NATIONAL MEAT ASSOCIATION h 1970 Broadway, Suite 825, Oakland, CA 94612

(510) 763-1533 Fax (510) 763-6186 h Email Address: [email protected] h http://www.nmaonline.org

Edited by Jeremy Russell

December 18, 2000

THE POLITICS OF CENTER

The demands of extremists have in recent years driven a partisan wedge into the workings of our industry. Questions about how we reach the common goal of producing the safest possible meat products have spurred divisive debate, where they could have sewn unity. Unattainable wishful thinking has created extraordinary regulatory uncertainty, the consequence of which is consolidation. Many have chosen to close doors or sell out rather than risk the loss of a lifelong investment.

The sharply divided American vote in the recent election at the Presidential, Senate and House of Representatives levels is another reminder that our country is divided. However, the conclusion last week of the Presidential election, with incredibly powerful statements by both President-elect George W. Bush and Vice President Al Gore, brings a new dawn. Our industry needs to heed Mr. Gore message’s that “this is the time to recognize that that which unites us is greater than that which divides us" and design our strategy for this new millennium.

Our priorities are still the same, and we’ll be working to achieve them. Following Mr. Bush’s lead, let us seek strategic alliances with groups seeking the politics of the center to responsibly meet the challenge of manufacturing meat and meat food products that are wholesome and safe to eat in a market-based economy.

WORDS OF WISDOM AND UNITY

I know America wants reconciliation and unity. I know Americans want progress. And we must seize this moment and deliver. Together, guided by a spirit of common sense, common courtesy and common goals, we can unite and inspire the American citizens.

--George W. Bush

This has been an extraordinary election. But in one of God's unforeseen paths, this belatedly broken impasse can point us all to a new common ground, for its very closeness can serve to remind us that we are one people with a shared history and a shared destiny.

--Al Gore

NOTE ON THE STRATEGIC PLAN

NMA’s Strategic Planning Committee met ten days ago, and in prescient action of this new dawn, redefined our Long Range Plan. In their deliberations, they revisited NMA’s vision and restated it succinctly: To be the most effective meat association in serving its members.

THE HOLIDAY SEASON

As we contemplate the events of this signal year of 2000, from the millennium mania that ushered it in to the extended election season, we’re grateful that America is one nation, under God, indivisible with liberty and justice for all. The business of the United States will continue.

It’s been a tumultuous year for our industry, and through it National Meat Association has worked to unite with honor, honesty and integrity. There is never a day that passes when we are not called on for information or service or simply to discuss strategy. We were greatly touched this past week to receive from one of our thoughtful members the following note: Thinking of you this Christmas Season reminds me of I Chronicles 12:32 which speaks of the “Men of Issachar, who understood the times and knew what to do.” I am glad that you understand the times and know what to do. Thanks for all your work for our industry.

We take this opportunity to send the warmest good wishes to our many correspondents, near and far, as we celebrate the season of the year with our family and friends.

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NECESSARY PRECAUTIONS?

At a briefing in Washington, DC organized by International Consumers for Civil Society, experts warned that current efforts to incorporate the “precautionary principle” into international risk evaluation could end up hurting consumers, Consumer Alert reported. The precautionary principle is the notion that new technology should be proved 100% safe for use, despite potential benefits.

Julian Morris, from the Institute of Economic Affairs in London, argued that incorporation of the precautionary principle would mean a move away from “trial-and-error” to a concept of “no-trials” by rejecting new developments when possible risks cannot by excluded.

Barum Mitra, from the Liberty Institute in New Delhi, India, addressed how developing countries are affected by the precautionary principle. He noted that for poor countries, balancing the potential risk from new technologies, such as modern agricultural biotechnology, with the real risks of stagnation and poverty, is often a life-or-death situation.

Fred Smith of the Competitive Enterprise Institute noted that the problem is that while it is very important to keep track of and avoid Type I errors, that is when a dangerous product is introduced, there are also Type II errors: A product is rejected that turns out to be safe.

