Development & Aid, Economy & Trade, Headlines, Health, Latin America & the Caribbean

AGRICULTURE: Mad Cow – Opportunity or Threat for Latin America?

Gustavo González*

SANTIAGO, Jan 5 2004 (IPS) - The recent appearance of a case of ”mad cow disease” in the United States may lead to opportunities for producers in Latin America, but could have negative effects as well.

Argentina, Brazil and Uruguay, Latin America’s three biggest beef producers, are studying the opportunity to fill the gap left by U.S. beef imports, which have been suspended in many countries. But they are more worried about the possible drop in their own exports to the U.S. market.

Mexico, another of the region’s large exporters of beef, is facing the challenge of keeping mad cow disease from crossing the border despite the heavy trade in contraband cattle and beef smuggled into Mexico from the United States, the country’s main supplier of red meat.

Chile, on the other hand, a marginal producer of beef, hopes the mad cow disease scare will fuel a rise in demand for pork and chicken, or seafood – products that Chile exports in significant quantities.

On Dec. 23, U.S. Secretary of Agriculture Ann Veneman reported the first case of Bovine Spongiform Encephalopathy (BSE), better known as mad cow disease, in the United States, in the state of Washington.

BSE, which first appeared in the United Kingdom in 1986, has been brought under control in Europe through the slaughter of millions of head of cattle.

The disease arose from feeding meat-and-bone meal to cattle. Like scrapie, a related disease that affects sheep, BSE is a transmissible, degenerative, fatal disease that affects the central nervous system of infected animals.

Although BSE attacks cattle, a similar disease called variant Creutzfeldt-Jakob Disease (CJD) is found in humans. There is strong scientific evidence that the agent that causes BSE in cattle is the same one that causes CJD in some people who have eaten beef from infected cattle.

Since 1998, 153 people worldwide have been diagnosed with CJD, a rare, degenerative, invariably fatal brain disorder. The disease was found only among people over 55 until 1996, when cases began to be diagnosed among younger people, and the connection with BSE was discovered.

About 90 percent of patients with CJD die within one year. The first symptoms are failing memory, behavioural changes, lack of coordination and visual disturbances. As the illness progresses, mental deterioration becomes pronounced and involuntary movements, blindness, weakness of extremities, and coma may occur.

The emergence of a case of mad cow disease in the United States led to the immediate closure of markets to U.S. beef exports around the world, especially in Asia, where the biggest markets for U.S. beef are located.

In 2002, Japan and South Korea imported 1.4 billion dollars and 732 million dollars of beef from the United States, respectively.

Japan, South Korea and Mexico imported a combined total of 3.2 billion dollars in beef from the United States in 2002.

South America’s big beef exporters are now keenly eyeing those markets.

The New York Times noted in a Dec. 27 article that Brazil has the world’s largest herd, 170 million head of cattle, while Argentina has 50 million head, and Uruguay 10.5 million.

One of the advantages enjoyed by South American producers is that cattle in this region are grass- and range-fed and are also fed grains like soy beans and corn, rather than meal that contains animal protein.

The president of the Brazilian Association of Meat Exporters, Marcus Vinicius Pratini de Moraes, told the New York Times that his country’s beef exports could grow 20 percent this year, in both volume and value, and that prices, which had fallen in recent times by 20 to 30 percent due to excess supply, could rally.

In contrast with Brazil’s optimism, Carlos Nassif, the head of Argentina’s Rural Federation, told IPS that the appearance of mad cow disease in the United States ”doesn’t benefit anyone,” but that on the contrary, it would curb Argentina’s prospects for increasing sales of beef to the U.S. market in 2004.

Argentine and Uruguayan exports of fresh beef to the U.S. market were temporarily banned in 2001 due to the reappearance of foot-and-mouth disease in both Southern Cone countries. Since the outbreaks were eradicated, the two countries have been involved in an intense campaign to recuperate their lost share of the U.S. market.

”But the most likely scenario now is that domestic consumption of beef will drop in the United States, and that the tons of beef that the United States is unable to export, due to the closure of markets to U.S. beef, will be consumed internally,” said Nassif.

That view was shared by agronomist Juan Lema in Uruguay’s Ministry of Livestock, Agriculture and Fisheries.

”The United States was planning to export 1.2 million tons of beef in 2004. But the closure of 90 percent of its markets means a large part of that will go towards internal consumption, which will hurt imports of Uruguayan beef” to the United States, Lema explained to IPS.

However, the appearance of the first BSE-infected cow in the United States ”could have a positive effect in the medium-term, because Uruguay could put a greater emphasis on markets like Mexico and Asian countries, to fill the gap left by U.S. beef,” added Lema.

Mexico is another attractive potential customer. In 2002, it imported 508,000 tons of beef, 85 percent of which came from the United States. The rest was imported from Australia and New Zealand, Gustavo Torres, president of the National Stockbreeders Confederation, remarked to IPS.

Mexico’s secretariat (ministry) of Agriculture and Livestock banned U.S. beef imports on Dec. 24, and the two countries began to implement rigorous controls along their extensive shared border.

But the Permanent Agrarian Congress (CAP) and other organisations warned of the risk that BSE could be introduced into Mexican territory by smugglers of infected livestock or beef.

CAP coordinator José Durán reported that some 40 tons of frozen beef are smuggled into the state of Chihuahua alone every year.

Beef declared unfit for human consumption in the United States is also smuggled into Mexico.

But the possibility of making headway in markets that have been closed to U.S. beef is neither automatic nor immediate, since it normally takes at least a year to gain the necessary sanitary certification in Asian and European markets.

Juan Miguel Ovalle, president of Chile’s Association of Poultry and Hog Farmers, also pointed out to IPS that ”The productive cycle of beef is long-term, and cannot be immediately brought to a halt.”

”That will generate an accumulation of stocks in the United States, which will take years to sell off, because the beef will simply be kept frozen, and that will distort prices in the future,” he added.

Octavio Sotomayor, assistant director of the Chilean government’s Office of Agrarian Research and Policies, told IPS that his country exports 13 million dollars in beef every year, and expects to increase that amount this year, mainly to Japan and Mexico.

But he also underlined that ”We have a very competitive white meat industry, which exports to different markets around the world, like Japan and Europe. We can safely say that the white meat industry will benefit” from the appearance of BSE in the United States.

Ovalle also stressed the opportunities for chicken and pork as substitutes for beef. ”In fact, we are seeing a rise in international demand, which is reflected in prices, in both Europe and Asia,” he said.

Last year, Chile’s chicken exports amounted to 30 million dollars, and pork exports to 120 million.

* Viviana Alonso in Argentina, Pilar Franco in Mexico, Raúl Pierri in Uruguay and Humberto Márquez in Venezuela contributed to this report.