Nation's Leading Cattle Organization Uses Fact, Reason
To Protect Cattle Producers in Post-BSE Regulation Frenzy
The nation's leading cattlemen's organization has again demonstrated its worth to members by standing up for the interests of producers following the finding of bovine spongiform encephalopathy (BSE) in the U.S. late last year.
Following the Dec. 23, 2003, discovery of a single cow with BSE in Washington state, the National Cattlemen's Beef Association (NCBA), which is the largest multifaceted marketing and membership organization in the industry, was prepared to respond. And it did, with impressive results.
The discovery of BSE threw the U.S. cattle industry into seemingly uncharted territory. Markets continue to react to the unprecedented finding, and U.S. producers are dealing for the first time with new safety regulations and the restriction of key export markets.
On one hand, with funding provided by America's beef producers through their $1-per-head beef checkoff, NCBA immediately put an exhaustive communications plan into action that put accurate information about BSE out to consumers, media and producers. These efforts, conducted on behalf of the Cattlemen's Beef Board and state beef councils, were able to maintain consumer confidence in the safety of U.S. beef.
And on the other hand, with NCBA member dues, the organization went to work without delay to address the closing of export markets and the impact of new government regulations designed to eliminate the disease from this country.
The U.S., since 1997, has had a triple firewall in place to guard against BSE. Measures include import bans from countries known to have BSE, a ban on feeding ruminant derived protein supplements to cattle and an aggressive surveillance and testing system. The U.S. surveillance system is designed to prevent the introduction and spread of BSE, rather than look for the disease once it has been established. As such, the U.S. risk of BSE incidence or spread has been judged extremely low by impartial scientists.
To address the international trade challenge, NCBA immediately began working with USDA and Bush Administration trade officials and with the U.S. Meat Export Federation (USMEF) to reopen export markets as soon as possible. Canadian and Mexican officials, with trade and policy incentives of their own, have been receptive to working out the details to resume trade.
But two other critical export markets for the U.S., Japan and South Korea, have their borders closed thus far. NCBA leaders have joined with government and USMEF representatives to meet with agents of those countries, both in this country and theirs, to discuss methods for resolving differences and getting borders open.
These discussions have found that cultural and production differences make communication difficult. South Korea, for instance, has had no BSE, so neither their trade officials nor their consumers are familiar with the disease or the science involved. Negotiations with officials in Japan, where significant BSE has been found, are hampered by their view of the science, the statistical risks as they exist in the U.S. cattle population vs. the Japanese population and the significant size difference between the cattle industries in Japan and the U.S.
These differences were important factors in Japan instituting a requirement to test every animal slaughtered. While supporting the USDA proposal to considerably increase testing among higher-risk U.S. animals, NCBA opposed testing the entire cattle herd. BSE has never been found in an animal less than 30 months of age. That makes the tactic of testing the entire U.S. cattle population - of which the majority is under 30 months of age - an inefficient and ineffective means of ensuring the safety of our herd.
Adding pressure for settlement, however, are the thousands of Japanese consumers and their food industry suppliers who are frustrated at the lack of U.S. beef. Most stockpiles of U.S. beef have long since run out, forcing the removal of key menu items from restaurant chains that have built important parts of their business on U.S. beef.
In addition to working on improving international trade - which represents about 10 percent of the total U.S. beef production - NCBA has been actively representing cattlemen during rule changes affecting slaughter and testing.
One of the first responses of USDA officials was to eliminate "downer cows" or non-ambulatory animals from the food supply. While the numbers of cattle involved is not huge, the lost revenue will still probably amount to more than $50 million annually. In further increasing the level of safety, the list of Specified Risk Materials (SRMs) that must be removed and eliminated from the food chain at slaughter has been lengthened. That will increase costs to processors by about $100 million a year, according to Cattle-Fax calculations, and consequently decrease revenue to cattlemen. The loss of Advanced Meat Recovery technology could cost another $15 million per year.
