January 27, 2004

US Chicken In Demand As Bird Flu Wipes Out Asian Poultry

US chicken exports to Asia are set to see a sharp increase as bird flu wipes out millions of poultry in Asia, industry sources said.

The chicken sales come at a time when the $3.2 billion U.S. beef export sector remains locked down after top importers like Japan banned beef from the United States, following the first U.S. case of mad cow disease, disclosed on Dec. 23.

Thailand, the world's fourth-largest poultry exporter, has been hit hard by the virus, as have Taiwan, South Korea, Vietnam, Cambodia and Indonesia. Seven people have died, sparking fears reminiscent of the SARS virus which emerged in China in 2002, spread to more than 30 nations and killed 800 people.

"It's possible we could see some benefit. There's an opportunity to fill the supply from Thailand," said Ray Atkinson, spokesman for Pittsburg, Texas-based Pilgrim's Pride Corp., the No. 2 U.S. poultry and chicken producer.

Pilgrim's Pride on Monday said first-quarter net earnings more than tripled on increased exports and as strong U.S. demand drove prices higher.

Tyson Foods Inc., the No. 1 U.S. meat company, was already reaping some benefits from the bird flu virus, whose rapid spread through Asia was described by the World Health Organization as "historically unprecedented."

"We are seeing and do expect to see some positive benefit as a result of disruptions in some of the Asian production," said Tyson's chief administrative officer, Greg Lee.

"So there will be some incremental demand and we believe that will be positive to both volume and price," he added.

The 15-nation European Union bloc banned imports of fresh and frozen poultry from Thailand, and said Thai poultry imports will be off its supermarket shelves for at least five months.

Jim Sumner, president of the USA Poultry and Egg Export Council, said the disease has caused "turmoil in international market trends" and sent countries scrambling for possible suppliers."

"This is going to have an unbelievable impact on the poultry trade," he added.

"The U.S. will benefit to some degree," he said, adding that poultry prices were also rising. "It is driving up the price in various markets," he said, adding that it could take several months before the bird flu is brought under control.

In an anecdotal account of the increased demand, Sumner said a private U.S. company had hired extra workers to debone chicken legs for export to Japan. He said Thailand is a large supplier of deboned chicken products to Japan and others.

Richard Lobb, spokesman for the National Chicken Council, said the United States, estimated to export $2 billion worth of poultry and eggs last year, stands to gain from the bird flu.

"It's certainly possible that we might see some growth in export business to some Asian countries as a result," he added.

The top export markets for U.S. chicken are Russia, Mexico, Hong Kong, China and Canada. Lobb said that based on data for January through October 2002, Hong Kong was the biggest market in Asia for U.S. chicken, followed by China and South Korea.