GILROY
–– Local cattlemen are confident their beef is safe, but they’re
worried about the impact a case of mad cow disease discovered in
Washington state could have on the beef industry.
The price of beef is poised to plummet from its recent all-time
high
– and
”
for no good reason,
”
says Jim Warren, owner of the 101 Livestock Market in nearby
Aromas.
GILROY –– Local cattlemen are confident their beef is safe, but they’re worried about the impact a case of mad cow disease discovered in Washington state could have on the beef industry.
The price of beef is poised to plummet from its recent all-time high – and “for no good reason,” says Jim Warren, owner of the 101 Livestock Market in nearby Aromas.
“There’ll be a national impact on beef prices only because of the distortion made by the national media,” Warren said Wednesday from his cattle market. “But it’ll be devastating for the industry.”
Japan, Taiwan and Mexico – this country’s three biggest beef buyers – are among the countries that have suspended all American beef imports. While middlemen like Warren may feel the blow quickly, local ranchers could duck much of its fullest impact.
There are about 20,000 cows in Santa Clara County and about 39,000 in San Benito County, according to the California Cattlemen’s Association. The owners of these animals may ride out part of the mad-cow scare because most cows raised here are sold as calves to big feed lots in the Great Plains, where they are fattened on grain and not slaughtered for about a year, said Kevin O’Day, deputy agriculture commissioner for Santa Clara County. By the time cows sold now are ready for the beef market, the mad-cow issue may have blown over.
“Most of our calf sales are based on what we think the price is going to be … 18 months from now,” O’Day said. “Our calf prices might hold.”
Nevertheless, O’Day said, he expects to see a drop in cattle prices on the county’s next crop report.
“Obviously, the dynamics of the market are going to change here in the next week or so,” O’Day said.
The ranchers who will feel the hurt quickest are those selling older cows ready for immediate slaughter, O’Day said.
Mad cow disease was not found on this side of the Atlantic Ocean until earlier this year, when a single breeder cow was found with it in Alberta, Canada. Bans that the United States and other countries subsequently put on Canadian beef crushed the country’s massive industry.
Despite the new, foreign bans on American beef, O’Day and California Cattlemen’s Association CEO Ben Higgins said the impact here won’t be as bad as it was in Canada. The United States has been exporting about 14 percent of its beef, whereas Canada exported 60 percent, according to The Canadian Press news agency.
Mad cow disease, also known as bovine spongiform encephalopathy, is a brain-wasting disorder that sprang up in Britain in 1986 and spread through countries in Europe and Asia, prompting massive destruction of herds and decimating the European beef industry. People can contract a form of the disease if they eat infected beef or nerve tissue, and possibly through blood transfusions. The human form of mad cow disease so far has killed 143 people in Britain and 10 elsewhere, but none in the United States or Canada.
Warren said that with only 150 people dead and no known health risk in this country from eating beef the health danger of mad-cow disease is largely a product of the international media.
“It got blown out of proportion in Canada, and it’ll get blown out of proportion here in the United States,” Warren said. “Eating beef is 100-percent safe. It’s not 99.9 percent; it’s 100 percent.”
The Canadian mad-cow finding caused an increase in testing in the U.S. Of the roughly 60,000 animals tested in the past 13 years, the Washington cow was the 20,527th this year. In 1997, the U.S. Food and Drug Administration banned the practice of supplementing cattle feed “mammal-derived animal protein byproducts.” According to Higgins, this was mostly ground-up bones used “as a means of recycling the parts of those animals, which were difficult to use, and to add some extra protein to the diets.”
In addition, since 1990 the USDA has overseen a slaughter-surveillance program. Any time an animal is presented for slaughter with signs of a neurological disorder, the slaughterhouse must remove for testing the parts that can contain mad cow disease: the brain, spine and lower small intestine. This happened in the case of the Washington cow, which was unable to move when it was slaughtered.
Despite the changes afoot in the cattle industry, Gilroy area rancher Don Silacci said Wednesday he wasn’t overly worried.
“The price will probably go down a little,” Silacci said. “I’m not concerned because I know (the diseased cow) will never get into the food chain.
“If there was an outbreak – then I’d be worried, but I know that isn’t going to happen.”
Silacci just finished a two-year term as second vice president of the California Cattlemen’s Association. He also owns a feed barn in Gilroy.
“I’m not concerned at all,” said an employee at Silacci’s Feed Barn who declined to give his name. “When they tell me to worry, I’ll worry. I was listening to the radio this morning, and they said they’ve got everything under control up there (in Washington state).”
Tissue samples from the suspect cow in Washington state were put aboard a commercial jet expected to arrive in England Wednesday for conclusive tests of the preliminary diagnosis, Veneman said. She said results of those tests could be available by the weekend.
Beef futures trading effectively stopped Wednesday at the Chicago Mercantile Exchange because no one was buying, and restaurant stocks fell on Wall Street. McDonald’s Corp., the nation’s largest beef purchaser, was one of the companies that took an early hit, with its stock dropping $1.32 to close at $23.96 Wednesday on the New York Stock Exchange.
Warren’s cattle auction center in northwest San Benito County has not seen a price drop, because he canceled his normal weekly sale on Tuesday for Christmas. At his next auction, Jan. 6, he said, “You can bet (the price) is going to be lower.”
Though Warren noted that speculating on future prices is sketchy, his “best guess” was that the auction price of calves would bottom out around 70 cents per pound, the lowest it’s been in two years. Weaned calves at the 101 Livestock Market were going for more than $1 a pound – some as high as $1.29 – on Dec. 16, its last auction date.
“There’s so much fear put into the market,” Warren said. “I would say you’d see a 10 to 20 (cents per pound) slide before anybody catches their breath, and it won’t be based on science. It won’t be based on reality of the situation. It’ll be based on fear.”
U.S. beef prices are at an all-time high thanks to high demand and short supply. The cheapest ground beef at Nob Hill Foods in Gilroy Wednesday cost $2.79 a pound. The massively popular, high-protein Atkins diet has more people eating beef than in recent years, but recent years of drought have led to small herds nationwide.
In Canada, beef prices are currently bouncing back from a late-summer low. In August, ground beef in Alberta supermarkets was selling for about 49 cents a pound Canadian (about 38 cents American), according to a source there. Now it costs around $1.49 ($1.14 American).
The Associated Press contributed to this report.