CORN CHAOS

The StarLink corn is coming back now and tests are being performed on corn for the Cry9C protein, which separates StarLink from other corns, at nearly every major food and agriculture company. The result has been a costly disruption to the nation’s grain-handling system. Scores of truck, railcars and river barges are being turned away daily by inspectors. The StarLink episode has already raised the decibel level of the biotech debates and it doesn’t appear to be quieting. The problem essentially is that grain-handling systems were not established to segregate. When they were designed it was just common sense, corn is corn. This is no longer the case in a world where the genetic structure can be subtly different.

TESTING FOR BSE

The Wall Street Journal ran a story today warning that tests for Bovine Spongiform Encephalopathy (BSE) may give a false sense of security with false negatives. This is because the disease is so difficult to detect. Visible symptoms may take as long as five years to materialize. Many tests look for brain lesions in a biopsy, which can only be done after the animal is dead. The most widely used test in Europe is made by Prionics of Switzerland and involves looking for the accumulation of prion proteins in a cow’s brain. In one British experiment, the tests detected stricken animals in only the final three to six months of incubation. “To think of these tests as a food safety measure is stretching the point,” commented Prof. John Wilesmith of the British government’s Veterinary Laboratory Agency, who was involved in the British experiment. However, a food safety measure is what the European beef industry needs now to reassure customers.

There is some good news, the first possible therapy for the human variant of BSE, so far incurable and terminal, is on the horizon. A small scale clinical trial in Germany has shown that an existing drug appears able to slow the rapid loss of mental function caused by the disease. If results remain consistent it would be the very fist positive development in research on this disease since prions (the infectious agent) were discovered a few years ago.

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TYSON TAKES UNUSUAL “NEXT STEP”

Calling its move the “next step,” Tyson Foods Inc. on December 12 said it has started a cash tender offer for a 50.1% stake of IBP Inc. “What Tyson is doing is a little odd,” noted Midwest Research analyst Christine McCranking. “But what it does is force the hand of Smithfield. The clock is ticking.” Smithfield, deriding the move as a “hostile” takeover attempt, has until Friday to respond. The tactic also triggers an antitrust review process by the Justice Department, which has 15 days to decide whether to challenge any combination of Tyson and IBP. The move comes a week after Tyson offered $2.8 billion in cash and stock to acquire IBP, the country's largest producer of beef and second largest producer of pork.

Steven Harkins, Tyson’s chief financial officer, said that members of the IBP special committee of independent directors were told ahead of time about Tyson’s plans and did not object. Smithfield, however, reaced with an angry statement that said in part, “Tyson’s tactic appears designed to short-cut the [IBP] special committee’s efforts to find additional value for IBP shareholders, and to coerce IBP shareholders into turning over corporate control to Tyson.”

AMERICAN FOODS GROUP STEPS IN TO HELP

Carl Kuehne, owner and CEO of American Foods Group, offered December 12 to pay all non-reimbursed medical costs for those who have had illnesses associated with the recent E. coli O157:H7 outbreak in the Midwest. “While the source of these illnesses is by no means clear,” said Kuehne in a news release, “I feel strongly that something should be done to relieve the financial burden for families affected by these illnesses.” He added that paying these medical expenses, even when there is no direct link to the company’s products, “is the right thing to do. Someone needs to help the people who have been hit with these serious illnesses.”

American Foods is establishing a hotline for those affected by this outbreak. The toll free number is 877-894-3927. A registered nurse will be available to gather information and answer questions. American Foods’ brand was one of those supplied to a retail chain store that re-ground and repackaged the meat at the store level. Only epidemiological evidence suggests American Foods is the source of the contamination. No product samples have been identified.

