Commentary: American consumers stand by beef

By Stewart Truelsen

The headline in a metropolitan daily newspaper was reassuring: "Beef-It's Still What's for Dinner." Consumers are standing by beef despite the nation's first case of BSE, bovine spongiform encephalopathy. The plunge in cattle prices after the BSE announcement reflects more the loss of export business than it does any lack of consumer faith in beef.

Consumer confidence has been buoyed by the fact that this appears to be an isolated case, and one in which the animal predates the strict feeding rules implemented a number of years ago. Consumers also seem to be getting the information they need to make intelligent decisions.

The facts about the case are being carefully researched and presented by the U.S. Department of Agriculture in frequent briefings to assist the news media, and so far the media have applied some restraint. There have been fewer scare headlines than anticipated, and anti-meat and animal rights activists who would try to further their agendas on this news haven't found much of a platform.

Government, industry groups and news media have been working together to give consumers the facts and relevant scientific opinions. What consumers generally are reading are reports like this one from the Washington Post: "No one thinks the Holstein found infected on a Washington state farm poses a significant health risk. The chances are extremely low that meat from the animal carries the infectious misshapen protein that causes the disease (BSE)."

When an infected cow was found in Canada earlier in 2003, the price impact was even greater because Canada exports so much more of its beef than does the United States. But Canadians stood by their cattle industry. "Canadian consumers actually increased their per capita consumption of beef when they learned there was virtually no risk associated with eating the muscle cuts," says American Farm Bureau senior economist Terry Francl.

American consumers seem to be having a similar reaction. They are continuing to eat beef. An A.G. Edwards report suggests that if this holds true the loss in beef demand will be roughly 10 percent, primarily from the export market. The drop in prices would be 20 percent. This is considered a worst-case scenario by A.G. Edwards.

The report goes on to say that if U.S. retailers lower consumer prices in tandem with the anticipated drop in farm level prices, it could make a big difference. "If they do so quickly, the resulting consumer response might greatly mitigate the long-term price impact of this development."

This is not the way cattle producers wanted to start the year. They will have to deal with the shocks in the cattle market the best they can, and there will be a ripple effect in rural America and throughout the food and agriculture sector. The BSE case further points out the financial risks in producing the food we eat and the uncertainties of marketing it. One thing that will make it easier on producers is a continued display of consumer confidence in beef.