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Our Perspective
Our Perspective

On July 19, USDA announced that ConAgra voluntarily recalled more than 18.5 million lbs. of beef trim and fresh and frozen ground beef products due to possible contamination with E.coli 0157:H7. The recall announcement was followed by nationally televised assurances by USDA Secretary Ann Veneman that the U.S. food supply was one of the safest, if not the safest, in the world. Meanwhile, commodity and producer groups took to the mail and airwaves to tell American consumers about all the steps that are taken to prevent the spread of foodborne pathogens in ground beef.

My question is this: How many times must the meat industry have to cope with these heartrending images of sick and dying children before it does the right thing for the most vulnerable of our consumers by promoting and initiating the widespread use of food irradiation? Consumers have a zero tolerance for food-borne illness and it's up to the industry to make sure it doesn't happen with our products.

Mike Osterholm is a former Minnesota state epidemiologist and one of the nation's most fervent and early advocates of irradiation of the U.S. ground beef supply. At a July 10 press conference in Minneapolis, MN, announcing Dairy Queen's expansion of its market test of irradiated ground to 43 stores, Osterholm had this to say:

The director of the University of Minnesota's Center for Infectious Disease Research and Policy said that on average 3% of U.S. surgery patients acquire an infection as a result of the procedure. Keep in mind that these infections are acquired in sterile surgical suites using sterilized equipment in the hands of highly trained medical professionals.

Even with, as he put it: "a billion-zillion dollars," his decades of experience and a transfer of the best of surgical suite sterile technology to a packing plant, Osterholm said he couldn't guarantee a product absolutely free of E.coli 0157:H7.

Despite that amazing pronouncement by one of the world's top epidemiologists, the beef industry largely continues to expend efforts and dollars working toward zero tolerance when it isn't possible by using the current technologies available.

There is an answer, however. It's called irradiation, a technology that Osterholm says is the most studied food safety technology in the history of humankind. It's endorsed by every major public health, medical, scientific and professional organization in the world.

What's more, consumers come in contact with irradiated products every day. The fact might be little known, but irradiation is used to sterilize the food spices Americans buy at the grocery store, as well as tissue, toilet paper, feminine hygiene paper products, disposable diapers, surgical equipment, etc.

But industry and commodity groups, packers, processors and restaurant chains are too skittish about negative consumer reaction to the term "irradiation" to do the right thing to protect the health of their consumers. Never mind that the SureBeam(R) irradiation rprocess uses the same household electricity used to run a domestic oven. And never mind the fact that tons of research and a hefty number of markets tests show that consumers prefer irradiated product once they're educated about its benefits and safety.

It's time for the industry as a whole to step forward, embrace the technology and take an active role in its promotion to consumers. It's the right thing to do for consumers and, in the long run, will be the best thing to protect the industry.

-- Joe Roybal

Foreign Trade
Exports' revenue bang is larger than expected

A new study by the U.S. Meat Export Federation (USMEF), a non-profit trade association working to create and boost U.S. exports of red meat, indicates that the importance of exports is greater than previously reported.

USDA statistics indicate that 9% of U.S. beef production is exported. But the USMEF study shows the value of those exports is significantly more than what they represent by a tonnage standpoint. For example, tongue is worth about $0.10/lb. domestically, but more than $4.50/lb. on the international market. Similar relationships hold for other variety meats as well.

The study shows that exports add the equivalent of $12.45/cwt. in total value on fed steers or about 18% of total carcass value and 13.4% of U.S. beef production on a wholesale weight basis. If the value of the dollar continues to decline that percentage could approach 20%. (The USMEF study's methodology was reviewed and approved by CF resources.)

The study illustrates that exports do far more than merely remove supply. It also illustrates the significance of export markets to our price structure.

While exports have dramatically improved prices, their importance also underscores the risk inherent in changing global conditions. Today, nearly $1 of every $5 that comes into our industry is the result of foreign purchases. The U.S. beef market is inextricably linked to the global marketplace.

-- Troy Marshall

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Food Safety
Another E. coli embarrassment

At last count, 27 people had become ill because of beef contaminated with the bacteria E.coli 0157:H7. And ConAgra's stock moved lower as it announced the second largest recall in history.

As expected, media coverage has been intense but, for the most part, fair and accurate. However, even if they are being fair -- talking about deadly pathogens that kill the young and elderly and are commonly found in beef products -- the bad news is that they're talking about the safety of beef at all.

