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

(510) 763-1533 Fax (510) 763-6186 h Email Address: [email protected] h

Edited by Jeremy Russell

April 23, 2001



Beef, pork and lamb packers were mandated April 2 to electronically report livestock purchases and, for beef, boxed beef prices. Since then, USDA Market News reports have been plagued with data blanks and computer glitches. The consequences are showing in both beef and pork complexes, but particularly beef.


Almost every week since Mandatory Price Reporting (MPR) began, USDA has been “behind the trade” in cash live cattle. Producers who previously looked to USDA to find if trade had even developed were left high and dry in two of the last three weeks. When USDA finally reported sales, the details inadequately represented what had happened. MPR is struggling to represent the beef trade even in its weekly summaries. Anomalies are frequent. Items reported daily don't appear in the weekly summary. It's even worse on the hog side, where MPR has all but eliminated the daily reporting of live hog prices.


The confusion is starting to negatively impact the market's performance. At a time when the market is already extremely nervous about BSE and foot-and-mouth-disease, the last thing it needs is more uncertainty. Yet, as analysts point out, MPR is breeding pessimism and lower markets. It threatens to cost the industry millions.


Some have suggested a couple of quick-fix remedies, including the elimination of the 3/60 rule and/or a return to the previous voluntary marketing system. Neither fix pleases everybody. NCBA’s chief economist, Chuck Lambert, was quoted in the Kansas Livestock Association (KLA) News & Market Report as having said that the lack of the 3/60 rule could potentially allow two packers to communicate through publicly reported information, thus creating the possibility of collusion and price-fixing. But a return to the original system might seem like failure to the proponents of the law.


NMA, long opposed to a mandatory scheme, previously proposed that the voluntary system worked a lot better than producers thought and that it could be improved to meet their needs and interests. Unfortunately, that proposal didn’t survive farm state politics.


As we go through what is reported as extremely uncertain and turbulent market news availability, it is NMA's view that a couple of things need to happen. First, it is extremely important that USDA not dismantle its core ability to conduct collection of market news information. It should neither reassign nor dilute its qualified and highly competent market news reporters. The staff in Des Moines, IA and other locations needs to continue what they’ve done successfully for years. USDA should keep not only its ability to collect information and verification of trades from credible and reliable sources, and use good judgment to publish data that reflects the market for livestock and meat prices in a timely manner. Remember, when programs are abolished it’s like abandoning military bases – they disappear and can never be resurrected.


Second, any haste to throw out the 3/60 rule in order to include more trades would have even worse unintended consequences than their exclusion. The 3/60 rule is designed to protect the confidentiality prescribed by law. Market News didn't dream up the 3/60 rule; it is used in government and by private companies and organizations to prevent anti-trust violations in the collection and publication of data. The 3/60 rule ensures that large companies can not, with clever math, figure out what their smaller competitors’ prices and volumes are. Without the 3/60 rule, MPR would fuel packer concentration. The consequence of eliminating the 3/60 rule would be concentration immune from antitrust oversight with the government as the vehicle.


It is our hope at NMA that leaders from the various industry organizations come together with policy makers to solve this huge market dilemma before the producers and others go broke in the MPR expirement.


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An 11-month inquiry prompted by a hidden-camera videotape of cattle struggling on a slaughterhouse chain at the IBP plant in southeast Washington concluded that no criminal charges should be filed against the company. “We are pleased this matter has reached a conclusion,” Dean Danilson, IBP vice president-Quality Control, said. “The outcome confirms that our company has been unfairly portrayed by these activist groups over the past year.” The videotape was the prompt for many negative press pieces, including a recent article at the Washington Post.


A report from the Walla Walla County prosecutor indicated that The Humane Farming Association’s edited version of hidden camera footage taken in the Wallula beef plant “does not show where steps were taken to correct problems in processing the livestock...” The prosecutor concluded that if there were litigation, IBP would have “no trouble showing the Humane Farming Association’s (HFA) intent was to create propaganda for its agenda” and that the unedited version of hidden camera video taken inside the plant “indicates that bias.” The prosecutor also wrote that IBP “would be able to attack” the alleged evidence “on the grounds that it was an organization and individuals who manufactured the evidence in order to fulfill their own agendas.”  


Walla Walla County Prosecutor Jim Nagle told the Associated Press he and several other prosecutors who reviewed the case agreed that there would be serious problems in trying to conduct a criminal prosecution of IBP. “The biggest problem is, even though there is good evidence of improper slaughtering practices by the employees, there's nothing to impute that activity to the corporate level,” he said.


IBP has entered into an agreement with the state, which includes videotapes produced by three monitoring cameras IBP installed in the plant last year to more closely observe the cattle slaughter process.