HACCP: THE NEXT STEP

At it’s “HACCP: The Next Step” meeting on December 12, FSIS made clear that HACCP was only the beginning, not the end of the transition process. In essence, FSIS intends to transition itself to a regulatory public health agency with the ultimate goal of reducing the risk of food borne illnesses related to meat and poultry to the maximum extent possible. This means improving the quality of both the establishments’ food safety systems and the agency's own role. In the broadest terms, the approach to achieving this goal has six elements. First, FSIS will continue to define minimum requirements for establishments and make the establishments accountable for meeting these requirements. Second, FSIS will stimulate improvements in production by adoption of new standards. Third, FSIS will continue to use and encourage establishments to use microbiological testing. Fourth, FSIS will attempt to foster scientific and technical innovations to reduce pathogens. Fifth, FSIS will encourage the principle of prevention. Sixth, FSIS will interpret its mission as broadly as possible to include activities in the farm-to-table continuum.

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WTO DECIDES AGAINST LAMB TARIFFS

The World Trade Organization (WTO) last week ordered the United States to remove the tariffs it had placed on lamb imports from Australia and New Zealand. The U.S. is expected to appeal the ruling. President Clinton set the tariffs for three-years, beginning last year, in response to U.S. farmers' claims that Australian and New Zealand lamb producers were dumping meat on the U.S. market. The soonest they could be forced removed if the U.S. appeals is by the end of 2001.

CASE READY TECH

The American Meat Science Association (AMSA), in conjunction with NMA, will host its 4^th Annual Western Science Conference in Las Vegas, NV at the Rio Suite and Casino Resort on February 21-22, 2001. The theme of the conference will be “Case Ready Tech: Technologies for Improving the Quality and Safety of Case Ready Products.” Speakers include Dan Segal of Curwood Inc. on packaging technologies, Tom Rourke of Emmpak on clean rooms and sanitation, Dr. Roger Mandigo from the University of Nebraska-Lincoln on ingredient opportunities, Dr. Gary Acuff from Texas A&M University on sampling for pathogens, Dr. Daniel Engeljohn of FSIS on performance standards, and Dr. Dennis Olson of Sure Beam on Irradiation. This event is a separate admission from the MEATXPO, but an exhibit floor entry for Wednesday (2/21/01) is included in the price: $275 for industry personnel and $95 for government/academic representatives.

USDA LAMB PURCHASES

USDA announced it will be inviting offers to sell USDA frozen lamb products. Last week it published a descriptio of the requirements under the program. Contact Nancy Hubbell, Agricultural Marketing Specialist, at (202) 720-2650 for the requirements.

NATIONAL MEAT ASSOCIATION

NMA - East: 1400 - 16th St. N.W., Suite 400, Washington D.C. 20036 Ph. (202) 667-2108

NMA - West: 1970 Broadway, Suite 825, Oakland, CA 94612 Ph. (510) 763-1533 Fax (510) 763-6186

Edited by Jeremy Russell

December 18, 2000

USDA FILES REPLY IN TEXAS LITIGATION

USDA filed a further attempt last week to have the decision in the Texas Litigation, which was very much in opposition to the Salmonella Standard, be declared moot. In its brief, USDA argues that the decision is not only limited to Supreme Beef, but to the very plant. The fact is, of course, any plant, Supreme Beef’s or anyone, could fail the Salmonella Standard and be declared unsanitary, despite the fact that FSIS Administrator Tom Billy admitted under oath that the Salmonella Standard does not reflect a plant’s sanitation. Part of the Agency’s current argument is “if Supreme is again subject to the identical regulatory action in the future, it will have available to it at that time the opportunity to challenge that action in court based on the record developed in that enforcement proceeding.” Which is to say, USDA is prepared to start the whole sordid process over again in order to keep its flawed Salmonella Standard, it’s what they call a “capable of repetition” analysis. Not surprisingly, the brief did not directly confront Supreme’s claim that the Agency was responsible for the company’s bankruptcy.

The amicus filing of the five associations, including NMA, argues vigorously against declaring the lower Court decision moot and suggests that if Supreme is not able to go forward with the appeal for either technical or financial reasons, that one or more of the associations be granted intervener status to carry the appeal forward.

