January 26, 2006

US poultry prices drop but producers are hopeful
 

US poultry producers are experiencing a drop in poultry prices as exports are at a standstill due to fears of bird flu in the destination countries.

U.S. exports of poultry are stockpiling because of the drop in foreign demand. This has led to a drop in prices in parts of the US by about 40 percent, said Tom Hensley, chief financial officer of Fieldale Farms, adding that the price of leg quarters has dropped from about US$0.38 to US$0.24 cents in the last six months.

Broiler exports in Nov 2005 were 99,700 tonnes, a 5 percent drop from the previous year, according to the U.S. Department of Agriculture. Countries in central and eastern Europe and Asia had reduced purchases because of concerns about bird flu. The USDA is expecting lower export levels through the first half of 2006 because it predicts consumers in those regions may avoid eating poultry.

Consumers in Arab countries were fearful that migrating birds have already spread the virus from neighbouring Turkey and poultry imports throughout the Middle East have nose-dived as families quit eating chicken, the Associated Press reported Tuesday.

Chicken-eating fears have also hit Russia, Romania, the Ukraine and China with consumption dropping in consequence, said Jim Sumner, president of the USA Poultry and Egg Export Council. The biggest worry for the US is whether it could re-gain the markets it lost. There could be a silver lining amidst all that gloom. Mr Sumner is hopeful that the US would be well-placed to export to infected countries if it remains free of bird flu. The US poultry industry may stand to gain from the disease, he said.

But until then, US poultry companies are seeing nothing but dropping sales. US poultry giant Pilgrim's Pride Corporation has seen their first-quarter profits halved due to bird flu concerns.

The firm reported net income of $25.7 million in the quarter, a decrease of $22.8 million compared with net income of $48.5 million in the first quarter of fiscal 2005

In response, poultry producers have launched an advertising campaign to highlight the safety of properly cooked chicken The US Poultry and Egg Export Council has also announced plans for a US$1 million international campaign to promote awareness of bird flu isues. Concerns about bird flu have not affected consumption in the US so far.