The Commercial Impact of Bovine Spongiform Encephalopathy (BSE)

On the US and International Beef Industry:


Strategies, Threats and Opportunities for the Firm


A Multi-Client Study by the GIC Group

Objectives of the Study

¨      Assess the commercial impact that BSE has had on individual companies and the world beef trade

¨      Give a concise, commercial intelligence report on the current status of the BSE issues and the ramifications of the disease

¨      Propose tactics and strategies for concerned companies in the international meat trade, feedstuffs and related food industries

Introduction

The Mad Cow disease crisis in Europe is causing significant structural shifts in the world beef trade with many firms going out of business.   Although there is considerable press coverage and research occurring at the disease level and regarding its health and safety consequences, little work is being done on the impacts it has had on the overall business climate and its players.  The primary focus of this study is how a company may expand its market share by exploiting the current situation, or the development of reactive business techniques to avoid potential problems arising from the BSE issue.

The adverse effects following the discovery of BSE infected cattle can be swift and devastating to the industry: in Germany alone, beef sales plummeted by over 40% in a short time, and even in Spain the repercussions were felt through a reduction of beef consumption with only one in five consumers presently including beef in their diet.

In the US alone, the beef system generates over $50 billion with many companies being an integral part of the food complex. The BSE question does not solely affect firms in the beef trade industry; its effects are felt all along the meat value chain.  Repercussions are being experienced in the business operations of suppliers of substitute meat products, pork and poultry in particular; animal feeds and supplements; as well as the retail sector of the industry.  Our analysis will include all key players in this food complex, the interactions within these business entities, and the ability of a firm to operate effectively in this complicated marketing environment.

 

Questions Answered by This Study

¨      How does BSE change the competitive environment of my industry?

¨      How can companies take advantage of the changing market situation, and avoid serious financial losses in the market?

¨      What are the short and longer term impacts on my sales of beef in terms of volumes, prices and marketing outlets?

¨      What are the additional costs of conducting business due to new regulations and marketing practices?

¨      What are the latest scientific conclusions on the causes and circumstances of BSE?

 

Background

§         The impacts of the BSE crisis on European agribusiness firms

§         Current actions undertaken by the EU to mitigate the damages of BSE

Governmental Regulations and their Potential Impacts on Firms

§         US  Regulations

§         EU Regulations

§         Japanese/Asian Regulations

§         Latin American Regulations

§         WTO Regulations

Latest Known Knowledge of BSE Disease

§         Probable causes and viable alternative theories/hypotheses of the disease

·        Symptoms

·        Incubation period

·        Transmission

·        Prevention and containment of the disease

Risk Ranking of Key Countries for BSE

§         Criteria for ranking of countries

§         Importation of cattle

§         Rendering industry

§         Surveillance for BSE

§         Structure of the bovine population

§         Determination of risk for countries to remain BSE free

 

Impacts on Beef Consumption and International Trades

·        Production

·        Exports

·        Imports

·        Consumption

·        Prices

 

Beef Industry Structure in Key Regions

·        Europe

·        North America

·        South America

·        Asia

·        Australia and New Zealand

 

Impact on Companies

§        Profitability, market share and cost margins on sales of beef

§         Structural change in the beef industry

§         Modifications in the methods of conducting business

§         BSE influences on a company's business practices in:

·        Europe

·        North America

·        South America

·        Caribbean and Central America

·        Japan, Korea, Taiwan, China and Singapore

·        Australia and New Zealand

Survey/Interview Results of Companies and Industry Participants

§         Responses from beef industry leaders

§         Outside industry experts' opinions on the BSE crisis

§         Actions taken by governmental officials to improve the situation

§         Reactions of consumer organizations and associations

Strategy of Companies

§         Transformation of company strategies as the BSE problem emerges and evolves

§         Potential strategies and approaches that firms can use

Case Studies of Companies

Outlook and Trend

§         Projections for future beef consumption

§         Country trade projections

§         Trends of commercial practices in disease prevention

Price and Availability 

§         The cost of the BSE study is USD 9,500

§         The study will be available at the end of May

 

