May 28, 2003

 

NDSU Economist Says Scope of Mad Cow Disease Will Drive Consumer Concerns

If the Mad Cow disease in Canada becomes more widespread, consumers willingness to buy Canadian beef will dramatically decline both domestically and in export markets and its impacts on the U.S. beef industry could be significant, says a North Dakota State University agricultural economist.

If the outbreak of bovine spongiform encephalopathy (BSE) in Canada remains relatively small and isolated, it may not have much affect on consumers’ behavior," says Won Koo, Fargo Chamber of Commerce Distinguished Professor of agricultural economics and director of the NDSU Center for Agricultural Policy and Trade Studies. "However, if this disease spreads to a much bigger area and includes more cases, it may affect the Canadian beef industry substantially," he says.

"Its impacts on the U.S. beef industry are unknown. Since the United States has imported a large amount of beef and cattle from Canada, consumers may have concerns about BSE contamination in the United States and may reduce beef consumption by switching to other meat," Koo says. "On the other hand, if the United States can make it clear to consumers that its beef is BSE-free, U.S. consumers would not be likely to be influenced by the BSE outbreak in Canada. Furthermore, the U.S. may gain market share in countries where the United States competes with Canada."

Koo bases his comments on an NDSU study of market trends in the United Kingdom, Western Europe and Japan after BSE outbreaks there. In Japan, beef consumption dropped by more than 40 percent just after the outbreak as consumers switched to other meats, primarily pork. In Europe, consumers shunned domestically produced beef for imported beef.

Last year the United States imported more than 840 million pounds of Canadian beef. In addition, the United States imported about 1.7 million cattle. Canada exports 80 percent of its beef and the United States is its biggest customer. The United States is also a large exporter of beef products and live cattle to Canada. After the outbreak was announced on May 20 all movement of cattle and beef products between the countries was stopped.

For now, the outbreak is primarily a Canadian issue, Koo says. Beef consumers in the United States as well as those around the world seem confident that the disease has been contained. That’s consistent with what happened in South Korea during the Japanese outbreak. "Korean consumers believed there was no importation of beef from Japan, so consumption remained stable. As long as consumers believe the disease is contained to one area of Canada, there should be little affect for the United States," he says.

"A more widespread outbreak of the disease in Canada may affect domestic consumption in the United States because of consumers’ concerns about beef and cattle imported before the announcement of the BSE outbreak in Canada," he says.

Koo says concerns about a potential link of BSE to new variant Creutzfeld-Jacob disease in humans and the long incubation period for that disease in humans, 10 to 30 years, makes consumers uneasy. "There are a lot of concerns and uncertainties among consumers about this disease. If the situation grows, they may simply reject beef in favor of other products," he says.

Those concerns and uncertainties make the U.S. beef industry extremely vulnerable. "If the disease occurs in the United States, our beef industry could be significantly damaged. It is important for the U.S. beef industry to clarify for all consumers in the United States and abroad that U.S. beef is BSE-free and to initiate labeling for U.S. beef to separate it from beef produced by other countries, especially Cananda," Koo says.

For more information on the study conducted by Koo and research assistant professor Hyun Jin, go to http://agecon.lib.umn.edu/cgi_bin/detailview.pl?paperid=7206 .

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Source: Won Koo, (701) 231-7448, wkoo@ndsuext.nodak.edu
Editor: Tom Jirik, (701) 231-9629, tjirik@ndsuext.nodak.edu