in the world because of screwworm. What we’ve changed is where those animals are, and the longer that the border stays closed, the more resources that the Mexican cattle industry is gonna pour into facilities to finish the cattle that are staying there, and then also beef packing facilities so they can just process them right there.

So we are not importing Mexican feeder cattle. We are importing Mexican beef.

So, that’s a positive for dairy producers who are supplying young livestock. In the long run, it’s a negative for the U.S. beef industry who would love to raise those cattle here and process them here. And every day that we don’t is a day that Mexico is investing in not sending them here and sending us the finished beef.

Ted Jacoby III: That makes a lot of sense.

Jamie Jonker: I think the one thing I would add is I don’t think there’s gonna be a milk disruption issue. But at an individual farm level, it could be very disruptive.

So nationally, you probably won’t really notice much, but at an individual farm level, depending on what happens, it could be very disruptive. In contrast to H5N1, which was really a big issue in so many different places. This is something that is gonna be at the individual farm level.

Ted Jacoby III: Do dairy farmers have insurance for events like this?

Sarina Sharp: So I know that with H5N1, you were able to file for some insurance protection related to your lost milk revenue, and you also registered that as an event for your dairy RP. I imagine that if you’re not gonna lose milk production at scale, that it’s not insurable

Ted Jacoby III: That makes sense.

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Ted Jacoby III: Everybody, we will be right back after these messages.

Diego Carvallo: I’m Diego Carballo with T.C. Jacoby & Co.. T.C. Jacoby & Co. specializes in international dairy markets. For new customers that haven’t done business with Jacoby, I would tell them that we can provide them with many of the powders, dairy products that they consume, not only with the physical product, but we can also help them mitigate their risk.

We know dairy. We know the main players. We know the main providers for the whole value chain. We are one of the strongest players in the U.S. market because we have contact all the way from the farmer moving the liquid milk all the way to the end users that buy the end products. I am Diego Carballo with T.C. Jacoby & Co., and we bring dairy to the world.

Ted Jacoby III: Jamie, where are we at with avian flu? Is it affecting the dairy industry as badly this year as two years ago, and how do you expect it to play out this year?

Jamie Jonker: It is not affecting the dairy sector like it was in 2024.

In 2024, there were 917 dairy farms officially identified as having H5N1 on their farms, probably some more that were not officially listed. Last year, in ’25 was only 171, and so far this year, halfway through the year, only 64. So, we’re seeing a downward trend but what we are seeing here is some lingering issues with H5N1 on dairy farms this year.

There have been two dairy farms in Texas, three in Utah, and the remaining fifty-nine are all in Idaho. And based upon my conversations with USDA for the farms where they have the genotyping done, these are all B3.13 strains (HPAI H5N1 clade 2.3.4.4b, genotype B3.13) so far, so no new spillover events. It’s a circulating one.

And they are all related to a lineage of B3.13 that are circulating in Idaho. And so, it’s still kinda hanging out there. When I look at it, it’s not gonna have the big impact on overall milk production. When I say big, I think when we looked at 2024, it’s probably about a 1% reduction in production.

That’s not huge but not inconsequential. Unless there was movement of this to places where there hasn’t been virus before. And you can think about large production areas around the Midwest into the Northeast where there hasn’t been this virus before.

And so, that’s the risk, is that this virus moves to places where we haven’t had it before. And that’s why I think it’s important that we do our best to see if we can eliminate this B3.13 strain entirely from the U.S. dairy cattle population because the only reason we picked up the three spillover events with the D1.1 strain is because we had the mandatory surveillance.

Based upon my discussions with folks that some of those herds and veterinarians that are dealing with those herds, if you weren’t testing for it, you probably wouldn’t have known that you had an outbreak of bird flu in your cattle. Unlike this B3.13, which was just so devastating, most herds that got it, ten to twenty percent of their herd had very severe clinical symptoms .

And, you could see starting in September of ’24 into January, February of ’25, what it did on milk production in California. California had over seven hundred dairy farms in those months that, that were impacted by it.

Ted Jacoby III: So if I’m hearing you correctly, this strain is far milder than the strain that affected us in 2024, and as a result it’s unlikely to have a major effect on milk production.

Jamie Jonker: This is the same strain as 2024 that has affected the vast majority of those dairy farms. But right now, it’s occurring In places where that strain has already probably impacted most of these dairy farms in some capacity. And so, when they’re getting it in their farms, they’re being picked up as part of the mandatory surveillance process.

And they’re not getting that big outbreak in a two-week period where ten to twenty percent of the herd needs to be in a hospital.

Ted Jacoby III: Is some of the reason why it’s having less of an effect because, like with human viruses over time, cows build up immunity to it and just don’t get as sick the second, third time they might get sick with the same virus?

Jamie Jonker: That appears to be part of that process. In most of our farms, we’re turning over, a quarter to a third of our animals every year, so you have a new naive population coming in. And some of these farms, what they’re really experiencing are they’re just constantly bringing in new naive animals, and they get like a rolling infection.

But you’re not having 10% to 20% of the herd all at once.

Ted Jacoby III: Thanks, Jamie.

Now let’s move on to the last subject we had: foot-and-mouth disease. Jamie, what is the status of foot-and-mouth disease in the United States today?

