Nevada County Picayune and Gurdon Times Newspaper Archive

Mad Cow threat doesn't affect local beef sales

There has been little reaction locally to the confirmation of "mad cow disease' in a Washington state dairy cow in December.

Local farmers are taking a wait and see attitude, and shoppers at a local grocery store continue to buy beef.

Nevada County Extension Agent Rex Dollar said, "Farmers are holding their calves and waiting to see what happens price wise, so numbers going to market are down."

"We haven't seen any drop in sales of beef here," Sexton Foods Store Assistant Manager Byron Toliver said. "People seem to be buying steaks and roasts just like before."

U.S. Cattle producers experienced high cattle prices for most of 2003. For many producers, the high prices allowed them to reduce debt and improve the profitability. However, events in December threaten to change the situation.

On Dec. 9, 2003, a downer Holstein dairy cow was taken to a Washington state slaughter facility. USDA rules in effect required all downer animals to be suspect for Bovine Spongiform Encephalopathy (BSE) disease, so the brain and spinal cord of the cow were removed for laboratory examination and did not enter the human food chain.

On Dec. 23 the USDA announced a single dairy cow in Washington State had tested positive for BSE, or Mad Cow Disease. Almost immediately, live cattle futures prices declined the $1.50 per cwt. daily limit on the Chicago Mercantile Exchange (CME) on Christmas Eve. The day after Christmas prices fell $3 per cwt. under expanded limits allowed by the CME. The CME announced that the daily limit would be increased to $5/cwt. on December 29.

At the same time cattle futures prices were falling on the CME, almost all major beef importers stopped importing U.S. beef, even those beef products in transit and in ports around the world. U S. beef exports account for approximately 10 percent of total U.S. beef production and were valued at $2.6 billion in 2002.

The loss of the beef export market means an increase in the domestic market supply, which should push domestic prices lower. While the exact magnitude of the supply increase is not known, the loss of the export market is projected to reduce cattle prices by about 15 percent; but the reduction could be even more. If no additional BSE cases are found, the prices should stabilize and begin a rebound soon.

"Prices have dropped 10 to 15 cents per cwt. at Arkansas markets since before Christmas," Dollar said.

How low will cattle prices go? That is a difficult question to answer because there are so many variables that can affect the final price. Dr. James Mintert, an agricultural economist at Kansas State University, says that even without the BSE announcement, cash prices were expected to fall to the upper $80's/cwt. this winter from an average of $98/cwt. this fall. The loss of export markets alone could push cash prices into the low to mid $70's this winter, although a drop into the $60's could not be ruled out.

In the 10 days following the BSE announcement, cash and futures prices lost approximately 20 percent of their value.

On January 2, 2004, the CME was steady to higher on early trade.

One change in the future for cattle producers is likely. Identification of animals at the farm of origin will probably become a reality sooner because of the BSE scare according to Dollar.

"With what has happened in the past few years we're operating in a new environment, and we're just going to have to adjust to it," he said.