February 23, 2004

Canada Reports Bird Flu Outbreak

Canada reported an outbreak of bird flu in British Columbia. Japan, Hong Kong and Singapore have already banned poultry imports from Canada following the news of the outbreak, but analysts are unruffled.
 
The Canadian economy has taken hit after hit in the past year. After the outbreak of sudden acute respiratory syndrome, or SARS, mad-cow disease, floods and forest fires, and a major power outage, bird flu in a flock of chickens in British Columbia isn't eliciting much reaction among analysts.
 
There's no scramble to revise economic forecasts or deliver dire prognoses. Analysts were far more preoccupied with Canadian and U.S. consumer price data Friday.
 
The Canadian dollar did fall to a four-and-a-half month low against the U.S. dollar earlier Friday, but that was mainly due to generic U.S. currency strength, and expectations of narrowing interest-rate differentials between the two countries. At best, the impact from bird flu is minor, currency analysts said.
 
For now, bird flu is just one among hundreds of other factors to be considered when looking at the economy, said David Wolf, director and senior economist at Royal Bank of Canada.
 
The key reason is that the strain of virus found in the B.C. chickens isn't the virulent form that has claimed at least 22 human lives in Vietnam and Thailand and infected birds in 10 Asian countries. It's the same low-risk strain found in poultry in Delaware recently.
 
"If it appeared that the bird flu was going to be having a significant impact on the human population, then we would have to revisit effects on the economy and it could become an impact," Wolf said.
 
Another important factor is that there has been no human-to-human transmission in the Asian cases, said Ted Carmichael, chief Canadian economist for J.P. Morgan Chase.
 
Nevertheless, with SARS having exacted such a toll on Asia and Canada last year, "we're very sensitive to the potential for possible illness to have an impact on economies," he added.
 
So he is keeping close watch on bird flu developments in Asia. "Should there be any indication of passing between humans, it could become a serious issue elsewhere," Carmichael said.
 
Limited Impact From Poultry Import Bans
 
Unlike SARS, the world has experience dealing with bird flu. There have been several outbreaks reported over the last decade, usually accompanied by large- scale slaughter of birds.
 
That's what's happening in B.C. Some 18,000 chickens on the infected farm in the lower mainland of the province are being destroyed. The farm is under quarantine.
 
The Canadian Food Inspection Agency is checking for signs of outbreak on other farms within a five-square-mile radius.
 
Suspension of poultry imports from Canada won't have much of an impact on the economy because poultry only makes up a small portion of total exports, said Shooshan Danagoulian, Canada economist at IDEAglobal.
 
"It's a drop in the ocean of agriculture restrictions," she said.
 
Several countries have banned beef from Canada since a case of bovine spongiform encephalopathy, or mad-cow disease, was discovered in Alberta last year. The U.S. border is closed to live cattle from Canada.
 
"The restriction (on poultry) is going to make a further dent in agriculture exports, but is not going to put such a strain on (overall) exports," Danagoulian said.
 
According to Statistics Canada data, Canada exported C$29.32 billion of agricultural and fishing products last year, down 5.2% from 2002. The country's poultry business is reportedly worth C$3.8 billion, of which 7% is exported.
 
Danagoulian doesn't think there's going to be a decline in chicken consumption either, unlike with beef where there's been a drop because "nobody wants to die from brains going to mush."