050641 U.S. Beef Market Not Expected to Slow

June 30, 2005

Fort Worth, TX - Texas livestock experts predicted that Americans will still indulge in burgers and steaks this Fourth of July, while the head of the world's biggest beef processor said the discovery of a second U.S. case of mad-cow disease will delay the reopening of important exports to Japan.

"We think Japan will hit the pause button a little bit, but it won't halt the dialogue," John Tyson, chief executive of Tyson Foods, told investors at a Wachovia Securities conference in New York.

In May, Tyson predicted that Japan would resume buying U.S. beef within two months. Japan imposed a ban shortly after a Canadian-bred dairy cow with BSE -- bovine spongiform encephalopathy, a brain-wasting disease that has been linked to a rare illness in humans -- was discovered in Washington state in late 2003. Japan bought about $1.7 billion worth of U.S. beef in 2003.

Another key Asian market, South Korea, also appears to be stepping back from resuming U.S. imports.

"I think Korea was on a forward, straight track," said Lynn Heinzle, spokesman for the Denver-based U.S. Meat Export Federation. "What they are now saying is that [lifting the ban] will be delayed. They will slow things down. I don't know if that's to overcome the current media swell."

Taiwan lifted its ban on U.S. beef imports three months ago, then reinstated it when the second case was confirmed. Other countries halting shipments are Belize, Indonesia, the Philippines, St. Lucia and Taiwan. The U.S. exports about 10 percent of its beef products.

Meanwhile, the Agriculture Department disclosed Thursday that the beef cattle operation in Texas that produced the infected cow was quarantined June 20, four days before the government confirmed that its herd produced a Brahman- cross cow with BSE, Jim Rogers, a department spokesman, said Thursday.

Rogers also said the department was mistaken in referring to the infected cow for seven months as a "downer" -- a living animal unable to walk. In fact, the cow was dead on arrival at Champion Pet Food's Waco plant Nov. 15 after being shipped from a Texas auction barn.

The Agriculture Department confirmed Wednesday that the infected animal was born and raised in Texas. A British testing lab confirmed the BSE diagnosis last week.

Thursday, the Agriculture Department continued to withhold the name and location of the ranch the cow came from, other than to describe it as a cow-calf operation.

The always-fatal BSE is spread to cattle through feed made of contaminated beef. Feeding beef to cattle has been banned in the United States since 1997. The Texas cow, the first native U.S. animal found with the disease, was born before the ban.

Humans can contract a similar brain-wasting disease known as variant Creutzfeldt-Jakob by eating BSE-tainted meat. Most of the 153 fatal human cases have been in Europe. One person who died in the United States had lived in Britain when contaminated beef was sold.

David Anderson, a livestock marketing economist with the Texas Cooperative Extension service, predicted that cattle trading in Texas won't be hurt by the BSE discovery here.

"I don't think it's going to make that much difference because this is a national market," Anderson said in a statement. "The futures market already had built that trading [impact] in after the USDA first announced they were doing the retesting."

Anderson said the case demonstrated that the nation's system of firewalls protects consumers.

"A number of safeguards have been put into place and have worked," Anderson said. "These safeguards have prevented higher-risk animals from entering the food supply."

The Agriculture Department has stressed that the infected cow was kept out of the human and animal food chain.

Texas has the most to lose as the nation's largest beef-producing state, with more than 5.7 million beef cattle. The extension service valued the state's 13 million beef and dairy cattle at more than $10 billion.

Jim Robb, director of the Livestock Marketing Information Center in Lakewood, Colo., doubted that the Texas BSE case would deter beef grilling during the holiday weekend.

"I don't think [mad-cow disease] is on the front of consumers' minds," Robb told the Texas Cooperative Extension news service.

The case "certainly adds uncertainty to the market place and the unknowns," he said. "But it's clear that consumers recognize it's not a human health concern.

"The U.S. risk assessment said a small number of animals will be found. I think if this unfolds as anticipated, it's clearly related to an older animal born before the ban. It's isolated, as most BSE cases are."

This report includes material from Bloomberg News.


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