BSE Detection Contract

Fact Sheet

 

The USDA knows BSE as the disease that devastated the livestock industry in the United Kingdom and shattered consumer confidence in Europe. BSE has affected international trade and all aspects of the animal and public health communities.

 

Bovine spongiform encephalopathy (BSE) is a progressive, fatal neurological disease of cattle that is apparently spread primarily through the consumption of animal feed containing protein from ruminants infected with BSE.  The public knows BSE as “mad cow disease,” a disease linked to human cases of new-variant Creutzfeldt–Jakob disease (nvCJD).

 

On December 23, 2003, USDA, APHIS announced a preliminary diagnosis of BSE in a single dairy cow in Washington State. On December 25, 2003, the United Kingdom Veterinary Laboratories Agency, which serves as an international reference laboratory for diagnosis of BSE, confirmed the diagnosis. USDA, in collaboration with the Canadian Food Inspection Agency, traced the birth of the BSE-positive cow to a dairy farm in Alberta, Canada.  Thus, the BSE-positive cow was not indigenous to the United States but rather was a cow imported from Canada.

 

Pathologists at APHIS’ National Veterinary Services Laboratories (NVSL) histopathologically examine the brains from these condemned animals. In addition, samples are tested using a technique called immunohistochemistry, which tests for the presence of the protease-resistant prion protein (a marker for BSE). NVSL also examines samples from neurologically ill cattle and nonambulatory (“downer”) cattle identified on the farm or at slaughter and from rabiesnegative cattle submitted to veterinary diagnostic laboratories and teaching hospitals.  NVSL is the organization responsible for activating the notification and BSE response process.

 

To prevent the introduction of this disease into the United States, APHIS issued an interim rule that lists Canada as a region where BSE exists, thereby prohibiting the importation of ruminants and most ruminant products from Canada, effective May 20, 2003.  U.S. exports of beef and beef variety meats are a fraction of what they were before the Washington BSE discovery.  Most export markets remain closed, including Japan and South Korea, our two largest markets besides Mexico. Exports to Canada and Mexico are at reduced volumes. Total beef and veal exports forecast for 2005 are less than 600 million pounds, compared to exports of 2,523 million pounds in 2003.

 

With the continued possibility of economic loss in mind, BSE Detection Contracts should be offered for the U.S. beef industry.

 

Salient Points:

 

The BSE Detection Contract is a 0-100 Contract that the specified event occurs on or before 11:59 pm ET on the specified date in the specified state. The expiry price will be 100 if the specified event does occur and 0 if it does not.

 

The Result used to determine the expiry prices will be the official announcement released by the United States Department of Agriculture (USDA), Animal and Plant Health Inspection Service (APHIS), or other official body of a confirmed detection of BSE in the United States regardless of origin.

 

The BSE Detection Contract is a time protected market, i.e., the expiry price is determined by a news announcement.  The Exchange reserves the right to pause the market, halt all trading and unwind ALL trades time stamped within one hour prior to the first news story/announcement appearing on Associated Press new service or another similar major news provider.

 

0-100 Contract Specifications

Minimum Price   0

Maximum Price  100

Tick Size           1

Tick Value         $0.10

 

BSE Detection Contracts should be listed for the entire U.S. with expirations on June 30, September 30, December 31, 2005 and December 31, 2006.

 

More information about BSE can be found at:

BSE Recent Information              http://www.aphis.usda.gov/lpa/issues/bse/bse.html

BSE Test Results                        http://www.aphis.usda.gov/lpa/issues/bse_testing/test_results.html

USDA Response Plan Summary   http://cofcs66.aphis.usda.gov/lpa/issues/bse/bsesum.pdf

FDA Response Plan                     http://www.fda.gov/oc/opacom/hottopics/bseplan/bseplan.html