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Monday, December 29, 2003 - Page updated at 12:56 P.M.
Mad-cow scare can set off panic and rattle beef industry
By Bradley Meacham
The discovery of brain-wasting mad-cow disease in a single steer in Alberta in May set off a worldwide panic that crippled Canada's $19 billion beef industry. Canadian consumers stopped buying meat, trade in cows came to a halt, and the United States, Japan and dozens of other countries banned imports of beef from Canada.
While the impact of a similar case of mad-cow found near Yakima this week probably won't be as dire because the U.S. industry is less dependent on exports, the experience of Canada shows what can happen when fear takes over.
"The cattle industry here was almost decimated," said Jim Crawford, co-owner of Olds Auction Mart, a market north of Calgary that sells about 110,000 cattle annually and has seen business fall by about 25 percent this year. "Public perception is everything. They think, 'I can't eat beef now because it's going to kill me.' Well, that's not the way it is."
Before the scare, Crawford's business was shipping thousands of live cattle across the U.S. border every day, sending them as far as Washington state, Texas and the Dakotas. In 2002, Canada exported beef worth more than $3.5 billion, with 90 percent of the shipments going to the United States, according to Statistics Canada. Shipments fell to almost zero during June, July and August.
Now the same thing could happen here on a smaller scale, potentially upsetting an industry that was profiting this year from the pinched supply from Canada, strong consumer demand and a falling U.S. dollar, which supports exports.
The U.S. beef industry is the world's largest, with $175 billion in sales and more than 1 million businesses, farms and ranches. Washington's meat-products industry makes up a small fraction of that, with $1.7 billion in gross income last year, according to the state Department of Revenue.
Closure of overseas markets to U.S. exports will hurt, but less than it did in Canada, which had exported 70 percent of its beef and cattle production before the bans. The U.S. exports about 10 percent of the beef it produces.
Nevertheless, if that 10 percent were redirected back into the domestic U.S. market, traders worry that it would cause a glut of beef here, depressing prices and hurting farmers and ranchers. Trading in cattle futures on the Chicago Mercantile Exchange was halted yesterday after it fell the maximum daily limit of 1.5 cents per pound.
Eric Hurlburt, an international trade specialist for the Washington Department of Agriculture, said the U.S. exported $1.3 billion worth of beef products during the 12 months through Sept. 30. Washington state exported $69 million worth during that time.
As of late yesterday, Australia, Brazil, Canada, Chile, China, Jamaica, Japan, Malaysia, Mexico, Russia, Singapore, South Africa, South Korea, Taiwan and Thailand had announced full or partial bans of imports from the U.S.
Until the cow was discovered near Yakima, cattle prices were going up, climbing 25 percent at the Chicago Mercantile Exchange since the May ban on Canadian beef, especially after a mad-cow case was discovered in Japan in October.
Retail beef prices hit a record $3.74 a pound in August, the highest since June 2001, according to the U.S. Department of Agriculture. The National Cattlemen's Beef Association forecast U.S. beef exports would hit a record $3.6 billion in 2003, up from $3.2 billion last year.
"Those guys have had a banner year, and now this will be a real kick in the teeth," Crawford said.
To overcome the drop-off in business, the beef industry in Alberta rallied with a campaign to explain the risks of beef to consumers, he said. Beef consumption in the province rose in July by 60 percent from a year earlier, he said, and Canadian farmers are expecting a lifting of the U.S. ban, possibly as soon as next month.
"You have to keep telling customers what you're doing. We built this industry on integrity of people doing their best," Crawford said, adding that renewed attention to safety will help the beef industry.
"In the long run, we're going to be better off," he said.
Seattle Times staff reporter Jane Hodges contributed to this report.
Bradley Meacham: 206-515-5066 or email@example.com
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