December 25, 2003 The Dallas Morning News by Ieva M. Augstums

U.S. Department of Agriculture officials would not speculate if others would follow suit, but investors quickly reacted to the news by selling off shares in meat-related food companies and restaurants.

Federal officials worked feverishly on Christmas Eve _ and planned to continue Christmas Day _ to find where a Washington state dairy cow was born and may have been infected.

They also want to track down meat from the infected 4-year-old dairy cow before it reaches consumers. Meat reached a small Washington state processing plant before being discovered.

"Despite the finding, we remain confident in the safety of our food supply," said Agriculture Secretary Ann Veneman in a news conference. "I do not hesitate to recommend to anyone that beef is absolutely safe to eat."

Still, the first mad cow case in the United States has left many wondering what's next for America's $175 billion beef industry.

Cattle producers in Texas, the nation's leading beef state with 15.5 million calves and head of cattle, are worried.

A ban on American beef by other countries could have a drastic impact on prices in the short-term, but Texas producers hope the market will rebound when consumers are reassured.

"It's a concern," said Jack Hunt, president of King Ranch, Inc., one of the largest beef producers in Texas, but "we feel USDA has a good plan in place and they're on top of it. This has been a possibility that everyone has been thinking about and preparing for, and so I guess we've got to let it play out."

Japan and South Korea halted U.S. beef imports late Tuesday evening, depriving American exporters of their two largest markets.

Australia, Malaysia, Russia, Singapore, Taiwan, Thailand, Chile and Peru followed suit early Wednesday morning, as did the Chinese territory of Hong Kong.

By the time consumers were shopping for their Christmas roasts, Mexico, Brazil, South Africa and Jamaica had also moved to block U.S. beef imports.

"As a precautionary measure and due to the lack of information, we closed the border to beef products and live cattle," said Javier Trujillo, the head of food safety for Mexico's Agriculture and Livestock Ministry, in comments to Spanish wire service EFE.

U.S. beef exports totaled more than $2.6 billion in 2002, with Japan, South Korea and Mexico as the best customers. Exports to Japan totaled $854 million; to South Korea, $619 million; and to Mexico, $615 million.

In Canada, where a single case of the disease was found in May, federal officials said imports wouldn't be banned unless the suspected case was confirmed.

"We are at the very early stages of this investigation, so what's going to happen in the marketplace and the economic effect is really going to hinge on how this investigation turns out," said Dr. Keith Collins, USDA's chief economist.

But on Wednesday, cattle futures fell and shares of fast food and other restaurants tumbled.

Shares in McDonald's Corp., the world's biggest hamburger-restaurant chain, fell $1.32, or 5.2 percent, to $23.96 on the New York Stock Exchange. Tyson Foods Inc., the world's largest meat processor, dropped $1.08, or 7.7 percent, to $12.90.

Cattle for February delivery fell 1.5 cents, or 1.7 percent, to 89.175 cents a pound on the Chicago Mercantile Exchange. A move of 1.5 cents is the most allowed under current price conditions at the exchange.

"We expected very little cash trading this week because of the holidays," Collins said. "So we probably really are not going to get a test on what happens with cattle prices until we get into next week."

On Tuesday, USDA officials identified a single Holstein at a large dairy farm in Mabton, Wash., about 40 miles southeast of Yakima, that had tested "preliminarily positive" for mad cow. All 4,000 animals on the farm have been quarantined by the state. If the testing confirms the preliminary finding, it is likely that other cows in the herd will be slaughtered, said Dr. Ron DeHaven, USDA's chief veterinarian, who works for the Animal Plant Health Inspection Service.

The animal in question was one of 20 slaughtered Dec. 9 at Vern's Moses Lake Meat Co. in Moses Lake, Wash. The meat was then shipped on Dec. 11 to Midway Meats in Centralia, Wash., and then to two other establishments to be processed, said Dr. Kenneth Petersen of the Food Safety and Inspection Service.

Vern's Moses Lake Meat voluntarily recalled 10,410 pounds of raw beef Wednesday, saying that the meat may have been exposed to tissues containing mad cow.

Parts of the cow that would be infected _ the brain, the spinal cord and the lower part of the small intestine _ were removed before the animal went to the processing plant, Veneman said.

Mad cow disease, also known as bovine spongiform encephalopathy, eats holes in the brains of cattle. It sprang up in Britain in 1986 and spread through Europe and Asia, prompting massive destruction of herds and decimating the European beef industry.

A form of mad cow disease can be contracted by humans if they eat infected beef or nerve tissue, and possibly through blood transfusions. The human form of mad cow disease has killed 143 people in Britain and 10 elsewhere. There have been no U.S. deaths.

Petersen said government officials would recall any beef that may have been infected as soon as it's located. The process will require records inspections at all of the facilities where the meat was handled.

"We're looking at when the carcasses were processed and what was done with them," he said.

The Agriculture Department has had safeguards in place since 1990 to check for mad cow disease, and 20,526 cows have been tested in 2003 in the United States.

Texas Agriculture Commissioner Susan Combs said Wednesday that she doesn't see the Washington state case as a threat to public health or the Texas cattle industry.

"I don't get the impression that there is widespread anxiety, and there shouldn't be," she said in a telephone interview from her home. "I think in Texas, we shouldn't worry about it. There's never, of course, been a case."

Many officials refused to speculate about the economic impact of the discovery.

"While it's too early to tell, I bet we will see a drop in the market prices of beef," said Gene Hall, spokesman for the Texas Farm Bureau in Waco. "Beef prices have gone up in the last couple of months because of a limited supply and it looks like they could be heading down."

Americans ate slightly more than 64 pounds of beef per capita in 2002, up from 63 pounds in 2001 and the highest total since 1989. Industry experts have projected that beef consumption would grow to more than 67 pounds per person this year.

In November, U.S. beef prices were nearing an all-time high _ $4.32 per pound of choice retail beef _ largely in part because of a case of a mad cow disease in Canada and the popularity of the Atkins high-protein diet.

"Yesterday's announcement was a disappointment," said Matt Brockman, executive vice president of the Texas and Southwestern Cattle Raisers Association in Fort Worth, which represents about 12,500 members. "The last year has been good."

But, "the thing we have to remember is ranchers deal with setbacks all the time. Volatile markets are not something that's new to cattle producers."

Don Smith, who runs both a small dairy farm and a beef operation in East Texas, said he too was concerned, but, "The big thing that everybody needs to understand is that this country has a safe food supply and the FDA and the cattle organizations and the farm bureau, all these organizations have worked for years to put things in place so that we don't have to worry."

In fact, Smith said his menu for Christmas Day includes beef.

"We're not concerned at all," he said. "We're having (beef) filets tomorrow and we're looking forward to it."