Zoetis Report to SEC on Lasalocid Contamination Incident

IN AUGUST OF 2014 50,000 turkeys died in a single weekend on a farm in west Michigan. The contaminant was eventually identified as lasalocid, a widely used antibiotic for poultry and cattle that becomes toxic at higher than recommended doses. In addition to the 50,000 turkeys, 20,000 pigs were also fed the contaminant and were later sent to market, and 450 tons of feed were lost. The contamination eventually spread to at least 100 farms in at least 8 states, and remains under investigation by the FDA.  

Despite the involvement of the Michigan Department of Agriculture and Rural Development (MDARD) in the investigation, and despite the potential for this contaminant to enter the human food stream or Michigan soil and water, no press release was ever issued by the State of Michigan. Indeed, the only public disclosure of this event occurred at the January 21, 2015 meeting of the Commission of Agriculture and Rural Development. During that meeting MDARD identified a pharmaceutical manufacturing byproduct called lascadoil as the source of the lasalocid contaminant, and identified Shur-Green Farms of Ansonia, Ohio as having issued a recall of lascadoil. Later reporting by Rosemary Parker at mLive identified Sietsema Farms as the farm at which the contamination of turkeys, hogs, and feed occurred. This and other reports on the lasalocid contamination issue can be found here.

Now, a year after the death of the 50,000 turkeys, we have additional information about the sequence of events that led to the lasalocid contamination. On August 6, 2015, Zoetis, Inc. filed a Form 10-Q quarterly report to the Security and Exchange Commission (SEC) which includes a three-paragraph summary of part of the investigation around this case, and names Zoetis Inc., Shur-Green Farms LLC, Restaurant Recylcing Services LLC, and Superior Feed Ingredients LLC as parties involved in this investigation and in court proceedings.

The first paragraph of the report lays out the broad outline of events:

Lascadoil Contamination in Animal Feed  An investigation by the U.S. Food and Drug Administration (FDA) and the Michigan Department of Agriculture is ongoing to determine how lascadoil, oil for industrial use, made its way into the feed supply of certain turkey and hog feed mills in Michigan. The contaminated feed is believed to have caused the deaths of approximately 50,000 turkeys and the contamination (but not death) of at least 20,000 hogs in August 2014. While it remains an open question as to how the lascadoil made its way into the animal feed, the allegations are that lascadoil intended to be sold for reuse as biofuel was inadvertently sold to producers of soy oil, who in turn, unknowingly sold the contaminated soy oil to fat recycling vendors, who then sold the contaminated soy oil to feed mills for use in animal feed. Indeed, related to the FDA investigation, Shur-Green Farms LLC, a producer of soy oil, recalled certain batches of soy oil allegedly contaminated with lascadoil on October 13, 2014.

So now we have the sequence of events:

Lascadoil manufacturer --> Soy oil producer --> Fat recycling vendors --> Feed mills --> Animal feed  

Furthermore, this paragraph identifies Shur-Green Farms as a producer of soy oil, and states that Shur-Green issued a recall of lasalocid-contaminated soy oil on October 13, 2014. Thus the “producer of soy oil” in this event timeline is suggested to be Shur-Green Farms of Ansonia, Ohio.  

Now for the second paragraph of the report to the SEC:

During the course of its investigation, the FDA identified the process used to manufacture Zoetis’ Avatec® (lasalocid sodium) and Bovatec® (lasalocid sodium) products as one possible source of the lascadoil, since lascadoil contains small amounts of lasalocid, the active ingredient found in both products. Zoetis has historically sold any and all industrial lascadoil byproduct to an environmental company specializing in waste disposal. The environmental company is contractually obligated to incinerate the lascadoil or resell it for use in biofuel. Under the terms of the agreement, the environmental company is expressly prohibited from reselling the lascadoil to be used as a component in food. The FDA inspected the Zoetis site where Avatec and Bovatec are manufactured, and found no evidence that Zoetis was involved in the contamination of the animal feed.