Perhaps the most concerning thing was not the presence of E.coli but how the latest outbreaks illustrated just how poorly the industry is equipped to respond. Response to detection is slow and encumbered by numerous agencies having varying areas of control. USDA has already issued new regulations to address some of the problems, but 10 days elapsed between when the contamination was detected and ConAgra was informed.

Thus far, ConAgra has recalled 19 million lbs. of potentially contaminated ground beef. Only about 12,000 lbs. have been returned. Granted much of the beef has already been consumed, but the sad reality remains that nobody in the system knows where the product in question is. The product goes through many hands and is often repackaged as it moves forward.

The U.S. beef industry has been very good at avoiding problems like bovine spongiform encephalopathy, foot-and-mouth disease and food-borne illnesses. But when it comes to the traceability of our product, we're well behind the world.

This lack of traceability is frightening. It not only limits our ability to respond to safety concerns quickly but increases the risk to the entire marketplace by increasing consumer fears. And in this post-9/11 era, it also encourages those who would attack the food system as it highlights our vulnerability.

Branded beef programs are building traceback mechanisms into their product lines out of necessity. But the time is fast approaching when the industry will have to decide if it can continue to offer non-source verified products.

Simply put, the industry must embrace technologies that can lower the occurrence of E. coli 0157:H7. The industry's move to irradiated ground beef makes sense and needs to be supported by consumer education. Irradiation is the best technology we have to reduce the occurrence of E.Coli.

Management systems like hazard analysis and critical control points programs certainly have a required role. So do other preventive measures (consumer education, steam pasteurization of carcasses, hot water washes, special rinses, careful slaughter and fabrication procedures, and pre-slaughter intervention techniques like the recent Texas Tech research that showed that the feeding of a sea weed product significantly reduced E. coli 0156:H7). But bacterial contamination can't be totally eliminated through these technologies.

This reality means that the industry needs to invest resources in responding to problems in much the same manner as they do in preventing them. Ground beef is the most popular beef product in the U.S. We simply can't afford to have its safety questioned.

-- Troy Marshall

Beef Checkoff
Producer support of checkoff remains strong

Two-thirds of beef producers continue to support the mandatory beef checkoff program, says an independent survey released last week. The research found that 66% of producers approve of the checkoff, while 22% disapprove.

Conducted for the Cattlemen's Beef Board (CBB) by Aspen Media and Market Research, Boulder, CO, the research was completed in June 2002 and has a margin of error of ±3.1%. The semi-annual survey is demographically representative of U.S. beef and veal producers and dairymen.

Not surprisingly, in light of weak market conditions, the independent research found that 45% of producers believe the industry is headed in the wrong direction, while only 40% feel optimistic about the current direction of the beef and dairy industries. Producer optimism about the direction of their industry has plummeted 35 points since July 2001. At the same time, however, the research also indicated that 71% of producers believe that the beef checkoff program has value, even when the market is down.

The survey indicates that more than three out of five producers believe that if there were no beef checkoff program, no one else would pay for beef promotion, while 88% of producers find it important that beef importers pay the checkoff on imported beef and beef products. In addition, nearly seven in 10 believe the checkoff helps producers compete with the aggressive promotion programs of poultry and pork.

Trade
Busting trade myths and misconceptions

Misconceptions about international trade in beef and cattle surfaced last week in a Rancher's Forum held in Billings, MT, that was broadcast nationwide via satellite. I promised some people I'd look into some specific subjects related to trade and report back on them -- so here they are:

Canada, Australia and New Zealand account for nearly 91% of the beef tonnage and value imported by the U.S. Australia has a 378,214 metric ton (mt) tariff-rate quota (TRQ) and New Zealand has a TRQ of 213,402 mt. New Zealand filled its quota in 2000 but did not quite fill during 2001. Australia bypassed Canada in 2001 as the largest supplier of U.S. beef imports and filled its quota during the week of Dec. 5, 2001.

Once the quotas are met, suppliers may continue to ship, but must pay a U.S. tariff of 26.5% applied to the customs clearing price -- the price of the product landed in the U.S. port. National Cattlemen's Beef Association chief economist Chuck Lambert says the tariff has been effective in stopping additional imports in years when countries have filled their TRQ. Even with currencies of most exporting countries depreciating against the U.S. dollar in recent years, the tariff has resulted in product being placed in bonded storage until the next year's TRQ became effective.

