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Release No. 0031.04

of\
Remarks by Agriculture\
Secretary Ann M. Veneman

# Before the House Agriculture Committee January 21, 2004

**SECRETARY VENEMAN**: "Well thank you very much, Mr. Chairman and thank
you to the members of the Committee for being here today. I do
appreciate the opportunity to be today to discuss this recent find of a
single BSE-positive cow found in Washington State, and the response that
USDA has taken as a result of this find.

"I have had the opportunity to talk with many of you over the past days
and months and I appreciate the input I\'ve received, and your input is
valuable as we continue to work through the many issues as the chairman
said that surround this situation.

## Response actions on and after December 23

"As was indicated, on December 23rd, we received word that a tissue
sample taken as part of our routine surveillance system had tested
presumptive positive for BSE, or what is commonly referred to as mad cow
disease. That was only four weeks ago, but in some ways it seems like
four months, especially when you consider all that has transpired.

"We had in place a BSE response plan, which was first developed in 1990,
and has been continually updated since then to reflect the latest
knowledge about the disease, as well as lessons learned from other
countries who have had cases of BSE. Upon hearing of the BSE find, we
immediately began to implement our plan.

"We began an epidemiological investigation to determine the origin of
the cow and to identify and locate her offspring and cohorts. We also
began the process of tracing the meat forward and learned that, while
meat from this cow went into the food supply, the high-risk products,
such as brain and spinal cord, did not enter the human food system.

"We feel very confident that the meat that did enter the food supply
posed virtually no risk to public health. However, in an abundance of
caution, we traced the meat from the animal and issued a recall of the
product. Also, consistent with our response plan, we sent the tissue
sample for confirmation to the World Organization for Animal Health
(OIE) reference laboratory in Weybridge, England.

"We also decided that it was important that we immediately inform the
public. I felt then and I still feel very strongly that we have an
obligation to the American public and to our industry to be as
transparent, timely and accurate as possible in our communication
efforts.

"Upon learning of the presumptive positive, I asked our scientists how
confident they were in these preliminary results that they had presented
to us. When our experts said they were very confident in the accuracy of
the tests conducted by our scientists at the National Veterinary
Services Laboratory in Ames, Iowa, we made the information public on the
same day I learned of the presumptive positive test, December 23rd --
even though the lab in England had not yet verified our findings.

"After the announcement, we began daily briefings that were broadcast
live via our website and, in some cases, broadcast live on network and
cable television so that those who were interested could hear the latest
information and updates. From December 24th through New Year's Eve, some
100,000 people viewed our briefings via the web and thousands more
participated through interactive phone lines.

"When considering actions to be taken following the find, we repeatedly
asked ourselves and our staffs three questions: First and foremost,
what, if any, additional actions needed to be taken to further protect
public health; second, what additional actions, if any, need to be taken
to prevent potential spread of the disease in the cattle herds; and
third, how can we best maintain consumer confidence in the safety of our
beef supply.

"On December 30th, one week after the find, I announced a series of
actions to further enhance our already strong safeguards. These included
an immediate ban on non-ambulatory, or so-called "downer" animals, from
the food system and further restrictions on what we call specified risk
materials -- such as brain and spinal cord tissue -- from entering the
food supply. We also announced that meat from cattle tested for BSE will
be held until the test is confirmed negative -- so-called "test and
hold" policy. These measures were published on January 12th as interim
final rules.

"We were able to act so quickly because of the advance planning we had
undertaken. After the find in Canada on May 20th of 2003, and prior to
the find in Washington State in December, we had been working on new
regulations on specified risk materials, so much of the regulatory
analysis had already been completed. In addition, we said that we will
maintain an aggressive surveillance system by doubling the number of
animals tested and continuing to target high-risk animals.

"We also announced that we will be expediting the implementation of a
verifiable system of national animal identification. Currently, many
animals can be identified through some system of animal identification.
In fact, the BSE-infected cow in Washington had an animal ID, which
greatly facilitated the traceback.

"Significant work to develop such a system has already been
accomplished. Over the past 18 months, USDA has worked with the National
Institute for Animal Agriculture, and state and industry groups, to
identify national standards for an animal identification system that
will enhance the speed and accuracy of our response to animal disease
outbreaks. I have asked USDA's Chief Information Officer to make it a
top priority to develop the technology architecture necessary to
implement an effective and verifiable system throughout the country. Our
goal is to achieve a uniform, consistent, and efficient national system.

"On Saturday, December 27th, we learned that the ear-tag matched that of
a Canadian cow that was exported to the U.S. We made the public
announcement of that information the same day, and further announced we
would be confirming that find through DNA testing. On January 6th, the
DNA result, along with other records and documentation, allowed the U.S.
and Canada to confirm that the cow originated on an Alberta dairy farm.

"In keeping with our commitment to continually review our systems, I
also announced on December 30 that I would convene an international
panel of experts to review our investigative efforts. We are asking them
to make recommendations for possible further enhancements to our
systems, including recommendations on changes to our current
surveillance systems, in light of the current situation. This team will
be composed of the same experts who reviewed the Canadian situation,
with the addition of an expert from OIE. We expect them to be here this
week to begin their review.

