Mad Cow Scare Hurts Midwest Meatpacking Belt
Jan. 21, 2004
On Dec. 23, the USDA announced that bovine spongiform encephalopathy, or mad cow disease, had been discovered in a Holstein cow in Washington state. More than 30 countries banned U.S. beef products, including Japan and Mexico, and slaughter cattle prices dropped about 18 percent.
Meatpacking plants from Minnesota to Texas and from Iowa to Idaho have since cut jobs because some of the "secondary" meats they produce - such as beef tongue and intestines -primarily go to international markets.
Overall meat industry job losses connected to mad cow disease have been relatively few, mainly because domestic demand for steak and hamburger has remained strong, said Ted Schroeder, an agricultural economist at Kansas State University. About 10 percent of U.S. beef is exported. "The total number of cattle here, the number processed, those things are unchanged," Schroeder said.
But Excel Corp. of Wichita, Kan., laid off 700 workers at five plants in Texas, Kansas, Colorado and Nebraska because of the loss of export markets for secondary meats, spokesman Mark Klein said.
Swift & Co. cut 140 jobs in Colorado, Nebraska, Texas and Idaho for much the same reason, spokesman Jim Herlihy said.
Gary Mickelson, a spokesman for Tyson Foods Inc., said his company laid off about 40 workers at its smaller slaughterhouses in Iowa, Nebraska and Idaho.
If export markets don't open within a year, job losses could grow and spill over into feedlots, equipment and supply companies for meatpacking plants and retail businesses in Midwest towns, Creighton University economics professor Ernie Goss said.
Nebraska would be hit particularly hard if exports don't pick up soon. The beef industry is the largest industry in Nebraska and more cattle is slaughtered here than in any other state. About 7.8 million head of cattle went through Nebraska's meatpacking plants in 2002, followed by Kansas with 7.4 million head and Texas with 6.4 million.
Nebraska could lose 21,000 jobs, Kansas 17,000, Iowa 6,800 and Minnesota and South Dakota each about 2,300, Goss estimated in a Midwest business conditions survey issued earlier this month.
At Fremont Beef, 49 people were laid off in late December -or 62 percent of the company's work force -because it lost its Japanese market for its beef tongue, liver and intestines, said Les Leech, the company's chief operating officer. Fremont Beef is losing money but hopes to stay open at least a year as it waits for resumption of exports, Leech said. For now, the company is processing a limited amount of pork for Japanese restaurants and vaccuum-packed, sliced beef liver for U.S. grocery stores, Leech said.
To help keep domestic demand for beef strong, the industry will launch a $4 million television ad campaign on Jan. 26 -albeit two weeks later than originally planned.
"Consumers watching (mad cow) news clips followed by 'Beef, it's what's for dinner' was not what we wanted," said Mark Thomas, a vice president of the Denver-based National Cattlemen's Beef Association.
The new campaign focuses on beef's appeal and nutritional value, without mentioning safety.
Source: OsterDowJones Commodity News
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