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Cost of BSE in the US

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Mike

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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.
 

Tommy

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Watch out Mike you are going to have Scott saying you cannot think for yourself by posting an article written by someone else on here.

From article...“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.

Wow....but we would be decieving the consumers by testing according to Scott.
 

Mike

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Tommy said:
Watch out Mike you are going to have Scott saying you cannot think for yourself by posting an article written by someone else on here.

From article...“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.

Wow....but we would be decieving the consumers by testing according to Scott.

No Tommy. These Professors did all this research work for nothing because no one has shown proof that the Japs would take tested beef. :lol: :lol: :lol: :lol:
 

Big Muddy rancher

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Some of it is theory because whole carcasses are not going to Japan. On a age verified kill just certain cuts are going. If one animal out of a group of cattle for a kill is over the 20 months rule that can stop anything from that kill going. That is how it is at Cargill in High River and Lakeside at Brooks. I under stand that at Better Beef they have a differnt set up and can run the over age off the line some how.
 

Mike

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MMR:Some of it is theory because whole carcasses are not going to Japan.

If Schroeder does a study that fits someone's agenda it's the gospel.

But if he does research that doesn't..........it's theory.

Did you read the whole study?
 

Big Muddy rancher

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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.



What I am saying is Korea was taking a huge amout of short ribs. Well you can't test 25% to get 50% of what you were sending before. if you tested all the cattle but weren't killing as many you still might not get to 100% of what you sent before. Same deal with tongue.
 

Mike

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:roll: :roll: :roll: :roll: :roll: :roll: :roll: :roll: :roll:

25% of the total "U.S." capacity.
 

Econ101

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Big Muddy rancher said:
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.



What I am saying is Korea was taking a huge amout of short ribs. Well you can't test 25% to get 50% of what you were sending before. if you tested all the cattle but weren't killing as many you still might not get to 100% of what you sent before. Same deal with tongue.

Good points, BMR, but if it paid to test, Creekstone would do it, no matter what the total amount of profit would have been. Creekstone, or another packer, could have sold short ribs to Korea and steaks to another customer. They could have even sold it in the U.S. as another safety policy for the customer. You do believe in the industry being able to go beyond the regulatory requirements in providing the safest meat for the consumer don't you?

Maybe reader would buy more steak and flounder too.
 

Tam

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Econ101 said:
Big Muddy rancher said:
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.



What I am saying is Korea was taking a huge amout of short ribs. Well you can't test 25% to get 50% of what you were sending before. if you tested all the cattle but weren't killing as many you still might not get to 100% of what you sent before. Same deal with tongue.

Good points, BMR, but if it paid to test, Creekstone would do it, no matter what the total amount of profit would have been. Creekstone, or another packer, could have sold short ribs to Korea and steaks to another customer. They could have even sold it in the U.S. as another safety policy for the customer. You do believe in the industry being able to go beyond the regulatory requirements in providing the safest meat for the consumer don't you?
Maybe reader would buy more steak and flounder too.

But did you forget the even Creekstone said BSE TESTED doesn't mean BSE FREE? Sandhusker has told us many times that the BSE tested beef would only go into the Japanese market because they were the one asking for it. Now you are telling us that the fraud that you want perpetrated on the Japanese will also be played out on the US consumers that will be eating the Steaks of beef that is BSE Tested but maybe not BSE Free because as Creekstone said Tested doesnt mean FREE.
 
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Tam said:
Econ101 said:
Big Muddy rancher said:
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.



What I am saying is Korea was taking a huge amout of short ribs. Well you can't test 25% to get 50% of what you were sending before. if you tested all the cattle but weren't killing as many you still might not get to 100% of what you sent before. Same deal with tongue.

Good points, BMR, but if it paid to test, Creekstone would do it, no matter what the total amount of profit would have been. Creekstone, or another packer, could have sold short ribs to Korea and steaks to another customer. They could have even sold it in the U.S. as another safety policy for the customer. You do believe in the industry being able to go beyond the regulatory requirements in providing the safest meat for the consumer don't you?
Maybe reader would buy more steak and flounder too.

But did you forget the even Creekstone said BSE TESTED doesn't mean BSE FREE? Sandhusker has told us many times that the BSE tested beef would only go into the Japanese market because they were the one asking for it. Now you are telling us that the fraud that you want perpetrated on the Japanese will also be played out on the US consumers that will be eating the Steaks of beef that is BSE Tested but maybe not BSE Free because as Creekstone said Tested doesnt mean FREE.

Tam- Creekstone could just slap the USDA inspected stamp on the remaining product Japan didn't take and pass it off as US generic beef-- thats what they do with Canadian, Mexican, Uruguain, Chilean, etc. etc. etc.
 

Tam

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Oldtimer said:
Tam said:
Econ101 said:
Good points, BMR, but if it paid to test, Creekstone would do it, no matter what the total amount of profit would have been. Creekstone, or another packer, could have sold short ribs to Korea and steaks to another customer. They could have even sold it in the U.S. as another safety policy for the customer. You do believe in the industry being able to go beyond the regulatory requirements in providing the safest meat for the consumer don't you?
Maybe reader would buy more steak and flounder too.