The Alameda District if hosting a meeting on May 31 from 5-9:00pm at the La Mirada Holiday Inn in La Mirada, CA to share a variety of HACCP related information with the industry. FSIS District Manager Dr. Murli Prasad and FSIS Assistant Deputy Administrator Bill Smith will begin the meeting and introduce the HACCP Next Steps concept. Bill Sveum, associate director of regulatory foods for Kraft, will discuss “Implementing Environmental Testing for Listeria,” an increasingly important topic as the recalls of Ready-to-Eat meat products for positive Listeria tests continues. Someone from the FSIS Technical Service Center will also be in attendance to discuss Directive 10240.2.


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A Judge denied Tyson’s motion to dismiss or stay IBP’s case to force the company to honor the terms of its merger agreement. The suit will go to trial May 14. The Judge went further to say that a case in Arkansas, filed by Tyson against IBP, would not do full justice to the dilemma. However, it is not yet clear what effect, if any, such a ruling will have on the Arkansas case, also set to begin May 14. One thing is clear, however, as Cattle Buyers Weekly editor Steve Kay said, the decision is “an important victory” for IBP.




Smithfield Foods may be counting its lucky stars after not entering into an agreement to buy IBP, but the company is not biding its time in entering the beef business. Smithfield Foods announced that it had signed an agreement in principle to acquire 100% of the outstanding capital stock of Moyer Packing Company, a closely-held beef processor based in Souderton, PA, with annual sales of almost $600 million. Moyer Packing is the ninth largest beef processor in the U.S. and the largest in the Eastern United States. Terms of the transaction, which is subject to regulatory approval and is expected to close in the first quarter of fiscal 2002, were not disclosed. Observers said the merger would be mutually beneficial for both companies, giving Smithfield a manageable entry into the beef industry and allowing Moyer to expand, while providing protection from the regulatory uncertainty that has driven some companies to close in the past several years.




The Centers for Disease Control and Prevention (CDC) have released new warnings about petting zoos and other farm animal exhibits, citing two outbreaks that sickened 56 people last year with E. coli O157:H7. John Crump, a CDC epidemiologist, said that the CDC was compelled to issue its warning because thousands of children visit such exhibits each year.


Scientists in New Zealand have a new take on sourcing the British mad cow crisis, they say it’s likely the fatal brain disease came from Africa antelopes. Apparently Bovine Spongiform Encephalopathy (BSE) was first detected in herds near Safari Parks where such antelopes were kept beginning in the 70s. The brain and organs of dead antelopes from the parks would have been recycled into feed for those very herds, and the same antelopes have been shown to be susceptible to BSE. All that remains is to actually find a diseased Antelope in Africa.


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Agriculture Secretary Ann Veneman announced at the annual Food Safety Summit in Washington, DC on April 18 that, based on information provided to her by FSIS, Salmonella prevalence in raw meat and poultry products continues to decline since the implementation of HACCP in 1998.


In a recently published FSIS report entitled, Progress Report on Salmonella Testing of Raw Meat and Poultry Products, 1998-2000, the Agency claims that all categories of product show improvement over baseline studies conducted prior to HACCP implementation. NMA questions this report particularly as it applies to prevalence of Salmonella in raw ground beef.


In the 1993-94 Nationwide Federal Plant Raw Ground Beef Microbiological Survey, baseline prevalence estimates of Salmonella in raw ground beef were reportedly weighted by weekly production estimates. FSIS’s current analysis fails to apply equivalent statistical weighting methods. FSIS also excludes from the new report data taken from plants undergoing second and third compliance testing, alleging that: “The laboratory results from follow-up testing from failed ‘A’ sample sets are not included because they represent biased test results.”


The Texas Litigation includes (see Herd on the Hill) critical issues concerned with the underlying data on which FSIS took enforcement action in 1999. It’s time to have an independent evaluation of FSIS’s misinterpretation of its microbiological data.




AMS is holding its annual vendor conference on May 3 in Kansas City, Missouri, NMA will host a reception for attendees on May 2. For more information contact NMA.



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

April 23, 2001




Continuing the arguments used in the earlier successful iteration of the Texas Litigation, in which Supreme Beef Processors sued to stop USDA from closing its plant based solely on the Salmonella Performance Standard, five meat industry associations jointly filed an amicus curiae brief last week to defend the decision against an appeal by USDA. The lower court decision that they defend held that, where performance standards and Salmonella tests do not necessarily evaluate the conditions under which meat is processed, such standards and tests cannot be used to find a plant unsanitary. Co-signers to the brief include National Meat Association, American Association of Meat Processors, North American Meat Processors Association, Southeastern Meat Association and Southwest Meat Association. The court accepted the motion of the groups to file as amicus curiae, officially allowing their brief, on April 17.


