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Europe's Bird-Flu Fears Cause Global Economic Ripples

Published on 4 March, 2006, Last updated at 15:42 GMT

3rd March, 2006: BRUSSELS - Italians are so loath to eat chicken amid avian-flu fears that poultry farmers there are stocking their farms with fewer birds, which in turn is depressing soybean and corn sales driven by demand for chicken feed.

The economic ripple effect of Italian eating habits is one example of the varied, and often conflicting, impacts that the spread of bird flu is having on the poultry industry in Europe and the rest of the world.

Weeks after migrating birds started dying of the lethal bird flu virus on European soil, the disease has touched just one commercial poultry flock, a turkey farm in southeast France. Medical experts say even birds with the flu can be eaten safely with no risk of humans catching the bug. But fear of the virus is hitting exports and causing significant flux within the market, especially in Europe where the spread among wild birds is the newest and most intense.

Italians are reacting more severely than other Europeans, though Italy hasn't been a particular target of the virus; wild swans infected with the virus were found in the country's south in early February. Poultry sales there are down 40% - after initially falling as much as 90% in the region where the birds were found - and so has the price farmers are charging. As a result, farmers are raising fewer birds.

"Every firm has reduced its production by 20 or 25%," said Alberto Murano, president of Italian poultry producers association UNA.

The shock is making poultry feed processors wary: prices for Argentine and Brazilian soy meal - used in chicken feed - and French corn have been falling noticeably in Europe, traders say.

Wholesalers in the U.K. are reporting similarly falling prices. According to the Poultry Board of the U.K.'s National Farmers' Union, chicken wholesale prices dropped by more than half, to GBP0.48 from GBP1.10 per kilo - well below the GBP0.80 needed to break even - since France detected bird flu at the turkey farm over the weekend.

Exporters are worst hit as more and more countries slam their doors shut to poultry from European states. In France - Europe's biggest poultry producer and exporter - the industry fears bans by 43 countries so far could ravage poultry meat exports by up to 65%. E.U. exports of raw poultry meat are worth about EUR800 million a year.

The countries' bans were prompted by either the finding of bird flu in French turkeys or France's plans to vaccinate millions of farmed birds to protect them. Some countries refuse to buy poultry inoculated against bird flu, fearing the drug may mask infected meat.

In France, domestic poultry consumption also is down, about 20%. But elsewhere, European shoppers are largely shrugging off the scare and buying the same amount of poultry as they did before the spring migration brought bird flu to countries across Europe. Sales in Germany, Hungary, the Czech Republic, the Netherlands and Sweden have stabilized and in many cases recovered to levels before bird flu first appeared around the edges of the E.U. last fall.

"Consumers have become somewhat immune to the scare they see in the media," said Lazlo Takacs, director of the Hungarian Poultry Product Industry.

Yet trade flows within the 25-nation bloc have altered radically, analysts say. Shoppers increasingly opt for locally grown chickens and eggs. Paradoxically, this means that in many cases free-range poultry sales are holding up better than sales of imported and mass-farmed chicken. In Sweden, consumption of domestic poultry in January was up 8% compared with 2005 a significant figure given Swedes have been cutting back on chicken meals in recent years.

"Consumers want Swedish chickens, they feel safer that way," said Maria Donis, director of the Swedish Poultry Meat Association.

Farmers believe the rest of Europe will go the way of Italy and France, however, once the flu crops up among more commercial flocks - which could happen later this month when vast flocks of wild birds fly north from Africa.

China provides a worrying example. Orders for Chinese chicken never recovered after outbreaks of bird flu and Severe Acute Respiratory Syndrome.

"It's no surprise if the export volume drops in the bird-flu period," said Gong Guifen, a researcher at the China Animal Agriculture Association in Beijing. "The whole world is so scared now. The consumption market will surely be pummeled."

The World Bank estimates a human pandemic could cost the global community $800 billion a year - more than three times the amount the U.S. says it has spent on homeland security and wars in Afghanistan and Iraq since 2001.

Just how hard a large outbreak in commercial flocks will hit Europe's economy is hard to predict, analysts say. Much of that depends on whether European farmers decide to follow France's example and vaccinate their flocks, says Andreas Schneider, an agriculture expert at the Center for European Policy Studies, an independent Brussels-based think tank.

Much also depends on the success of national campaigns in limiting the risk of contamination and educating consumers.

"Italians are .. sensitive to this kind of news," said Roberto Valentini, who owns a chain of delis selling roast chicken in Italy. "When we are talking about food, the (average) Italian is easily influenced."

Flutters of bird-flu panic are being felt even in the U.S., with some large poultry producers lowering their earnings forecasts and demand for U.S. exports dropping in areas experiencing bird flu locally. That's even though bird flu hasn't come close to U.S. shores, theoretically making its chickens more attractive to cautious consumers.

The USA Poultry & Egg Export Council, an industry trade group, has developed television advertisements to make that point. The ads began airing this month in Iraq, where bird flu also has been identified in wild birds. The spot tells Iraqi consumers that "properly handled and cooked poultry is safe to consume," said Toby Moore, spokesman for the Atlanta group. A half-dozen countries including Russia, one of the largest consumers of U.S. chicken, are getting versions of the ad.

The Iraqi commercial, broadcast in Arabic, shows plates of chicken wings, a map of the U.S., and chicken being processed. According to an English translation provided by the council, the ad notes the U.S. "has never had a case of what is commonly referred to as the Asian Bird Flu."


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