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Consumers sticking with beef, for now

Predictions were that a single case of mad cow disease would not hurt domestic beef sales. That seems to be true, and consumers should see lower beef prices soon because foreign buyers have banned U.S. beef after the mad cow case was reported.
Tonyette Bables shops for beef at the Eastern Market in Washington, D.C., on Saturday. Workers at the market say beef sales have not been affected by the discovery of mad cow disease in the United States.Evan Vucci / AP
/ Source: news services

Beef sold well this weekend at Jim's Quality Meats, a suburban Chicago butcher shop.

Under normal circumstances, that would be expected. But it proved to be a great relief for owner Ed Wedell and confirmed predictions that consumers would stay with beef in the wake of the first reported case of mad cow disease in the U.S.

"I have been very concerned. I lost a lot of sleep," said Wedell, who said beef sold well the entire weekend.

Wedell's experience is not a surprise. Analysts and economists had predicted that the single case of mad cow would not hurt domestic beef sales.

The U.S. Agriculture Department on Tuesday said a Holstein cow in Washington state tested positive for bovine spongiform encephalopathy (BSE), the formal name for mad cow disease. So far, no other cases have been found.

"If this is only one animal and USDA stays aggressive, I don't think we are going to see a lot of switching to pork and poultry," said Jim Robb, an economist with the Denver-based Livestock Marketing Information Center.

In cattle, BSE is a fatal brain-wasting disease caused by a misshapen protein called a prion. For humans, scientists suspect a similar fatal brain disease called variant Creutzfeldt Jakob Disease (vCJD) can be contracted by eating parts of the brain or spinal cord of an infected animal.

Muscle beef, such as steaks and roasts, are believed safe because prions have not been found in those cuts.

"I don't think people are looking at it as a huge health concern like E.coli," said Travis Benson, livestock analyst with Colorado-based brokerage firm Crystal River Capital. "We are not seeing a human relationship in the U.S. yet."

Beef contaminated with E.coli O157:H7 bacteria or other pathogens often sicken people a short time after consumption. With vCJD, it takes years for the symptoms to develop. At least 137 people, mostly in Britain, have died from the disease.

Beef prices set to drop
Consumers should see lower beef prices soon because foreign buyers have banned U.S. beef after the mad cow case was reported. Beef destined for export will now be diverted into domestic markets, increasing supplies and likely driving down prices, analysts said.

U.S. cattle prices have already plummeted, largely because of the loss in export business. About two dozen countries, including top buyer Japan, have banned imports of U.S. beef.

On Monday, Japan rejected a U.S. request to discuss lifting the ban, saying that officials should first establish the facts surrounding the discovery of mad cow disease in the United States, Agriculture Ministry officials said.

The officials spoke after talks with American agriculture delegation in Tokyo to discuss the mad cow disease scare.

The U.S. delegation asked to discuss the lifting of the ban, a Japanese official said on condition of anonymity.

“First we have to confirm the facts, so it’s too early to have such a discussion,” the Japanese official told reporters.

The United States had been exporting about 10 percent of its beef production.

"Clearly, beef prices will be lower. I don't think we will see much of a drop in consumption. It will be a supply problem," LMIC's Robb said.

Bryan Butler, meat market manager at the Fresh Plus food store in Austin, Texas, said he will delay buying more beef, but only because he assumes wholesale beef prices will fall.

Beef sales at Butler's store have dropped since the mad cow case but he has been working to reassure customers that the beef is safe and cuts such as steaks and roasts are not risky.

"I think the fact that they traced the cow back to Alberta makes me feel better," Butler said. "I think that will have a lot of people breathing a sigh of relief."

USDA officials had said Saturday the infected cow may have entered the country from Alberta, Canada, in 2001. Canadian officials said such a statement was premature and U.S. officials said they were awaiting further data.

A mad cow case in Canada earlier this year severely hurt that country's beef industry. Beef exports were halted and prices plummeted.

Analysts here said the U.S. may do better than Canada, because the U.S. exports a smaller percentage of its beef. As a result, the increase in domestic supplies may be less than what was seen in Canada.