FAO STUDY PROJECTS LITTLE IMPACT FROM 'MAD COW DISEASE' CRISIS ON WORLD MEAT ECONOMY
Press Release
FAO/3632
FAO STUDY PROJECTS LITTLE IMPACT FROM 'MAD COW DISEASE' CRISIS ON WORLD MEAT ECONOMY
19960508 Lasting Impact Predicted if Links to Human Illness ProvenROME, 8 May (FAO) -- The Food and Agriculture Organization (FAO), in a report released today, said that the world meat economy would be little affected in the medium-term by the current crisis caused by "mad cow disease", as bovine spongiform encephalopathy has come to be known. In its initial assessment, the FAO used a model that simulates the impact of some possible changes in European Union policy and consumption behaviour, as well as linkages between the food and feed commodities.
Mad cow disease was elevated to crisis level, severely disrupting meat markets of the European Union, when the Spongiform Encephalopathy Advisory Committee of the United Kingdom announced on 20 March that the most likely explanation for 10 cases of variant creutzfeldt-jakob disease in people under 42 was ingestion of beef products from cattle with the bovine illness.
The FAO report suggests that the global impact of the crisis on prices, production, consumption and trade of the main livestock products is likely to be small. However, should a link between the cow disease and the human one eventually be proven, the effects would be much more profound and long lasting, the report said, adding, "the effects of the steps that have already been taken and the reactions by consumers indicate that the economic problems which would have to be faced could be considerable".
Assuming the culling of half of the dairy and beef herds in the United Kingdom, in the absence of definite policy decisions, and a 10 per cent drop in beef consumption in the United Kingdom and a 5 per cent reduction in consumption in other countries of the European Union, the changes in global production, consumption and trade by the year 2000 do not exceed 1 per cent of the baseline projections. The impact on bovine meat prices is expected to remain small, the increases reaching nearly 2.5 per cent in 2000. The simulations also suggest that world prices of feedgrains and oilmeals will not be subject to notable changes.
According to the report, the overall impact on usage of feedgrains and oilmeals will essentially depend on the extent of decline in overall meat consumption and of the substitution that will take place between different
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meat products. If human health is found not to be affected, most other effects are likely to be temporary, depending on the success of governments, particularly of the United Kingdom, in reassuring consumers about the safety of British beef. This will depend on their ability to contain and then eradicate the disease from the cattle and dairy herds.
The FAO report was based on a number of assumptions on the extent and timing of culling of dairy cattle and cows used to produce beef calves in the United Kingdom, the pattern of herd rebuilding in that country, the expected reduction in beef consumption and the consequent shift to other types of meat in the European Union. On the supply side, the report uses a single scenario to capture the effects of slaughtering, herd rebuilding and the resulting changes in the off-take rate in the United Kingdom. The report assumes the combined effects on United Kingdom beef production are spread over six years, leading to reduction of 6 per cent in 1996 from the 1995 level and a gradual fall to about 3 per cent of the 1995 level in 2001. With no detailed policies announced by the United Kingdom at the time of writing, the report concedes "it is not possible to determine the degree of 'realism' embodied in this particular scenario."
The report says that the major impact will be felt in the European Union, where production of bovine meat is expected to be affected negatively throughout the 15-year projection period, while the negative impact on the consumption of bovine products in the European Union was seen as significant only in the short run.
The FAO report was produced for its Intergovernmental Group on Meat, meeting in Bologna, 8-10 May. It provides basic information on the current state of knowledge on mad cow disease and the possible linkages between the bovine and human diseases and it assesses the possible impact of the crisis of the world meat economy using FAO's World Food Model, based on certain assumptions rather than firm policy decisions.
The model used for the FAO report covers the impact of mad cow disease on meat prices, meat and poultry production levels, global meat consumption, trade and feed demand.
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Note:The FAO report "The Possible Effects of the Bovine Spongiform Encephalopathy Crisis in the United Kingdom on the World Meat Economy" is available from 8 May by telephoning the FAO Press Office (396) 5225- 3625.