Unintended Consequences

By Terry Stokes

CEO, National Cattlemen’s Beef Association

Dec. 23, 2003, was a day each of us will never forget.  Our industry has changed and we are struggling to define “normal” in a post-BSE world.  What does “normal” mean?  Does it mean there are simple answers to complex questions? Does it mean we should maximize short-term gains while sacrificing long-term opportunities?  Does it mean questioning the safety of beef to keep from resuming trade based upon sound science? Finally, does it mean keeping our borders closed to trade for short-term profitability for our cattlemen? There are some within our industry who think so.

This short-sighted approach to defining “normal” in a post-BSE world will have unintended consequences for our industry. First, it will result in a decline in consumer demand due to the loss of consumer confidence in the safety of beef. Consumer confidence in the safety of our beef is at an all time high. Nine out of ten consumers believe that our beef is the safest in the world. Since 1997, consumer confidence is 21 percent higher and beef demand has increased 25 percent. This has resulted in an additional $200 per head for our cattlemen.

Are we willing to let recent accusations by a faction of our industry, including a misinformed judge, affect consumer confidence in our product and sacrifice this $200 per head? Today, we have firewalls in place to ensure the safety of our product. Science clearly shows that the removal of central nervous system tissue protects our consumers from BSE. This is not a food safety issue.  

We have a cattlemen’s activist group within our industry which is risking consumer demand by litigating science to protect their short-term economic interest. There has been no other time in history where a group of our own people disparaged our product for personal gain. The risk is $200 per head.

Secondly, keeping the border closed from Canada will result in continued loss of export markets. We lost $175 per head to our cattlemen when our trading partners halted trade on Dec. 24. Fed cattle prices were $93 hundredweight before Dec. 23 and fell to $78 hundredweight afterwards.  This occurred because of the loss of export markets.  Many of these markets remain closed because of protectionist attitudes within those countries. We are taking the same approach with Canada. Is this the example we want to set for the rest of the world?  

A couple of weeks ago, a resolution was introduced in the House of Representatives for sanctions against Japan for not basing trade decisions on science while the Senate passed a resolution to not resume trade with Canada without any basis in science. This is the ultimate hypocrisy.  This type of action increases the difficulty of reopening our export markets and regaining the $175 per head we lost Dec. 23.

Actions like these clearly have unintended consequences. If we lose the beef demand we have gained in the last eight years by destroying consumer confidence, we will lose $200 per head. If we are unable to regain export markets because we don’t make decisions based upon science, we will not regain the $175 per head. Short term we may experience higher prices, but longer term we will experience lower prices and reduced profits.

These unintended consequences jeopardize our future and the future of the next generation of cattle ranchers. Loss of demand means lower prices and fewer cattlemen. Loss of export markets means lower prices and fewer cattlemen.  More regulation means more concentration, increased costs and fewer cattlemen. I don’t think this is what we want for ourselves or for our children. We want a growth industry that comes from increased demand for our product both here and around the world, which means more cattlemen, higher profits, and a brighter future.

Someone once said, “Every now and then, somewhere, someplace, sometime, you are going to have to plant your feet, stand firm, and make a point about who you are and what you believe in.” It is time for us to stand for resuming trade based upon science. It is time to stand for the safety of our product and reprimand those who disparage it. It is time for us to stand firm for who we are and what we believe. Most importantly, it is time to plant our feet and stand firm for solutions that ensure the future of our families and our legacy.