'Mad cow' scare could cost Pennsylvania millions

'Mad cow' scare could cost Pennsylvania millions

University Park, Pa. -- The finding of a single cow with bovine spongiform encephalopathy (BSE) -- also known as "mad cow disease" -- on a dairy farm in the state of Washington Dec. 23 could cost Pennsylvania livestock producers many millions of dollars this year, according to a beef expert and an agricultural economist in Penn State's College of Agricultural Sciences.

"If we take everything into account -- beef byproducts, beef steers, beef feeder cattle and culled dairy cattle," says Bill Henning, professor of dairy and animal science and a meats specialist, "the cost to Pennsylvania beef and dairy producers could be enormous, potentially as high as $75 million. It's all a question of perception. If the public stays worried about BSE, people won't buy as much beef and the price will stay down."

Lou Moore, professor of agricultural economics, agrees with Henning's estimate, but says he is hopeful that the furor over the discovery of a case of BSE in the United States soon dissipates and prices recover. "At this stage of the game, I hate to put a dollar figure on anything," he says. "When we do, we demoralize anybody left in the industry who is not already demoralized. This is a pretty devastating thing. Right now, folks in Pennsylvania have calves to sell and nobody wants to buy them."

The price of finished beef cattle just before Christmas was about 95 cents a pound, and it is now hovering around 75 cents a pound. "That's a drop of about 20 percent," Moore points out. "The meat cattle industry in Pennsylvania -- both beef and dairy -- generates well in excess of $600 million annually for producers. So, if prices stayed down for a prolonged period, it's conceivable Pennsylvania producers could lose many millions, but lower prices which may come in the future cannot necessarily all be attributed to mad cow disease."

The record high cattle prices this past fall were considered a "bubble" by many in the industry, Moore noted, and not expected to last beyond spring. In fact, the current futures market price for June 2004 cattle is 72 cents a pound -- about 4 cents a pound less than on Dec. 3, 20 days prior to the announcement of the infected animal.

Strong evidence indicates that BSE has been transmitted to humans primarily in the United Kingdom, causing a fatal variant form of Creutzfeldt-Jakob disease (vCJD). In the United Kingdom, where over 1 million cattle may have been infected with BSE, a substantial species barrier appears to protect humans from widespread illness. As of Dec. 1, 2003, a total of 153 vCJD cases had been reported worldwide; of these, 143 cases had occurred in the United Kingdom. Scientists say the risk to human health from BSE in the United States is extremely low.

Henning notes that there is more involved than beef prices in the United States. He is concerned about the import of products not consumed in this country. "The loss of the export market for beef byproducts is significant," he says. "We export cow livers to Russia, tongues to Mexico and tripe (muscular lining of stomachs) to Japan. Those markets are all closed now due to the discovery of the case of BSE."

Henning calculates that Pennsylvania producers may lose $10 million or more in the next year if exports of beef byproducts are curtailed. Also, because BSE was discovered in a "downer" cow, non-ambulatory, weak cows may no longer enter the food chain and become hamburger as they had before. "So producers now must incinerate, compost or landfill the carcasses of downer cows," Henning says. "The cost resulting from disposal of those condemned cows will be significant."

The USDA observes a seven-year moratorium on beef imports from other countries where communicable diseases have been discovered. "But BSE is not a communicable disease, so regulators aren't sure how to handle it," he says. "Hopefully the export markets won't be closed for long and this is a very temporary setback. That's a real big issue for Pennsylvania producers."

Just how long the major importers of U.S. beef decide not to buy is a critical question, Moore believes. With about 10 percent of American beef production exported, the economic impacts of countries such as Japan deciding not to accept shipments from this country are huge. "It all depends on how fast our government can implement changes and convince the importing countries that we have this under control," Moore says.

"The nightmare scenario, of course, is if another cow with BSE would be discovered. I think this whole thing is not quite as bad as it would have been if the Canadians hadn't had this problem last summer and the cow in Washington hadn't been traced back to there. A lot of precautions have been taken already and the public has been somewhat sensitized."