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Cost Analysis- BSE Testing For Export

Mike

Well-known member
Released: April 28, 2005


K-State Study Puts Beef Export Market Loss Related to BSE in Range of $3.2 to $4.7 Billion

TOPEKA -- The Kansas Department of Agriculture and K-State Research and Extension today released “The Economic Impact of BSE on the U.S. Beef Industry,” which provides a comprehensive assessment of the economic impact of lost export markets and policy changes affecting cattle procurement and processing.

“The most significant economic impact of BSE is from lost beef export markets,” said Kansas Secretary of Agriculture Adrian Polansky. “Alone, they accounted for a $3.2 billion to $4.7 billion revenue loss to the U.S. beef industry last year.”

Within days of the U.S. Department of Agriculture’s late 2003 announcement that a cow in Washington state had been diagnosed with bovine spongiform encephalopathy (BSE), 53 countries banned imports of U.S. cattle and beef. In 2003, U.S. beef exports were valued at $3.95 billion and accounted for 9.6 percent of U.S. commercial beef production. Five countries – Japan, Mexico, South Korea, Canada and Hong Kong – received 90 percent of U.S. beef exports in 2003.

Mexico and Canada partially resumed beef imports in 2004, but overall the quantity of U.S. exports fell by 82 percent below 2003 levels. Japan and South Korea have agreed in principle to resume beef imports from the United States, but neither country has committed to a date when that will occur.

“Kansas’ fifth-largest export market in 2003 was Taiwan, and they resumed beef imports a little more than a week ago” Polansky said. “It’s progress, but we really need access to markets like Japan, which accounted for 35 percent of all U.S. beef export value in 2003.”

The report evaluates the potential impact BSE testing could have if it were used to regain export markets. Researchers estimate that it would have cost about $640 million to test all cattle slaughtered in the United States in 2004, but that figure does not include any investment needed to place testing facilities in a beef processing plant.

“The cost of equipping a facility to perform the tests varies substantially from one operation to another,” said K-State professor of agricultural economics James Mintert. “We focused on the known expenses; the tests and the labor to conduct them.”

Mintert led the research team which included K-State professors of agricultural economics Sean Fox and Ted Schroeder, and research assistants Brian Coffey and Luc Valentin. The study was commissioned by the Kansas Department of Agriculture.

Researchers estimated that the revenue gain would equal testing costs if the United States regained about 25 percent of the Japanese and South Korean export markets and the United States was testing roughly 75 percent of commercial cattle slaughtered. However, if half of those markets were regained with only 25 percent of cattle tested at slaughter, the wholesale revenue gain would be $22.84 per head. Whether such market access would be attainable with this level of testing was not addressed in the study.

“According to the research, if voluntary testing of 25 percent of U.S. slaughter cattle allowed the industry to regain access to the Japanese and South Korean export markets, and the U.S. was able to ship just one-half the quantity shipped during 2003, the potential return to the beef industry would have been nearly $750 million,” Polansky said.

To strengthen existing firewalls to prevent BSE and to boost consumer confidence in American beef, USDA introduced new and updated regulations in 2004. The report provides an objective assessment of the economic impact of those changes.

K-State researchers polled seven firms representing more than 60 percent of 2003 beef slaughter to get the data needed to assess the cost of new regulations. The firms involved were sufficiently diverse to represent a reasonable cross-section of the beef packing industry.

Regulations issued in 2004 by USDA’s Food Safety and Inspection Service had an estimated net cost to the beef industry of approximately $200 million, plus some one-time investments that were substantial, but varied widely from firm to firm. Those costs related to the inability to market non-ambulatory cattle, the need to age cattle presented for slaughter, to segregate and process separately cattle older than 30 months and to prevent certain tissues from entering the food supply. To offset the cost of complying with new regulations, packers are paying less for cattle over 30 months of age. According to USDA, some packers reported discounting cattle over 30 months of age by as much as $35 for every 100 pounds of carcass weight. However, average packer discounts for cattle over 30 months of age were closer to $10 per 100 pounds of carcass weight.

The regulations also led to changes in cattle procurement, employment, employee training requirements, food safety plans, capital investments and marketing opportunities for the beef industry.

While some new jobs were created to comply with the new regulations, overall there were more jobs lost.

Job gains were due to the need to age cattle. Job losses were tied to closed export markets and condemnation of certain beef by-products.

The study also examined potential costs related to feed regulations being considered by the Food and Drug Administration. Last July, FDA published an advance notice of proposed rulemaking seeking input on regulation changes the agency was considering to ban from cattle feed all bovine blood products, plate waste and poultry litter, and to require dedicated equipment for producing ruminant and non-ruminant feed to prevent cross-contamination. To date, FDA has not made the rules final.

“BSE-related policies will continue to evolve, and the analysis provided by the research team should be beneficial to that process,” Polansky said. “The best regulations are those that provide consumer and animal health protection without being particularly onerous on industry.”

Also examined in the study was the economic impact of USDA’s rule that prohibits non-ambulatory cattle from entering the food supply. The beef industry contends that injured non-ambulatory animals can be distinguished from animals that are non-ambulatory due to symptoms that place the animal at high-risk of having BSE. The inability to market any non-ambulatory cattle means the industry lost revenue because of the new regulations.

