• Mad cow disease found in Washington Holstein

WASHINGTON, D.C.—Federal officials announced that the first case of mad cow disease ever found in the U.S. has been tracked to a Holstein (a popular black and white dairy cow) near Mabton, Wash.

According to the Wall Street Journal, on Dec. 9, a sample of nervous-system tissue from the animal was collected by meat inspectors after it arrived at a small processor; it appeared the cow was suffering from a neurological disorder.

The economic implications could be catastrophic for the U.S. cattle industry, which is the single-largest part of the American agriculture sector. U.S. consumers spend more than $50 billion on beef annually, and the entire cattle industry generates some $180 billion in economic activity.

According to CBSMarketwatch, international impact already is being felt. Japan and South Korea issued bans imports of U.S. beef. on Dec. 24, as did Taiwan Australia and Singapore.

The U.S. banned Canadian beef imports in May when a single Alberta beef cow tested positive for mad-cow disease. The disease technically is known as variant Creutzfeldt-Jakob Disease (vCJD).

Consumption of infected meat is thought to cause the rare, human form of the disease, which has been linked to about 140 deaths, mostly in Britain and Europe. Scientists don't believe the milk of an infected dairy cow can carry the disease.

In a Dec. 24 e-mail alert, Carl Sibilski, equity analyst for Morningstar, Inc., wrote that he will retain previously stated fair-value estimates for McDonald's, Wendy's, Sonic and Outback Steakhouse (all stocks he covers) regardless of the announcement. Additionally, panic selling of those company's shares should be considered a "potential buying opportunity" for others.

"While the restaurants are somewhat at the mercy of consumers, who may become scared of beef products, there was no indication that infected beef entered the food chain or that anyone became ill," Sibilski wrote. "Still, negative public perception of the issue could result in lower sales or at least a shift toward non-beef items."

In Sibilski's view, a mad cow scare will have a more serious and longer-term impact on commodity markets via a decrease in imports, which would boost domestic supplies. Still, lower prices, he predicts, "could help offset losses in sales leverage experienced by restaurants as a result of negative consumer reaction."

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