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Canada's beef industry is coming to a grinding halt, even as the hunt widens for the origins of the outbreak of mad-cow disease.

A farm in Alberta and another in northwestern Saskatchewan were quarantined yesterday, bringing to three the number of farms that have been isolated. Cattle from the first farm identified in northwestern Alberta - the last home of the one infected cow - are being killed and tested.

So far there's only one confirmed case of bovine spongiform encephalopathy, or BSE, in Canada. But it may not be the last.

"Canada has now one case. Will it have another one? We don't know," Claude Lavigne, associate executive director of animal products at the Canadian Food Inspection Agency, said in a briefing in Edmonton.

Even just one case of mad-cow disease has triggered bans on Canadian beef in the United States, Australia, Japan and elsewhere, forcing stockyards and slaughterhouses in Alberta and across the country to drastically curtail operations.

Alberta's biggest slaughterhouses either slowed production yesterday or halted it entirely, as they waited to see how long the United States will maintain its ban on Canadian beef. Scores of cattle in Canada were pulled from the auction block yesterday, and will likely be withdrawn again today, as the absence of U.S. buyers collapses the market and drags down prices.

The industry - which is worth $30-billion, including spinoff economic benefits - is waiting to see if the origins of the mad-cow case can be determined quickly, and allow it to resume exports to the critical U.S. market.

"A third of your business is gone temporarily or, who knows, forever," said Lee Nilsson, co-owner of XL Foods Inc. in Calgary, which operates two slaughterhouses, one in Calgary and another in Moose Jaw, Sask.

The search for how the eight-year-old cow became infected intensified yesterday, with investigators zeroing in on a northwestern Saskatchewan farm, which could be the animal's birthplace.

But the search is unlikely to end there.

Dr. George Luterbach, a chief veterinarian with the Canadian Food Inspection Agency, said investigators are not assuming that the Saskatchewan farm is either the birthplace of the cow, or where it became infected. "This is a very serious matter and we have to make sure we don't go off in the wrong direction somehow here."

Officials have determined that 211 calves from the infected animal's most recent herd, where it lived for the past three years, left the group this year. Those animals are being culled from their herds and put into quarantine, Mr. Lavigne said.

Investigators have not succeeded in completely tracing the infected cow's history, including how many calves she birthed, and where they are. Scientists believe BSE can spread from mother to offspring.

The most pressing question that investigators are examining is how the cow contracted the debilitating disease.

The most likely mode of transmission is consuming feed made with protein from infected cows, a practice that was banned in 1997 when the diagnosed cow was about two years old. Scientists believe BSE has a long incubation period that ranges from about two to eight years.

While investigators search for answers, the beef industry is watching its sales shrivel without access to U.S. consumers.

XL is reducing its overall daily output of 1,800 head of cattle by a third, although not all of the cuts will be made immediately.

Cargill Foods said its slaughterhouse at High River, Alta., is reducing production from its typical 4,000 cattle a day, but would not say by how much.

At the Lakeside Packing Plant in Brooks, Alta., however, beef production was entirely shut down yesterday, temporarily putting its 2,400 hourly employees out of work. One of the largest slaughterhouses in the province, Lakeside typically handles 4,000 head of cattle each day.

Gary Mickelson, a spokesman for owner Tyson Foods Inc., said his company is aiming to restart production today, although at lower-than-normal levels. Tyson is gauging market conditions daily and adjusting its output accordingly, Mr. Mickelson said.

In Ontario, Better Beef Ltd. of Guelph has cut back its weekly production of 8,500 to 9,000 cattle.

Auction blocks across the country are also hurting. The Alberta Beef Producers' daily cattle report for yesterday told the story: "Alberta direct cattle sales yesterday saw no new trade to report. It is unlikely that trade will develop this week due to the BSE news."

Wayne Jennings, the office manager at Cookstown-based Ontario Stockyards Inc., said prices plummeted by up to 25 per cent for steers and heifers at his company's auction yesterday. Buyers for slaughterhouses fled the bidding - realizing there wasn't a market for their purchases. About 40 per cent of the cattle sold at Ontario Stockyards winds up in the United States, Mr. Jennings said.

At an auction set for today, he's not expecting much improvement. About 2,500 animals would normally go through the sale. Instead, he's expecting 500 - at most. "We've asked a lot of our producers not to ship cattle. And we've had cattle that were here that have been taken home," he said.

Feedlot operators, which fatten cattle for slaughter, may be among those hardest hit. Roseburn Ranches Ltd. in High River, south of Calgary is briefly home to between 50,000 and 60,000 cattle each year. A portion of those are destined for the United States - but not any more. "There's no doubt it will affect us. We're geared up as a supplier," said Peter Morrison of Roseburn.

Effects were even felt at the U.S. border yesterday, when trucks hauling trash from Toronto to Michigan were detained because a strict interpretation of the ban on Canadian beef was thought to include food scraps in garbage. Eventually U.S. Customs allowed the trucks to cross.

An extended ban on beef could cast a further pall over Canada's economic prospects, J. P. Morgan warned yesterday. In a research note, the brokerage said that if the ban lasts until the end of June, export growth could be cut by up to 1.5 percentage points. Growth in real gross domestic product could be reduced by as much as 0.6 percentage points in the second quarter, more than half of the projected 1-per-cent expansion.

Cam Daniels, vice-president of the Canada Beef Export Federation, said the trade ban is hurting producers, packers and the price of beef - but the damage to the industry can't yet be tallied. The worst-case scenario, he added, would unfold if more cases of BSE are discovered. "That would literally destroy our industry."

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