Because Canada and Mexico are NAFTA trading partners, beef exported to the U.S. from those countries is not subject to TRQs. With some exceptions, beef cooked, canned and processed in certified and inspected plants may be imported to the U.S. from all other countries without quota restrictions.

Argentina voluntarily suspended exports of fresh and frozen beef to the U.S., Canada and Mexico March 13, 2000, after foot-and-mouth disease (FMD) outbreaks in Argentina. All livestock in Argentina are reportedly being vaccinated and it will likely be a year or more before Argentina again attains FMD-free status without vaccination.

TRQs of 20,000 mt limit the exports of fresh and frozen beef to the U.S. from Argentina and Uruguay, even when both countries are FMD free. Beef is imported from these countries today but must be cooked, canned or preserved in inspected and certified plants. The same is true for Brazil, which isn't allowed to export fresh, frozen or chilled beef to the U.S.

Uruguay also voluntarily suspended exports of fresh and frozen beef after cases of FMD were reported near the border with Argentina but may regain FMD-free status in late 2002. Both Argentina and Uruguay filled their TRQs in 1999, however, neither filled its TRQ in 2000.

Brazil's initiative to attain FMD-free status suffered a setback with an FMD outbreak in November 2000 and will be delayed indefinitely. Brazil has applied for regionalized FMD-free status in two Southern states. It's important to note that a NAFTA evaluation team completed evaluation of the Bovine Spongiform Encephalopathy (BSE) status in Brazil during February 2001 and determined that there is not a BSE risk in Brazil.

All imported beef is subject to checkoff collection on a 1$/head carcass weight equivalent. The USDA establishes an annual carcass weight average.

All imported live cattle are subject to $1/head checkoff collections -- even if they do not "trade hands" when imported. If they trade hands once they have entered the U.S., another $1/head assessment applies.

Imported packer-owned cattle (same as with domestically held cattle) are subject to an additional checkoff assessment if they're owned by the packer for more than 10 days prior to slaughter.

-- Clint Peck

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Public Lands
Federal graziers don't like buyout idea

The Federal Lands Committee of the National Cattlemen's Beef Association (NCBA) and Public Lands Council (PLC) will ask the entire NCBA membership to join in opposing moves by several anti-livestock grazing organizations to create a new federally funded program to purchase and permanently retire grazing rights on federal lands across the West. The PLC says its member organizations strongly question the validity of this proposed program.

"The organizations behind this idea are the same livestock grazing industry opponents who consistently file lawsuits and appeals with the ultimate goal of driving livestock producers from our federal lands, " says Paul Frischknecht, Manti, UT, a sheep and cattle producer and PLC president. "The buyout effort is nothing less than another attempt to remove federal lands grazing. And now they intend to use tax dollars to further that effort."

The group calling itself the National Public Lands Grazing Campaign (NPLGC) is lobbying Congress to provide funds to compensate federal grazing permittees who voluntarily return their federal grazing permits to the federal government. The NPLGC is proposing a compensation rate of $175/animal unit month. If approved, the program could cost the American taxpayer more than $3.2 billion.

-- Clint Peck

Consumers
Why do people adopt a vegetarian lifestyle?

That question was asked as part of a cover story entitled "Should You Be A Vegetarian?" in the July 15 issue of TIME. Included in that story was an online poll of 10,007 adult Americans, of whom only 4% claimed to be vegetarians. Of those 4%, their most important reasons for becoming a vegetarian were:

health -- 32%

chemicals and hormones in meat products -- 15%

don't like the taste of meat -- 13%

love of animals -- 11%

animal rights -- 10%

religious reasons -- 6%

concern for the planet -- 4%

to lose weight -- 3%

to reduce hunger and famine worldwide -- 1%

Margin of error is plus or minus 4.8%.

Drought
Drought aid is on the way

Despite the lack of rain, American agriculture has to be thanking its lucky stars that this is an election year. Last week, Minnesota's two U.S. senators -- both democrats -- introduced a $5.5-billion proposal to cover losses incurred in 2001 and 2002 due to drought. The bill would provide aid to both farmers and ranchers, and the funds would be obtained from outside the farm bill.

