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CATTLE INDUSTRY FACES CHANGES WITH DISCOVERY OF BSE IN THE UNITED STATES

by: Stephen B. Blezinger
Ph.D, PAS

As every beef producer and more than likely every beef consumer in the U. S. and possibly the world knows, BSE has come to America. Every day that passes since the discovery on December 23, 2003 reveals new information, changes and challenges to the United States Beef Industry.

Currently, as of January 13 when this is being written, the USDA has traced a third animal to the herd in Mattawa, Washington. Two animals were previously traced to this herd. The three animals in the Mattawa herd will be removed. Eighty-one cows were imported into the United States from Canada including the BSE-positive cow. USDA's investigation has yielded the following information: One is the positive cow; three are under a hold order at a premise in Mattawa and will be removed in the near future. USDA believes seven cows may have gone to another dairy and is working to determine if those animals are at the dairy. The state of Washington has placed a hold on this facility in order to facilitate the investigation. Nine cows are in the index herd where the positive cow was located. Some of the remaining cows that came in that shipment may be on the index premises, but at this time the identity of these animals has not been confirmed.

Interestingly enough however, despite this major occurance, positives can and are being observed with growing frequency. Comments that are commonly heard include: “I really expected the markets to be more severely affected than they have been,” “Despite this incident, consumer beef demand remains high and apparently unwavering,” and “You know if this was going to happen it probably occurred at the best time it could – prices were already in a downturn and in the middle of the holidays not a lot of trading was taking place to begin with.”

The greatest reaction to the entire issue appears to be from countries we export beef to – a list that now includes the following: Argentina, Australia, Brazil, Cambodia, Chile, China, Colombia, Costa Rica, Egypt, Indonesia, Jamaica, Japan, Jordan, Kuwait, Lebanon, Malaysia, Mexico, Nicaragua, Peru, Russia, Singapore, South Africa, South Korea, Taiwan, Thailand, Uruguay, Venezuela, and Vietnam. Canada has only banned processed beef. It's anyone's guess how long it will take to reopen these markets but in the meantime, our domestic markets will undoubtedly adapt to this change.

There have been any number of implications to the market above and beyond the effect to beef prices. Let's spend some time here considering how this is affecting the industry now that the shock is wearing off.

Let's begin by looking at some of the steps the federal government is taking that will affect the beef industry. On Jan. 8, USDA's Food Safety and Inspection Service (FSIS) issued four new rules to implement announcements made last week by Agriculture Secretary Ann M. Veneman to further enhance safeguards against BSE. These rules include:

1) Product Holding. USDA is publishing a notice announcing that FSIS inspectors are no longer marking cattle tested for BSE as "inspected and passed" until confirmation is received that the cattle have, in fact, tested negative for BSE. FSIS will be issuing a directive to inspection program personnel outlining this policy.

2) Specified Risk Material. With the filing of an interim final rule, FSIS is declaring that 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, thus prohibiting their use in the human food supply. Tonsils from all cattle are already considered inedible and therefore do not enter the food supply. These enhancements are consistent with the actions taken by Canada after the discovery of BSE there in May. These prohibitions are effective immediately upon publication in the Federal Register.

In this rule, FSIS is requiring federally inspected establishments that slaughter cattle remove, segregate and dispose of these specified risk materials so that they cannot possibly enter the food chain. To facilitate the enforcement of this rule, FSIS has developed procedures for verifying the approximate age of cattle that are slaughtered in official establishments. State inspected plants must have equivalent procedures in place to prevent these specified risk materials from entering the food supply.

3) Advanced Meat Recovery. AMR is a technology that removes muscle tissue from the bone of beef carcasses under high pressure without incorporating bone material. AMR product can be labeled as "meat." FSIS has previously established and enforced regulations that prohibit spinal cord from being included in products labeled as "meat."

This interim final rule expands that prohibition to include dorsal root ganglia, clusters of nerve cells connected to the spinal cord along the vertebral column, in addition to spinal cord tissue. In addition, because the vertebral column and skull in cattle 30 months and older will be considered inedible, they cannot be used for AMR.

4) Air-Injection Stunning. To ensure that portions of the brain are not dislocated into the tissues of the carcass as a consequence of humanely stunning cattle during the slaughter process, FSIS is issuing an interim final rule to ban the practice of air-injection stunning.

