Meat & Poultry -- January 2014 - 32

BSE - THE COST

Months later (April 18, 2008),

and forced them to make many mil-

However, the US Meat Export

Korea agreed to resume imports, in-

lions of dollars in new capital expen-

Federation had forecast that exports

cluding bone-in beef. But its decision

ditures. A new BSE-related rule also

values would keep increasing after

caused such a wave of anti-US beef

resulted in revenue losses after prod-

2003. With this in mind and the fact

protests in Korea that the government

ucts were banned from the food sup-

that the industry is still losing export

delayed resumption and sought to re-

ply. The loss of most export markets

values because of continued restrict-

vise the April agreement. Korea and

also briefly forced domestic beef and

ed access, USMEF says lost export

the US fi nally reached a new agree-

live cattle prices lower.

sales are estimated to have cost the US

ment June 21 and Korea on July 10

Export bans were, by far, the larg-

finally began to accept US beef again.

est cost to the industry incurred. Pre-

beef industry $16 billion from 2004
through 2012.

supposing that export values had re-

Total US beef industry losses aris-

Price tag

mained at 2003's $3.856 billion level

ing from the loss of beef and offal ex-

The first BSE cow stole far more than

in succeeding years, the industry lost

ports during 2004 alone ranged from

Christmas 2003. It cost the US beef

$8.829 billion from 2004 to 2008 in-

$3.2 billion to $4.7 billion. That's ac-

industry billions of dollars in lost ex-

clusive. Values in 2009 were down $774

cording to a study by Kansas State

ports of beef cuts and variety meats.

million on 2003, but this was largely

Univ. published in April 2005. The

It also added tens of millions of dol-

due to the global recession. Values fi-

study's analysis included the increase

lars of new operating costs to beef

nally exceeded the 2003 total in 2010

in beef available on the domestic mar-

processors that continue to this day

and reached $5.511 billion last year.

ket, which it says depressed domestic
prices below levels they would have
attained if exports were possible.
Live cattle prices fell by about
16 percent in the week after the announcement, noted the study. However, prices recovered in early 2004
as it became clear that US consumer demand had been impacted only
minimally, if at all. In fact, market
data on beef disappearance and retail
prices suggest that consumer demand
for beef actually strengthened in the
fi rst half of 2004, the study revealed.
Packers incurred additional costs
in numerous ways, according to the
KSU study. New regulations introduced in 2004 led to changes in cattle
procurement, employment, employee
training requirements, food-safety
plans, capital investments and marketing opportunities for the beef industry. Firms it surveyed on average incurred additional labor costs of $0.45
per head of daily slaughter capacity.
Given that industry-wide capacity in
2004 was 145,000 head (as calculated
by the author) and using 280 days of

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