Economists: Limited U.S. Mad Cow Impact
December 23, 2003 7:37:00 PM ET
By Sarah Edmonds
WASHINGTON (Reuters) - The announcement on Tuesday of the first U.S. case of mad cow disease will have a short-term impact on the economy, economists said, but that impact will remain limited if no further cases are found.
``It's likely to make people a little more reluctant to eat not only steak but burgers and other things,'' said Anthony Chan, an economist at Bank One.
In the short term, that behavior could lead to lower sales at restaurants, Chan said. However, a single case would be unlikely to have a longer-term effect, he said.
Agriculture Secretary Ann Veneman announced the first U.S. case of the deadly disease, which devastated parts of the European agriculture industry in the 1990s, earlier on Tuesday. It was found in a Holstein cow in Washington state.
The announcement led to an immediate drop in the shares of fast-food companies, and analysts in Chicago predicted beef and grain prices would fall sharply when trading resumes on Wednesday.
Carl Tannenbaum, chief economist at LaSalle Bank in Chicago, said the discovery would land hard on the U.S. agricultural sector, particularly the $27 billion cattle industry and beef exports worth more than $3 billion a year.
Hours after the announcement, a South Korean official said South Korea would be likely to halt imports of U.S. beef, the same action it took against Canadian beef earlier this year.
``This is coming at a time when beef prices have been rising quite dramatically and ranchers were just beginning to smile,'' he said, adding that agriculture makes up a small part of broad economic activity.
In Canada, a case of the disease in a single Alberta cow last May devastated the Canadian beef industry as many countries closed their doors to Canadian beef exports.
According to a report by Serecon Management Consultants of Edmonton, Alberta, the disease took a $3.3 billion toll on Canada's cattle sector.
Beef shipments from Canada have since resumed.
Economist Sung Won Sohn of Wells Fargo Bank in Minneapolis said he did not anticipate any widespread economic impact.
``I think it should be quite limited. That is my hope,'' he said. ``U.S. authorities are pretty well placed to impose measures for protection (of the food supply).''