"We are also in the process of approving so-called "rapid tests" for
BSE. On January 9, we announced that the Animal and Plant Health
Inspection Service would begin formally accepting license applications
for BSE rapid test kits. These tests, among other things, are less
specific than the immunohistochemistry test that USDA has designated as
the official test for BSE, but can produce results for screening
purposes more quickly. Internationally, this IHC test is considered the
"gold standard" diagnostic test method.

"Our Animal and Plant Health Inspection Service is now reviewing and
responding to the data submissions, physically inspecting the facilities
where these test kits would be produced, and actually testing these kits
at the National Veterinary Services Laboratory in Ames, Iowa.

"Last week, on January 13th, I traveled to Ames, Iowa, to visit with our
scientists at the National Veterinary Services Laboratory to get a sense
of how the testing process currently works, to listen to their views
about revisions to our testing program, and to discuss what additional
resources they need to get their jobs done.

"As you all know, the National Centers for Animal Health in Ames are the
linchpin in our animal health infrastructure. We have world-class
scientists there, and they need world-class facilities. That is why I
was pleased to announce last week that the President's 2005 Budget,
which will be announced in early February, will include \$178 million to
complete the renovation of the USDA campus in Ames. This houses a
critical mass of APHIS' diagnostics and veterinary biologics
laboratories, as well as many of our Agricultural Research Service
researchers.

"When completed, the campus will be the most modern and best-equipped
animal disease diagnostic and research facility in the world. If
approved by Congress, these funds would allow us to fully complete this
project by the end of 2007 under an accelerated contracting and
construction schedule.

"All the actions that we are taking are in addition to the strong
safeguards that we had in place before this find on the 23rd of
December. We have continually reviewed the scientific research,
conducted risk assessments and strengthened our protective measures
accordingly.

"As you know, USDA requested Harvard University to conduct an
independent risk assessment to evaluate preventative measures already in
place and to identify additional actions that should be taken to
minimize the risk of BSE. After three years of extensive data gathering
and analysis, these results were announced and released in November of
2001. At that time, the Harvard study found that the BSE is highly
unlikely to become established in the United States, should the disease
be detected in our country. As a result of the Harvard analysis, we
announced additional preventative actions, such as increased
surveillance and the testing of certain ground beef products for central
nervous system tissue.

"In 2003, we asked Harvard to reassess the situation, taking into
account the BSE find in Canada in May. In August, Harvard reaffirmed the
findings of the initial study that systems already in place would
prevent BSE from spreading if it were found in the United States.
Harvard also concluded that even if infected animals or ruminant feed
material entered the U.S. animal agricultural system from Canada, the
risk of spreading extensively within the U.S. herd was extremely low.

**[Impact on domestic and export beef markets]{.underline}**

"Throughout this process, we have been committed to maintaining public
health safety and consumer confidence in our systems. Some 90 percent of
U.S.-produced beef is consumed domestically, and all indications are
that the confidence of the U.S. consumer in the safety of American beef
remains very strong. Retailers and food service outlets are reporting
virtually no adverse effects on consumer demand as a result of the BSE
finding. We believe this is due in part to the quick and aggressive
steps the Administration has taken to protect the public health.

"Unfortunately, most of our export markets, including our key buyers --
Japan, Korea, Mexico and others -- immediately closed their markets to
U.S. beef after the December 23rd announcement.

"In 2003, the quantity of U.S. beef exports is estimated at about 2.6
billion pounds, accounting for 10 percent of U.S. beef production. The
value of exports of our beef, veal and variety meats is estimated at
about \$3.8 billion for 2003, and we exported another \$65 million worth
of live cattle. The products that otherwise would have been exported in
2004 must now be absorbed into the domestic market.

"The loss of exports had an immediate impact on the cattle market,
resulting in an initial drop of 15 to 20 percent in cattle prices on
cash and futures markets. However, prices have continued to strengthen
over the past week. Markets are now down as of last week about 10 to 15
percent, and today's prices indicate even a little lower than that -- or
higher than that, I should say. They are down about 10 to 15 percent
from last week levels prior to the BSE finding, but current cattle
prices remain above year-ago levels.

"Regaining our export markets is a top priority for the Administration.
The conditions our trading partners impose on us for re-opening trade
must reflect what science tells us. We know that the risk to public
health from BSE is very low in countries that have no or low incidence
in cattle, and that also have appropriate mitigation measures in place.

"The United States is leading the effort to ensure that the
international response to BSE is science-based. After the find in Canada
last May, we reacted exactly the way countries are now treating the
United States -- we shut off all beef and cattle imports from Canada.
However, after conducting a complete and thorough investigation into the
incident, and evaluating the additional safeguards that Canada made to
its already strong system, we allowed trade in low-risk products to
resume in late August.

