Prepared Foods of March 7, 2005 enewsletter

A federal judge's decision to temporarily block plans to allow Canadian cattle into the United States was a setback for Tyson Foods Inc.

The U.S. Department of Agriculture cut off the chicken, beef and pork producer, along with all U.S. meatpackers, from Canadian cattle in May 2003 after the first case of Mad Cow Disease in North America was discovered in Alberta.

Cattle prices in the U.S. have since risen because of tighter supplies. Tyson was expecting some relief from those high prices, as Canadian cattle trading was scheduled to resume on March 7.

U.S. District Judge Richard Cebull ruled at the behest of a U.S. cattle ranchers association called the Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America. The group argued that lifting the ban would increase health risks in the U.S. and make it more difficult to convince other countries to lift their bans on U.S. beef.

A case of Mad Cow Disease found in Washington in December 2003 prompted dozens of countries to ban American beef products.

On January 4, the USDA announced a rule granting Canada a special "minimal risk" status for the importation of live animals. It would have allowed American companies like Tyson to import Canadian cows that are less than 30 months old.

Scientists believe younger cows are less likely to be infected with Mad Cow Disease.

Cebull gave attorneys for the USDA and the cattle growers group 10 days to come up with a schedule for hearings on the issue, said Bill Bullard, the chief executive officer of the cattle group.

The hearings will determine if the injunction halting imports of Canadian cows will be made permanent, Bullard said.

Agriculture secretary Mike Johanns said he was disappointed by the decision because the minimal-risk rule and other health measures already in place provide sufficient safeguards to protect U.S. consumers and livestock.

"We continue to believe that international trade in beef, founded on science-based regulations, should be re-established in an expeditious manner," Johanns said in a news release.

The cattlemen group's attorney, Cliff Edwards, told Cebull in court that it would be "insane" to allow the importation of cattle from a country that has already reported two new cases of mad-cow disease this year.

An attorney for the government, Lisa Olson, argued that the plan was as safe as it possibly could be.

Tyson, among the world's biggest beef producers, has been hurt by trade restrictions stemming from Mad Cow Disease. Not only has it had to pay more for cattle because of a scarcer supply, but it has also been cut off from key export markets like Japan, which has hurt sales.

"We're disappointed with the delay in reopening of the border and hope the matter can be resolved quickly. (The) USDA has stated there's no scientific reason for keeping the border closed," Tyson spokesman Gary Mickelson said in an e-mailed response.

The company's beef sales declined 10.8% in its most recent quarter, and Tyson reported $61 million in Mad-Cow-related charges.

On January 6, Tyson suspended operations at four of its beef plants and reduced operations at another, idling about 2,100 workers and reducing its slaughter capacity by 15%. The company has since restarted some production at those plants.

"Because of anticipated increases in domestic cattle supplies and expected seasonal improvements in beef demand, we currently intend to keep all of our U.S. beef plants open, though some may continue to operate at reduced levels of production," Mickelson said.