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Articles from 2003 In December

Swift Hit Hardest By Canadian Border Fallout

The May closing of the U.S./Canada border to Canadian beef exports due a single case of bovine spongiform encephalopathy (BSE) appears to have hit Swift the hardest.

Both Excel and Tyson own major packing plants in Canada. They've benefited because the border has been open to boxed beef exports for months now.

However, Swift, which doesn't have a Canadian packing interest, has traditionally relied on Canadian live cattle to process in their U.S. plants. The continued border closure to live cattle exports from Canada hasn't made Swift happy.

Swift spokesman Jim Herlihy was quoted in the

Greeley Tribune

recently as saying, "The live animals that are now being stopped at the border are being imported into the U.S. -- in boxes -- and eaten by American consumers. And Canadian processing plants are working overtime to process the cattle available to those plants. We've reached the point now where it costs us more to produce a product than we get for it, especially when compared to the low price of beef coming in from Canada."

Herlihy also said that while Swift's competitors are earning windfall profits of up to $7 million/day/plant in Canada, "we're losing more money with each additional animal we process."

While everything is always a matter of perspective, there's little doubt about the irony in allowing product to be processed in Canada and then shipped across the border, but not allowing the same animals to be shipped to U.S.-based plants for processing.

The comment period of the proposal to reopen the Canadian border ends Jan. 5. It's not expected to be finalized until early spring.

Recent Fed Cattle Prices Analyzed

October is a good month to describe the components that contributed to huge year-to-year increases in fed cattle prices because most of the data required are available, say economists from the Denver, CO-based Livestock Marketing Information Center (LMIC).

Several factors contributed to the year-to-year surge in beef and fed cattle prices. First in importance was the decline in the domestic supply of beef after adjustments for international trade (estimated net of imports and exports). Other factors that contributed to this year-to-year price surge included:

  1. Improved consumer demand for beef;

  2. Smaller marketing margins by packers and retailers;

  3. Higher byproduct values (liver, hide, etc).
In October, U.S. beef production was 12% below a year earlier and federally inspected beef produced from steers and heifers alone declined nearly 15%. On a per capita basis, year-to-year declines in U.S. beef supply were even larger due to increased population and international trade changes (e.g., reductions in U.S. beef and cattle imports).

Using conservative relationships, the year-to-year decline in per capita beef supply in the U.S. probably represented an $18-24/cwt. increase in live fed cattle prices in October 2003 versus a year ago.

So, after accounting for the impact of beef supply reduction on price (averaged at $21), the balance still to be explained of the $33 year-to-year increase in live fed cattle price is about $12/cwt. ($33 - $21). In explaining the $12, LMIC estimates put year-to-year increases in beef demand as the largest component, followed by smaller marketing margins and then higher byproduct values -- up $1-$2/cwt.

Compared to a year earlier, packers and retailers together captured smaller margins. In October, packers captured more, but retailer margins declined significantly.

Excel Announces Recall Of Irradiated Ground Beef

The product, produced by Excel on various dates from Sept. 2 to Nov. 20 and sold in one-lb. chubs (93/7 and 85/15) into retail outlets in Iowa, Minnesota and Wisconsin, was labeled and marketed as "irradiated for food safety" but hadn't undergone the irradiation process.

Mark Klein, Cargill's director of public relations, attributed the recall to a "simple clerical error."

Irradiation is marketed as an added food safety step, though it is actually the only real "kill" step for food-borne pathogens such as

E. coli

O157:H7 and Salmonella in ground beef. There is no indication that anyone was or is at risk or that anyone had become ill because of the mislabeled product.

But the term "irradiation" is regarded by purchasers of ground beef as a guarantee that the ground beef they pick up at the grocery story is free of food-borne pathogens. Though the irradiation industry and proponents of the process have continued to stress the importance of safe handling practices such as the thorough cooking of irradiated product, some consumers, confident of the process's proven record of killing food-borne bacteria, have been known to undercook it in preparation.

