PoultryWorld: Costs of US avian flu outbreak in 2014/5

Trade losses from the devastating high pathogenic avian influenza outbreak in 2014/5 totalled £1.3bn and more than 50 million birds were lost, leaving the US poultry sector substantially impacted, according to a new report.

The USDA Economic Research Service study said trade restrictions during and after the outbreak affected all poultry commodities, but the overall market impact differed for each commodity, reflecting several factors.

Egg and Turkey
Egg and turkey production decreased as a result of the large number of birds lost or destroyed during the outbreak, so despite export losses from restricted trade, egg and turkey prices rose. The huge loss of birds was nearly three times more than the previous worst US bird flu outbreak in 1983/4 which claimed 17m chickens and turkeys.

Though these higher prices increased revenue for producers not directly affected by the outbreak, producers that lost birds and consumers who paid higher prices for products were negatively impacted.

The study, “Impacts of the Highly Pathogenic Avian Influenza Outbreak on the US Poultry Sector” said that economic losses in the broiler sector due to trade restrictions from foreign markets were serious even though very few birds were lost or destroyed from bird flu in this sector.

Authors Sean Ramos, Matthew MacLachlan and Alex Melton said “these restrictions decreased overseas demand for broiler products and led to lower prices for broiler producers – highlighting the importance of policy responses to the total cost of the outbreak.”

The report highlighted that:

• The US poultry sector was able to recover quickly from population losses from disease events but that other market impacts – such as trade losses and price instability – can persist. Poultry production returned to more typical levels in early 2016 as the egg and turkey industries recovered. However, prices for many poultry products remained at multi-year lows in 2016, partly due to lingering export weaknesses related to the outbreak and other factors.
• Disease events can result in disparate impacts across the poultry sector. HPAI had very negative impacts on many producers as bird losses per operation averaged 50,000 for turkeys and over 1 million for layers where the disease was confirmed. Many other egg and turkey producers lost no production – they received higher prices in the short run without bearing the high costs incurred by those directly affected.
• Disease events can impact related industries even if the disease has no direct effect. While the broiler industry lost less than 0.01 of its numbers, the threat of potential infection was the basis of the trade restrictions that contributed to much lower prices in 2015 and 2016.

Commenting on the report, James Sumner, president of the US Poultry and Egg Export Council, said some export markets had not fully returned with foreign firms finding substitutes for US products.

Mr Sumner said China had been closed to US eggs for three years: “We’re hoping that changes in the near future, but there’s not necessarily any positive indication that will be the case. We don’t think (the closure) has any validity,” he added.

Prior to the outbreak, China took 7% of the US export market for turkeys and 4% for broilers.