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Friday July 19, 12:31 pm Eastern Time
Reuters Business Report
ConAgra Orders 2nd Largest Beef Recall
By Randy Fabi

WASHINGTON (Reuters) - Giant ConAgra Foods Inc (NYSE:CAG - News) will launch
the nation's second-largest recall of ground beef because of potential
contamination with a deadly bacteria, the U.S. Agriculture Department said
Friday.
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ConAgra's recall of more than 18.6 million pounds of fresh and frozen ground
beef ranks behind Hudson Beef's record withdrawal of 35 million pounds of
meat in 1997.

At least 19 people, mostly in Colorado, have fallen ill from eating ConAgra
beef contaminated with E. coli 0157:H7, according to USDA Undersecretary
Elsa Murano.

Murano told reporters ConAgra agreed to expand its recall to try to prevent
more illnesses.

ConAgra on June 30 first recalled 354,200 pounds of hamburger from its
Greeley, Colorado, plant after an outbreak of E. coli 0157:H7 was linked to
the meat.

E. coli O157:H7 can cause bloody diarrhea, dehydration and kidney damage.
Children and the elderly are the most at risk.

A ConAgra spokesman declined to comment on another recall, saying only that
the company has had talks with the USDA over the past week about its
Colorado plant.

The USDA sent an investigative team to the Colorado plant after the first
recall.

"Our investigation and review has led us to conclude that ConAgra should
conduct this recall, and they have agreed," Murano said. "Our highest
priority is protecting the public's health."

19 ILL FROM HAMBURGER

The tainted meat from the Colorado plant was distributed to grocery stores
in 21 states, according to the USDA.

The government said it would issue detailed information with lot numbers and
grocery store locations later on Friday.

So far, 19 illnesses from the beef have been reported to the U.S. Centers
for Disease Control. One case occurred in Wyoming and another in South
Dakota.

News of the recall sent ConAgra shares falling on Wall Street.

Shares of the No. 2 U.S. food company were off $1.59, or 6.7 percent, to
$22.15 in mid-morning trading at the New York Stock Exchange.

The company reached an agreement in May to sell off more than half its fresh
meat-processing operations to a private investor group led by Hicks Muse
Tate & Furst, so it could focus more on branded consumer products such
Healthy Choice Meals and Armor meats. The deal is valued at about $1.4
billion.

However, analysts said the recall may not have any lasting effect on the
company.

"I continue to be amazed at the capacity of the American consumer to brush
off most recalls," said Credit Suisse First Boston food analyst David
Nelson. "I've yet to see Americans get overly concerned about this type of
thing."

The recall also depressed prices in the U.S. cattle market, which has seen
soaring supplies in recent months due to drought and slumping exports.

USDA CRITICIZED

The USDA has been scrambling to recover from criticism over how it handled
the first ConAgra recall last month.

The department's Food Safety and Inspection Service admitted that it waited
10 days after federal meat inspectors first detected the E. coli bacteria in
a ConAgra sample before notifying the company.

The USDA said this week it revised its food safety policy. Federal meat
inspectors will immediately alert a beef company when its sample tests
positive for E.coli, instead of waiting until an investigation is complete.

In the earlier ConAgra recall, USDA tests confirmed the bacteria's presence
on June 19, but the company was not notified until after an investigation
was completed on June 29. ConAgra announced its first recall the following
day.

The largest U.S. food recall for E.coli 0157:H7 contamination was in the
summer of 1997 when Hudson Foods withdrew an eventual total of 35 million
pounds of ground beef after 15 people in Colorado fell ill, according to the
USDA.

Hudson was purchased by poultry giant Tyson Foods Inc. (NYSE:TSN - News) one
year later.

The E. coli 0157:H7 bacteria is destroyed when meat is thoroughly cooked to
an internal temperature of at least 160 degrees Fahrenheit.

(Additional reporting by Deborah Cohen in Chicago)