BSE IN CATTLE -- ONLY THE FACTS

Unless you have totally avoided television, radio, newspapers and Web sites during the holidays, you are probably aware that the first case of Bovine Spongiform Encephalopathy (BSE) or “Mad Cow” disease in the U.S. was announced as being diagnosed on December 23, 2003, by USDA. On Christmas Day, USDA reported that a Laboratory in England had also confirmed a positive test for BSE from the same animal. The positive BSE sample originated from a four-year-old cow from a large dairy operation in Washington state. As usual, when there is anything new identified in the U.S., there are a lot of myths, rumors and fallacies that are floated about by a variety of sources. Let’s try and review the facts relative to BSE.

Following are the facts on BSE, as we know them on December 26:

  • Background on BSE. The cause of BSE is mutant protein, called a “prion,” that destroys brain cells. BSE is not a contagious disease like the flu, and it is not caused by a bacteria, a virus or a fungus. BSE will not be eliminated in meat by irradiation or other “on-site” food safety measures at processing plants. These “prion-type” brain diseases are quite rare in animals throughout the world, and even more rare in humans. Fewer than 150 people worldwide have died from Creutzfeldt-Jakob (vCJD) disease in the 12 years since it was diagnosed as a variant caused by humans ingesting meat from BSE-infected cattle. There has never been a diagnosed case of vCJD in humans in the U.S.
  • BSE not likely to spread. Because BSE is not contagious, and is not spread by animal-to-animal or animal-to-people contact, it is not likely to show up on other farms in the U.S., unless there is some connection with an infected herd or a contaminated feed supply. In most cases, BSE is spread to new animals from meat and bone meal (MBM) feed that was processed from the animal parts of BSE-infected cattle. These types of feed products have been banned in the U.S. since 1997. The affected herd in Washington state is under quarantine by USDA until the matter of other animals with BSE has been resolved.
  • Beef is still highly safe to eat. The meat from the dairy cow in Washington state never entered the food chain. The only meat tissue affected by BSE are brain and spinal tissue, not whole muscle cuts of meat (steaks, roasts, etc.). The U.S. has much more restrictive food safety and testing measures in place at processing plants than other countries to maintain the quality and safety of beef produced and processed in the U.S. Remember, the BSE case diagnosed on the dairy farm in Washington was most likely an isolated “incident,” and was not an “outbreak” of something that is highly contagious.
  • Effect on Beef Exports. In 2003, beef exports in the U.S. are expected to total between $3.7 and $4 billion. Approximately 15 countries had placed restrictions on U.S. beef imports as of December 26, 2003. Included in that list were Japan, South Korea and Mexico, which are three of the largest importers of U.S. beef. In 2002, the U.S. exported approximately $1.2 billion in beef and veal products to Japan, which was nearly one-third of the total beef exports for that year. Most European Union (EU) countries already ban imports of U.S. beef, due to concerns over the use of certain growth hormones.
  • Effect on Fed-Cattle prices. The live cattle futures price at the Chicago Mercantile Exchange (CME) on Tuesday, December 23, 2003, before USDA announced the BSE incident, was trading near $93/cwt. Live cattle futures prices at the CME dropped the limits of $1.50/cwt. on December 24 and $3/cwt. on Dec. 26. CME expanded the trading limit to $3/cwt. for December 26 and will raise the limit to $5/cwt. on December 29 and 30. The $5 trading limit will continue as long as cattle futures continue to close down the limit. Some economists estimate that fed-cattle prices will drop as much as $15-20/cwt., due to the short-term loss of beef exports, before prices stabilize again. Hopefully, long term, cattle prices will rebound and improve, once all the facts are known about the current BSE incident. Beef supplies in the U.S. remain quite tight, and as long as U.S. consumer demand for beef remains strong there should be a good chance for price recovery.
  • Effect on Cattle Producers. Total beef sales from U.S. farms in 2003 is expected to reach $37 billion, which is up almost $7 billion from 2002 totals. This was mainly due to record high prices for fed cattle this past fall, resulting in some of the highest profits for cattle feeders in decades. Some economists are estimating that the current BSE situation will cost the U.S. beef industry over $2 billion. Many cattle feeders have been filling their feedlots with feeder cattle in recent weeks, at feeder cattle prices that were also near record levels. Feeders were relying on continued strength in the fed-cattle market for the next 6-9 months, when these cattle go to market. Now, unless those cattle feeders “locked-in” a market price, or the cattle market rebounds quickly from the BSE incident, those feeders could be facing some large financial losses in 2004. The price of feeder cattle futures on the CME has also been down the limit since the BSE announcement. This is bad news for beef cow/calf producers that still owned their 2003 calves and were planning to sell them early in 2004, anticipating some of the best profits from their beef cow herd in decades.
  • Bottom Line. On the surface, it does not appear that the BSE incident in Washington state should have long-lasting impacts on the U.S. beef industry. Let’s hope that USDA officials can get to the bottom of tracing the origin of the affected dairy cow and the potential source of contaminated feed so that many of our beef exporting trading partners will again buy ample supplies of high quality U.S. beef. Also, let’s hope that U.S. consumers remain confident in the safest, highest quality supply of beef in the world that is readily available in the U.S. This will certainly help ease the financial impact on cattle producers and the beef industry in the U.S.
  • For more information on BSE and the current BSE incident in Washington state, please refer to the USDA web site at: http://www.usda.gov/

Editors note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at kent.thiesse@minnstarbank.com.