“Avian influenza (AI) has shifted from being a regional challenge to being a global one – in the past six months we have seen occurrences in the US, Russia, China, India, Taiwan and several African countries, including Egypt, Nigeria and Burkina Faso.
The US layer and turkey sector has been particularly hit by the virus and human cases in China and Africa have had a major impact on consumer behavior in those markets.
International poultry trade has been undermined by restrictions following the AI epidemic with several Asian countries’ bans on breeding stock imports set to have a negative impact on sector viability in those countries over the coming years.
Europe has not had an AI outbreak since the one in Hungary in February but the threat still lingers.
The impact of the disease is going to create a huge amount of volatility for the feed sector over the next few years,” said Rabobank’s Nan-Dirk Mulder, following the release of that group’s poultry quarterly last week.
Stock ban could lead to bird shortage in China
China used to import white-feathered grandparent stocks from the US but can no longer as a result of a ban the administration there imposed on US poultry products in January this year. Mulder reckons this will result in shortages of commercial birds in China from the second half of 2016 through to 2017.
And while Chinese breeding firms have reportedly managed to source grandparent stocks from the European market, the Rabobank report questioned whether such a supply base would be large enough to meet the massive Chinese demand.
“This kind of scenario also shows that chick breeding stock companies, mainly located in Western countries, should think about greater diversification in their operations and set up more Asian facilities to counter trade restrictions,” said Mulder.
He told us the feed industry has a role to play in engaging with the poultry sector, NGOs, the UN’s Food and Agriculture Organization (FAO) and local governments in determining how the global poultry production and trade model, along with biosecurity measures should be adjusted to take account of the ongoing threat of avian flu.
Prices for chicken products on international markets are still falling, with lower prices for whole chicken and chicken legs in particular. The market for breast meat, processed meat and feet is less affected and the weak euro is having an upward impact on prices, said Rabobank.
And the agri-business analysts expect poultry prices to remain under further pressure in the next months, driven by the AI fall-out, exchange rate volatility, lower pork prices, ongoing low feed prices and abundant supply.