RoguePundit

Trying to Buy Canadian

The USDA and Canadian Food Inspection Agency have worked together for years to develop and manage an integrated meat market.  The goal is for customers to focus upon the quality of a product, not its source.  That's part of the reason that Canadian beef and pork producers had a conniption when the U.S. moved towards country-of-origin labeling (COOL--previous blog here). 

The Canadians complained that COOL would increase their costs and thus create a trade barrier.  That was an easier argument to make with pork, as Canada's problems with mad cow disease had reduced the integration of our beef production.  But, the Canadians also feared that their meat soon wouldn't sell as well here...no Product of USA label.  Indeed when COOL went into effect last fall, packing plants paid less for Canadian beef and pork.  

Flashing forward...

Earlier this week, the Canadian Food Inspection Agency announced a recall involving a variety of President's Choice beef products, including steaks, roasts and ground beef over fears of E. coli contamination. The products came from JBS Swift Beef Co., based in Colorado, and are part of a larger recall that has been linked to at least 18 illnesses in numerous states.

While news of a food recall is hardly surprising--in recent weeks, the CFIA has announced recalls on everything from pistachios to salad greens to food made with peanut products--many consumers were startled to find out some fresh meat products sold by Canadian companies actually originate in the U.S..

The recall is prompting new questions about sources of meat sold in Canadian grocery stores, and whether consumers have a right to know where the product originated.

Under current regulations, companies that sell fresh meat products, such as ground beef, aren't required to name the product's country of origin on the label, according to several industry experts.

Representatives of two of Ontario's biggest supermarket chains said that they usually bought Canadian meat, only tapping American sources to meet spikes in demand.  However, neither would say how much of the meat they sold was Canadian.  Hmmm. 

Last year, the CFIA toughened its own COOL requirements.  Yes, it was likely in retaliation for what they view as our protectionism under the guise of helping consumers.  Here's what it now takes to legally use a Product of Canada label. 

A food product may claim Product of Canada when all or virtually all major ingredients, processing, and labour used to make the food product are Canadian. This means that all significant ingredients are Canadian and non-Canadian material must be negligible. Ingredients that are present in a food at very low levels and that are not generally produced in Canada, including spices, food additives, vitamins, minerals, and flavouring preparations, may be used without disqualifying the food from making a Product of Canada claim.

Thus, it ought to be pretty simple to determine how much of the meat was Canadian...at least if the producers feel that adding a Product of Canada label to the packaging is worthwhile.  It's not like many Canadians shun their own beef because of fears of mad cow disease. 

On the other hand, it's possible that the contaminated beef from the Colorado plant was imported from Canada, slaughtered, and then exported back to Canada.  If that's the case, it wouldn't qualify for a Product of Canada label.  It's rather like cattle born in Canada and raised in the U.S. can't be labeled Product of USA.  That's hurt Canadian beef sales here.  Finishing with the original article...   

There have been no reported illnesses in Canada associated with the products involved in the current recall.

And hopefully there were none that went unreported.

FYI, here's how one well-known brand dealt with our new mandatory COOL regulation.

Certified Angus Beef® product source

• With mCOOL, you’ll begin seeing a label on packages for "Product of USA, Canada and Mexico." This is a change only to the packaging, not to the Certified Angus Beef® brand or its high standards. The brand continues to offer the same high quality you and your customers have enjoyed for 30 years.
• The vast majority of Certified Angus Beef® products are from the United States. In fact, less than 4% of all Certified Angus Beef® products could ever come from cattle born in Canada or Mexico. The United States imports a small number of cattle from Canada and Mexico, and most of them are raised and harvested in the United States and incorporated into the nation’s cattle herd.
• Less than 1% of the brand’s beef is certified in Canada. Most satisfies consumer demand in that market. A very limited quantity could be exported to the United States as a "Product of Canada", and will likely end up in foodservice.

That Product of Canada label disappears in the foodservice industry. 

The Body's Regulation of Copper

Prion proteins still aren't well understood. The misfolded ones get most of the press, as they're linked to fatal neurodegenerative conditions like mad cow disease, chronic wasting disease, and scrapie.  Quoting an old post...

There is a divergent line of thinking when it comes to the causes of prion diseases.  It relates to the presence or lack thereof of certain metals. 