Country of Origin Labeling

One of the most prominent is the renewed and increasing call for adoption of the Country of Origin Labeling program (COOL) which will provide labeling on beef products that will show what country the specific cut originated in and is designed largely to differentiate between domestic and foreign or imported beef products. While the concept is good, implementation, especially by packers and retailers would be a logistical nightmare, i.e. tracking each individual cut from the point of entry into the packing plant as a live animal, the processing of that animal into a chilled carcass and subsequent breakdown into primals, subprimals and retail cuts. The estimated cost of this program to the beef industry could be as high as $1.9 billion.

Organic Beef

As reported in Meat News Daily (Meatnews.org) organic meat sales are set to surge in the United States as BSE sparks consumers' fears for food safety. A new study by Organic Monitor shows that sales of organic meat products in Canada expanded by 35 per cent in 2003 mainly because of the BSE scare.

Many Canadian retailers reported record sales of organic beef this year due to BSE elevating consumer demand.

Sales of organic beef in the US could double in 2004 if suppliers can get sufficient volume into the retail trade, Organic Monitor said. "The BSE scare is raising consumer demand for organic meat products and retailers are likely to respond by introducing these products in their stores," said an Organic Monitor spokesman. "Many consumers see organic beef to be safer than non-organic beef since organically reared cattle are not fed animal remnants. There have also been no cases of BSE reported on animals that have been reared their entire lives according to organic production methods." The newly published study shows that organic poultry dominates the organic meat products market in North America, comprising over 70 per cent of total volume. The relatively short production cycle, large production volume, and low price premium are responsible for organic chicken to be the most popular organic meat with consumers. In contrast, organic beef is typically produced on a small-scale, distributed via inefficient supply chains, and priced three times higher than conventional beef.

Organic Monitor added: "Consumers also perceive organic beef to be very similar to natural beef, which is widely available in natural food shops. These are factors behind organic beef to have a mere 0.02 per cent share of the US beef market in 2003.

The organic market analyst said that BSE is poised to accelerate growth in the North American organic meat products market. A large rise in domestic production volume is envisaged as the number of organic meat producers increases. Greater volume is to enter retailers as supply chains develop from farmers to retailers, and prices are predicted to decrease as organic meat products become more available in retailers. Sales are projected to surge in 2004 and 2005, however organic meats are expected to face stiff competition from similar products like natural meats in the midterm. A BSE-induced shake-up of the meat industry is envisaged that will raise meat production standards and improve safeguards, possibly limiting demand for organic meat products.

Other Implications

One development the industry can probably count on seeing at some point is a system of tracking cattle all the way back to their point of origin. The technology is already in place for something of this nature and would probably rely on the use of implanted microchips in the animal. These microchips can be implanted much in the same way conventional implants are administered. Subsequently a microchip reader would be installed at any point where verification would be required. The unfortunate part of this program is that the cost would be borne by the cow-calf producer since that is the start of the process. The positive side is that a system of this nature not only tracks the origination and the producer of this animal but also could provide start-to-finish performance tracking of the animal as well and could be used to identify where the truly superior genetics are being produced in the industry. The industry has quite a ways to go before adoption of this type of technology will become standard.

Another possibility that was suggested to me in a recent conversation was the possibility of standardized testing for BSE in cow herds that wanted to be certified as “BSE Free,” and could be implemented in a similar manner to brucellosis testing. Of course this would depend on the development of a cost-effective test for the disease. Subsequently, IF cattle were found to carry the disease it would be necessary to develop a relatively low-impact resolution. Obviously we want to stay away from a media circus in the event a positive case is found. The message here is that the industry as a whole would be taking a very pro-active position on the issue and doing everything it could to control and eliminate any possibility that the disease might exist within US borders.

Conclusions

Without a doubt we will see many other changes and policy adoptions take place as we move forward from here. The thing we have to remember is that our goal in producing a quality beef product is producing a safe product.

Dr. Steve Blezinger is and nutritional and management consultant with an office in Sulphur Springs Texas. He can be reached at Route 4 Box 89 Sulphur Springs, TX 75482, by phone at (903) 885-7992 or by e-mail at sblez@peoplescom.net.

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