A Case for Consideration: USDA v. Creekstone Farms,
USDA Protects Producers from their Own Markets

Clark Wolf, Director of Bioethics, Iowa State University

 

Protecting Consumers from their Fears?  Or Cutting Off a Lucrative Market?

 Creekstone Farms wanted to sell its beef to Japanese consumers, who are wary of the possibility that U.S. beef might be unsafe because of Bovine Spongiform Encephalopathy (BSE), popularly known as ‘mad cow disease.’  Creekstone proposed to test all its cows.  But the United States Department of Agriculture (USDA) refused to allow the testing, arguing that existing safeguards are sufficient to guarantee safety.  Is it appropriate for the USDA to protect producers from the fears of their consumers?
 

Creekstone and the USDA: Protecting Producers from Wary Consumers?

 
Because of fears of BSE, Japan banned beef imports from the United States in 2003.  The ban affected individual producers differently, depending on their marketing strategy.   Creekstone Farms reported losing a third of its sales, prompting the layoff of about 150 people.  The ban was lifted in 2005, but was briefly reinstated in 2006 when spinal cord parts were found in a veal shipment from the U.S.  Japanese consumers and policy makers view American food safety standards as inadequate.  Because of this, Japan still insists on special import standards to insure that no cattle younger than 20 months are imported to Japan.  Tissue that might transmit BSE, like brain and spinal cord tissue, must be removed.
 
In an effort to increase sales to Japan, and to market their product to wary Japanese consumers, Creekstone Farms took an unusual step.  They proposed to test every one of their animals for BSE, using test kits that are sold only by the USDA.  Creekstone spent considerable resources to build a special testing lab in a packing plant.  They then ordered testing kits.
 
But the USDA refused to sell the kits. The USDA argued that random testing is entirely adequate to insure the safety of U.S. beef.  Further, the USDA asserted, the tests are neither necessary nor effective to guarantee food safety.  They’re not effective because they can’t detect BSE early enough—not until very shortly before a cow develops the symptoms that would clinch a diagnosis anyway.  They’re not necessary because meat can most effectively be made safe by removing risky materials and through the existing regulations that prohibit “mammalian protein” in cattle feed. (DeHaven, 2006)  This means that dead cows cannot be fed to live ones any more.
 
Ron DeHaven, administrator of the USDA Animal and Plant Health Inspection Service, took his case to the public in a widely read editorial.  DeHaven argued that U.S. meat is already safe:
 

“Only two positive BSE cases were detected out of more than 764,000 samples collected as part of our enhanced surveillance program.  Moreover, seven years of surveillance data, which were recently released, found that the prevalence of BSE in the U.S. is less than one case per 1 million adult cattle, with the most likely range of infected animals being four to seven (years of age?).” (DeHaven, 2006)

Creekstone Farms sued the USDA for the right to purchase testing kits for their cattle. In a news conference, John Stewart, who was then CEO of Creekstone, said:
 

“We’re not in any way saying that U.S. beef isn’t safe; we believe it’s the safest beef supply in the world, but that’s not the issue.  We’re talking about consumers, and consumers want the product tested.” (Quoted in Quaid, 2006)
 

Does the USDA have authority to prevent BSE testing, when the producer will pay the cost and consumers want the testing done?  And if they have such authority, should they exercise it? 
 

Does the USDA have the Authority to Prevent Testing?

If Creekstone Farms would pay for the test, why should the USDA care?  What interest does the USDA have to prevent producers from using the tests their consumers want them to use?
 
The USDA claims an exclusive right to the distribution and use of BSE test kits.  They assert this exclusive right on the basis of the Virus Serum Toxin Act or VSTA (21 U.S.C. 151-159).  VSTA requires a permit for the importation of biological products, and authorizes the USDA to impose restrictions on their use.
 
In addition, the USDA argued that “allowing a company to use a BSE test in a private marketing program is inconsistent with the USDA’s mandate to ensure effective, scientifically sound testing for significant animal diseases and to maintain domestic and international confidence in U.S. cattle and beef products.”  (USDA letter to Creekstone Farms, 1 June 2004)
 
While VSTA does give the USDA the right to regulate tests like the BSE test, in this case the USDA has asserted a monopoly.  Such a monopoly is justified only if it is necessary in order for the USDA to fulfill its mandate.  Is a monopoly on the sale of BSE test kits necessary for the USDA to insure food safety, or to maintain confidence in the U.S. beef supply?  Some Japanese consumers, and maybe U.S. consumers as well, would like assurance that their beef is from tested animals, but they may not be aware of the limitations of the tests, or of other measures that might more effectively insure safety.  Apparently they are willing to pay a premium for U.S. beef if they can be assured that it comes from an animal that has been tested. 
 
According to the USDA, allowing Creekstone to test its cattle might undermine consumer confidence in the U.S. meat supply, since a false positive—that is, a test result that wrongly showed that an animal had BSE—might raise inappropriate consumer fears.
 
Creekstone Farms claims that it has suffered a 35% drop in revenue as a result of consumer fears about BSE.  They are willing to pay the cost of testing, and they are apparently confident that their consumers will be willing to pay a premium for beef from animals that have been tested individually.
 

Court Ruling

In March 2007, a District Court in Washington, D.C., ruled that the USDA had exceeded its mandate and its authority by preventing Creekstone Farms from testing their cattle.  According to District Court Judge James Robertson, the consumer issues relevant to the case should rightly lie with the Federal Trade Commission or the Commerce Department, not the USDA.  The USDA has appealed Judge Robertson’s ruling, so the case is not yet settled. 
 
Dennis Buhlke, present CEO of Creekstone Farms, said in a recent press release:
 
“While Creekstone Farms has taken a lead role in this effort, it is not alone in believing that the government should not prevent private companies from voluntarily testing cattle for BSE. Although we are disappointed, we are not surprised by USDA’s decision to appeal.” 
 
Buhlke added “Creekstone Farms will continue to pursue our right to test even in the wake of this latest action by the USDA.” 
 

SOURCES:

 Comments from John Stewart are from Libby Quaid, “Meatpacker Sues Feds over Mad Cow Test.  Associated Press, 2006. 
 
Ron DeHaven’s USA Today Editorial is available on the Internet at http://www.usatoday.com/news/opinion/editorials/2006-08-03-oppose_x.htm. 
 
Judge Robertson’s 2007 decision in favor of Creekstone Farms is available at https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2006cv0544-22.
 
Creekstone Farm’s response to the USDA appeal, including comments by present CEO Dennis Buhlke, are available on the Creekstone Farm Website at http://www.3buddies.com/creekstone/news.html

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