Other costs, like changing the status of cattle judged older than 30 months in the fed slaughter supply and increased testing levels, are much more difficult to estimate. The 30-month rule is complicated by the fact that dentition as a basis of estimating cattle age is a problematic methodology. NCBA, through its contract with the Cattlemen's Beef Board, is coordinating checkoff research that would determine the accuracy of dentition and identify other means of accurately assessing animal age.
The USDA in mid-March announced increased testing of higher-risk animals, which NCBA supported in order to verify the accuracy of U.S. statements that our cattle herd is at low risk of contracting BSE. Faster testing technologies are being evaluated and approved by USDA, and NCBA fully supports the USDA position that any preliminary positive samples be confirmed by internationally recognized methods, such as Immunohistochemistry or IHC and that proprietary business information be handled in a confidential manner.
USDA has licensed two tests and will approve others over time. The cost to test each animal, including lab and processing fees, is about $30 per head. Only one U.S. lab is approved to run the test and it has a two-week turnaround time and limited capacity.
Total cost estimates for implementing new BSE regulations could run up to nearly $300 million - with many of these costs ultimately borne by the U.S. cattle industry. These costs are being incurred to protect both the domestic and export market now. Future further steps to satisfy export customers are possible, too.
Even before the single-case discovery the industry was doing what science indicated was prudent. But to further enhance safety, as well as cement positive consumer confidence, the cattle industry, through NCBA, has agreed that a certain amount of additional reinforcing of the firewall is justifiable. But just how far the industry should go beyond sound science to satisfy the perceptions of big export customers like Japan and South Korea is another question. NCBA is working to balance that equation and help producers understand the potential impact of the measures put in place to protect cattle health and the safety of the food supply.
One way to improve the safety of the U.S. animal herd is the ability to trace back problems that occur. NCBA is involved with the U.S. Animal Identification Program, a task force of more than 40 organizations working to create a framework for an animal identification system that will serve the needs of cattlemen and their customers.
Early on in the BSE incident, USDA indicated that one response would be to make a national animal identification system a priority. USDA has since indicated it favors phasing in a system beginning in the fall of 2004, with further implementation in 2005.
There are many details to work out involving premises identification, the tagging of cattle, data handling and privacy issues. Regulatory and data system infrastructure will most likely be taxpayer supported through government services. The cattle industry and associated commerce channels will also incur costs and whether there will be government assistance for any of these costs is unknown at this time.
NCBA will be involved throughout the process to create a useful, practical, fast response system at the most reasonable cost to U.S. producers. The goal is for NCBA to help assure that the benefits of an animal identification program exceed the costs to cattlemen through enhancing or protecting the health of the U.S. cattle herd.
Expanded Beef Marketing Campaign Will Work to Boost Demand
New summer beef checkoff-funded radio and print advertising will be added to existing national consumer advertising and summer grilling promotions to address potential increased beef supplies caused by closed export markets for U.S. beef.
National network radio advertising will air prior to the three major summer holidays - Memorial Day, Independence Day and Labor Day. In addition, print advertisements will run in grilling issues of the popular Sunday newspaper supplements, USA Weekend and Parade. The new advertising, as part of the overall "Taste of America Summer Grilling Promotion," will tap into Americans' passion for beef during the summer grilling season.
The National Cattlemen's Beef Association (NCBA) will manage the campaign on behalf of the Cattlemen's Beef Board (CBB) and state beef councils. Efforts are funded by cattlemen through their $1-per-head Beef Checkoff Program.
"We are operating in a unique time," said Nelson Curry, CBB chairman and Kentucky beef producer. "We are dealing with a market that is extremely volatile due to export market closures following the December discovery of a single case of BSE in the U.S. Beef checkoff dollars are being invested to address both the potential oversupply of certain products, and the high-demand for others." He continued, "Our goal is to keep all cuts of beef moving through the marketplace and to remind consumers of beef's great taste and good value."