There are links between prion proteins and the regulation of copper in the brain, leading some to believe that prion diseases are related to a copper deficiency.  It could be because of a shortage of copper in the diet and/or the presence of other metals (typically manganese--which is unrelated to magnesium) that can occupy prion protein receptors instead of copper.  However, there is also research which fails to support prion protein's role in regulating copper in the brain.  Nevertheless, there are clusters of TSE cases in areas with high manganese and where, for instance, strong pesticides have been used that can impact the uptake of copper.

Last week, a research team published the following on the topic. 

Prion proteins, or PrPs, are commonly found in brain tissue and throughout the central nervous system. In humans or animals with prion diseases, these proteins deform and aggregate, creating clumps of PrPs that interfere with the nervous system's ability to function normally. A team of NC State physicists, led by Miroslav Hodak and Jerry Bernholc, has found that when PrPs bind with copper in the human body, their structure becomes more stable and less likely to misfold or aggregate.

"We believe that a prion protein's normal function is to serve as a copper buffer in the human body, binding with copper ions and keeping those ions from damaging human tissue," Hodak says. "We wanted to determine whether this was the normal function of the prion, and then look at how that binding affected the prion's structure."

The researchers created a 3-D model of the PrP using supercomputers at Oak Ridge National Laboratories. With the model, they determined that PrPs can bind up to four copper ions apiece, depending on the concentration of copper present. They also found that when the PrPs bind to the copper ions, the structure of the protein changes, becoming more stable.

...

"Prion proteins are unusual in that half of the protein has a well-defined structure, but the other half of it - where the binding occurs - is a flexible, random tangle," Hodak says. "When we looked at the so-called 'random' portion of the PrP where that binding occurs, we found that the copper ions lend stability to the overall protein. This stability may play a role in preventing PrPs from misfolding or aggregating - which indicates that with prion diseases, copper binding may be beneficial.

Slowly but surely, scientists are chipping away at this mystery.

The Bursting of the Organic Milk Bubble

Organic farming used to be dominated by believers.  But as organic sales shot up, a number of conventional farmers got into the business, lured by the prospects of bigger profits.  Dairy farmer Ken Preston went organic in 2005.

Sure enough, his income soared 20 percent, and he could finally afford a Chevy Silverado pickup to help out. The dairy conglomerate that distributed his milk wanted everything Mr. Preston could supply. Supermarket orders were skyrocketing.

But soon the price of organic feed shot up. Then the recession hit, and families looking to save on groceries found organic milk easy to do without. Ultimately the conglomerate, with a glut of product, said it would not renew his contract next month, leaving him with nowhere to sell his milk, a victim of trends that are crippling many organic dairy farmers from coast to coast.

For those farmers, the promises of going organic—a steady paycheck and salvation for small family farms—have collapsed in the last six months. As the trend toward organic food consumption slows after years of explosive growth, no sector is in direr shape than the $1.3 billion organic milk industry. Farmers nationwide have been told to cut milk production by as much as 20 percent, and many are talking of shutting down.

The chart the New York Times included shows that consumption hasn't just slowed.

But with consumer confidence now on the rise, it will be interesting to see how that's reflected in the sales of organic products.

Hood and the two other big processors, Horizon Organic and Organic Valley, say cutting contracts, pay and production are necessary to absorb overproduction and offset softening demand. Organic Valley, a nationwide cooperative, told Maine organic dairy farmers last month that its sales growth had dropped to near zero from about 20 percent six months ago.

...

For many farmers, the changes coincide with crushing debt resulting from the cost of turning organic, which can run hundreds of thousands of dollars. In addition, the price of organic feed has doubled in the last year. Credit has dried up for some, and others say it is nearly impossible to sell cows and so thin their herds.

Cattle prices have been depressed ever since the U.S. fully reopened its borders to Canadian beef (previous blog here), despite the continuing occurrence of mad cow disease there.  The most recent case was earlier this month, again in Alberta.

Here's an example of some bubbly organic milk behavior.

“We’re in big trouble,” said Craig Russell, an organic dairy farmer in Brookfield, Vt., who owes $500,000, mostly from converting his farm to organic in 2006.

Mr. Russell quit a day job as an accountant to farm full time last year. “I made more money in six months than in five years of conventional farming,” he said, but his farm is now barely hanging on. The price he receives from the distributor dropped another $1 per hundredweight on May 1, just when he most needed money to prepare for the summer grazing season.

