A fourth case of BSE in the U.S. is announced on Tuesday, but time, wisdom and an effective industry response seem to have mitigated its negative market effects.
The fourth confirmed case of BSE in the U.S., this one in a dairy cow presented for rendering in central California, sent shockwaves through this industry this week. It’s little wonder, though, as everyone still carries the scars from the first cases, particularly the first one in December 2003. The tens of billions of dollars in losses that resulted from that case will never be regained; thus, the uncertainty is certainly justified.
The timing of the announcement also was problematic, as Japan is set to bring its age requirement for U.S. beef imports into line with scientific standards. Plus, grilling season in the U.S. is just kicking off.
Most importantly, the market had just begun to recover from the media-hyped assault on lean finely textured beef (LFTB), which it affectionately referred to as “pink slime.” Ironically, the LFTB fiasco, while one of the industry’s darkest moments in recent times, may have played a hand in keeping the BSE coverage more balanced. After all, even the media, which loves to manufacture a crisis, can’t afford to have too many in short intervals.
The media coverage on Tuesday’s BSE announcement has been fairly balanced and factual, with most of the stories making the point that the surveillance system for BSE worked and that consumers were never endangered. In fact, the responsible reporting of the BSE case, compared against the sensationalism that marked coverage of the LFTB issue, demonstrates the power that media has in affecting consumer response to an issue.
USDA says the California BSE case is the rare variant of the disease, which isn’t linked to tainted feed and, according to most experts, was inevitable. The able and forthcoming announcement and follow-ups by USDA personnel was exemplary. And it certainly didn’t hurt to have USDA Secretary Tom Vilsack signing off his press conference appearances by saying he was heading home to have a hamburger.
The National Cattlemen’s Beef Association (NCBA) also deserves high praise for its efforts in forward planning and crisis management of the issue. NCBA had the foresight to create the websites and social media tools for disseminating information in today’s instantaneous media marketplace. NCBA’s issues management team had the experts, the science and the talking points in place, and did a great job of utilizing social media to help control and frame the discussion.
As Forrest Roberts, NCBA’s CEO, said in a membership call on Wednesday: “We worked to get and stay ahead of this issue. We're trying to manage this to the very, very best outcome.” The response was apparently effective as the market on Wednesday had rebounded to recover almost two-thirds of Tuesday’s drop. And the negative impact on U.S. beef export markets has been minimal thus far, with a number of key trading partners – particularly Mexico, Japan and South Korea – announcing that the new case of BSE won’t affect their beef-trade relationship with the U.S.
All in all, the industry response was excellent. Fortunately, unlike the first time around, we didn’t have factions within the industry trying to leverage the crisis to achieve their narrow political aims; or maybe their credibility has just been so damaged that nobody listens to them anymore. Either way, the market impact is expected to be negligible in terms of our BSE status, foreign trade, and short- and long-term markets.
Certainly, much has changed in 8½ years. BSE isn’t received with the same level of panic that shook England in the late 1980s. The science is much better understood today; thought leaders are better educated; and science-based, effective control programs that are recognized and accepted throughout the trading world are in place.
Still, the industry response was nothing short of incredible.