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U.S. companies start to feel effects of mad cow disease
© St. Petersburg Times, published February 14, 2001 Poet Rudyard Kipling certainly wasn't writing about the terror of mad cow disease when he wrote this famous line. But to U.S. investors these days, Kipling's words seem right on target. The fear of mad cow disease, spread by tainted beef and beef byproducts, jumped this year from Britain across most of Europe. The threat of the disease has spurred boycotts and bans on beef imports across Europe. Canada has even closed its doors to Brazilian beef -- much to Brazil's economic concern. So far, the mad cow swirl that's forced the slaughter of tens of thousands of cattle and left more than 100 people dead in Europe appears to have left the United States largely untouched. No cases of the disease, formally known as bovine spongiform encephalopathy, have yet been found in U.S. beef herds. No person in this country is known to have contracted the nasty human form of the disease. Federal regulators say they are monitoring food supplies closely. But inevitably, a growing international panic over a disease that leads to a slow but wretched death in humans is starting to touch U.S. businesses. No surprise, restaurant chains built on selling lots of beef are on the front lines. Right behind are companies that make animal feeds, drug companies that use beef products in vaccines, candy companies that rely on beef gelatins as key ingredients and even fertilizer companies that sell bone meal to gardeners. They may all be players battling the spread of mad cow disease. Wall Street and wary investors are starting to take notice. Cattle get mad cow disease from eating parts of other animals ground up in feed -- specifically the brains and spinal cords of infected cows. Most researchers think humans contract a variation of the disease by eating the meat of an infected animal. In humans, the disease becomes new-variant Creutzfeldt-Jakob disease, also known as CJD, and can hide undetected in the body for years. Once it strikes, the Alzheimer's-like disease slowly riddles the brain with holes. Victims often suffer such a loss of muscle control that they sometimes die of starvation because they can no longer swallow. Right or wrong, among U.S. companies McDonald's already is feeling the brunt of the mad cow scare. The fast-food giant gets a third of its operating income from sales in a now beef-scared Europe. That explains why the world's biggest burger chain last month reported its first down quarter in 36 years as a public company. At Wendy's International, chief executive John Schuessler this week called the U.S. food supply "the safest in the world." But he plans to meet with new U.S. Agriculture Secretary Ann Veneman soon "to urge tougher procedures and enforcement." And, without offering details, he said Wendy's has "contingency plans" in place to deal with any domestic outbreak of the brain-wasting disease. Chicago's Viskase Cos., a sausage-casing company whose biggest owner is Tampa Bay Bucs owner Malcolm Glazer, is "closely monitoring the negative impact that the mad cow disease situation in Europe will have on the demand for products in 2001." Even Tampa-based Outback Steakhouse investors are talking about the mad cow factor. The topic is prominent this month on the Yahoo Web site's message board devoted to Outback discussions. And Atlanta-based Rare Hospitality, the owner of the popular LongHorn Steakhouse chain (well known in Tampa Bay), says it is tracking mad cow sentiments. "Consumer preferences could be affected by health concerns about the consumption of beef ... or by specific events such as the outbreak of mad cow disease which occurred in the United Kingdom," the company stated this month in a regulatory filing. Even some drug companies that make Iletin, an insulin product made partly from beef products, are halting production. Why has mad cow disease smacked Europe but left this country apparently unscathed so far? A big reason is that Europe feeds its beef cattle a heavy diet of livestock parts that people won't eat, which boosts the protein content of their cattle feed. United States ranchers tend to feed their cattle with more grains and soybean products for protein. But nothing is guaranteed. In 1997, the government banned the feeding of leftover animal parts to cattle. But late last month, a Texas feed mill run by Purina Mills violated safety procedures by apparently feeding cattle the remains of other cattle. (The cows were quarantined.) Wall Street did not like the message left by such a shoddy breakdown in the U.S. food supply. A vulnerable McDonald's stock fell about 7 percent before later recovering. None of this is meant to cause panic in the United States. Still, the increasing globalization of U.S. corporations and international trade will make it all the more challenging to control the spread of a disease whose symptoms in humans may not appear for years. Last week, a U.S. advisory panel recommended that anyone who had lived in France, Portugal or Ireland for a total of 10 years since 1980 be prohibited from donating blood. That's on top of last year's rule banning blood donations from anyone who lived in Britain for six months between 1980 and 1996. In the meantime, let's keep our heads. And our best wishes to Europe -- where at least one enterprising life insurer now offers discounts to vegetarians. -- Contact Robert Trigaux at trigaux@sptimes.com or (727) 893-8405.
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