“It’s going to cost me more to make milk than sell milk,” he said.

Conventional dairy farmers are used to enduring volatility in milk prices...but not with organic milk.  It's becoming just another commodity.

CWD in Elk Tenderloins

There's another recall of elk meat because an animal was infected with chronic wasting disease (Hat tip, Cynthia).  Notice the convoluted route this meat took to market.

Exotic Meats USA of San Antonio, Texas, implemented the voluntary recall of Elk Tenderloin with production dates of December 29, 30, and 31, 2008.  The recalled Elk Tenderloin was purchased from the Sierra Meat Company in Reno, Nevada and the infected elk came from Elk Farm LLC in Pine Island, Minnesota and was among animals slaughtered and processed at Noah’s Ark Processors LLC, a U.S. Department of Agriculture (USDA) facility [in Dawson MN].

Once again, there's no evidence that CWD can infect people.  However, the CDC recommends that people not eat meat potentially contaminated with the disease, hunters take precautions when slaughtering animals in areas where CWD is present, etc. (previous blog here).  

The purchased Elk Tenderloin weighed 16.9 pounds and was sold from January 16 through January 27, 2009.  The recalled Elk Tenderloins were packaged in individual vacuum packs that weighed about three pounds each.  A total of six packs of the recalled Elk Tenderloins were sold to the public at the Exotic Meats USA retail store.

Considering how large an elk is, where did the rest of the meat go?  Googling didn't help me with that question, but I did find some additional info from late last month.

An elk on a farm north of Rochester -- the largest elk farm in the state with about 1,000 head -- has been found to have chronic wasting disease.

It's the first time the fatal brain disease -- known as CWD -- has been found in Minnesota since 2006 and the first time it has been found in southeastern Minnesota.

Minnesota is the leading elk farming state in the nation.  The two previous CWD cases on elk farms there resulted in the quarantine, then destruction of the entire herds.  State law requires testing of all farmed elk over 16 months old that die or are slaughtered...which is how this case in a seven-year-old female was discovered. 

CWD hasn't been found in the wild in Minnesota...yet (national CWD map here). 

Regaining Market Share

As concerns over the safety of American beef have subsided in South Korea (previous blog here), sales have risen.

Last year, anti-government protests in South Korea erupted after President Lee Myung Bak lifted a ban on imports of American beef. Demonstrators believed U.S. beef imports were tainted with mad cow disease. Consumption of U.S. beef subsequently declined during that period. But U.S. beef is now once again South Korea's top imported meat.

...

Ahead of the Lunar New Year holiday, many supermarkets throughout South Korea are selling special gift sets of American steak.

One reason why U.S. beef has regained popularity here is because of its price. For example, one kilogram of American tenderloin costs 70 percent less than its Korean equivalent.

That is what brought customer Jin Soon Seong to A-Meat to do his shopping.

Jin says American meat is cheaper than other types, and there Is no difference in the taste.

Unfortunately, the article didn't provide much in the way of metrics.  No doubt our beef sales there are still lower than they were before mad cow disease was found here.   

And what of Australia, which became the top supplier of beef to South Korea in the interim?  I had to switch articles to for that. 

Exporters face continued problems with credit and stocks and fear of even weaker demand for beef.

"These problems and the resultant absence of substantive buying from South Korea and Russia continue to delay the anticipated lift in sales and prices of Australian beef arising from the competitive Australian dollar," MLA said in its weekly market review.

South Korea and Russia were the third- and fourth-largest export markets for Australian beef in 2008, after Japan and the US.  Australia is the second largest beef exporter after Brazil, in an annual trade worth about A$4.5 billion a year.

...

As previously reported, beef exports to South Korea fell 32 per cent on month and 44 per cent on year in December to 9,412 metric tonnes. Total exports to South Korea fell 15 per cent in 2008 to 127,206 tonnes.

Many of our cattle producers have been losing money (previous blog here).  Meanwhile, our beef is gaining market share in South Korea because it's cheaper.  That's good for agribusiness and the jobs it provides...often to illegal immigrants.

An Elk Meat Recall

Unfortunately, the testing for chronic wasting disease (CWD) sometimes takes longer that it does for meat from slaughtered animals to reach consumers.  In Colorado this week, some elk meat had to be recalled.

