Minnesota ranchers brace for domino effect

Minnesota ranchers and animal-health officials were awaiting the fallout today on what many see as the worst crisis to hit the U.S. beef industry: the first presumed case of mad cow disease in the nation.

After the discovery of the disease in a dairy cow in Washington state, Japan and South Korea became the earliest in a string of nations expected to close their borders to U.S. beef exports -- just as they and the United States did to Canadian beef after a lone case of mad cow disease was diagnosed in Canada last May.

The U.S. announcement of a preliminary finding of mad cow, also known as bovine spongiform encephalopathy (BSE), came after domestic livestock markets had closed Tuesday. It's expected to send cattle and beef prices tumbling today as some consumers decide to avoid that meat.

Minnesota's beef sector drew $891 million in farm receipts in 2001, the most recent figures available. The state has about 2.47 million head of beef and dairy cattle valued at $1.9 billion.

Ranchers such as Steve Brake, president of the Minnesota State Cattlemen's Association, said they hope the U.S. investigation will proceed quickly and reassure consumers that U.S. beef is safe.

"We have to get out there and stand up and say, 'This one case is not going to devastate the food supply in our country,' " Brake said.

Minnesota officials had not changed any rules on import or export of cattle as of Tuesday night. They were awaiting more information from the lead federal agency, the Animal and Plant Health Inspection Service, part of the U.S. Department of Agriculture.

"It's a very important event," said Paul Anderson, assistant director of the Minnesota Board of Animal Health. "We're certainly watching it very closely."

At Cargill Inc., the global agribusiness giant headquartered in Minnetonka, spokesman Mark Klein and other officials in the company's beef business were gauging the Japanese market and waiting to see what will happen on the futures market in Chicago today.

Before the ban on Canadian beef, Canada exported 70 percent of its beef to the United States and also exported to more than 30 other nations.

After its case was discovered, Canada's cattle markets slowed to a trickle, beef cattle fattened and lost value, and ranchers lost millions of dollars collectively. Yet Canadian consumption of beef remained relatively strong.

The United States consumes most of its domestic beef supply, exporting only about 10 percent of its supply, said Ron Eustice, executive director of the Minnesota Beef Council.

Prices tumble

On Tuesday, companies that rely on beef sales saw their stock prices fall in after-hours trading. Shares of CKE Restaurants, which owns the Timber Lodge Steakhouse, Hardee's and Carl's Jr. chains, fell as much as 7.1 percent, while McDonald's dropped 3.7 percent and Wendy's fell 2.3 percent.

On the other hand, shares of Australian Agricultural Co. rose as much as 6.4 percent as investors bet that demand for Aussie beef will increase. Australia is the world's largest beef exporter.

After the news May 20 that BSE had been found in Canada, U.S. beef prices tumbled about 5 percent. But they quickly rebounded, rallying nearly 50 percent to the highest levels since futures trading began in 1986...