This paragraph explains that Zoetis manufactured lasalocid for use in two of its animal feed products (Avatec and Bovatec), and that lascadoil, a byproduct of this manufacturing process, contains small amounts of lasalocid. Furthermore, this paragraph states that the FDA has identified this manufacturing process at Zoetis as one possible source of the lascadoil involved in this feed contamination issue. Thus one possibility is that the “Lascadoil manufacturer” in the event timeline is Zoetis, Inc. This paragraph goes on to explain, however, that Zoetis has an established practice of disposing of lascadoil waste by selling the byproduct to an environmental company that is prohibited from reselling the lascadoil as a component in food.  

And now for the final paragraph of the report to the SEC:

On March 10, 2015, plaintiffs Restaurant Recycling, LLC and Superior Feed Ingredients, LLC, both of whom are in the fat recycling business, filed a complaint against Shur-Green Farms alleging negligence and breach of warranty claims arising from their purchase of soy oil allegedly contaminated with lascadoil. Plaintiffs resold the allegedly contaminated soy oil to turkey feed mills for use in feed ingredient. Plaintiffs also named Zoetis as a defendant in the complaint alleging that Zoetis failed to properly manufacture its products and breached an implied warranty that the soy oil was fit for use at turkey and hog mills. Zoetis was served with the complaint on June 3, 2015, and we filed our answer, denying all allegations, on July 15, 2015. We believe we have strong arguments against all claims and do not believe there is any liability on the part of Zoetis.

In this paragraph, the first sentence indicates that Restaurant Recycling, LLC, and Superior Feed Ingredients, LLC are both fat recycling vendors and both purchased soy oil from Shur-Green Farms. Thus these two entities hold the third position as “Fat recycling vendors” in the above sequence of events. Furthermore, this sentence discloses that the two fat recycling vendors have filed a complaint against Shur-Green Farms. The second sentence establishes that it was Restaurant Recycling Services and Superior Feed Ingredients that sold the contaminated soy oil to turkey feed mills, presumably including Sietsema Farm Feed where the 50,000 turkeys died. The third sentence states that Restaurant Recycling and Superior Feeds also allege that Zoetis is complicit in these events since it "failed to properly manufacture its products and breached an implied warranty that the soy oil was fit for use at turkey and hog mills." Thus the question of whether Zoetis played a role not only in the production of lascadoil but also in the inappropriate distribution of this waste product to the animal food chain, appears to be in dispute.

Regardless, in this report to the SEC several significant players in the investigation of the lasalocid contamination incident have now been identified. Putting these names to the sequence of events described in the first paragraph suggests the following:

Zoetis --> Shur-Green Farms --> Restaurant Recycling Services + Superior Feed Ingredients --> Feed mills --> Animal feed

Similarly, it can be considered whether any of these names can reasonably be added to the flowchart of lasalocid contamination incident provided during the January 21, 2014 meeting of the Michigan Commission of Agriculture and Rural Development. This graphic is interesting since it presents a broader (but still not complete) view of the entire contamination incident:

Slide 11 from the presentation by MDARD at the January 21, 2015 meeting of the Michigan Commission of Agriculture and Rural Development, with numbers in left column added by me.  Click image for larger version.

Slide 11 from the presentation by MDARD at the January 21, 2015 meeting of the Michigan Commission of Agriculture and Rural Development, with numbers in left column added by me.  Click image for larger version.

Here is one way of thinking about how these new names from the report to the SEC might fit into the MDARD schematic:

#1 - Orange Box - Zoetis, Inc.

#3 - Blue Box - Shur-Green Farms, LLC (perhaps also known as Kremer Family Farms, which resides at the same address as Shur-Green Farms in Ansonia, Ohio.)

#4 - Blue Box - Restaurant Recycling Services, LLC

#6 - Gray Box - Superior Feed Ingredients, LLC

After a year in which almost no new information has been made available about this incident it is important that the details are finally beginning to emerge. These details matter because the food system has become so complex and secretive that almost no one understands what farm animals are being fed, or how much of whatever is fed to them ultimately ends up in the food we eat. With any luck the information will keep coming, and we will all learn more about what happened in the lasalocid contamination incident in 2014, and also more about how our food system actually works.