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The Stanley abattoir in Liverpool supplies meat to areas throughout the north-west, and normally thousands of animals are slaughtered there each week.
Inspectors from the Ministry of Agriculture were called in when eight suspected cases were found in carcasses.
The inspectors then found 10 more cases in live cattle at the abattoir.
The affected cattle are thought to have been part of a consignment from Beeston Castle market in Cheshire.
Centre of infection
Foot-and-mouth restrictions are already in place in part of north Wales, near Beeston, and there is another centre of infection in south Lancashire, near Bolton.
Ministry vets have now supervised the slaughter of the remaining cattle, sheep and pigs at the plant.
All entrances to the abattoir have been closed except one, and disinfectant-soaked straw has been laid on the ground.
Slaughtermen have also been asked to leave their outer clothing to be treated at the end of the day.
There is a restriction on the movement of animals within a 10-mile radius, and any stray dogs within five miles of the abattoir will be rounded up.
Dogs are considered to be a major carrier of the disease.
Meat shortages 'unlikely'
Meat shortages as a result of the closure are thought unlikely, as after a two-day closure for thorough cleaning and disinfecting, the abattoir will re-open to distribute meat from slaughterhouses outside the area.
Rumours of a price rise as a result of the closure were quickly dismissed by local tradesmen.
"The worst that can happen," said one meat trader, "is that the increased costs of the alternative arrangements might force a small rise in prices in perhaps three weeks' time."
The outbreak is the latest in a series of foot-and-mouth cases in the north-west and north Wales in recent months.
Thousands of cattle, sheep and pigs have been slaughtered and restrictions placed on the movements of animals, as well as disinfectant precautions, but the disease is still spreading.
The number of outbreaks is the highest in five years, and so far the government has paid out some £800,000 in compensation to farmers.
The 1956-1958 outbreak of foot-and-mouth disease reached its peak in 1957, and affected 20 counties in England and Wales, mostly in the north-west. Over 30,000 animals were slaughtered.
The disease had gained a foothold in British farms after a serious epidemic in the early 1920s, and for 40 years hardly a year went by without new outbreaks.
The sudden spate of cases in the mid-1950s was particularly worrying because it took so long to get the disease under control again.
More than 100 outbreaks were reported each year for three years, putting many farmers out of work.
In 1967, there was a major epidemic. The government brought in improved hygiene and animal health standards, and the disease was almost eliminated for over 30 years.
Then, in 2001, foot-and-mouth struck again, and on a scale which dwarfed even the 1967 outbreak. Over 2,000 cases were reported, and an estimated four million animals were slaughtered across the UK.
The farming industry was devastated, and is expected to take many years to recover.
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