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

March 19, 2001

THE CONSEQUENCES OF A GLOBAL CRISIS

There has never been a case of Bovine Spongiform Encephalopathy (BSE) in the United States, and, as you’ll read on page 3, there has been no Foot-and-Mouth Disease in the U.S. since 1929. What we haven’t been so successful at keeping at bay are the consequences of these two spreading illnesses. Bans on products are just the most obvious, there are also a host of other ways that problems like this take on global implications that filter down to every level of the marketplace. Even in industries beyond ours, fluctuations follow like the ripples in a pond struck by a stone.

“I read a small article on mad cow and I was double-checking to see if there were animal products in cleansers that I use,” one consumer said in a report in the Chicago Tribune. The report noted that animal activists and vegetarians are seeing a rare opportunity to win over the minds and mouths of America. According to the Vegetarian Resource Group, the number of Americans who call themselves vegetarians is up 1.5% from last year. Many consumers are turning to sources like Vegsource.com for information about BSE.

Companies in the meat replacement business see all of this as an opportunity. A study by the company that makes Gardenburgers found that 6 out of 10 Americans are concerned that BSE will affect U.S. cattle. Food Ingredient Solutions put out a press release about its “BSE-Free Beef Extract Replacer.” The release noted that its product was also FMD-free, as well.

A report in the Wall Street Journal noted that FMD could help U.S. pork export prospects. About 32% to 33% of the pork Japan imports comes from Denmark, while 29% comes from the U.S. If FMD shows up in Denmark, as is likely because of its proximity to France, pork exports would likely be banned paving the way for more U.S. sales. Of course, the last time FMD made headlines, in Taiwan in 1997, Japanese consumers merely tightened their belts rather than buy more from the U.S. and they’ve got the cold storage supplies to do the same here. A subsequent report in today’s WSJ noted that U.S. suppliers are already scrambling to fulfill domestic demand for baby back ribs, half of which were previously supplied by Demark.

But the biggest consequences of these global crises has been the move by McDonald’s to require its beef suppliers to certify their materials free from meat and bonemeal from mammalians. The fast-food company has given meatpackers until April 1 to document compliance with the new requirements. Naturally the action has had a ripple effect through the beef industry. Packers who supply McDonald’s, including IBP, have already ordered their cattle suppliers to document their compliance with the FDA feed rules.

In Europe, one desperate butcher found an interesting solution to his dilemma (as reported in the Wall Street Journal on March 12). No one would buy his meat because of the scare, so he put an ad in the paper offering it for free. He gave away 440 pounds in a day, 60 times what he used to sell. People were invading his small shop, he said, calling at seven in the morning, and now his sales are back to nearly what they were pre-panic. His once-again-paying customers tell him, sheepishly, that they may have “overreacted” to the scares.

Page 2

“CASE-READY TECH” ONLINE!

The American Meat Science Association has made the 2001 Western Science Meat Conference, “Case-Ready Tech,” available at its website. To find the Conference online, just go to NMAonline.org and visit either the Association Links page or the Files page and then click through to AMSA’s website. Or you can go to AMSA direct at http://www.meatscience.org/. Once there click on "Conferences" then on "Western Science Conference." Please note, the audio portion of the proceedings has been put on hold until bugs are worked out in AMSA’s server system.

SOME CONVENTION TAPES UNAVAILABLE

Due to problems with the audio-visual equipment at the Rio, several of the tapes from NMA’s 55^th Annual Convention, announced last week, are are not available. If you are interested in obtaining roundtable recordings ($25 each), the following list of topics did record: NMA: The Roadmap Ahead for Members, Importers Meet with U.S. Processors, Making Ergonomics Standards Work, Case-Ready with Partnerships, Managing & Responding to Crises, Value Based Carcass Assessment. Simply contact Communications Manager Jeremy Russell at [email protected] or Administrative Assistant Ira Perez at (510) 763-1533 to place an order.

NMA CONVENTION EVALUATIONS

NMA’s Roundtables received high marks from participants in all areas – Topic Coverage, Speaker Presentations and Round Table Format. The evaluations were collected from the audience at the end of each session. They reveal that very few attendees feel that the format needs to be improved and most think it is excellent. All the topics received equally high marks and the speakers were lauded in comments.

Some of the comments about the roundtables included “This may be one of the best I have ever attended! Whoever put this panel together should be commended!” and “Excellent panel of speakers! Very informative.” There were also lots of excellent suggestions, such as “I’d hold [Achieving Optimum Process Control] again but present greater detail on how to set up a control process, parameters and data analysis,” these comments are being reviewed and will inform future topics. Thanks to everyone who filled out an evaluation, we appreciate your comments. And thanks also to the student volunteers who distributed and collected the evaluation forms and helped make the MEATXPO successful in many other ways.

