030528 Mad Cow Case Triggers Economic Shock Wave

Calgary, Alberta - Canada reported its first case of mad cow disease in a decade on Tuesday, sending shock waves through the North American food industry just weeks after the country's economy was damaged by the SARS threat.

A cow in Alberta, Canada's top cattle-producing province and a major beef exporter to the United States, tested positive on Friday for brain-wasting bovine spongiform encephalopathy, or mad cow disease, in a test conducted after it was slaughtered last winter, government officials said.

"The actual test was taken Jan. 31 from a cow in Fairview, Alberta," an official with the Canadian Beef Export Federation said. "It's just one isolated case of an 8-year-old cow."

But the report sent a major chill through the continent's economy, triggering a bans on Canadian beef and sparking a sell-off in cattle futures and food-related stocks such as hamburger giant McDonald's Corp. The currency in Canada, the world's third-largest beef exporter, also fell after the news but later rebounded.

The animal was not processed and its northern Alberta herd of 150 animals will be slaughtered, as will any other found to be affected, Canadian Agriculture Minister Lyle Vanclief told a nationally televised news conference in the Alberta capital of Edmonton. Vanclief said he did not know the cow's origin.

"The investigation to date indicates the animal in question was sent to a rendering plant after slaughter. I want to stress that the animal did not go into the food chain," he said.

Other herds had yet to be quarantined. "We've only been investigating this for about 24 hours," a government scientist said.

The United States quickly slapped a temporary ban on imports of Canadian cattle, sheep and goats as well as meat and other products. But the U.S. Agriculture Department said the threat of transmitting the disease to animals in the United States was very low and it planned no further measures.

Japan and South Korea, the third and fourth largest markets for Canada's beef exports, issued similar importation bans, with South Korea also banning the importation of Canadian dairy products.

Canada's only other case of mad cow disease was in 1993, but the animal was imported from Britain, where the disease led to the slaughter of 3.7 million cattle and a U.S. ban on British imports. Its carcass was destroyed, as was its herd.

The new case is a major blow to Alberta, where ranching is as ingrained in the culture as it is in Texas. About 5.5 million cattle dot the landscape, outnumbering people by almost 2.5 million.

The western province accounts for nearly 60% of Canada's beef production, providing C$3.8 billion ($2.8 billion) in annual farm cash receipts.

In 2002, Alberta shipped more than half a million live cattle to the United States, even as ranchers faced financial crisis as a drought made hay scarce.

STOCKS, FUTURES, CURRENCY TUMBLE

On Wall Street, shares of Tyson Foods Inc., the biggest U.S. beef processor, fell 5% on the news and McDonald's sank nearly 7%, making the stock the biggest loser in Dow Jones industrial average on Tuesday.

U.S. cattle futures tumbled their allowable daily limit on the Chicago Mercantile Exchange.

The Canadian dollar, which has been soaring in recent weeks, skidded on the mad cow report before regaining lost ground.

"It still remains to be seen how serious it is but the news is not good for Canada, without a doubt," said a currency trader at a major Canadian bank. "We're trading off the headlines."

In April, Canada's economy was hit by fears over flu-like severe acute respiratory syndrome, especially in Toronto, where trade and tourism sputtered. Canada recently declared victory in the battle against SARS, but not before the affliction killed 24 people in the Toronto area.

Some experts believe mad cow disease may have been spread by cows in Britain who were fed the remains of sheep contaminated with scrapie. Other scientists say the disease arose from a mutation in a cow in the 1970s.

More than 80 people in Britain and Europe have died from the human variation of mad cow, called Creutzfeldt-Jakob disease.

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