MU Economist Analyzes Market Impact of Mad Cow Disease

5 years 1 month 4 weeks ago April 27, 2012 Apr 27, 2012 Friday, April 27 2012 Friday, April 27, 2012 7:48:43 AM CDT in News
By: University of Missouri

COLUMBIA - Mad cow disease is much less scary to beef consumers than it was when the first case in the U.S. was found almost a decade ago.

New regulations and time have dulled the market impact of the disease as the USDA on April 24 confirmed a case of bovine spongiform encephalopathy (BSE) at a California dairy farm, said Ron Plain, a University of Missouri Extension economist. It was the first recorded case of BSE in the U.S. since 2006.

"Each new case seems to have slightly less impact than the previous occurrence," Plain said. "There will be a negative impact, but it doesn't appear that it will be that large or last as long as previous ones."

Futures markets took a hit Tuesday with the USDA's announcement but had regained 40 percent of those loses as markets closed Wednesday. Slaughter steer prices stood at $1.20 per pound as of April 26.

BSE, also known as mad cow disease, is a neurological disorder in cattle. First discovered in Europe in the 1980s, it spread when beef byproducts from infected cattle were ground up and fed back to cattle. The USDA and FDA banned that practice in 1997.

After the first U.S. case in 2003, the USDA strengthened rules to keep BSE-infected cattle from entering the food supply. Nervous system tissue - the brain, spinal cord, significant nerves and tonsils - was banned from being used in food in 2004 by USDA's Food Safety and Inspection Service. These tissues are more likely to carry BSE.

More stringent restrictions also keep higher-risk cattle from entering the food supply. Federal or state inspectors visually observe all live cattle before they become anyone's meal.

"They observe all cattle for illness and are specifically looking for any signs of central nervous system disorders when it comes to BSE," said Bryon Wiegand, an MU meat scientist. "Cattle showing any signs of illness are held out of the food chain until a diagnosis can be confirmed and their safety determined. In addition, any cattle that cannot stand are not permitted into the food chain."

Testing offers a final line of defense. The USDA samples nearly 40,000 cattle per year from farms, veterinary diagnostic labs, public health labs, processing plants, veterinary clinics and livestock markets. One of these samples found the current case of BSE at a dairy in California.

BSE risk remains extremely low. According to a 2006 USDA study that evaluated seven years of testing, less than one case of BSE exists per 1 million adult cattle. Analysis of that data found the likely number of cases is four to seven infected animals out of 42 million cattle.

The U.S. food supply appears to remain unscathed by the disease.

"No sample of beef or milk from the United States has been ever been found to contain BSE," Wiegand said. "Human and animal health experts agree that in the U.S., both beef and milk are safe to consume."

With each identified case of BSE, public alarm has decreased and so has the market downturn in the aftermath. After the first occurrence of BSE in the U.S., the beef industry lost $3 billion in exports in 2004. Exports dropped from about 2.52 billion pounds per year to only 460.3 million pounds after the announcement.

Plain says this time the impact on beef sales likely won't last long.

"It was a huge market impact when mad cow disease was found in the U.S. in 2003. Cattle prices dropped six days in a row and we lost 18 cents per pound off prices," he said. "Each subsequent case has had less impact than the first one. More than anything, this outbreak reminds people just how few cows in the U.S. are infected with BSE."

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