The Bush administration, however, has promised to veto any aid or disaster legislation that's not offset by reduced spending in the farm bill. The question is if the Bush administration will hold Congress to the spending agreement it made when the farm bill was passed, and thus risk the political ramifications that a veto might pose in an election year. Many of the key races are taking place in agricultural states.

This week, republicans responded with a proposal by Wyoming's two senators and a Nebraska senator. This bill would provide $634 million in direct assistance to ranchers and extend tax benefits to enable them to rebuild when the drought breaks. It would be funded by reductions in the new farm bill (2003 farm loan rates lowered slightly, EQIP would lose $280 million from next year, and the Desert Terminal Lakes project in Nevada would lose $200 million). The bill would provide reimbursements for feed losses due to the drought.

Ranchers are expected to be very supportive of this bill, which would also meet the administration's requirements. However, the narrower focus of the bill will reduce support from other production segments, especially those whose funding would be reduced under the proposal.

In the short-term, it will be about political positioning. The House is expected to weigh in with their versions shortly. Being an election year, the process will be slowed as both sides strive for political leverage, but it also practically ensures that meaningful assistance will be provided in the 11th hour.

For more information on USDA disaster assistance, contact your local FSA office or visit FSA's Web site at:

http://www.fsa.usda.gov

For more on the drought, visit:

http://www.drought.unl.edu/dm/monitor.html

-- Troy Marshall

Cow-Calf Weekly Mailbag
I work for a packer who harvests 8,300 head/day

I work in the hog procurement side of the business and am involved in mandatory price reporting as well. I'm personally very much opposed to the packer ownership ban.

I used to be a small hog and cattle producer in Kansas. From my experience in both sides of the industry, I fail to see how the ban would help the small farmers that they are supposedly trying to protect. The trend toward fewer and larger operations has been going on for quite a long time. There are a lot of other factors involved in people staying in business in the livestock industry than packer ownership. Sadly, most of them are beyond the farmer's control such as: feed (grain) prices, weather, fuel, taxes, interest, export embargoes or disruptions, political and others.

Senators Tom Harkin and Grassley are doing the industry a disservice. This past week, the Des Moines Register about how Grassley was considering proposing a bill that would require packers to purchase 25% of their daily slaughter on the open market. That is totally unworkable.

We, like other packers, have a good share of the daily slaughter coming from producers with some kind of marketing agreement with us. We would have to tell those customers "no, you can't bring hogs today, because we have to buy open market hogs." Generally speaking, the small producers that aren't involved in a genetic program like ours, for example, are the ones that produce a lower quality animal. So the end result would be a lower quality product for the consumer.

Another result would be delayed marketing for the producers with contracts and would result in heavier slaughter weights and lower prices for the negotiated hogs. We would be producing the result that we are trying to avoid.

I'm sure that Senators Grassley and Harkin mean well but they're out of touch with the needs of agriculture. We desperately need some new ideas in Washington as well as less government involvement.

--Robert Wullschleger
rwullsch@fmctc.com

I'm a relatively large producer for Virginia ...

...about 300 mama cows, 100 stockers and 50 heifers under development. We try to use the Internet to connect with niche customers for our grass-fed beef. Your article on taste the taste-preference research conducted by the University of Nebraska's Chris Calkins and published in the July 19 edition of BEEF Cow-Calf Weekly is probably right for the average Joe, but there is a growing "green" market in places like Northern Virginia that is nurtured by information and articles like the one recently written by Michael Pollan of the New York Times.

You can find that article at:

www.nytimes.com/2002/07/19/opinion/19POLL.html

You can also hear a National Public Radio interview with him, which is accessible from my Web site's beef page at:

hollinfarms.com/pages/beef.html

Farming, as I do, on the edge of an affluent suburban area has advantages and disadvantages. Most of the advantages come from very cheap rental or no rental for land due to the fact that the land is mostly owned by folks who know very little about farming but receive real estate tax discounts if they farm. In fact, The biggest beef operation east of the Mississippi is just outside the DC beltway in Haymarket, VA.

I also enjoyed Troy Marshall's July 19 article on packers. I think the simple emotion of the matter is that cattle farmers don't want to end up like chicken raisers -- handmaidens/hired help for the powerful corporation. And with so much of the market controlled by so few packers, there is a natural suspicion of what might happen if there weren't any checks.

-- Tom Davenport

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A Primedia Property
July 26, 2002