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Paynesville Press - December 31, 2003

Case of Mad Cow disease causes beef prices to drop

By Michael Jacobson and Bonnie Jo Hanson

Last week's announcement by the USDA that a Washington state dairy cow had tested positive for BSE (bovine spongiform encephalopathy), more commonly known as Mad Cow disease, caused beef prices to plummet.

In four days last week following the discovery, the price of live beef dropped from 90 per pound to 70 per pound, according to Greg Supan, assistant manager of the Central Livestock Association, which operates a livestock auction in Albany.

That may not sound like much, but it makes a big difference to farmers with 100 head of cattle weighing 1,500 pounds each, he added.

Live beef prices had gradually gone down from the one-week higmh of $1.20 per pound earlier this year after Mad Cow disease was discovered in Canada, said Jack Hennen, a local beef producer and cattle trader. An average price for live beef is around 75 per pound.

While Christmas is always an uncertain time for the markets - with farmers not selling much and plants not knowing about post-holiday demand - in the wake of the news last week, selling really stalled, said Hennen, who had a couple of deals cancelled, leaving him with extra beef cows.

Hennen expects beef prices to drop dramatically in the short term, down to 60 per pound for live beef. Where it goes from there will depend on what more is learned about this case. If more discoveries are made, prices will continue to drop, he said But if domestic demand stays steady, as it did in Canada, the price drop should not be as dramatic.

"I don't think anyone knows yet how this will play out," said Jim Salfer, an extension educator with the University of Minnesota Extension Service.

Within hours of the announcement of the case of Mad Cow disease, which was later confirmed by a European laboratory, eight countries including Japan imposed bans on beef imports from the United States. Now, nearly two dozen foreign countries have banned U.S. beef imports.

But since only a small percentage of U.S. beef is exported - most goes to U.S. consumers - beef prices will depend on domestic demand, said Hennen. According to the USDA, only about 10 percent of the beef produced in this country is exported. If beef consumption in the United States remains steady, prices may level out, said Hennen.

Hennen figures that beef prices - barring more disastrous news - will level out around 75 per pound. He figures this by subtracting 15 percent (for the loss of export markets) from the 90 beef price prior to the Mad Cow discovery last week.

That calculation, though, depends on U.S. consumers remaining confident in U.S. beef.

"After all the hoopla is over, it all depends on demand," agreed Salfer.

If the origin of the cow and disease can be determined to be an isolated case, tied to the Canadian case, or readily explained it would reassure the market that U.S. beef is safe, Hennen said.

On the other hand, if more Mad Cow discoveries are made or if this case is somehow linked to other parts of the country, the scared initial reaction may last, he added.

So far, the news from the USDA is good, which should reassure consumers that U.S. beef is safe.

According to the USDA, the confirmed case of BSE affected a six-and-a-half-year-old cow. The age of the cow is significant, according to the USDA, since she was born before feed bans were implemented in North America in 1997.

This means that the USDA safety measures have not been breached. The feed bans prohibit the inclusion of animal protein in feed, a practice which has been identified as the primary means for the spread of BSE.

The USDA is checking on the other 73 cows that came to the United States in the same shipment from Canada as the infected cow. The USDA has also located the three calves from the infected cow and has put holds on two of them. (The third died previously.) The Washington state farm where the cow was located also is under quarantine.

The chance of humans contracting the disease from an infected animal is very low, according to the USDA. The portions of a beef cow that can be affected by Mad Cow disease - the brain and the spinal column - are routinely removed from slaughtered animals before any other meat is processed, reducing the chances that meat could be contaminated.

Since 1990, when the disease was found in Europe, the USDA has had a monitoring program in place to identify and isolate any animals that may have the disease.

Out of extra caution, the USDA ordered the recall last week of all the beef products from the meat plant where the infected cow was slaughtered in early December. (Its illness was originally attributed to calving, so its BSE testing was not completed and its positive status not identified until 11 days later.)

In all, 10,410 pounds of beef (from the 20 cows killed that day at the plant) was recalled by the USDA. Of this, at least 80 percent was distributed to stores in Oregon and Washington.

Mad Cow disease (bovine spongiform encephalopathy) is a disease that affects the central nervous system of an infected animal. Essentially, the disease eats holes in the animal's brain and spinal cord rendering it clumsy and eventually unable to walk.

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