Page 3

FOOT IN MOUTH DISEASE

The European Union was caught with its foot in its mouth, and not for the first time, when it accused trading partners of overreacting to the spread of Foot-and-Mouth Disease (FMD) last week. FMD has not only appeared in France and Argentina, but two Middle Eastern countries as well, Saudi Arabia and the United Arab Emirates. Nevertheless, the decision by the U.S. and several other countries to ban live animals and animal products from the EU caused European officials to call such measures “excessive and unnecessary.” Similar language was no doubt used to describe the measures they didn’t take to eradicate Bovine Spongiform Encephalopathy (BSE), which has moved across much of Europe in the last year. The U.N. Food and Agriculture Organization had quite another take on the disease, stating, “The rapid spread of a pandemic strain of foot-and-mouth disease clearly demonstrates the ability of the FMD virus to infiltrate a wide geographic area and to cause epidemics in countries which have been free from the disease for many years.”

Meanwhile, passengers flying in from Britain are being stopped at airports across the states and, if they’ve visited any rural areas, having their shoes washed by USDA officers while members of the USDA’s elite task force, the Beagle Brigade, sniff their luggage for contraband. A team of experts has been sent to observe Europe’s control efforts and a list of banned products has been release by the USDA. The items included cloven-hoofed animals and the uncooked meat, organs and embryos of such animals. Other foods such as cheese and cured meat will be evaluated on a case-by-case basis. Nonfood items such as untanned hides and skins, glue stock, raw wool and animal semen have also been banned. For more information on the ban contact Dr. Gary Colgrove, APHIS, at (301) 734-4356.

NMA sent out an Alert by the California Department of Food and Agriculture last week to inform its members of the precautions they can take to keep FMD out of the U.S. (Contact NMA for a copy of the Alert). Some of the suggestions include, making clean protective clothing and footwear available to foreign visitors and discouraging close contact or animal handling by them. All items that have traveled in FMD-affected countries should be carefully washed. There has not been an outbreak of FMD in the U.S. since 1929.

Page 4

MCDONALDS CUTS EARNINGS OUTLOOK

Citing problems in Europe, McDonald’s Corp. warned March 14 that 2001 per-share earnings in constant currencies could be 4-5 cents lower than prior forecasts. The Company expects first quarter per-share earnings to be 29-30 cents on a reported basis, and 30-31 cents in constant currencies. “We anticipated difficult worldwide comparisons in the first quarter due to strong marketing programs last year and the extra day in 2000 due to leap year,” chairman and chief executive Jack Greenberg. He added that “the effect of consumer concerns regarding the European beef supply has persisted longer than we expected, despite the fact that McDonald's overall safety and quality standards lead the industry and provide the benchmark for safe food around the world.” McDonald’s plans to reduce expenses world-wide, introduce more non-beef products overseas, including pork patties in Europe, and cut the number of stores it plans to open in emerging markets by about 100.

IBP EARNINGS OUTLOOK LOW

One day after IBP restated its earnings for the first three quarters of 2000, a move which some say may finally clear the way for the Tyson merger, IBP said on March 14 that its 2001 first-quarter and full-year earnings would come in significantly below expectations. The company expects first-quarter earnings to be close to 12 cents per share. IBP has yet to report fourth quarter 2000 results. Tyson is expected to continue with its cash offer for the Dakota Dunes-based company. Pursuing a cash merger will delay the deal, because Tyson will have to file a prospectus with the SEC that will include IBP’s restated financial results. The deal will now also need special votes by Tyson and IBP shareholders, Reuters reported.

FMD SPREADS

As of today, the British Ministry of Agriculture, Fisheries and Food (MAFF) has reported a total of 322 confirmed cases of foot-and-mouth (FMD) in Great Britain and one confirmed case in Northern Ireland. NMA has placed comprehensive FMD links on its website NMAonline.org. The following link will guide you to APHIS' complete fact sheet and other FMD information online: http://www.aphis.usda.gov/.

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

March 19, 2001

CONSUMER GROUPS FILE BRIEF IN TEXAS LITIGATION

In their brief filed last week, the amici for USDA zeroed in on the most crucial questions posed by the Texas Litigation: “Does a ground-beef processing plant operate under insanitary conditions if it (1) lacks adequate controls to prevent contaminated meat from entering its facility, and (2) fails to sanitize adequately the plant surfaces that contribute to the spread of contamination.” However, rather than focus on the practical and possible means by which food safety can and should be guaranteed, the group’s arguments seek to expand the legal definition of ‘insanitary conditions’ to include “deficiencies in a facility’s own processes and equipment relating to receipt and inspection of incoming materials.” The logic of this argument makes the recipient responsible for product over which he has had no control. Also, the argument overlooks the fact that the meat met inspection requirements at the earlier inspected facility. Despite the fact that, even with heavy testing, science acknowledges no way to guarantee raw product free from pathogenic microorganisms, the brief argues that grinders can magically screen contamination.