INDUSTRY MARKET PRICE REPORTING MEETING THIS WEEK

NMA and AMI are co-sponsoring this afternoon a meeting in Washington, DC to prepare for tomorrow’s USDA/Agricultural Marketing Service (AMS) meeting to “assist producers and other market participants in understanding how the new mandatory livestock price reporting program will affect them.” This is the final rule that emerged from the legislation instigated and driven by producer groups in 1999 that mandated packers and processors, other than very small firms, to report their purchases of livestock and their sales of boxed product.

NMA Executive Director Rosemary Mucklow will participate in these meetings. A full report will be available for those who are unable to attend immediately before the seasonal holidays – one of the most demanding weeks in the meat industry. Market News did provide a packet of material to those firms that it foresees as being required to report. The packet includes the Meat Packing Industry User’s Guide from PEC Solutions, Inc., the computer technology firm that is working with USDA to set up the technology to run the program. Members who would like to review this material should call Market News at 202-720-6231.

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U.S. WINS WTO BEEF CASE AGAINST SOUTH KOREA

U.S. cattle producers won a case at the World Trade Organization (WTO) that may lead to increased beef sales to South Korea. “The ruling assures unfettered access to one of Asia's fastest growing beef markets,” U.S. Secretary of Agriculture Dan Glickman said in a statement. The decision against South Korea's marketing restrictions on imported beef comes just as the country's quota of beef imports expires on December 31, Bridge News reported on December 12. At issue was a South Korean rule that required that imported beef be sold in separate stores. That excluded it from about 90% of the country's beef outlets, the U.S. Trade Representative's Office said.

DISEASE STATUS CHANGE OF URUGUAY

USDA’s Animal and Plant Health Inspection Service (APHIS) is amending the regulations governing the importation of certain animals, meat, and other animal products by removing Artigas, a department in Uruguay, from the list of regions considered to be free of rinderpest and foot-and-mouth disease. It is taking this action because the existence of foot-and-mouth disease has been confirmed there. The result of this action, published in the Federal Register on December 13, is to prohibit or restrict the importation of any ruminant or swine and any fresh (chilled or frozen) meat and other products of ruminants or swine into the United States from Artigas.

RTE POULTRY RECALL

Cargill Turkey Products is voluntarily recalling approximately 16.7 million pounds of Ready-to-Eat (RTE) turkey and chicken products that may be contaminated with Listeria monocytogenes. This is the second recall to be initiated because of epidemiological evidence rather than hard scientific proof in the form of sampling positives. According the USDA press release, “The problem was discovered through illnesses identified by state health departments and reported to the Centers for Disease Control and Prevention. FSIS and the CDC are currently studying these illnesses. While the study is ongoing, Cargill is recalling the products based on a preliminary analysis of epidemiological data.”

INS CORRUPTION

According to a report in the San Francisco Chronicle, the Immigration and Naturalization Service (INS) is one of the federal government’s most corrupt law-enforcement agencies. In the past three years, the Department of Justice’s inspector general has investigated more than twice as many INS employees as it has those of the comparably sized Bureau of Prisons. Last year the inspector general and INS launched a record 4,551 internal investigations, one per seven workers. Since 1998, as least 294 INS employees have been arrested and charged with crimes ranging from immigrant-smuggling to sexual assault, bribery, extortion and drug trafficking. About 25% of the cases ended in guilty pleas or convictions. “When I first became inspector general, I was astounded at the percentage of the criminal investigations caseload comprised of INS matters,” commented former inspector general General Michael Bromwich.

AOAC APPROVED TEST KITS

AOAC has two types of approvals for test kits: Performance Tested Methods and Official Methods. More information on the Performance Tested Methods (PTM) is available at www.aoac.org/testkits/testkits.html. A list of current AOAC Research Institute approved PTMs is available at www.aoac.org/testkits/testedmethods.html (or send a self-addressed, stamped (33¢) envelope to Jeremy Russell at NMA-West for a copy).