Tyson, McDonald's Shares Fall on U.S. Mad-Cow Concern
DANIEL GOLDSTEIN & JEFF WILSON / Bloomberg 13jun2005
[More below]
Shares of Tyson Foods Inc., the world's largest beef packer, and McDonald's
Corp., the biggest restaurant chain, fell on concern a second possible case of
mad cow disease in the U.S. might slow beef and hamburger sales.
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Mindfully.org
note:
ATTENTION SHOPPERS
This seal is absolutely no assurance
of safety.
The industry sees Mad-Cow as a cost of doing business and will continue to
utilize the same farming and production methods as long as they are able
to — generally that means as long as they can control the USDA, Congress
and administration.
Considering that corporations are in effect our present government, it'll
be a very long time before problems are addressed. But for now we'll get a
lot of lip-service and possible attention to symptoms. The present system
is not working. Fixing it increasingly appears to be an unrealistic
option.
Purchasing food from corporations like these is at best an unhealthy
choice. They are completely out of control and see profit as the only
reason to exist.
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Shares of Tyson, based in Springdale, Arkansas, fell 15 cents to $18.22 at
9:56 a.m. in New York Stock Exchange composite trading. Before today, they had
dropped 9 percent the past year. Oak Brook, Illinois-based McDonald's fell 39
cents to $29.14. The stock had climbed 9.2 percent in the past 12 months.
Tyson and other meatpackers have reduced operations in recent months, citing
the continued closure of export markets in Japan and other nations because of
mad cow disease, and a shortage of slaughter-ready animals. McDonald's stock
tumbled 5.2 percent on Dec. 24, 2003, the day after the U.S. announced its first
case of mad cow.
"If a second case is confirmed we believe progress in re-opening trade with
Japan could be delayed," wrote Bank of America analyst Todd Duvick in a report
to investors. The new case "could remove some of the upside potential that we
had incorporated into our outlook in the short term related to the potential
reopening of the Japanese and Korean markets to U.S. beef."
The U.S. Department of Agriculture on June 10 said a sample from the suspect
animal had provided contradictory results in tests for mad cow disease and more
tests were being conducted, including tests at a laboratory in Weybridge,
England. Results are expected this week.
Mad cow disease, or bovine spongiform encephalopathy, is a brain-wasting
cattle illness that scientists say is caused by tainted animal feed. It's been
linked with variant Creutzfeldt-Jakob disease, blamed for the deaths of 150
people in the U.K., where BSE was first reported in the 1980s.
"If it does turn out positive, some of the fast-food restaurants will trade
down," said Ephraim Bernstein, food analyst with Highline Capital Management in
New York, which manages $680 million. Tyson Foods "2005 earnings guidance
already factors in no border or overseas market openings, so there's no risk to
guidance," he said.
Japan, South Korea
A new case of mad cow disease might hinder moves by the U.S. to resume beef
trade with countries including Japan and South Korea, which completed a third
round of talks with the U.S. last week.
"We already have an import ban, so we don't need to take any new measures,"
Kim Chang Seob, chief veterinary officer with South Korea's agriculture
ministry, told reporters today in Gwacheon. "We will decide on our stance after
the results of the test come out and after we receive more information from the
U.S."
The U.S. has tried to persuade Japan, the biggest U.S. beef buyer, and other
countries to lift 18-month bans on U.S. beef. Japan bought $1.7 billion in U.S.
beef in 2003.
Cattle futures for August deliver fell 1.475 cents, or 1.8 percent, to 80.65
cents a pound at 9:11 a.m. today on the Chicago Mercantile Exchange. Futures
tumbled 3.3 percent on Nov. 18 after the U.S. Department of Agriculture said a
preliminary test showed a case of mad cow. Conclusive tests later found no
evidence of the disease in the tissue sample.
`On the Defensive'
"Until more is known about the testing and the final results, traders and
hedgers will be on the defensive," said Brian Hoops president of the Midwest
Market Solutions Inc. in Yankton, South Dakota.
The meat from the suspect animal didn't enter the U.S. food or feed chain,
the U.S. Department of Agriculture said on June 10. More tests also are being
held at the National Veterinary Science Laboratory in Iowa.
`No Risk'
"There is no risk to human health," Agriculture Secretary Mike Johanns told
reporters in Washington. "I feel very strongly that this information should not
impact our discussions with Japan, Korea or Canada."
The U.S. halted imports of cattle from Canada after that country reported its
first case of mad cow in May 2003. A government plan to resume importing
Canadian cattle in March was blocked by a rancher group that obtained an
injunction from a federal judge. The group argued Canadian cattle pose a threat
to U.S. consumers and livestock. A hearing on the case is set for July 27.
Canada had been providing about 5 percent of the 35 million cattle
slaughtered annually in the U.S. The Washington state dairy cow with BSE was
imported from Canada.
South Korean food retailers including Lotte Mart said earlier this month the
government should lift a ban on U.S. beef that has driven up prices and led to
an 18 percent drop in consumption of the meat since the end of 2003.