Jamie Jonker: Hollywood likes to glamorize things and I’m happy to say it’s been nearly 100 years since we’ve had a foot-and-mouth disease outbreak in the U.S., and I sure hope that we don’t have one in my lifetime, it can be quite devastating.

But no FMD in the U.S. since an outbreak in California in the late 1920s. And importantly, there’s a lot of work that’s being done on preparation in case of an outbreak . Back in the 2018 Farm Bill, dairy, beef and swine lobbied really hard to modernize our U.S. FMD vaccine bank.

And there was a significant amount of new monies that were put into that, and that has been modernized. We have the secure food supply plans, including the secure milk supply and secure beef supply plans, and secure swine supply plans that are in place to help us deal with how we continue continuity of business if an outbreak occurs in the U.S.

And ,so we’re much better planned today than we were even ten years ago. That being said, FMD is a risk. We see that it moves around a lot more than we would like it to in other areas of the world. And the example that I’m gonna give, there’s seven different serotypes of FMD, and a whole bunch of subtypes.

There’s one called South African type. That is typically a Sub-Saharan African type and has been quite devastating in South Africa over these past two years. In 2023, they had an outbreak of SAT 1 Type 1 in the African horn that moved into Middle East in 2025 and through the end of 2025 into 2026, an SAT Type III actually broke out starting in Asia, moving into India and China.

And although not officially listed, probably also into Russia. And so it’s moved into places where they routinely vaccinate for FMD but they don’t vaccinate for this serotype. And unfortunately, the vaccines that they use do not have cross protection for the SAT types, and so it’s been a really big issue in those areas.

And it’s a demonstration of how quickly animal diseases can move these days. It’s very much on my radar and of concern to me about how quickly they move. Obviously, we have several oceans on both sides of us that help keep some things at bay. But boy, there’s a lot of flights that come into the U.S. from places where FMD is every day.

And we have ships that are coming to container ports that come from those areas as well. It’s not a zero risk. I would say it’s a very low risk. But we wanna make sure we keep it on our radar that we continue to be prepared. It’s better to be prepared for something that doesn’t happen than be unprepared and have an outbreak .

I have fire insurance on my house not because I want a fire to happen. I have it just in case, and I hope I never use it.

Ted Jacoby III: Why do you think the U.S. has been so much more successful than, let’s say, Europe at staying FMD free?

Jamie Jonker: I think part of it is that bit of geographic isolation. The vast majority of the Western Hemisphere is free of foot-and-mouth disease.

There may be some in Venezuela, but their political issues over the past decade, their instability , their reporting of disease has been a bit spotty, so it wouldn’t surprise me if they still had a little bit circulating there . But everywhere else in South America, including Brazil, Argentina, Uruguay, Paraguay those places have all gotten rid of FMD, and they’ve done it through vaccination campaigns and culling.

Essentially eliminating it from the Western Hemisphere, our risk is much lower than Europe, which has direct geographic connections to places where it’s endemic.

Ted Jacoby III: That makes a lot of sense. Serena, I’ve got one last question for you. What is the thing that keeps you and your family’s farms what keeps you guys up at night in terms of a disease or an outbreak in the U.S.?

Sarina Sharp: Foot-and-mouth disease would be terrible, but it doesn’t feel like that’s imminent. I think that another round of avian influenza feels much more likely to have a devastating impact on an individual dairy. It’s not something that’s keeping us up at night every night, but it is something that when you hear, “Yep, there’s 50-plus cases in Idaho,” it feels could happen right here, kind of no matter where in the US right here is.

So I think that one is forefront of dairy producers’ minds. But I just don’t think that disease pressure is keeping dairy producers up at night in the way that it did in 2024 when it was a mysterious virus. We were trying to figure out how to treat it. We weren’t sure how it was spreading, and the impact on animal health was so severe.

And it feels to me like how we treat the flu and, to a lesser extent, COVID today compared to how we did in 2020. I think that’s how dairy producers generally feel about disease pressure in general today. I don’t want myself or my kids to get COVID or the flu, and we sure don’t want avian influenza on any of our farms

Ted Jacoby III: I’d have to agree with that sentiment. This is what I’ve heard today. I’ve heard that screwworm, we are well prepared to deal with it if it does get on a U.S. dairy, but in general, it’s not something we’re terribly worried about affecting milk production in the United States.

Avian flu is something maybe we’re a little bit more worried about affecting milk production, but the strain that’s out there today is one that’s been out there before, and we seem pretty well prepared for it. And foot-and-mouth disease is not in the United States, and we’ve got a lot of protocols in place to really keep it at bay, and we’re in a pretty good place in terms of making sure that foot-and-mouth disease stays away from this country.

Jamie, hey, thank you very much for joining us today. I really appreciate it. I learned a lot today, and thank you so much for your time.

Jamie Jonker: Yeah. Thank you for having me.

Ted Jacoby III: Thanks, guys. Thanks, Serena. Thanks, guys.

Jamie Jonker: Thank you. Thank

Sarah Olson: you, Serena. Jamie, thank

Jamie Jonker: you.

Yes, see you. Bye, guys.

Ted Jacoby III: Coming up next time.

Scott Briggs: Yeah, the US is really in a great position to drive global dairy markets over the next five to 10 years.

Ted Jacoby III: Tune in next time when we have Scott Briggs from Bridgescape Commodities joining us, talking about milk production on the global scale and how the US is positioned to be competitive against the major global exporters moving forward