Kansas wants probe of cattle rumor

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Posted 1:37PM on Thursday, April 4, 2002

TOPEKA, KANSAS - The state attorney general is asking federal regulators to investigate last month's unfounded rumor of a foot-and-mouth disease outbreak in cattle in northeast Kansas. The rumor was blamed for a steep decline in prices of cattle and beef products that was estimated to have cost the industry as much as $50 million. State attorney general Carla Stovall said Thursday that the Commodity Futures Trading Commission has jurisdiction over cases involving allegations of price manipulation. She said she sent a letter to CFTC chairman James Newsome in Washington, saying that because of the commission's ``exclusive'' jurisdiction, ``We are unable to conduct our own investigation and prosecution.'' On March 12, a rumor that nine cows at the Holton Livestock Market were infected with foot-and-mouth disease spread quickly throughout the Midwest and to the floor of the Chicago Mercantile Exchange, where livestock futures contracts are traded. Analysts estimate that the rumor cost the industry as much as $50 million nationwide after prices dropped $1.50 per hundredweight for market cattle. Prices later rebounded. Last week, U.S. Sen. Tom Harkin, D-Iowa, asked U.S. Attorney General John Ashcroft to investigate the matter. Harkin, chairman of the Senate Agriculture Committee, said a Justice Department inquiry would strengthen the hand of other agencies investigating the incident. Sen. Pat Roberts, R-Kan, has also asked U.S. Department of Agriculture Secretary Anne Veneman to investigate any improprieties. State Sen. Tim Huelskamp, R-Fowler, had asked Stovall to investigate, saying he wanted to know whether someone was trying to illegally manipulate markets. Huelskamp was disappointed by Stovall's decision. He said he was concerned with the manipulation of the cash market, not just the futures trading markets. But state Senate Agriculture committee chairman Derek Schmidt said it was appropriate for Stovall to send the request to the commodities commission. ``That's what should have happened in the first place,'' said Schmidt, R-Independence.