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Mad Cow vs. the American Carnivore

Written by Jeff Siegel
Posted June 27, 2005

A second case of mad cow was confirmed on U.S. soil Friday when tests revealed a cow, previously cleared of the illness, was in fact contaminated. Though cattle futures were not adversely affected today.

Back in 2003, when the first U.S. case of mad cow was discovered, cattle futures fell by 20 %.

But Americans love their beef, and supermarket chains like Safeway and Kroger quickly pointed out that they didn't experience the catastrophic loss in beef sales, as was predicted by some analysts.

In fact, one segment of the beef industry actually increased its sales during that time.

Already maintaining a consistent growth rate of approximately 18% since 1999, organic beef producers were overwhelmed by huge spike in sales following the news of mad cow in the U.S. They couldn't fill the orders fast enough.

Organic retailers like Wild Oats (OATS:Nasdaq) and Whole Foods Markets (WFMI:Nasdaq) were actually running out of the stuff, leaving meat freezers empty until new deliveries could be made.

And this is at price premiums of as much as $4.00 a pound! (There's a growing belief that organic beef is safer as it comes from cattle that is fed strict vegetarian diets. Some previous cases of Mad Cow have been linked to feed that contained contaminated cattle bone, fat and blood.)

The fact is, the American public's taste for porterhouse and beef ribs isn't going to be traded in for salad coupons and tofu anytime soon.

However, many health-conscious carnivores (part of the economically-influential 'cultural creatives' consumer population which currently stands at around 63 million) are now seeking alternatives to traditional, conventional beef in order to offset their concerns of mad cow contamination…as well as other health risks that have been associated with the hormone, steroid and antibiotic treatment of conventional beef.

Good news for organic beef producers is that this 'cultural creative' segment is one that's becoming more and more financially powerful ever day. As evidenced by their increased numbers and purchasing power which has been fueling the organic food industry at a 20% growth rate for the past 6 years.

Overall, organic beef sales are now projected to grow by as much as 39% annually over the next five years, according to the Nutrition Business Journal.

And organic cattle ranchers are now expected to see an increase in foreign orders too, as many importing nations continue to slam the door on conventional U.S. beef imports - primarily because current testing methods that the U.S.D.A. employs have proven ineffective and don't match the more competent testing done in countries like Japan and England.

Taiwan, which used to import more than $76 million in U.S. beef in 2003, recently announced that it would reimpose its band on U.S. beef.

And surely you've heard all the reports of the fragile trade talks between the U.S. and Japan regarding what is now an 18-month import ban.

Even though Japanese authorities did confirm yesterday that they will not allow this most recent case of mad cow to affect deliberations on ending the ban, they still refuse to set a timeframe for reopening its market because of their differences on safety standards.

Japan imported more than $840 million of U.S. beef in 2003.

According to the Agriculture Department, beef exports have plunged from $3.1 billion in 2003 to about $550 million last year.

Trust me when I say there's a way to make money in there somewhere!

-Jeff Siegel
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