But did you forget the even Creekstone said BSE TESTED doesn't mean BSE FREE? Sandhusker has told us many times that the BSE tested beef would only go into the Japanese market because they were the one asking for it. Now you are telling us that the fraud that you want perpetrated on the Japanese will also be played out on the US consumers that will be eating the Steaks of beef that is BSE Tested but maybe not BSE Free because as Creekstone said Tested doesnt mean FREE.

Tam- Creekstone could just slap the USDA inspected stamp on the remaining product Japan didn't take and pass it off as US generic beef-- thats what they do with Canadian, Mexican, Uruguain, Chilean, etc. etc. etc.
Tell us then Oldtimer just how could that give the US consumer another safety policy if they didn't KNOW it had been tested? :wink: How is Reader and Flounder to know where the TESTED beef is if it isn't marked
 
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Tam-- It was the Japs that were screaming for the tested beef...Test them and sell them what they want of the tested beef- sell the rest as generic here in the US....Nothing says you have to put BSE tested on those tested...USDA didn't label the meat off the 200,000+ they tested at slaughter with a BSE tested label- Did they :???: .....

Reader and flounder should have the opportunity to buy tested if a company is willing to provide it- same as they should have the opportunity to know what country their meat comes from.....
 

Econ101

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USDA Inspected doesn't mean the meat is any safer either but that lable still gets put on.

Are you just trying to keep the U.S. out of the Japanese market, Tam?

Any way you can, eh?
 

Mike

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But did you forget the even Creekstone said BSE TESTED doesn't mean BSE FREE?

Statistical errors in modern rapid BSE testing is lower than aging by dentition and has been the contention of the Japs during these long winded negotiations.

It would only make sense that Fielding would not guarantee beef to be BSE free because the USDA would be overseeing the testing.

I know that "I" would never guarantee anything done under the auspices of the USDA.

But it's what the Japs asked for. Oversight.

Think.................. the "Texas" and "Washington" cow.
 

Tam

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Econ101 said:
USDA Inspected doesn't mean the meat is any safer either but that lable still gets put on.

Are you just trying to keep the U.S. out of the Japanese market, Tam?

Any way you can, eh?

What the USDA inspected label means is that all the beef met the same USDA standards no matter where it happen to come from. Is that not the important part Econ. THAT ALL BEEF MEETS OR EXCEEDS THE USDA STANDARDS.

And the US is doing a good enough job of keeping themselves out of the Japanese market they don't need any help from me. :wink:

Tell us even if all packers tested for the Japanese market and Japanese believe the OIE when they say that SRM removal is the most critical and valuable central measure for public health protection. Do you think the Japanese would be taking tested beef now after one US packer sent SRM's to them? And if you think they don't believe the OIE SRM rule then why did they stop US imports again in meat that they themselve knows the test doesn't show positives in?
 

Econ101

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Tam said:
Econ101 said:
USDA Inspected doesn't mean the meat is any safer either but that lable still gets put on.

Are you just trying to keep the U.S. out of the Japanese market, Tam?

Any way you can, eh?

What the USDA inspected label means is that all the beef met the same USDA standards no matter where it happen to come from. Is that not the important part Econ. THAT ALL BEEF MEETS OR EXCEEDS THE USDA STANDARDS.

And the US is doing a good enough job of keeping themselves out of the Japanese market they don't need any help from me. :wink:

Tell us even if all packers tested for the Japanese market and Japanese believe the OIE when they say that SRM removal is the most critical and valuable central measure for public health protection. Do you think the Japanese would be taking tested beef now after one US packer sent SRM's to them? And if you think they don't believe the OIE SRM rule then why did they stop US imports again in meat that they themselve knows the test doesn't show positives in?

I am going to play your game for a little bit Tam, just to show you how annoying it is to have kindergarteners in a grownup class.

So if the beef is not labled with a sticker from the USDA saying it has been tested for BSE does it mean that the meat is possibly infected with BSE?
 

Tam

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Mike said:
But did you forget the even Creekstone said BSE TESTED doesn't mean BSE FREE?

Statistical errors in modern rapid BSE testing is lower than aging by dentition and has been the contention of the Japs during these long winded negotiations.

It would only make sense that Fielding would not guarantee beef to be BSE free because the USDA would be overseeing the testing.

I know that "I" would never guarantee anything done under the auspices of the USDA.

But it's what the Japs asked for. Oversight.

Think.................. the "Texas" and "Washington" cow.

So Mike By doing the testing and letting people assume what they want isn't Creekstone openning themselves up to more liability? If a consumer eats only Creekstone tested beef assuming somehow it is safer than generic beef and that consumer comes down sick, will Creekstone be saying well they should have known that tested doesn't mean BSE free. Or the USDA was overseeing our testing so blame them if you got sick. No they themselves will be held responsible as they were the ones selling a product that was sold under a misleading label. Why would you want to put yourself and your business at risk for a label that you CAN"T GUARANTEE. If consumers are assuming the USDA INSPECTED label means US Beef they we all know that they will be assuming BSE TESTED means somehow the meat is safer than generic and Creekstone is counting on it if they are willing to test to reopen a market.
 

Sandhusker

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Tam, "And the US is doing a good enough job of keeping themselves out of the Japanese market they don't need any help from me."

You're not all bad, Tam. I think that is two things we agree on now. :lol:
 

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