Packinghouse workers often wear rubber boots to protect themselves from wetness or filth. Now they may need them because they have to work knee-deep in government hypocrisy. That is one conclusion evident in the strange case of Creekstone Farms, one that is of renewed relevance with the discovery of a second “mad cow” in Canada this week.
Creekstone is a specialty beef processor with a plant in Arkansas City, Kan. In the last three decades it has built up a reputation for quality beef, especially for the restaurant trade. Creekstone produces “natural” beef from animals raised according to strict specifications, including no use of growth-promoting hormones or antibiotics.
Along the way, it developed a substantial business exporting premium beef to Japan. Such exports were halted when a cow with bovine spongiform encephalopathy (BSE), popularly known as “mad cow disease,” turned up in the United States in 2003.
Creekstone understandably wants to resume this trade. Japan requires that all cows slaughtered in that country be tested for BSE. Creekstone is willing, even eager, to do such testing. But the U.S. Department of Agriculture has prohibited even voluntary testing of all cows at any U.S. packinghouse. The situation is Orwellian. Coming from an administration that touts its support for private enterprise and free markets, it is mind-boggling.
Under the Bush administration, USDA has maintained that 100 percent testing for BSE is not necessary for protecting public health and should not be mandatory. I, and a lot of other economists and epidemiologists, believe that is correct. The incidence of BSE is extremely low, and spending billions to test every cow slaughtered would do a lot less to improve public health than spending equal sums elsewhere. Requiring testing would make us less well off as a society.
Not requiring testing, however, is a far cry from prohibiting voluntary testing. If beef buyers prefer meat from tested cows, however irrational it may be to economists or public health officials, let them have it.
It is an axiom of economics that governments should not ban contractual agreements between a willing buyer and a willing seller when such agreements do not harm any third party. It is an axiom of successful business people that “the customer is always right.”
Japanese consumers (and voters) clearly want beef that has been tested for BSE. A U.S. business is willing to supply it. No consumer in the United States or elsewhere suffers if Creekstone tests brainstems from all the animals it slaughters.
USDA has gone through all sorts of rhetorical contortions explaining its ban, but the situation is pretty clear. USDA has taken the position that 100 percent testing is not necessary. Some large packing firms oppose such testing, as do many beef farmers and ranchers. Allowing even one small specialty firm to engage in full testing would open a chink in the armor of this position.
The logic goes that if Creekstone starts voluntary testing, it would supply ammunition to groups that want mandatory testing. Moreover, it might undercut the U.S. trade position that scientifically unjustifiable sanitary regulations not be used to restrict imports. Ergo, voluntary testing by Creekstone must be prohibited.
Creekstone’s plight is doubly ironic because it has been doing precisely what agricultural economists — including many employed by USDA — have told agribusiness firms to do for two decades. It has moved away from meat as a low-value-added commodity to meat processed to satisfy specific consumer groups.
It has identified niches where identity-preserved, high-quality meat can earn more money not only for the firm, but also for the farmers and ranchers who sell their animals to Creekstone. Now the administration orders Creekstone to refuse to meet a legitimate preference of one of its best customers.
A dynamic firm wants to expand U.S. farm exports but cannot because a Republican administration is squelching free enterprise to please a special-interest group. One does not have to be a Libertarian to find this outrageous.
© 2005 Edward Lotterman
Chanarambie Consulting, Inc.