We got lucky. Even an optimist would have bet big money that news about the case of bovine spongiform encephalopathy (BSE) in Canada would have had a negative impact on the cattle markets here.
Yes, cattle-related futures contracts went limit down for all months on May 20 when news began to break about suspicions, then confirmation, of BSE in Canada. Yes, investors took out their fears on some publicly traded food companies, punishing their value by 5% and more.
By the end of that week, though, judging by the markets, nothing ever happened. Cash trade for fed cattle held steady with the previous week, futures contracts regained all that they lost, and wholesale beef values reached record levels. While some estimates pegged losses to the Canadian beef industry at $20 million/day, U.S. markets continue to chug down the avenue of bulls.
Along with luck, chalk it up to short front-end supplies, cut thinner with the ban on Canadian imports. Credit the unexpected, evenhanded way the media handled the situation, due in no small part to a quick and effective response by the National Cattlemen's Beef Association.
Also, while you can't put a price tag on it, Canada's mandatory cattle identification system also played a role in helping to manage the crisis. Canada's ID system was a factor in reassuring consumers on both sides of the border that the government could quickly and accurately track the cattle involved. Imagine how different the public fallout might have been if officials still would have been trying two weeks later to find the cattle involved.
The bottom line is that a single, six-year-old cow in Canada may have accomplished what a jillion cattle producers, lobbyists and congressmen never could. That is to demonstrate the necessity of a coordinated national ID and traceability system for livestock, as well as the potential penalty for going without one.
Cool Isn't National ID
Unfortunately, some in the U.S. industry may be tempted to believe that country-of-origin labeling (COOL) will fill the ID gap in this country. Its provisions, which become mandatory in September 2004, require that all cattle, carcasses and the resulting beef products be documented and identified as to the countries of origination.
Never mind the fact this legislation ignores product sold at food service — about half of all the beef trade — or that poultry is exempt. Forget the fact that collecting and coordinating the necessary information will require doing business differently and add cost. The fact is lawmakers will be reluctant to do anything that hints at taking the teeth out of a law that hints at traceability.
However, what COOL won't do is provide a national standardized livestock premises or individual animal ID and traceability system that will connect the dots throughout an animal's production life. The legislation mandates against that.
In other words, it's one thing to tell consumers where their product comes from in general terms. It's quite another to trace a disease problem or performance success from the meat case back to the individual ranch and animal.
That fact bears earnest consideration as the U.S. National Animal Identification Team takes the next step in an already too-long process of building such a system in this country. Even though the livestock species' representative organizations, allied industries and government have all agreed on the process, there is likely to be plenty of squalling before a law is written, much less enacted. Ironically, much of the opposition is likely to come from the same folks who supported COOL.
Finally, what COOL or even this much-needed standardized animal ID and tracking system won't provide is immunity. As Canada's BSE woes demonstrate, an effective system of complete traceability forwards and backwards can mitigate risk by quickly and accurately locating the source of the problem.
But it also verifies the fact that such a system does nothing to prevent the market from nose-diving in the event of a feared livestock disease that is either accidentally or intentionally introduced. Nor can the existence or absence of such a system make blameless the individuals involved in producing food for a hungry world. Nothing can.
We got lucky…this time.