The argument goes further to posit that the mere presence of Salmonella, with a relatively high frequency and despite whatever other controls and practices the plant may have, makes a plant unsanitary. Here they are essentially repeating exactly what the Judge in the lower court said decided him against the USDA. It is what FSIS Administrator Tom Billy admitted on the stand: A plant could be the most sanitary plant in the world, and it could still be closed by the Salmonella Standard. Even in their brief, the consumer groups can’t escape the fact of this double standard, admitting “USDA’s interpretation may not be the only permissible reading” of the statute.

The remainder of the argument is a simple touting of Salmonella testing. It would do the consumer groups good to read more about the use of microbiological testing in systems for assuring the safety of beef in the new report released by the International Journal of Food Microbiology. For a complete copy of “The Role of Microbiological Testing Systems for Assuring the Safety of Beef,” send a self-addressed, stamped (34¢) envelope to Jeremy Russell at NMA-West.

A report in yesterday’s New York Times, noted that “some health officials, consumer advocates and epidemiologists doubt that without more of a presence the FDA [and by proxy USDA] can catch contaminated food at the source and prevent it from getting into the food supply.” And, as has often been pointed out, it is impossible to test every square inch of meat for microbiological contamination and so it is also impossible to be fully assured that the meat is free from such contamination. These are naturally occurring organisms; there is no ‘zero’ in zero tolerance. Which is why HACCP is a system to prevent contamination not to sterilize product.

CRISIS MANAGEMENT

Recalls, outbreaks, lawsuits, oh my! NMA has made available a crisis management book for all general members. This invaluable resource includes information on making and managing a crisis management team. If you haven’t picked up your copy, contact Regulatory Assistant Justin Mariani today at (510) 763-1533.

Page 2

NEW UNDER SECRETARY FOR FOOD SAFETY CONSIDERED

Word inside the beltway is that a contender for the position of Under Secretary for Food Safety, the position held in the last administration by Catherine Woteki, has emerged. Dr. Lee Myers told her colleagues, supporters and friends last week that she had positive interviews with both Secretary of Agriculture Ann Veneman and the White House Staff. Dr. Myers currently serves as the state Veterinarian and Assistant Commissioner of Animal Industry for the Georgia Department of Agriculture. She manages approximately two hundred employees in programs encompassing livestock, poultry, and companion animal disease, meat inspection, and humane care. She is also the current president of the American Association of Food Hygiene Veterinarians. She is a veterinarian and has a Masters in Public Health.

OIG TESTIMONY TO HOUSE APPROPRIATIONS

The USDA Office of Inspector General (OIG) testified March 14 before the House Appropriations Subcommittee on Agricultural, Rural Development, Food and Drug Administration and Related Agencies. In testimony, Inspector General Roger Viadero reported that OIG investigations resulted in $175.9 million in fines, restitutions, other recoveries and penalties during the year. OIG staff completed 553 investigations, obtained 481 indictments and 459 convictions, and made 2,616 arrests. Viadero said the results would have been “much more dramatic” if not for the “overall continuous erosion of [OIG’s] budget in the past 7 years in constant dollars” which “continues to severely limit what [OIG] can accomplish.” Viadero’s main concern were “repeat offenders” who smuggle agricultural products, run illegal meat processing operations, attempt deliberate introduction of biological agents in the U.S. food supply, or assault regulatory agents.

Viadero concluded that the OIG examination of HACCP revealed “that while FSIS had taken positive steps to secure the safety of meat and poultry products, more needs to be done in all four areas reviewed. Overall, we concluded FSIS had reduced its oversight to less than what is prudent and necessary for the protection of the consumer.” But his concerns were much more focused on those people who operate beyond inspection. In particular, he cited the smuggling of meat products from delisted countries as something the OIG had been investigating.

SHEEP TO BE SEIZED AFTER DELAY

USDA announced March 16 plans to seize the two flocks of Vermont sheep suspected of carrying a Transmissible Spongiform Encephalopathy (TSE). The Agency had said on March 6 that it would wait for a federal appeals court to decide the matter, but the first hearing in the appeal is not set until April. News reports said USDA officials denied the department has changed its position, saying the government has gone through the legal process and will seize the sheep before the April 10 hearing. The sheep were imported from Belgium in 1996, the year before the U.S. banned meat imports from all European nations to prevent the spread of another TSE, Bovine Spongiform Encephalopathy (BSE). The USDA and the farmers have fought in court for the last nine months over the government’s right to destroy them.

HUISKEN MEATS ATTACKED FOR OMITTING ‘IRRADIATION’

Huisken Meats was slapped with an FTC false advertising complaint by Public Citizen March 7 when it omitted the word ‘irradiation’ from descriptions of its electronically pasteurized ground beef at its website. Although, the meat company has already changed the site to address the concerns, Public Citizen told Food Chemical News Daily that it would like “to see the phrase ‘electronically pasteurized’ removed from all advertising material, including the Internet, because ‘electronically pasteurized’ simply does not mean anything.”