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Economic Impact of Mad Cow Disease

posted on December 26, 2003


The U.S. cattle industry is the largest component of the American agricultural sector. Consumers spend more than $50-billion annually on beef and the cattle industry generates nearly $200-billion in total economic activity.

The U.S. also is the world's largest exporter of beef with 2003 sales of about $3.5 billion. Within hours of the announcement, Japan -- the top importer of U.S. beef -- announced it would ban all imports of American beef, at least temporarily.

Mexico, South Korea, Taiwan, Malaysia and Singapore all followed suit on Wednesday. In all, more than a dozen foreign countries announced some type of restriction on imports of U.S. beef.

In the wake of the discovery, the National Cattlemen's Beef Association praised the USDA inspection system and urged consumers to continue to eat beef with confidence.

But after watching the economic impact of a single case of Mad Cow in Canada last Spring, America's cattle producers may need some reassurance themselves.

Economic Impact of Mad Cow Disease

Despite reassurances from the government and the domestic cattle industry, there's little doubt the first reported case of Mad Cow disease in the United States will affect consumer confidence in beef.

Rural lawmakers joined the scores of officials who mobilized this week to try and reassure consumers. But food safety advocates warn that consumers will be nervous and may avoid eating beef altogether.

Research into previous Mad Cow outbreaks in Europe and Asia indicates the disease may be capable of crossing species from animal to human, where it manifests as Creutzfeldt-Jakob disease, or CJD.

Consumer fear of contracting CJD from diseased meat has devastated beef industries in other nations, including Canada. The discovery of a single case of Mad Cow disease in Alberta last May prompted 32 nations around the world to block imports of Canadian beef. Indeed, the U.S. border remains closed to imports of live cattle from Canada. Officials estimate Canada lost $1 million a day after the bans went into affect.

The Canadians' loss has been a boom for U.S. cattle producers. Sales of American beef skyrocketed as countries that had relied on Canada for meat turned to the United States. Domestic demand also has increased, due in part to popular high-protein diets.

The combination of rising demand and dwindling supply led to record prices for beef at both the wholesale and retail levels.

But what now?

Some analysts predict the discovery of the first U.S. Mad Cow case will kill demand for beef, and with it the high prices. They say grain markets, too, will be affected because of the psychological impact of the news.

 


Tags: agriculture animals beef cattle diseases economy food safety industry livestock Mad Cow meat news