The threat of mad cow’s disease continues to vex health inspectors, tilt the beef trade industry and strain international trade relations with the Far East.

The tension was heightened in recent days when the United States Agriculture Department announced that a second case of bovine spongiform encephalopathy, or mad cow’s disease, was confirmed after two conflicting test results.

USDA Secretary Mike Johanns said on Friday the third conclusive test was conducted at a laboratory in Weybridge, England.

Because the cow was unable to walk (referred to as a "downer") it was never mainstreamed into the general food supply. Thus, Johanns observed, human health was never in jeopardy.

"I am encouraged that our interlocking safeguards are working exactly as intended," Johanns said at a news conference. "This animal was blocked from entering the food supply because of the firewalls we have in place. Americans have every reason to continue to be confident in the safety of our beef."

But simply the announcement of a third test made a negative impact financially. On June 11, trading shares of both McDonald’s Corp., the biggest restaurant chain, and Tyson Foods Inc., the largest beef packer, fell 39 cents and 11 cents respectively.

The day after the USDA confirmed its only other case of mad cow’s disease, Dec. 24, 2003, from a dairy cow imported from Canada into Washington, McDonald’s stock plummeted 5.2 percent.

On June 20, the first live cattle trade day since the USDA announced the decision for the third BSE test, the most-active August futures contract fell to 80.35 cents, a loss of 177 points.

Heated exchange

Meanwhile, the second confirmed case comes on the heels of a heated exchange between Japan health officials and U.S. Trade representatives, who are eager to convince Japan to resume beef trade with the U.S.

Prior to the first confirmed domestic case of mad cow’s disease, Japan accounted for the largest importer of U.S. beef.

According to the Japanese news service, Kyodo News, U.S. Ag Undersecretary for Farm and Foreign Agriculture Services JB Penn "threatened" the Japanese delegation during a trip to the island nation.

"We told them we are the buyer and the U.S. is the seller, so the seller should listen to what the buyer wants. The U.S. insistence was something like, 'We are the most advanced nation regarding beef, so just listen and follow us,'" delegation chief Kenji Yamaoka was reported to have said.

However, the U.S. beef industry and the USDA are still pushing for Japan to follow through on its "agreement of understanding" reached with the U.S. last October that it would reopen beef imports upon completion of additional safeguarding measures.

But Japanese lawmakers have balked, saying that they view that pact as "not an agreement but a common understanding" for Japan to work toward such an import resumption.

Johanns expressed confidence that the latest disease finding would not hamper trade conditions with other nations. "I feel very strongly that this information should not impact our discussions with Japan, Korea or Canada," he said.

e-mail:abell@primediabusiness.com