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World Bank outlines economic effects of bird flu

Published on 12 July, 2006, Last updated at 03:30 GMT

12th July, 2006: BRUSSELS, BELGUIM - A World Bank report outlines the dire economic effects avian influenza is having on Europe’s poultry flocks and demand for the meat.

The report outlines the projected economic consequences and loss of life due to a possible avian influenza pandemic worldwide. Such warnings are serving to increase consumer fears about the safety of poultry meat throughout the bloc.

Consumption of poultry meat has dropped by more than half in some EU states, with 300,000 tonnes and more in storage across the bloc, according to previous EU estimates.

While no human case of the H5N1 virus has occurred in the EU, scientists worldwide have been worried that H5N1, which can pass from poultry to humans, may mutate so that it can be transmitted from human to human and start a influenza pandemic. Worldwide, governments are starting to step up their precautionary measures against the disease as more scientific evidence points to coming pandemic.

For example, a UK government department said yesterday it will order a further ten million doses of avian influenza vaccine for possible use in poultry and other captive birds.

The measure is being taken as a precaution in case the UK suffers a large outbreak of avian influenza in its domestic poultry flock.

The country's chief veterinary officer recommended the step be taken as a precaution, the Department of Environment, Food and Rural Affairs (Defra) stated in a press release.

The measure is being taken “to ensure that Defra has every tool available to tackle an avian influenza outbreak, in light of uncertainties about the future spread and nature of the virus”, the department stated.

Defra already has 2.3 million doses of vaccine bought earlier this year for a possible preventive vaccination of zoo birds.

The World Bank has estimated that a severe avian flu pandemic among humans could cost the global economy about 3.1 per cent of gross domestic product - around US$1.25 trillion on a world gross domestic product of $40 trillion.

The severe case scenario, prepared by the Bank's Development Economic Prospects Group, is based on a one per cent mortality rate – or about 70 million people.

Until now, the principal transmission of the H5N1 form of the bird flu virus has occurred between animals, and, to a very limited extent from animals to humans.

The principal costs have been felt in the rural or commercial poultry sectors of affected economies.

However, as these outbreaks continue and spread to new regions, they also increase the probability of a second stage, with human-to-human transmission and a global influenza pandemic, with enormously greater costs on a world scale, the World Bank report stated.

Until recently highly pathogenic avian influenza H5N1 virus had been concentrated in East Asia, where some 10 countries had experienced outbreaks since late 2003, the most serious in Vietnam, Thailand, Indonesia and China.

In the last six to nine months, the virus has gone global, spreading to over 40 more countries.

In Western and Central Europe the majority of these new outbreaks have been among wild birds. But elsewhere, in South Asia, Central Asia, the Middle East and Africa, nearly all the new outbreaks have been among poultry.

Among the many things not fully understood about the disease is its mode of transmission, the report stated.

However it now appears that both wild birds and domestic poultry are involved in transmission, the latter through poultry trade, both legal and illegal or informal.

In most economies the impact has been relatively limited so far, mainly because the poultry sector is a relatively small part of the world economy, stated Milan Brahmbhatt, the bank's lead economist for East Asia.

There are direct production costs because of losses of poultry, due to the disease and to control measures such as culling birds, with impacts extending not only to farmers but also to upstream and downstream sectors such as poultry traders, feed mills, and breeding farms.

According to the Food and Agriculture Organisation, over 200 million poultry have died or been culled since the end of 2003, mostly in East Asia.

The largest declines have occurred in Vietnam and Thailand, where they were equal to 15 per cent to 20 per cent of the stock of poultry.

Additional losses have occurred because of lower egg production and reduced activity in distribution channels.

There are also secondary or indirect impacts related to sharp shifts in market demand which result primarily from spontaneous efforts by consumers to reduce their perceived probability of becoming infected from eating the meat.

In Romania, for example, which has suffered about 100 outbreaks of the disease in poultry over recent months, domestic sales have fallen by 80 per cent, Brahmbhatt stated.

Many Romanian producers are on the verge of bankruptcy. In Iraq only 10 per cent of semi-commercial farms remain operational, and there have also been large losses in Turkey.

In France, Europe's leading poultry producer, producers hit by sharply lower demand reportedly lost 40 per cent of their income in the first quarter of 2006, he stated.

The poultry feed sector in Europe, which accounts for a turnover of $42bn, has been hit with a 40 per cent reduction in demand for poultry feed in some EU countries.

The Food and Agriculture Organisation projects an eight per cent to nine per cent fall in European poultry consumption this year, which is contributing to sharply lower prices and poultry producer incomes worldwide.

“Thus even in Brazil, which has not experienced an outbreak of the disease, weakening world demand and lower prices have induced the main suppliers to reduce production by 15 per cent this year,” Brahmbhatt stated.

Thailand, which is the only large net exporter of poultry in East Asia, had already experienced a 40 per cent fall in poultry exports in 2004 due to import restrictions in foreign markets on its uncooked, poultry exports.

“Exporters have managed to switch from uncooked to cooked poultry exports, which are not affected by trade restrictions, as a result of which exports began rebounding last year,” he stated.

The number of human infections and deaths reported to WHO has accelerated in the past six months. There were 41 deaths in all of 2005, but 54 in only the first half of 2006, more than twice the pace of last year.


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