State health officials issued a warning Wednesday after learning that unsuspecting consumers bought hundreds of pounds of elk meat this month from an animal infected with chronic wasting disease.

The elk was sold Dec. 13 at a farmer's market at the Boulder County Fairgrounds.

Although research has found no risk to humans who eat infected elk, officials at the state and Boulder County health departments recommended that the meat not be consumed.

Here's what the CDC says on the subject.

...to minimize the risk for exposure to the CWD agent, hunters should consult with their state wildlife agencies to identify areas where CWD occurs and continue to follow advice provided by public health and wildlife agencies. Hunters should avoid eating meat from deer and elk that look sick or test positive for CWD. They should wear gloves when field-dressing carcasses, bone-out the meat from the animal, and minimize handling of brain and spinal cord tissues. As a precaution, hunters should avoid eating deer and elk tissues known to harbor the CWD agent (e.g., brain, spinal cord, eyes, spleen, tonsils, lymph nodes) from areas where CWD has been identified.

More studies are needed.  Returning to the original article...

In all, 15 animals purchased at a commercial Colorado elk ranch were processed in early December at a USDA-licensed plant. All those animals were tested for the disease.

Pape said the infected elk came from a ranch in northern Colorado and was purchased by the High Wire Ranch in Hotchkiss, which had the animal slaughtered.

Results Tuesday showed that one of the fifteen elk tested positive for CWD.

Pape, who's with the Colorado Department of Public Health and Environment (CDPH&E), said the animals went straight from the unnamed ranch--which is now quarantined--to slaughter at Cedaredge Processing, a USDA-licensed plant.  The towns of Hotchkiss and Cedaredge are both in Delta County, which is in west-central Colorado.  Delta and Boulder Counties have been dealing with CWD in cervid populations for years. 

Brain Diseases and Our Sense of Smell

Scientists know that misfolded prion proteins can cause mad cow disease, chronic wasting disease, scrapie, etc. (previous blog here).  However, there's little understanding of what purposes prions may serve in our bodies.  Here's another intriguing clue. 

While his prion-protein free mice were still able to detect scents, they had lost some higher functions which required that smell information to be analysed and processed by the brain.

The scientists found changes in the communication between neurons in the nerve cells of the olfactory bulb, part of the forebrain which deals with odours.

When the protein was restored to this part of the brain, the ability to discriminate between odours came back.

The scientists said that while the discovery had no direct link to the diseases caused by faulty prion proteins, it might help account for some of the symptoms experienced by patients, which might be due to the failure of the proteins to do their normal job properly, rather than the damage caused by accumulation of defective prions.

This is not the first suggested role for the prion protein - in 2007, Leeds University scientist Professor Nigel Hooper said that it might help reduce the formation of "plaques" linked to the onset of Alzheimer's Disease.

Speaking of Alzheimer's and our sense of smell, from a study published last year...

Scientists have previously linked poor scent detection to a more rapid decline in thinking and memory in people who have mild cognitive impairment or Alzheimer’s disease. Problems with the sense of smell have also been linked to the presence of so-called tau tangles, a hallmark of Alzheimer’s, in parts of the brain linked to memory.

In the current study, researchers from Rush University Medical Center in Chicago studied 589 seniors (average age around 80) who were mentally intact. Over the next five years, they were given regular exams to measure memory and thinking skills. They were also given a smell identification test, in which 12 familiar odors, such as banana, chocolate, cinnamon, gasoline, smoke, and turpentine, were placed under their nose. They then had to match the scent with one of four possible choices.

During the study, almost a third of the participants (177 individuals) developed mild cognitive impairment. The researchers found that the worse a person did on the odor identification test, the more likely they were to develop mild cognitive impairment. Men and women who scored below average (eight or fewer correct responses out of 12) on the odor identification test were 50 percent more likely to develop the condition than those who scored above average (11 correct answers).

The link between a poor sense of smell and mental decline persisted even when investigators considered other conditions that could affect olfactory responses and cognition, including smoking or having a stroke. Poor odor identification was also associated with lower cognitive scores at the beginning of the study and with a more rapid decline in memory of past experiences, ability to recall words and symbols, and perceptual speed.

Scientists have been working on scratch-and-sniff tests for Alzheimer's.  Maybe someday there will also be ones for the various prion diseases in people.

Choice Restricts Free Trade?