The crux of the group’s argument is summarized in this paragraph from the brief:


In stark contrast to the variety of current technologies that are available at the slaughterhouse, the same preamble [from the HACCP final rule] is remarkably silent on what a grinder can do to address Salmonella at its facility. Indeed, the sole suggestion proffered by the USDA is that grinders should attain “more control over incoming raw product, including contractual specifications to ensure that they begin their process with product that meets the standard.” This is curious advice given that grinders must always obtain their raw materials from FSIS inspected slaughterhouses that presumably are in compliance with the Salmonella performance standard.


The bottom line is that, at least at this time, grinders have no way to remove microbiological elements from their raw materials. Even USDA and the consumer groups admit this fact. Furthermore, a plant can take every precaution available, be in effect the cleanest plant in the world, and still have Salmonella, because such organisms are natural. To close a plant that is operating under the highest sanitation standards, based on something that is naturally occurring, detectable only through very complicated and expensive tests, and totally uncontrollable by the plant is arbitrary and capricious. It goes against the spirit of HACCP and sound scientific method.


There is a better way. HACCP speaks of control points. Grinding is not currently a control point and no arbitrary testing standard will make it such. It’s voodoo microbiology to think differently. Instead, FSIS should focus its attention on places where there are interventions and controls, e.g. the slaughterhouses and the kitchens, as well as the source of the problem. Anything else is a monstrous and unforgivable waste of food safety resources.


The District Court ruling reached an appropriate decision in declaring the Salmonella standard ineffective, but it left room for potential improvements. FSIS continues to have extensive authority to use microbiological tests and other science-based techniques. As Judge Joe Fish wrote: “What the court takes issue with today is not the use of scientific methods in USDA inspections but the agency’s science-based testing of a processor’s product to evaluate the conditions of its plant.” There is no reason to suppose that such tests could not be used, as long as they truly evaluated sanitary conditions in a processing plant.


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The Supreme Court heard oral arguments last week in a case concerning a promotion program in the mushroom industry, the decision from which may have implications for all other like programs throughout the country. In fact, it was noted during the hearing that “the beef [checkoff] program is very much like mushrooms.” At issue is the question of whether or not such programs constitute “compelled speech,” which has previously been determined to be unconstitutional.


In a 5-to-4 decision four years ago, the Court upheld a similar promotion program for the California fruit tree growers; a shift of only one vote is all that is needed for a radically different outcome in the current case.


While it may seem clear to some that checkoff programs are not compelled, because they are enacted by a vote within the industries which they promote, the programs are administered by the government. And the fact that they are not voluntary gives credence to claims of opponents. However, it was noted that what the producers in such programs actually say is neither compelled nor censored, and that it makes a contribution to the industry as a whole.




USDA’s Food Safety and Inspection Service (FSIS) is sponsoring a technical conference and public meeting May 8 to discuss scientific research and new technologies, provide information, and receive public comments specific to the recently proposed regulatory requirements for ready-to-eat meat and poultry products. Both events will be held at the Washington Plaza Hotel in DC. Papers and presentations for the May 8 technical conference can be sent to Matthew Michael by fax (202) 690-0486; or e-mail [email protected]. Those preparing an oral comment for the May 9-10 public meeting should submit a copy of the prepared comment to: FSIS Docket Clerk, Docket No. 97-013P, Room 102 Cotton Annex, 300 12th Street, SW, Washington, DC 20250-3700.


FSIS will also hold a public meeting on the same issue May 9-10 at the same location.




The National Advisory Committee on Microbiological Criteria for Foods (NACMCF) will hold a committee meeting on May 7 at the Washington Plaza Hotel. The committee will review scientific issues related to the FSIS E. coli O157:H7 policy. It will also begin consideration, as directed by Congress, of issues regarding microbiological performance standards, including the role of such standards in assuring meat and poultry product safety. This committee has not met for two years.


Pathogen Analysis Conference


The 4th Annual Pathogen Analysis Conference sponsored by the Association of Food and Drug Officials, Southern States and the Florida Department of Agriculture and Consumer Services will be held July 18th through 20th at St. Pete Beach, FL. This year’s keynote speaker is Dr. Bala Swaminathan from CDC. Dr. Swaminathan was instrumental in organizing and implementing the award winning PulseNet on a national scale.  He will be speaking on New Technologies for Food Safety Laboratories. Other speakers from industry, academia, and government will be discussing a variety of topics on food safety issues and rapid new technologies for food pathogens detection, isolation, and characterization. For additional information visit at call Peggy Melton of Grace Hall at 850-488-4407.