No one is claiming anything but a tragic oversight on Excel's part. In fact, Excel notified USDA's Food Safety and Inspection Service (FSIS) last week that its internal investigation had found the mix-up. FSIS rated the recall as a Class II, which carries a low level of health risk to consumers.

But the news delivers a body blow to the industry that could be felt in several ways.

For one, the beef industry has done much in the past few years to shore up its performance and reputation among consumers in the area of food safety. In fact, just this week USDA Secretary Ann Veneman reported that, in random sampling by FSIS, cases of salmonella in raw meat and poultry had declined by 66% over the past six years and by 16% since last year. Just a few weeks ago, USDA announced data showing similar precipitous declines in

E. coli

O157:H7 in ground beef, and listeria in ready-to-eat meat and poultry products.

In addition, the processing industry has made much about the success of its hazard analysis critical control point (HACCP) system as a tool in ensuring beef is as wholesome as possible. While this particular recall may have nothing to do with Excel's HAACP procedure, though ensuring that product packaged as irradiated certainly is irradiated should be a critical control point, the incident could fix in consumers' minds the question about just how much it can trust the beef industry to police itself.

Picture a consumer asking him or herself: "How good can a HAACP program be when it misses a critical control point like this -- for almost three months?"

The incident is likely to set back the irradiation movement for ground beef, which had been gaining steam, even with little to no help from the trade associations for beef producers, processors and retailers. With this news, consumers who paid more for product they thought had an added assurance of safety against food-borne pathogens -- only to find they'd been duped -- could well become discouraged from buying the product in the future. Of course, the biggest risk is of consumers not having thoroughly cooked the product because they thought the ground beef had the added assurance of irradiation.

The beef industry is currently working at a frantic pace on a lot of pre-harvest interventions to try to eliminate the incidence of food-borne pathogens in ground beef. In fact, a press conference held last week in Canada trumpeted the effectiveness of a new

E. coli

O157:H7 vaccine for cattle that could be on the market in early 2004.

But the truth is that, added together, all the pre-harvest interventions developed thus far, as well as those still on the drawing board, don't add up to what the single step of irradiation can do in controlling food-borne pathogens. Plus, there's the added cost for these new vaccines and feed additive regimes, and the extra labor to apply them, which will likely be borne by the producer. Then, of course, there are potential related costs to the industry of injection site damage, more antibiotic use, etc.

Everyone loses with Excel's "simple clerical error" -- producers, processors, consumers, and the industry overall. But the biggest hit will be absorbed by the industry's greatest and most underused beef safety tool -- irradiation.

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Basic RFID Components

Transponder — This is the electronic identification (EID) tag itself, often serving as the female button attachment for a traditional visual identification tag. Transponders for radio-frequency identification (RFID) in the beef industry are passive responders. This means they possess no power source of their own. Instead, it's the charge provided by the transceiver (reader) that enables the transponder to emit a signal back to the transceiver.

The transponder contains an integrated electronic circuit (the chip) and a capacitor, which captures and uses energy from the transceiver in order to send a signal back. Electronic circuits in the transponder can be programmed as Read Only (R/O), meaning that information contained in the chip — in this case, a unique 12-digit number — can only be read. Chips can also be programmed as Read/Write, which enables information to be added, warehoused and transferred to them.

Transceiver — Also known as the reader or the interrogator, transceivers send the electronic signal to the transponder that provides the power for the transponder to send the signal back to the transceiver with the information contained in the transponder's electronic circuit. Transceivers can be powered by batteries or plugged into a traditional power supply.

The transceiver is either tethered (physically attached to the data accumulator such as laptop or scale head) or it transmits data to the accumulator wirelessly. Transceiver units are usually comprised of a transmitter/receiver, antennae, control unit, power unit, coupling element and an electronic interface enabling it to communicate with the data accumulator.