 

 

Study Option

§         GIC will provide a study and update on Foot and Mouth Disease (FMD) at an additional cost of USD 3,500

GIC Group

The GIC Group, an international agribusiness consulting and investment advisory firm, specializes in:

 

·        Industry, sector, and trade flow analysis

·        Commercial intelligence, market development, and market strategy

·        Distribution management and infrastructure development

·        International investment and finance

GIC was established in 1980 and, since that time, the company has been involved in a variety of projects, ranging from wholesale agricultural product marketing in developing countries, to strategic investment analysis of the global ag biotech industry.  GIC has extensive experience in analysis and strategic planning for private agribusiness companies that are considering expansion through merger and acquisition, penetration of new markets or requiring corporate profiles.   

A small sampling of recent projects completed by GIC include:

·        The Impact of the Corn Import Duty on Colombia's Poultry and Feed Industries.

·        Evaluation of Korea's Swine Program for the US Grains Council

·        The Impact of E-Commerce on the Food and Agribusiness Industries

·        Entry Strategies in the US Feed Additive Industry for a private client

·        Subsector Analysis of the U.S. Agribusiness System

·        China Dairy Farm & Milk Processing Facilities

·        Market for Feed Probiotics in the US

Cazenave y Asociados S.A.

Cazenave was founded in 1969 as a major consultancy firm in South America.  It serves as a major advisor for agriculture and ag-industry firms, international organizations, banks, and insurance companies.  Currently, the company is developing private placements in the meat processing industry.

Since its foundation, Cazenave has served as administrator and consulting agency for livestock operations in the Pampean Meadow, the Argentina Northwest, and Littoral, managing more than 300 ranches.  The firm has a vast experience in agricultural and meat programs in South America and is currently managing the Agricultural Fund (FAID) and the Livestock Fund (FOGA).

 

Project Staff

GIC Group

Project Director

 

John Mott, GIC Senior Analyst. Mr. Mott has Master’s degrees in international management and agricultural economics. John grew up on a cattle ranch in Montana and has experience in the beef processing and beef marketing industries.  He serves as Senior Analyst for the GIC Group's Strategic Intelligence Advisory Services. His GIC responsibilities include competitive and commercial intelligence and market, trade, and investment assessment.

Project Supervisor

Project Analyst

 

Daniel Secondi, GIC Business Development Director. Mr. Secondi holds a Master’s degree in Agricultural Economics and an Engineer’s degree in agriculture. He has worked nine years as a farm management and specialist consultant in agribusiness for Cazenave & Asociados S.A. In addition, Daniel has in-depth knowledge of the South American livestock and feed industries. His GIC responsibilities include marketing strategy, financial analysis, due diligence, mergers and acquisitions.

Project Advisor

 

Richard Gilmore, GIC President & CEO. Dr. Gilmore has a Ph.D. in trade economics and extensive experience in policy analysis, trade, investment, and market research for agro-industries. As founder of GIC, he has either directed or participated in a majority of the company's projects.  He has written extensively on agribusiness, and with his background in trade and finance, he will be responsible for the trade analysis portions of the study.    

 

CAZENAVE & ASOCIADOS S.A.

Project Director

Luis M. Gonzalez Victorica,  CAZENAVE & ASOCIADOS S.A. President & CEO. Mr. Victorica holds an Engineer degree in Animal Science. His extensive agricultural experience, more than twenty years as manager and coordinator in Argentine, has included international agribusiness projects, meat and cattle production, feedlot, and meat trade projects. 

Project Analyst

Fabián Moni, Cazenave Senior Associate Consultant. Mr. Moni holds a Master´s degree in Agribusiness and International Marketing. He worked for the last 10 years with large multinational companies in Latin America and the United States. Current responsibilities at Cazenave & Asociados S.A., include international projects, acquisition targets, marketing development and capital investment.


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Title of Study:

The Commercial Impact of BSE on the US and International Beef Industry: Strategies, Threats and Opportunities for the Firm

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