By Todd Hirsch
What is it about people that we’re so attracted to economic panic and alarm? Are the business pages and economic news stories so bland and lifeless that we need to stir up crises out of nothing?
Consider one of the biggest news stories this fall in Alberta: the E.coli situation. Several weeks ago, there was a serious breach of safety standards at one of Canada’s largest beef packing facilities in Brooks. Meat tainted with E.coli ended up on supermarket shelves, and several people grew ill.
It was a real problem. But it is not a ‘crisis’ – and referring to the problem as a crisis is not only exaggeration, but it borders on irresponsible. A crisis is a word reserved for things like tsunamis, terrorism, famine and financial collapse.
Situations like NHL hockey strikes, traffic congestion, rising unemployment, and Dutch Elm disease are serious and need to be addressed. But they are not crises – and Alberta’s E.coli situation falls into this category.
Commentators have been quick to point out how the system failed Canadians. Politicians, quick to gain a political edge on the back of a very unfortunate situation, have referred to it (irresponsibly) as the tainted meat scandal. Indeed, parts of the system did fail, particularly since it was American meat inspectors who detected the problem.
Still, most parts of the system worked precisely as they should have. When the problem was brought to light (admittedly a bit late), a massive meat recall went into action. Through Canada’s highly advanced tracking system, it is possible to know precisely where each beef product came from – the farm, the cow, the slaughter house, the beef packer. And that tracking system was able to remove all of the potentially unsafe beef products off the shelves in short order.
While several beef consumers did become ill, no one died – which would have been the mark of a true system failure.
There are two primary economic threats that could have arisen out of the E.coli situation. The first is the immediate hit to cattle prices received by farmers. Within days of the facility closure, a backlog of animals ready for slaughter started to put downward pressure on prices at cattle auctions around the province.
The facility accounts for about a third of Canada’s total slaughter house capacity, and if it cannot receive livestock, things back up quickly. The cattle rancher cannot ask his animals to stop eating, no matter how politely he might ask. Cattle are funny that way.
Secondly, and perhaps more seriously, there is an enormous reputational threat to the Canadian beef industry if consumers lose confidence in the product. Thousands of ranchers and hundreds of other workers in the beef packing and distribution industry are at risk – and for a problem not of their making.
For each additional day the E.coli situation remains in the media, and for each time someone calls it a crisis or a tainted meat scandal fewer shoppers will feel like picking up that roast or steak for the barbecue. And once a reputation is seriously impaired, it is a long uphill battle in winning back the trust and respect of consumers.
Fortunately, it appears that neither of these two threats to Alberta’s and Canada’s beef industry will amount to much.
Cattle prices are unlikely to sustain too much of a needless hit, and shoppers are likely to lose any fear of beef they may have suffered when the problem arose. All of that is positive – not only for cattle ranchers but for the provincial economy. While the energy sector tends to capture most of the attention, the importance of agriculture to Alberta should not be forgotten.
The E.coli situation was a serious problem. But it never was a crisis, and once all of the remaining hurdles have been cleared in the coming weeks, it will be time for everyone to move on and throw another juicy T-bone steak on the barbecue.
Todd Hirsch is senior economist with ATB Financial. His column is distributed through www.troymedia.com.