Canada was nervous that if the U.S. increased its country-of-origin labeling (COOL), it could hurt the sales of Canadian beef and pork (previous blog here).  Supposedly their concerns weren't quality (despite continuing mad cow problems) or our tendency to buy American, but the increased costs our meat packers would incur in handling Canadian animals.  The new COOL regs went into effect on October 1...though actually the Final Rule hasn't been published yet.  

As this emotional article notes, Canadians are now convinced they were right to be concerned.        

“U.S. COOL will drive some Canadian producers out of business, reduce livestock herds and cost the pork industry millions” Pork Council President Jurgen Preugschas said. The challenge “is a clear signal that our government understands the adverse impact U.S. COOL already is having and the grave threat its continued application poses to our producers.”

The pork industry enjoys a solid world-wide reputation for superior quality and animal health status and Canadian producers are alarmed that the U.S. COOL requirements are destroying the U.S. export market for Canadian live swine, he said. Since the U.S. implemented the program on Sept. 30, it has created serious problems as American hog buyers have announced that they will curb, or in some cases, cease altogether the purchase of animals that are born outside of the United States.

The CCA said COOL “has significantly impeded Canada’s ability to market livestock in the U.S. This law requires beef, as well as pork and other meats sold in U.S. stores, to be labeled with the country where the animal was born. This requires U.S. ranchers and meat packing companies to handle Canadian cattle separately from U.S. cattle. To minimize their additional costs, many U.S. meat packing companies are now refusing to accept cattle from Canada. The few U.S. companies continuing to process Canadian cattle are discounting those cattle and some are also limiting their acceptance of Canadian cattle to certain days.”

The American action has reduced the price of all Canadian cattle by $90 a head and will result in an annual $400 million hit on the industry.

In a typical year, Canada exports approximately 1.2 to 1.5 million head of live cattle and 310,000 tonnes of beef to the US. Approximately one-third of the live cattle would be further raised in the U.S. and two-thirds are exported for immediate processing into beef.

Funny how there was no mention of the fact that the recent depreciation of the Canadian dollar made it less attractive to send cattle to the U.S. for feeding and slaughter.

Over the years, the USDA and its Canadian equivalent have worked together to harmonize regulations, focusing upon food quality and safety.  American consumers have long been conditioned that USDA labels indicate the quality of the meat.  And, most simply assumed that the USDA label indicated an American product.  Canadian beef producers benefited from that...though mad cow changed things for awhile.             

The new COOL regs apply to retail sales of both ground and muscle cuts of beef, pork, lamb, goat, and chicken, plus fish, shellfish, fresh and frozen fruits and vegetables, peanuts, pecans, macadamia nuts, and ginseng.  Food service establishments are exempted, as are processed products, like sausage, cured ham, and canned tuna.  The labeling is broken into four basic categories...note that the following was written with Canadian animals in mind. 

• Product of the United States — Exclusively from animals born, raised, and slaughtered in the U.S.

• Multiple Countries-of-Origin — Product of the U.S., Canada; allows flexibility for slaughter plant to have either animals born raised and slaughtered in the U.S. and/or animals born in Canada, raised in the U.S., and slaughtered in the U.S.

• Imported for Immediate Slaughter — Product of Canada, U.S.; product from animals imported from Canada for immediate slaughter in the U.S.

• Covered Commodity that is Foreign Country-of-Origin — Product of Canada; Muscle cuts of meat from animals slaughtered in a foreign country and imported to the U.S.

Some Americans may shun Canadian beef, and others may only purchase it if motivated by price.  Another concern is that the extra variety can present shelf-space issues in supermarkets.  At least Canada isn't as dependent on U.S. slaughterhouse capacity as it was before mad cow disease was discovered there.  Back to the original article.

COOL’s complex labelling rules that distinguish between domestic and foreign meat have sharply reduced the demand by American packers and feeders for Canadian cattle and hogs resulting in drastically lower prices for farmers and processors, farm groups say. Ritz said under NAFTA, Canada and the United States achieved a continent-wide livestock market but COOL is undoing that.

...

Day told the news conference: “While Canada is firmly committed to a co-operative trading relationship, we believe that the country-of-origin legislation is creating undue trade restrictions to the detriment of Canadian exporters. Under these circumstances, Canada has no choice but to assert its WTO rights in the defence of our exporters.