The new summer radio and print advertising will supplement ongoing national television and print "Beef. It's What's For Dinner.®" advertising, as well as reinforce an aggressive beef checkoff-funded grilling campaign that is already rolling out to America to prime the pump for increased beef sales all summer long.
The Taste of America Summer Grilling Promotion will celebrate the anniversary of the hamburger, which was reported to first make its public appearance at the St. Louis World's Fair in 1904. Some 100 years later, the hamburger has earned a place as one of America's favorite traditions.
Dozens of marketing elements make up this checkoff-funded summer campaign. Building on the success of the 2003 grilling effort, this summer's campaign includes:
Advertising messages to consumers through television, radio and print ads;
Public relations and editorial efforts to extend the campaign's reach;
Foodservice and retail promotions to leverage dollars. For instance:
A retail "Cheeseburger Fingers" in-store demonstration will be conducted in 700 Wal-Mart stores this spring;
Spot market radio ads, tagged with retailer messages, will air in 43 populace consumer markets;
At retail locations and in two Sunday newspaper circulars to 42 million households each, A-1 Steak Sauce and Marinades from Kraft will offer $1-off coupons for beef with the purchase of sauce. The coupon is funded by Kraft;
In support of the two A-1 Steak Sauce coupon inserts, radio promotions will run in 25 top consumer markets and a special 14-page insert in Midwest Living, produced with A-1 Steak Sauce, Bush's Best beans and Char-Broil grills, will feature grilling recipes, tips and party planning ideas;
This Old House television show and Beringer Wines will be placing specially designed bottle-neck tags featuring beef recipes, coupons and sweepstakes offers on more than 800,000 bottles;
A flat iron steak promotion at hotel restaurants will reach travelers at more than 220 hotels in 48 states. The flat iron -- itself a product of checkoff-funded new product development -- will be promoted in hotel room table displays, on room key card jackets, on posters in hotel lobbies and elevators and in menu inserts;
In a promotion with health and fitness connections, patrons who buy a "Fiesta Vida Salad" featuring taco-seasoned beef and a beverage at McDonald's during a four-week period this spring receive a pedometer. Partners are the President's Challenge and American College of Sports Medicine;
Sutter Home Wines will reinvigorate its annual "Build a Better Burger" promotion with support from the Beef Checkoff Program;
And a new partnership with Borden Cheese will offer consumers a 55-cent instant coupon for ground beef when they purchase Borden singles.
Cross-promotions will use consumer magazine sweepstakes and Web site links to bring people to www.BeefItsWhatsForDinner.com. A bi-weekly e-newsletter called the "Dinner Bell" goes out to thousands of consumer subscribers with menu planning ideas, as well as recipes, shopping advice, nutritional information and other useful beef insights.
Youth-tested recipes, including three from the recent National Beef Cook-Off, will be featured.
Plus, an array of appetizing beef recipe photo features and inserts will be distributed to food magazines and newspapers reaching millions of hungry readers.
The Beef Promotion Operating Committee on April 5 approved the new elements to the summer promotion. Final U.S. Department of Agriculture approval must be received prior to promotion implementation.
Research from last year's summer grilling campaign shows that these types of promotions work. "Last year's promotion took place in a period of time -- May to Labor Day -- of reduced supplies and higher prices than the year before, yet beef dollar sales volume increased 3.4 percent, and grilling cuts sales volume increased 4.2 percent," according to Randy Irion, NCBA director of retail marketing services. "That certainly indicates that this campaign is helpful to cattle producers as they work to keep beef on Americans' plates."
State beef councils will again play a major role in the rollout of the campaign within their states and regions. For more information about the 2004 Summer Grilling Promotion, visit www.BeefItsWhatsForDinner.com.
Note: Additional information on this subject, including a PowerPoint presentation on the market situation and BSE response efforts, can be found at the following Web location: www.beef.org.