Suspected mad-cow disease hurting US economy

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Last updated at: (Beijing Time) Thursday, December 25, 2003

Suspected mad-cow disease hurting US economy

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The biggest markets for the US beef around the world slammed shut on Wednesday, not because of the eve of Christmas, but because no one wants to buy the beef from the United States after the US government announced the previous day that the first case of suspected mad-cow decease was found in the country.

US Department of Agriculture Secretary Ann Veneman said on Tuesday that a single Holstein dairy cow from a farm in WashingtonState tested presumptively positive for the fatal brain-wasting disease in recent days. And the bad news has been hitting the markets in the United States and the world in the past two days.

Trade in live cattle ground to a halt Wednesday as prices took the steepest dive allowed in a single day's trade on the Chicago Mercantile Exchange.

The stocks of big US fast food companies declined sharply in the past two day as the beef is the main material in their products. On Wednesday, stocks of McDonald's was down by 5.46 percent at 23.90 dollars and Wendy's fell 4.69 percent to 38.90 dollars as the New York market came to the end of half day tradingbefore Christmas.

There in no doubt that suspected mad cow disease will hurt the US economy although it is not clear yet the case is only a single and isolated one or the tip of a widespread disease in the country.

The health implications of the finding are at present minimal, but the economic implications are substantial for the US cattle industry, which is the single largest part of the American agriculture sector.

US customers spend more 50 billion dollars every year on beef and the cattle industry generates about 180 billion US dollars in economic activity.

The fear of the suspected mad cow disease may stop customers from going to restaurant in holiday season who otherwise would go without hesitation.

The news of the sick cow also comes at time when many US consumers have rediscovered an appetite for beef, thanks in part to the high-protein diet fad and the push by meat giants to make beef more convenient for consumers. That growing demand, as well as a shortage of Canadian Beef, also because of mad cow disease found in last May, has helped to push US cattle prices to a recordhigh level now. Many analysts have predicted the US beef and cattle prices would fall sharply in the future and hit US farmers in a relatively long time because of the decease.

The case is also hurting the US beef and cattle export heavily.Many countries and regions have decided to stop importing beef from the United States in the past two days soon after the mad cowdisease case was announced, among them are three biggest US beef importing countries: Japan, Mexico and Korean.

Beef export has been one of the quickest increasing sectors in the United State and is one of the main force resulting in a strong increase of US agricultural exports.

In the first 10 months of this year, US beef export totaled more than 2.5 billion dollars, an increase of 27.65 percent comparing with the same period of last year.

The decision to stop importing US beef by some countries will surely reduce the US export and result in a sharp slowdown of agriculture export as well as in a slowdown of the economic expansion.

To reduce the hurt to the US beef industry, the government has called on the consumers to go to restaurants as usual.

"We remain confident in the safety of our food supply," Venemansaid on Tuesday.

Many companies, the fast-food companies in particular, are alsotrying their best to keep distance from the mad cow case. McDonald's Corp, the world's largest fast food company, and Burger King Corp., the second largest burger chain in the United States, have said that they don't use the meat suppliers associated with diseased cow.

At present, there are still many questions marks around the first suspected mad cow case in the United State. If it is a tip of a widespread disease, it would hurt the US agriculture seriously, the cattle industry in particular.

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