Opportunity Disguised as Calamity
In December 2003 the much feared Bovine Spongiform Encephalitis (BSE) found its way into the US. The news of the infection in just one cow wreaked havoc on the US cattle market as every US trading partner slammed its border closed and many US consumers turned to other protein sources. Since the discovery of that first case of BSE, three other confirmed cases and multiple false alarms have served to fuel concerns that BSE could become a widespread problem in the global beef industry. The US market has rebounded well, but many of the concerns about the potential spread of the disease remain.
The industry response to these fears and concerns has been both regulatory and entrepreneurial in nature. USDA has implemented rigorous testing of at-risk animals and banned certain parts of animals from entering the food chain. US diplomats have been working to develop new trading agreements to reopen export markets. And, companies and organizations of all types, as well as individuals, have capitalized on new marketing opportunities created as a direct result of BSE arriving on US soil.
Because BSE has only been diagnosed in animals over 30 months of age and because being able to track the source of an infection is critical to the ongoing effort to eliminate the disease, a new market niche has surfaced. USDA had already developed protocols for source and age verification programs, but the appearance of BSE gave such programs a new, more serious relevance. Packers need cattle that they can be confident are ‘BSE free’, and cattle that have been age and source verified through a USDA monitored program is the only sure way to fill that need. Because there still are limited numbers of these animals available, varying levels of monetary incentives, or premiums, have been implemented by packers to help pull more source and age verified animals into the market.
What began as one of the darkest days in the history of the US beef industry actually bloomed into one of the brightest opportunities that the industry has seen in a long time: producers could actually get paid for doing something extra. Today, the premiums for source and age verification at the feeder calf level range from $12 to $25, and USDA is predicting continued strong demand for source and age verified calves even as the concerns over BSE diminish.