Canada chose to complain to the World Trade Organization (WTO) rather than NAFTA in hopes that several nations would join it.  So far, Mexico and Nicaragua have.  Switching links...

Mexico "considers that the measure generates discrimination against Mexican products, since the U.S. consumer will prefer products labeled as originating in the U.S.," the ministry added. Canada sought WTO consultations on the labeling rules early this month amid concerns about the impact on livestock and meat exports to the U.S.

According to Mexican Agriculture Ministry data, Mexico exported 360,000 head of cattle to the U.S. in the first 10 months of this year. In all of 2007, live cattle exports were just over 873,000 head.

Obviously this drop wasn't in anticipation of COOL.  The causes were low cattle numbers and good grass conditions in Mexico and a buyers' market here in the U.S.

So what do the WTO and NAFTA rules say about COOL?  From this link...

WTO rules require that imported products be provided national treatment (treated no less favorably than domestic products for offering for sale, purchase, transportation, distribution, or use) and that the labeling not result in serious damage to the product, a material reduction in value, or an unreasonable increase in cost. NAFTA allows COOL, but requires that any marking requirements be applied in a manner that would minimize difficulties, costs, and inconvenience. The WTO and NAFTA provide procedures for settling disputes between member countries over the consistency of a country’s laws, regulations, and practices with the agreement. COOL is also covered as a technical regulation under the WTO Agreement on Technical Barriers to Trade.

And how long will that battle take?

The WTO consultation is a first step that allows the parties to resolve trade disputes through formal discussions. The United States has ten days to reply, but the actual consultation will last for 30 days.  If at the end of 30 days the consultations have failed to resolve the issue, the matter can be referred to a WTO dispute settlement panel.

...which can drag on for many months and won't care what American consumers want.

Artificially Inflated Beef Prices

When the U.S. fully reopened its borders to Canadian beef late last year, American cattle producers suddenly lost a lot of pricing power.  But while the amount they received for their cattle plunged, the price we pay at supermarket sure didn't (previous blog here).  A year later, one would think that market forces would have corrected this condition.  Nope.  

...U.S. cattle feeders have lost $3 billion from the sales of fed cattle in just the past 11 months, and the U.S. Department of Agriculture estimates that feeders lost an astounding $23.82 per hundredweight (cwt) for fed cattle sold in October 2008 and $22.70 per hundredweight for fed cattle sold in November 2008. This represents losses on each animal sold at $298 and $284, respectively.

...

In a report issued by the CME Group Nov. 24, the multinational meatpackers' gross margins for 2008 far exceed their average gross margins earned during the years 2002 through 2006. USDA also reports that the spread between what U.S. cattle feeders received for their cattle and what U.S. consumers paid for beef was wider from August through October 2008 than at any time in our industry's history.

We're used to the prices of various commodities zipping upward but falling more slowly as retailers and wholesalers try to boost their profit margins.  But with the way that retail beef prices have remained so high, it sure smells of an anti-trust situation.  

One of the things that's made food inflation easier for many people to accept is the knowledge that for a number of years, many farmers and ranchers struggled to make a living.  The major meatpackers and supermarkets are happy to leave that impression in tact.        

Retail beef prices from August through October 2008 were higher than at any time in history—while cattle producers were losing their shirts.

The tremendous losses in our fed cattle market has impacted, and will continue to impact, the prices for lighter-weight cattle sold by cow/calf producers and others. Additionally, these losses will accelerate the continuing exodus of independent feeders from our industry.

During the 10-year period from 1997 to 2007, our industry suffered a loss of 19,000 feedlots. That means there already are 19,000 fewer buyers for lighter-weight cattle than there were just a decade ago. The current fiasco will certainly worsen this negative trend.

Some of that is simply the industry becoming more efficient.  But, it's also serving to consolidate power in the hands of a few large corporations...their control of the supply chain is increasing.   

The National Cattlemen's Beef Association, which receives millions from the mandatory beef checkoff program paid for by hard-working U.S. cattle producers, blocked every effort by independent cattle producers who tried to correct this problem in Congress last year before it could reach the disastrous proportions we're now experiencing.

NCBA made certain that corporate packers were able to keep the tools they use to manipulate the live cattle market. These anticompetitive tools are known as captive supplies and they include packer ownership of cattle and formula contracts that do not contain a negotiated price.

