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Canada Mad Cow Crisis Has Cost $3 Billion

Canada's mad cow costs industry C$3.3 bln-study
Reuters, 11.14.03, 4:56 PM ET

By Roberta Rampton

WINNIPEG, Manitoba (Reuters) - Canada's beef industry has lost an estimated
C$3.3 billion ($2.5 billion) since it detected its first and only case of
mad cow disease six months ago, according to a new study obtained by Reuters
Friday.

The impact "represents the greatest threat and shock the Canadian
agricultural industry has ever experienced," said the report, written by
Serecon Management Consultants Inc. of Edmonton for an industry coalition.

"Cattle need to be culled, farmers may need to be moved out of the sector,
and rural communities may need to face increased downsizing," the report
warned.

Canada's cattle crisis started May 20, when government officials revealed a
sick Alberta cow, judged unfit for human consumption, had tested positive
for mad cow disease.

The United States and other export markets, which had previously bought more
than 60 percent of Canadian cattle and beef, closed their borders to
Canadian exports, throwing the industry into chaos.

The brain-wasting ailment, formally known as bovine spongiform
encephalopathy, has been linked to variant Creutzfeldt-Jakob disease in
humans, which has killed more than 100 people, mostly in Britain.

In early September, after an massive investigation of the Canadian beef
industry turned up no other case, U.S. officials opened the border to
limited types of meat from young animals. U.S. Officials have since proposed
rules to allow cattle and more cuts of beef into the country, pending a
period of public comment.

The new study, which assumes existing trade bans will continue until early
2004, said the beef industry has lost C$1 billion in meat exports.

Meat processors have faced C$500 million in higher costs because they have
no markets for offal or bone meal, used in hog and poultry feed, the study
said. Those costs have meant lower price for feedlots and farmers, as well
as for pork producers.

Feedlots have lost C$192 million, despite government aid programs. Farmers
who normally export live cattle as breeding stock or to U.S. feedlots have
lost an estimated C$700 million, the report said.

Farmers are expected to take a loss of nearly C$850 million over the winter
on more than 1.1 million older beef and dairy cows and bulls.

While trade in beef from cattle considered too young to develop mad cow
disease is expected to resume, Canadian government officials have said they
expect trade in meat from older cattle will be banned for the foreseeable
future.

Prices for cull cattle have dropped 75 percent since May, the report said.

Not included in the C$3.3 billion total is an added C$3 billion loss in
equity for the country's 46,000 cattle farmers, the report said.

Nor does the total include estimated costs of C$1.8 billion to secondary
industries, including truckers, feed companies, veterinarians, and other
suppliers.

($1=$1.30 Canadian)

Copyright 2003, Reuters News Service

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