Beef Industry Feeling The Heat Food-Safety Scares Threaten Overseas Sales As Domestic Consumption Drops

The beef industry is on the defensive again because of food-safety scares.

At a time when Big Beef increasingly counts on overseas markets for growth as changing American eating habits reduce meat consumption at home, reports of contamination and government investigations are raising new clouds and roiling beef markets.

The latest blow to the industry came Thursday, when South Korea suspended imports of beef produced in Nebraska after reporting finding E. coli bacteria last week on the surface of frozen and sliced beef bought from IBP Inc.

News of that discovery scared away customers from South Korean restaurants serving beef. Major stores reported sharp drops in sales of imported beef.

On Wednesday, prices of contracts for future delivery of cattle plunged to their lowest level since late June when Hudson Foods Inc. revealed that it has been subpoenaed in a federal grand jury investigation in this summer’s recall of 25 million pounds of ground beef - the largest meat recall in U.S. history.

In addition to the Hudson recall, the U.S. Department of Agriculture is investigating a Nebraska BeefAmerica plant suspected of supplying contaminated meat found in a Virginia grocery store.

It is too early to know what the long-term repercussions will be, said Dennis Burson, a University of Nebraska-Lincoln professor of meat science and a meat specialist.

“Many times you’ll see a dropoff in sales initially,” Burson said. “As long as afterwards there’s no further problems you may see a rebounding.”

During an E. coli outbreak in 1993 that sickened more than 500 hamburger eaters and killed three children, consumers turned their backs on beef. Annual consumption bottomed out at 61.6 pounds a person, according to the National Cattlemen’s Beef Association.

Consumption climbed back to 63.4 pounds a person in 1997, far below the 17-year high of 74.7 pounds per person in 1985.

A big fear of producers is that foreign markets may use these cases as a reason to shun American beef in favor of local product, said Sara Lilygren, senior vice president at the American Meat Institute, a trade association representing 300 companies.

Foreign markets “are very important to the economic health of the beef industry,” she said. “When they find E. coli in U.S. shipments they can sometimes overreact in a way that’s extremely damaging to the U.S. beef industry.”

To combat a fear of U.S. meat in foreign markets, IBP works to educate customers, butchers and grocers about food safety precautions, said company spokesman Gary Mickelson.

“I think it all boils down to doing the best job everybody can to promoting food safety,” Burson, the meat science professor, said. “We’re just currently operating in a system that’s not 100 percent risk free.”