Rabobank has issued a new report on the global poultry industry, examining the impact that avian influenza (AI) will have on production and commerce in the near future. The findings, published by the Utrecht, Holland-headquartered financial services company’s Food & Agribusiness Research and Advisory department, concludes that bird flu and trade restrictions will have a big impact on the international poultry trade during 2015.
Regions affected by avian flu outbreaks, including the European Union and Canada, will suffer from lost export markets. This will affect local prices. On the other hand, the outlook for non-affected regions like Brazil and the United States remains strong. They could benefit from ongoing bullish market conditions such as strong demand, low feed costs and high competing meat prices, and thus capture additional export market share from the EU and Canada.
Avian influenza is caused by influenza type A viruses endemic in some wild birds (such as wild ducks and swans), which can infect poultry (such as chickens, turkeys, pheasants, quail, domestic ducks, geese and guinea fowl). AI viruses are classified by a combination of two groups of proteins: hemagglutinin or “H” proteins, of which there are 17 (H1–H17), and neuraminidase or “N” proteins, of which there are 10 (N1–N10). Many different combinations of “H” and “N” proteins are possible. Each combination is considered a different subtype, and can be further broken down into different strains. AI viruses are further classified by their pathogenicity – the ability of a particular virus to produce disease in domestic chickens.
“A key concern for the coming months is the spread of avian flu, which has recently become a major issue. Several strains are already endemic in several parts of Asia and Mexico, and the disease is increasingly spreading globally via wild birds,” stated Rabobank analyst Nan-Dirk Mulder.
Breaking News
On December 17 the United States Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service (APHIS) confirmed the presence of highly pathogenic (HPAI) H5 avian influenza in wild birds in Whatcom County, Washington. Two separate virus strains were identified: HPAI H5N2 in northern pintail ducks and HPAI H5N8 in captive Gyrfalcons that were fed hunter-killed wild birds.
It should be emphasized that neither virus has been found in commercial poultry anywhere in the US and no human cases with these viruses have been detected in North America or internationally. There is no immediate public health concern with either of these avian influenza viruses.
Both H5N2 and H5N8 viruses have been found in other parts of the world and have not caused any human infection to date. While neither virus has been detected in commercial poultry, federal authorities with the USDA also emphasize that poultry, poultry products and wild birds are safe to eat even if they carry the disease, if they are properly handled and cooked to a temperature of 165 degrees Fahrenheit.
The finding in Whatcom County was reported and identified quickly due to increased surveillance for avian influenza in light of HPAI H5N2 avian influenza outbreaks in poultry affecting commercial poultry farms in British Columbia, Canada.
Meanwhile, the Rabobank report said that AI virus concern has heightened as pathogenic outbreaks in the EU, Canada, India and Egypt have added to existing cases in East Asia and Mexico. Affected regions will therefore continue to suffer from economic damage and temporary lost export markets, with lower local prices – especially for dark meat.
In the longer term, the bank advises, industries need to prepare for ongoing disease pressure, especially in times of bird migration. This will require higher levels of biosecurity and reconsideration of existing business models.
Trade prohibitions, namely Russia’s import ban on US and EU poultry meat, will lead to ongoing record high prices in Russia. The outbreaks of avian flu in Northwest Europe have been a big wake-up call for the Russian industry as markets have been highly affected by import restrictions on day-old chicks and hatching eggs. In recent years Russia has depended on countries that are currently trade-sanctioned to supply approximately 15% of its total hatching egg requirements.
Although Russia is now re-opening imports of hatching eggs and day-old chicks from non-affected regions in these countries, a future supply risk will remain and any outbreak in Northwest Europe can affect future market conditions significantly, especially if this happens in the Netherlands.
Global trade streams are shifting significantly and Brazil is the big winner, strengthening its export position in Russia and capturing US and EU export market shares. The country is relatively safe from AI outbreaks due to its more isolated location from bird migration routes from Asia.
Despite the big impact of avian flu on the international scene, industry margins are still bullish in ongoing strong markets, and low feed prices and global poultry trade prices are expected to remain stable after declines in recent quarters.
About Rabobank
The Rabobank Group offers wholesale and retail banking, leasing and real estate services, as well as renewable energy project financing. It ranks as a leading financial institution catering to food, beverage and agribusiness industries. Founded over a century ago by Dutch farmers as a small cooperative of banks serving their rural communities, today the company is one of the largest banks in the world, with nearly $1 trillion in assets and operations in more than 40 countries.
