|
             
|
By Jose G.
Peña After reaching record
high prices last fall, cattle futures plummeted about 20 percent in
the five days of trading following the December 23, 2003 report of the
discovery of a single dairy cow infected with bovine spongiform
encephalopathy, or “mad cow” disease, in Washington state. Feeder cattle futures
prices dropped to the high 70s‑to‑low‑80s and live
cattle to the high 60s‑to‑low‑70s for most contracts
on the Chicago Mercantile Exchange. Since then, futures prices have
recovered to the mid‑80s for feeder cattle and
mid‑to‑high 70s for live cattle. It appears that the worst
is behind us. While U.S. demand and
consumption have remained relatively strong, the market weakness was
influenced by the publicity when about 20 nations, including top
buyers of U.S. beef — Japan, Mexico and South Korea — halted U.S.
beef imports shortly after the announcement. Exports account for only
10 percent of the U.S. beef sales, but represent a value of about $3
billion a year. So, when more than $200 million in beef export
shipments enroute were halted overnight, the market weakened. The U.S. cattle herd, at
96.1 million head as of January 1, 2003, is one of the world's
largest. With 170 million head of cattle, Brazil has the world's
largest commercial‑cattle herd, according to a recent U.S.
Department of Agriculture survey. While the market
weakness has been hard on the cattle industry, the situation could
have been a lot worse. First, the adverse report came at an opportune
time. Trade had slowed down for the holidays. The slow‑down
buffered the market and provided an opportunity for market forces to
digest the true risk of the adverse event. Most sale barns had closed
and futures contract trading had shortened. In addition, prices had
been at record highs and the market had expected some adjustment
anyway. Now, with the market recovery underway, the impact may not be
as bad as reported earlier. The overall effect of
the mad‑cow‑induced market weakness may not be as
traumatic as in Canada last spring when prices collapsed completely.
U.S. cattle markets have more flexibility. For example, Canada was
unable to handle the inventory buildup of cull cows, compared to the
U.S. which has an efficient system in place to handle cull cows and
bulls. In addition, the U.S.
system moved quickly to dispel fears of the risk associated with an
isolated incidence of mad cow disease. USDA moved quickly to maintain
confidence in the U.S. beef industry shortly after the report by
providing positive food safety reports, banning all "downer"
cattle (cattle which can't get up) from entering the human food chain,
and preventing meat from any animal suspected of possible BSE from
entering the food chain until the animal has tested negative. This past week, USDA's
Food Safety and Inspection Service posted rules and public notices in
the Federal Register to
continue to assure the public that U.S. food is safe. These rules and
notices include: declaring that the skull, brain, trigeminal ganglia,
eyes, vertebral column, spinal cord and dorsal root ganglia of cattle
30 months of age or older, and the small intestine of all cattle are
“specified risk materials” and prohibited in the food supply;
expanding on the prohibition of central nervous system tissues in
advanced meat recovery products; prohibiting injection stunning; and
announcing that FSIS inspectors will not mark ambulatory cattle that
have been targeted for BSE surveillance testing as "inspected and
passed" until negative test results are obtained. And, USDA
continues to work to develop more details of its BSE surveillance
program. While the origin of BSE
in cattle remains unknown, the epidemic that occurred in the United
Kingdom is believed to have resulted from feeding cattle meat and bone
meal (rendered ruminant protein) containing the tissues of scrapie‑infected
sheep. The BSE-infected cow in Washington state was born and raised in
Alberta, Canada, and theoretically acquired the disease by eating
contaminated feed before the ban on feeding rendered ruminant protein. The feeding of milk
protein, blood meal, animal fat, and yellow grease (recycled oil from
the restaurant industry) is still allowed in the U.S., but the U.S.
Food and Drug Administration banned using remains of cattle, goats and
sheep in any ruminant feed, such as for cattle, goats and sheep, back
in 1997. Some would argue to
discontinue all feeding of recycled animal products to livestock and
require only vegetative feed i.e., grass and grain. While this sounds
simple and logical, it would create many other problems. Milk product
feeding to calves is often required, and environmental issues
associated with disposing of thousands of tons of these animal
by‑products — which have proven safe for feed — are massive.
The prions associated with BSE are only found in the brain and spinal
cord of infected animals, and not in any other tissue. Others argue that each
slaughtered animal should be tested for BSE, as is being done in
Japan. Costs associated with individual tests would be almost
prohibitive in the U.S. due to the cost per unit and the volume of
cattle slaughtered. Certainly, the costs would be disproportionate to
the risks associated with contracting the variant Creutzfeldt‑Jakob
disease from cattle (BSE which is thought to cross to humans from
cattle is a variant of CJD in humans). One hundred and
thirty‑seven people have died from the brain wasting disease in
Great Britain, the country with by far the greatest documented
incidence of BSE, where more than 200,000 documented cases have been
reported (not counting possibly thousands of unreported cases) in the
more than 20 years since BSE was first detected. About a dozen other
humans, worldwide, have contracted CJD in the approximately 23
countries which have reported incidence of BSE-infected cows. As a result, the risk of
contracting CJD is almost nonexistent. It appears that the government,
industry, and everyone else associated with the tragic event has acted
appropriately to reduce its economic impact. |
|
 |
|
Questions? Comments? Suggestions? |