“Assuming that 95 percent of nonambulatory cattle in 2004 passed the standards in place before USDA enacted its ban on non-ambulatory cattle entering the food supply, the economic benefit could have been more than $63 million,” Mintert said.

The report is available online at http://www.agmanager.info/livestock/marketing/bulletins_2/industry/default.asp.


-30-

K-State Research and Extension is a short name for the Kansas State University Agricultural Experiment Station and Cooperative Extension Service, a program designed to generate and distribute useful knowledge for the well-being of Kansans. Supported by county, state, federal and private funds, the program has county Extension offices, experiment fields, area Extension offices and regional research centers statewide. Its headquarters is on the K-State campus, Manhattan.

Story by:
Lisa Taylor
Kansas Department of Agriculture, 785-296-2653
K-State Research& Extension News

Additional Information:
James Mintert is at 785-532-1518; Ted Schroeder is at 785-532-4488; John (Sean) Fox is at 785-532-4446
 
A

Anonymous

Guest
K-State Study Puts Beef Export Market Loss Related to BSE in Range of $3.2 to $4.7 Billion

According to the research, if voluntary testing of 25 percent of U.S. slaughter cattle allowed the industry to regain access to the Japanese and South Korean export markets, and the U.S. was able to ship just one-half the quantity shipped during 2003, the potential return to the beef industry would have been nearly $750 million,” Polansky said.


I suppose a guy should take this opportunity again to thank NCBA for backing and supporting the AMI/USDA/Multinationals in their opposition to BSE testing or to allowing those (like Creekstone) that wanted to test for export- and could have avoided us much of those losses.... :wink: :( :mad:

No wonder some in our country now think and are predicting our leadership will implode our economy .... :shock: :(
 

Sandhusker

Well-known member
More of those wonderful things NCBA is doing to ensure prosperity for US producers, MRJ? Do you happen to notice the disconnect from what you preach to what has actually happened?
 

fedup2

Well-known member
I am going to stay out of the finger pointing but, this is what can happen when a local government agency works with its producers!


Pennsylvania Veterinary Laboratory Tests 6,000 Cattle for Export


HARRISBURG, Pa., Nov. 20 /PRNewswire-USNewswire/ -- Pennsylvania's
nationally-recognized veterinary laboratory is preparing more than 6,000
cattle for export to Saudi Arabia and Turkey in the next two months,
Agriculture Secretary Dennis Wolff said today.

All of the cattle were blood tested for diseases through the laboratory
to meet rigid export requirements and to ensure animal and human safety.

"We commend the efforts of those working in the vet laboratory who
efficiently and accurately conducted the testing on such a large number of
animals," said Wolff. "Facilitating this large export is good for
Pennsylvania agriculture and the state's economy."

In 2006, Pennsylvania exported nearly $23 million in livestock, ranking
it in the top 20 nationally in live animal and meat exports.

Between the end of November and the middle of January, the cattle will
travel on four specially-designed cargo ships to Saudi Arabia and Turkey.
All of the animals going to Saudi Arabia are bred Holstein heifers and the
Turkey shipment includes some beef cattle, in addition to dairy heifers.

The Pennsylvania Department of Agriculture is helping facilitate the
export project with cattle collected from the state and across the country.

The Pennsylvania Veterinary Laboratory tests all of the cattle for
brucellosis and bovine leukosis, among other diseases. The animals are then
quarantined and vaccinated at the Pennsylvania Holstein Association's farm
near Harrisburg before being shipped overseas.

"By using Pennsylvania facilities to prepare the cattle for export, we
are stimulating our local economies," said Wolff. "Transport companies,
feed mills and veterinarians benefit from the increased business."

To learn more about Pennsylvania's export business, visit
http://www.agriculture.state.pa.us, and click on "Bureaus" and "Market
Development."

(not sure of the year of this article)
 

PORKER

Well-known member
US: E. coli Spinach Outbreak Caused by Cows?

Groundwater contaminated by cattle and used to irrigate spinach crops in California is under suspicion in the investigation of the current E. coli outbreak that has infected more than 100 people, killing one. This particular strain of E. coli, O157:H7, is found in the intestinal tracts of cattle raised on a grain diet,

U.S. researchers have found that high-grain diets make E. coli more potent. When cattle are fattened on grain, their digestive tracts become unusually acidic and kill off most of the E. coli. But the bacteria that survive are those that have adapted themselves to an acidic environment. This is a major problem for human health because our first line of defense is the acidity of our own digestive juices. Acid-resistant feedlot bacteria can survive our gastric juices in sufficient number to make us ill.

By contrast, the E. coli from grass-fed cattle remains sensitive to acid and is quickly destroyed in our stomachs. 'Switching cattle from grass to grain to speed their growth has created a lot of unforeseen problems,' says Jo Robinson, grass-fed expert and author of the book Pasture Perfect.

For instance, Bovine Spongiform Encephalopathy (BSE, or more commonly, mad cow disease), has not been found in grass-fed animals. Mad cow is thought to be caused by feeding cattle pieces of brain and nerve tissue from other infected animals. (This practice was abolished in the United States in 1997.) When humans consume meat from animals with mad cow disease, they risk contracting its human form ? Creutzfeldt-Jakob Disease. Mad cow disease has not been found among grass-fed animals because they exclusively eat forage materials.
 

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