Farmers eye mad cow impact

December 28, 2003|GARY MOYERS

The state of Washington may be two-thirds of a continent away, but the implications of the discovery of beef there infected with mad cow disease earlier this month are most certainly being felt locally.

For local beef producers, it could get worse before it gets better.

United States Department of Agriculture officials announced last week a case of mad cow disease had been identified for the first time in North America, and beef sellers and buyers alike have cast a wary eye on the market to see what would happen.

Two participants in the local beef market - one a buyer, one a producer - agree the announcement will have a pronounced effect on local farmers.

"It is going to impact the market in the short term, for sure," said Mike Asberry, a buyer for Conley Livestock at the Boyle County Stockyards. "Until the initial shock goes away, we're estimating the price of cattle will go down maybe $20, probably for 30 to 45 days. Farmers are going to definitely feel that."


Any impact on the cattle market would be felt strongly in Kentucky, the biggest beef cow state east of the Mississippi River and eighth largest producer in the United States.

"Any farmer in the state who tries to go to market next week may be surprised," said Harvey Mitchell, manager of Anderson Circle Farms in Mercer County. "Farmers may very well see a stoppage of sales, because the short term effect will be the supply line gets interrupted."

Mitchell said the consumer is the key to how farmers are affected by the latest scare, which saw the largest importers of U.S. beef - Japan, Mexico and South Korea - halt shipments, while other countries imposed temporary bans.

"It won't take but a very few days to back the system up, and in fact, it may be difficult if not impossible to sell beef within a week or two," said Mitchell. "When 12 countries or more withdraw from the market for American beef, and those 12 or more countries account for about 90 percent of our exports, then it hits the market hard. The key to a fast rebound will be how the American consumer reacts. If Americans trust the system and the safeguards that are already in place, the American market rebounds quickly."

Asberry agreed with Mitchell about the role the consumer will play in market prices.

"As long as consumers keep buying beef, the market will stabilize and come back up," he said. "It'll slow a little bit, but once consumers are reassured that everything is okay, it'll come right back up."

How long it will take is a matter of conjecture, Mitchell said.

"There are a lot of factors that come into play," he said. "Right now, there's enough beef on the market to supply the world for three days. That doesn't include what's in transit. If sales slow, a backup begins that halts demand, meaning no cattle will be slaughtered and none will be sold. What that does is stop sales completely on the local level. Then you have the farmer losing not only the money he would have gained from selling the cattle, but the money he's out because he has to continue to feed the animals. Cash flow and liquidity then become issues."

Ironically, news of the disease came in a year in which Kentucky cattlemen have enjoyed banner prices.

"This has been a very good year for beef cattlemen," said Asberry. "Prices for fat cattle are running about 91 to 92 (cents per pound) each, and in the yearling market, which is where most farmers locally do their selling, they're going for about 91 to 92 cents."

At its low point, cattle prices dropped into the low 50-cent range for feeder calves in the early 1990s. Buyers were paying Kentucky farmers an average of 91 cents per pound for steers and heifers as of mid-October. That's the highest price on record and nearly 20 cents more than last October's prices, according to the Kentucky Agricultural Statistics Service.

Mad cow disease, officially known as bovine spongiform encephalopathy or BSE, decimated Great Britain's herds in the early 1990s, and caused USDA officials to impose stringent testing procedures at home and virtual bans on imports of cattle into the United States. Canadian imports dropped drastically last May after the disease was identified in a herd there.

Both Asberry and Mitchell agree identification and tracing requirements for cattle in the United States will likely become tougher as a result of the latest crisis.

"I think you'll see some changes in the way cattle are identified and tracked," said Asberry. "There's already been some talk about the procedures, and we'll see some changes. The biggest weapon to defend against mad cow is identification of the infected animal, and the ability to trace where it came from. That's one of the good things about what happened in Washington State - they identified and traced this animal in less than 20 days. They haven't been able to do that overseas, and that's why it got so bad over there, especially in England. The changes that will happen here in the market will speed up that tracing process."

Mitchell said mandatory identification requirements go into effect nationwide in 2005, and that process may be expedited.

"Now we will have to take a look at the security of the food system in the United States," said Mitchell. "It has been the best in the world and is still the best, but there are ways to make it even safer. That's what the consumer has to realize, that even though it was inevitable that this disease would make an appearance in the United States, one positive that will come of it is that every cow in the country will be traceable back to its birth herd, and that in turn lets us identify and exterminate infected animals before they make it into the food supply."

Asberry said the topic - and the term mad cow disease - is a hot one among buyers and sellers alike.

"It's definitely on everybody's mind, and everybody has been talking a lot about it," he said. "It had to happen here eventually, because it's happened everywhere else."

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