Transceiver antennae can be incorporated into hand-held units (as in the case of reader wands used at chute-side, or within stationery units such as panel readers that are placed permanently to read tags as cattle flow by a certain physical location.

Data Accumulator — This is any device, such as a laptop computer, an electronic scale head or a hand-held computer, that is capable of communicating with a transceiver and accepting the information from it.

Software — Considered by many to be the heart and soul of a comprehensive RFID system. The transference of data between transponder and transceiver, and between transceiver and data accumulation, is electronic (mechanical, if you will). It's the software that allows you to actually tie electronic identity to production and management information, massage the data and share the information with others.

Data Warehouse/Management — This is where you store all the data you receive it and manage it. It can be part of a central database or a decentralized one.

You can store data on your own, but value increases with volume. Thus, many producers use third-party service providers in order to exploit this advantage, as well as to save the time and hardware cost of creating and maintaining their own database.

Identifying Alliances

Most of the beef production and marketing alliances springing up around the country are predicated on some kind of animal identification (ID) system.

Ken Conway, Hays, KS, says the radio-frequency identification (RFID) technology he's experienced is working very well for collecting and transferring cattle performance data. He's owner and president of GeneNet, an integrated marketing alliance that's traded over 250,000 head of cattle — many “equipped” with RFID. He's presently working with more than 1,000 cow-calf producers, 100 feedlots and a large number of seedstock producers throughout the U.S.

Wave Of The Future

“For our purposes, the RFID systems out there are working as well as conventional panel eartags for data collection,” says Conway. “Things like retention rates, readers and software systems are good enough to make this technology look like it's the wave of the future in livestock agriculture.”

He knows that animal health issues like the one case of bovine spongiform encephalopathy (BSE) discovered in Canada last spring are accelerating the move toward individual ID. But, Conway's business interests lie more in traceback for animal management than for health security.

“There's no question that with all the health issues like BSE and foot-and-mouth disease around, that animal ID is going to be a way of life,” he says. “It's going to be dictated to us that we follow our cattle throughout the production chain. In the end, this will be a good thing for us all.”

Conway emphasizes though that source verification — at least from an animal performance standpoint — doesn't always need to involve individual ID.

“You certainly don't have to identify your cattle individually in order to participate in GeneNet,” he says. “We can use group data to provide some valuable management information.”

“The larger range-calving ranching operations aren't going to find it easy to individually ID calves from birth,” Conway speculates. The likely scenario, he thinks, might be that ID tags would be applied at the ranch during branding.

“Obviously, the closer to birth you can get the tag on the calf, the better,” Conway says.

For many producers, the location of first sale, like an auction barn or feedyard, might be the first point permanent ID is applied. He thinks the more progressive auction yards and feedyards will begin gearing up to facilitate RFID systems.

“I'm assuming that automatic ID readers will be installed in auction markets,” he says. “I'm not sure who's going to pick up the tab for all this. Though. I guess ultimately it will be handed back to the producer, as most everyone else in the system is a margin operator.”

EID Pocket Pal

Looking for more information on electronic identification (ID) of livestock? Check out “A Guide For Electronic Identification of Cattle,” a 24-page bulletin that provides an extensive discussion of the components of implementing a radio-frequency (RF) technology system and applying it in a national ID program for the U.S. beef industry.

The bulletin permits readers to better understand the key components of an electronic ID system and evaluate the components that best fit their operation. Produced by Kansas State University faculty Dale Blasi, Mark Spire, Kevin Dhuyvetter, Marcus Epp and Brian Barnhardt, it covers the importance of individual ID, why visual ID isn't sufficient, the advantages of RFID and how the technology works, components and economics of an electronic ID system, and includes a comprehensive glossary of electronic ID terms.

The bulletin can be ordered for $10, which includes shipping, from Los Schreiner at 785-532-1267 or by e-mail at [email protected]. Volume discounts are available.