Mad cow in Canada puts NZ deals at risk

By LIAM DANN

New Zealand beef exporters could face serious fallout from an outbreak of mad cow disease in Canada.

"The immediate impact is going to be a drop in the price of beef in Canadian and US markets," said Ben O'Brien, trade policy manager for Meat New Zealand.

North American consumer demand was likely to fall in the short term as shoppers switched to other meats, he said.

That's bad news for New Zealand exporters.

More than 50 per cent of New Zealand's $2 billion beef export trade goes into the North American market.

Last year exports to the US were worth $1 billion and exports to Canada $208 million.

A single case of bovine spongiform encephalopathy (BSE) was confirmed in the western Canadian province of Alberta on Tuesday.

The human form of BSE is variant Creutzfeldt-Jakob disease (vCJD), an ultimately fatal disease which causes paralysis.

Shares in hamburger chains McDonald's and Wendy's dropped by more than 6 per cent after the announcement.

To avoid a panic the US has put an immediate ban on all imports from Canada.

That would cause a glut of local beef in the Canadian domestic market, O'Brien said.

All exports to North America are governed by quotas.

A Canadian Government committee was due to meet this month to set quotas for the next year, O'Brien said.

It was now possible they would look to lower the volumes of beef they import, he said.

In the US a shortfall of supply could be positive for New Zealand as big importers such as McDonald's look for safe supplies elsewhere.

But if the US were to increase its imports of New Zealand beef it would have to revise quotas, so nothing was likely to change in a hurry, O'Brien said.

In general any case of BSE anywhere in the world was a bad thing for the sector, he said.

PPCS chief operating officer Keith Cooper said it was too early to make any major decisions.

A lot depended on how quickly the disease was dealt with and how long the US import ban stayed in place, he said.

Richmond chief executive Graeme Milne said his company would also adopt a wait and see approach.

"We're one day into it and it's one cow," he said. "It could go either way."