As I've noted before, the NCBA is in the pockets of agribusiness...as is the USDA.  That means we consumers sometimes get short shrift.  Considering that the reopening of our borders to Canadian cattle has increased our risk of mad cow disease, shouldn't we at least be paying less for our beef?  

Mad Cow and Rendering Costs

Rendering is one of the oldest forms of recycling.  But, certain of the body parts that are recycled can be dangerous.  Case in point is mad cow disease, which is why many nations have banned using certain cattle parts in cattle feed.  But as I noted earlier this week, several of Canada's cases of mad cow disease were likely caused by cross-contamination.

...while Canada banned using certain ground up cattle parts in cattle feed back in 1997, it didn't ban using those cattle parts in feeds for a number of other animals until 2007.  Authorities figure--but can't conclusively prove--that on a couple of occasions, manufacturers of multiple types of feed suffered some cross-contamination, possibly through not thoroughly cleaning their equipment between batches.  The U.S. remains vulnerable to this problem.

But that will change next year, which has some folks concerned.   

At issue is a Food and Drug Administration rule, set to take effect in April, that will prohibit the use of the brains and spinal cords of older cattle as ingredients in livestock feed and pet food.

Some of the rendering plants that grind up carcasses for use in feed have already announced they will stop accepting dead cattle from farms because it would be too costly to remove the banned organs. Other renderers are likely to raise the prices they charge farmers.

As a result, many farmers--especially now, with the economy in crisis--may simply bury dead cattle on their property or let them rot in the open, industry officials and regulators say.

The current economic woes aren't what's been squeezing ranchers.  Until recently, they'd been suffering much higher costs due to the spike in commodity and fuel prices.  Meanwhile when the U.S. fully reopened its borders to Canadian cattle, the extra supply of beef made it really difficult for ranchers to pass along those higher costs.  Anyway...

"I think there will be some illegal disposal - animals that get dragged into the woods or into the back fields," said Gerald F. Smith Jr., president of Winchester, Va.-based Valley Proteins Inc., which operates 12 rendering plants in seven states but will no longer remove dead cattle from farms come February. He said the fee per animal would have to go from $85 to $200 to cover the additional expense, and "I don't think the farmers would be willing to pay."

Farmers already routinely bury, abandon or compost millions of cattle carcasses each year without serious environmental problems, according to the FDA.

But the fear is that the new rule could lead farmers to put hundreds of thousands more dead animals into the ground, especially on dairy farms, which tend to have many more older cows than cattle ranches do, and are often closer to populated areas, too.

According to the FDA's own environmental assessment of the new rule, abandoning dead cattle or improperly burying or composting them can cause foul odors; pollute soil, groundwater and streams; and attract insects and scavengers. Moreover, the infectious agent that carries mad cow disease may survive burial or composting, the agency said.

There are always going to be a few farmers that are sloppy or who cut corners.  But the infectious agents that cause mad cow disease--prions--can also survive the rendering process.  Thus, there can be cross-contamination at a feed plant or for instance on a farm where cattle can gain access to contaminated chicken feed.  Or if a pig eats contaminated feed and is then itself rendered, the resulting feed could conceivably infect cattle.  It's all risk management.

Mad cow takes several years to develop.  This is why the new reg will primarily impact the dairy industry...beef cattle are usually slaughtered young.  With our nation's first case of mad cow occurring in 2003, we're just entering the window where we'll see if the prions spread before they were detected. 

For decades, farmers have sent their dead cows to rendering plants to be turned into pet food, soaps, cosmetics, toothpaste, lubricants and other products. The carcasses are ground to a uniform particle size, heated under pressure to separate fat, protein and bone, and then refined.

...

Nearly 2 million head of beef and dairy cattle annually, or more than 40 percent of all those that die before they can be sent to slaughter, are rendered in the U.S., according to government and industry estimates. The remaining carcasses are mostly buried.

Regulators estimate the new feed ban will reduce the number of cattle handled by rendering plants by 500,000 to 800,000 annually.

Some farmers will be hamstrung by state or local regulations that limit burial or composting, in which the carcass is left to decay in a pile of clippings and other organic material. Iowa, for instance, limits the number of cattle carcasses that can be buried to seven per acre. California prohibits composting of dead livestock.

Rendering plants in some areas--including in parts of Oregon--have been struggling to remain viable.  This new FDA rule won't help.  But, our recycling needs to be safer.