"The United States reviewed the scientific evidence and determined that
imports of boneless beef from animals under 30 months of age and other
low-risk products could safely resume. The U.S. decision was consistent
with international scientific standards that allow for trade to resume
when a country has taken necessary actions to prevent the spread of BSE.

"Last fall we published a proposal to extend the trading, to allow live
animals and certain other products to enter the United States. The
comment period on that rule closed on January 5th. In light of the
finding in Washington State and the origin of the cow, we will consider
the next steps on this proposal after our investigation is complete, and
determine how to obtain further public comment on the proposal, or if we
need to revise the original proposal.

"In addition, together with Canada and Mexico, we have asked the OIE to
clarify its guidelines regarding trade among countries with BSE so that
science guides the actions of all countries. We expect the OIE to issue
an updated chapter on BSE this spring.

"U.S. beef is safe for consumers in the United States and all around the
world, and we are urging our trading partners to base their decisions on
science. Since December 23rd, we have worked continually to inform our
trading partners about the case, the steps we are taking to investigate
the situation, and the additional safeguards that we have implemented.

"Within days of the finding, we dispatched USDA's senior trade advisor,
David Hegwood, and Dr. Chuck Lambert, Deputy Undersecretary for
Marketing and Regulatory Programs, to Japan and South Korea to explain
the investigation and the rigorous safeguards that we already had in
place.

"Earlier this month, U.S. Trade Representative Zoellick and I each had
very encouraging meetings with the Japanese trade minister. Last week, I
had a lengthy conversation with Japan's Minister of Agriculture Kamei. I
impressed upon him the importance of finding a practical solution to
allow resumption of trade and releasing into commercial channels the
considerable quantity of beef shipped to Japan prior to December 23rd.

"Minister Kamei stated that Japan is looking forward to resuming trade.
As a result, Dr. J.B. Penn, Undersecretary at USDA for Farm and Foreign
Agricultural Services, is in Japan today leading a delegation of USDA
and FDA officials to further engage the Japanese in discussions to
reopen that important market for our beef.

"In addition, I have talked with ministers from Canada, Mexico, the
Philippines and others on an ongoing basis to keep them informed of our
progress. We have been quite pleased with the reactions from both Canada
and the Philippines, as both countries have allowed at least a portion
of their markets to remain open to our beef.

"Dr. Penn and Mr. Bill Hawks, USDA's Undersecretary for Marketing and
Regulatory Programs, traveled to Mexico a week or so ago for very
productive discussions, and other U.S. officials just returned from
China where these issues were discussed.

"And last Friday, I met with my counterparts from Canada and Mexico, and
we discussed the need to enhance and coordinate a consistent North
American response to the animal health and trade issues that BSE raises.
We agreed to develop an enhanced consultative process led by senior
officials in each of our respective departments to facilitate these
efforts. The work is already underway, and we expect the officials to
meet within the next 30 days.

"In addition, technical teams from Japan and Mexico spent several days
in the United States over the past couple of weeks, meeting with
technical experts at USDA and the Food and Drug Administration. The
Japanese team also traveled to the State of Washington to review the
investigation there, and the Mexicans visited processing facilities in
Colorado.

"USDA staff at U.S. embassies abroad continue to inform foreign
governments of actions taken and reassure them of the safety of our
beef. In addition, we held a briefing here last week for all foreign
embassies to keep them informed of new developments in the BSE
investigation and to respond directly to their questions.

"Our efforts to restore our foreign markets continue to be a top
priority, and we are urging our trading partners to resume trade based
on sound scientific principles.

"Our investigation into the case in Washington State is ongoing. In just
four weeks and one day, we have made a great deal of progress in both
the traceback and trace-forward from the infected animal. Our
investigators have worked hand-in-hand with the State of Washington and
other states, as well as with Canadian authorities.

"Because of our advance planning and our continuous review of BSE
risk-mitigation measures -- and particularly the intensive review we
have undertaken since the Canadian find in May of last year -- we were
able to respond very quickly and effectively to the BSE find in
Washington State.

"We are continuing to trace the other animals that came across the
border with the infected cow and are finding and testing those animals.
To date, all animals tested have been negative for BSE. We have
implemented significant policy changes and had numerous meetings with
our international counterparts. We have worked to be as transparent in
our process as possible, and provided updated information as quickly as
possible.

"I am very proud of the accomplishments of our dedicated team at USDA
and the work that they've done in this process. Many of them are with us
today, including Under Secretary Hawks, Under Secretary Murano, and
Chief Economist Keith Collins. But I'd like to especially recognize our
chief veterinarian, Dr. Ron DeHaven, for his extraordinary work
throughout this process.

"We will continue to provide timely updates to the public as information
is available to us. We will continue to update this on our website as
information is available.

"Mr. Chairman, again, thank you very much for holding this hearing
today. We appreciate the opportunity to inform the agricultural
community and the broader public of the actions we have taken.

"We recognize that there are many different ideas and opinions about how
we can achieve the most robust system possible to protect the public
health and guard against BSE. I look forward to the opportunity for
dialogue on these issues that this hearing affords us. And I am pleased
to take questions at this time. Thank you very much."