The U.S.'s chief veterinarian, Dr. John Clifford, called the result a "weak
positive," considering that the earlier negative finding came from the
department's most reliable procedure. That included the so-called
immunohistochemistry test and an earlier screening known as ELISA, a test
produced by Hercules, California- based Bio-Rad Laboratories Inc.
Johanns called the suspect animal "aged" and didn't release any other
information.
Mad-Cow Test On U.S. Animal Sparks
Concerns
SCOTT KILMAN / Wall Street Journal
13jun2005
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Countries reporting
cases of BSE in red
Tallying
Mad-Cow Disease
MAD-COW DISEASE, or bovine spongiform encephalopathy, was first confirmed
in cattle in the mid-1980s in the U.K. A decade later, scientists
discovered a new strain of the human form of the disease, called variant
Creutzfeldt-Jakob disease. BSE is always fatal in cattle and vCJD is
always fatal in people.
Country vCJD BSE
U.K. 155 182,807
U.S. 1 1
Canada 1 4
Japan 1 19
Netherlands 1 77
France 11 960
Ireland 1 1,510
Italy 1 150
Countries with mad-cow disease
but no recorded cases of vCJD:
Belgium - 129
Czech Republic - 17
Denmark - 14
Finland - 1
Germany - 369
Greece - 1
Israel - 1
Liechtenstein - 2
Luxembourg - 2
Oman - 2
Poland - 22
Portugal - 954
Slovakia - 19
Spain - 538
Switzerland - 457
Slovenia - 5
Source: WSJ.com
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The second American cow to test positive for mad-cow disease is sparking new
questions about the safety of U.S. beef and how the Agriculture Department looks
for cases.
While the discovery probably won't spook most consumers — partly because of
government assurances that the prevalence of mad-cow disease in the U.S. is very
low — cattle prices are widely expected to sink today on speculation that the
development will further discourage Japan and other countries from reopening
their borders to American beef.
Agriculture Secretary Mike Johanns said Friday that a brain sample from a
crippled beef cow the department had declared free of the fatal brain-wasting
disease in November had just generated a "weak positive" in a
more-sensitive test.
Mr. Johanns said none of the cow's meat entered the food supply, thanks
largely to new rules created after the first U.S. mad-cow case was discovered in
December 2003 in an imported Canadian dairy cow living on a Washington state
farm. The latest cow was old when it was slaughtered and couldn't walk,
automatically disqualifying it from human consumption. After a brain sample was
collected, the carcass was burned.
Because the tests conducted on the November 2004 cow conflict, the Bush
administration hasn't declared whether the animal was infected, and probably
won't for at least a week. The USDA is conducting more tests at its laboratories
in Ames, Iowa, and will send brain tissue to the world's premier mad-cow testing
laboratory in Weybridge, England.
If the latest discovery withstands further scrutiny, it could establish for
the first time that the disease is in the native-born U.S. cattle population.
After the first infected cow was discovered 17 months ago, the Bush
administration limited damage to the $45 billion ranching sector by proving that
the animal had lived its first 4½ years in Canada, and most likely caught the
slowly-incubating disease there.
While the USDA has disclosed few details about the suspect beef cow, federal
authorities said they have no evidence yet that the animal was imported.
According to people familiar with the matter, the cow was several years old and
found in Texas.
Regulators are now trying to find other cattle that grew up with the cow and
shared its rations, but that task could be complicated by the seven-month delay
since the cow first came to the government's attention in November. Cattle
typically catch the fatal brain-wasting disease by eating feed contaminated with
the remains of infected cattle.
Mad-cow disease, which is technically known as bovine spongiform
encephalopathy, can cause a rare but fatal brain disorder in people who eat
products from infected cattle. The disease has erupted in the indigenous cattle
populations of more than 20 nations, including Canada and Japan.
The testing flip-flop is an embarrassment for USDA officials, who have
resisted calls by consumer groups to employ the more-sensitive test — called
the "Western blot" — as European and Japanese regulators do when
cattle-brain samples trigger conflicting results on less-sensitive tests. The
Western blot was used in this recent case only at the prodding of investigators
in the USDA inspector general's office. The inspector general has been skeptical
about the ability of the government's expanded mad-cow surveillance program to
determine the prevalence of the disease in U.S. cattle.
"We think the USDA is not doing enough," said Michael Hansen, a
senior research associate at advocacy group Consumers Union, who said he pressed
last week during a meeting of the National Academies' Institute of Medicine for
the USDA to screen a sample of the November cow with the Western blot. Bill
Bullard, chief executive of R-Calf USA, a ranchers group, called for
congressional hearings into the USDA's mad-cow surveillance program.
John Clifford, the USDA's chief veterinary officer, said the department is
evaluating whether to use the Western blot test more frequently. "This is a
very unusual case," Dr. Clifford said. "We are still very confident in
our program."
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