Prepared Foods November 29, 2004 enewsletter

Tests have come back "negative" for an animal suspected of having mad cow disease, the U.S. Department of Agriculture said.

The announcement, which followed five days of uncertainty while detailed tests were run, allows the nation's cattle farmers to breathe a sigh of relief.

It also saves the beef industry from a public relations nightmare during the holidays, a historically strong period for beef sales.

"It's certainly welcome news," said Matt Brockman, executive vice president of the Texas and Southwestern Cattle Raisers Association.

Just a few days earlier, the USDA roiled the beef market when it announced that an unidentified animal had produced "inconclusive" tests for the brain-wasting disease bovine spongiform encephalopathy (BSE), commonly called Mad Cow.

The inconclusive tests were part of the agency's rapid screening -- a program launched in June that subjects thousands more animals to preliminary tests than in the past.

This month's incident marks the third announcement of an inconclusive finding since June. Further tests at the National Veterinary Services Laboratory in Ames, Iowa, produced negative findings on all three.

The agency says that given the sensitivity of the preliminary tests and the sheer number of animals being tested, "false positives are not unexpected." More than 121,000 samples have been tested for BSE since June.

While the tests were pending, the industry held its breath, hoping to avoid a repeat of last Christmas' upheaval, when a confirmed case of BSE was found in a single dairy cow from Washington state that had been imported from Canada. That announcement led to a ban on U.S. beef imports from more than 20 countries, including Japan, previously a key customer.

Now, even the false alarms can cause cattle futures to swoon.

Following the inconclusive announcement, cattle futures fell 3.3% to 85.975 cents a pound on the Chicago Mercantile Exchange, the biggest decline in eight months, according to Bloomberg News. They rose 1.9 cents to 87.85 cents following the negative announcement, Bloomberg reported.

Prices, which fell more than 20% in the six weeks after the December 23 BSE confirmation, are down 3.2% from a year ago, as rising domestic demand for beef partly offset lost exports, Bloomberg wrote.

The USDA's announcement of inconclusive findings has caused an ongoing debate within the industry. Some argue that in its pursuit of full disclosure, the USDA is needlessly damaging the industry.

"It's a dilemma that the USDA is in," said Brockman, whose organization has not taken an official position on the disclosure. "It's a difficult matter to address."

With seven different facilities conducting the preliminary tests, the USDA said it fears possible rumors if it chooses not to publicize the inconclusive findings.

"The information would inevitably make it out into the rumor mill," said Ed Curlett, a spokesman for the USDA's Animal & Plant Health Inspection Service. "We believe the leaks would be more damaging to the market."