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Food Industry Stocks

Written By Brian Hicks

Posted February 19, 2008

Risk or no risk to human health, news of the largest meat recall in history is sure to turn stomachs, wreaking havoc on meat manufacturers, distributors, retailers, and carnivorous consumers alike. Unfortunately, as my vegan friends have told me, we may not have seen the last of recalls and the horror stories.

On Sunday, the U.S. Department of Agriculture ordered the recall of 143 million pounds of frozen beef from a California slaughterhouse, making this the largest U.S. recall since the 1999 ban of 35 million pounds of meat. What’s sickening is that some of the meat came from "downer" animals or those too sick or injured to walk into slaughterhouses that were kicked, shocked, and abused by staff.

While regulations call for keeping downed animals out of food supply (they pose higher threats of e.Coli, salmonella, and mad cow diseases because of weaker cattle immune systems), money is more important to plant officials than the health of animals and impact on the human population.

Food Safety Stocks: The Food Safety Market Should Benefit Near Term

Consider this. In 2007, the USDA (which is responsible for the safety of meat, poultry, and egg supply, and has 7,800 inspectors that cover 6,200 businesses) suspended 66 in the Food Safety and Inspection Service for "egregious humane handling violations" and saw another 650 instances of other inhumane practices, according to

Nice. It makes the vegan diet look that much more appetizing.

Worse, over the last six months, there have been 10 publicized food recalls involving e.Coli, Listeria, and salmonella. That’s in addition to the 100 recalls over the last year, which involved food allergens.

I’m sure you remember the recall of 21.8 million pounds of frozen hamburger meat in October 2007 because of e.Coli contamination. That Topps Meat recall was second in size toe the Hudson Food 1997 recall of 25 million pounds of ground beef.

Heightened consumer concerns are boosting the need for food safety measures. Two of those food safety stocks competing for global opportunity are:

· Neogen Corporation (NEOG:NASDAQ), a $361 million company that makes test kits for food and animal safety; Neogen’s tests are used to detect dangerous substances in food and animal feed.

· Strategic Diagnostics (SDIX:NASDAQ), a $93 million company, which provides biotech-based detection solutions for food, water, agricultural, environmental, and life science applications.

Another possible boon for these food safety stocks is a December 12, 2007 food and drug safety agreement between the U.S. and Chinese governments. While it was designed to give U.S. inspectors access Chinese factories, it has been criticized for failing to provide safeguards to prevent "further imports of seafood tainted by banned antibiotics or pet food ingredients blended with adulterants," says the Chicago Tribune.

Supposedly, new regulations are being birthed that will enforce further and stronger testing of imported products, opening opportunities for U.S. food-safety companies.

Ian L. Cooper

P.S. Here’s more information on the recall from The Humane Society of the United States.

And if you’re interested in the video of the incidents, click here. Have a strong stomach.