March 13, 2006

US chicken exports lower on bird flu fears

The Agriculture Department said the growing bird flu panic overseas is reducing US chicken exports and warned that the deadly bird disease is getting closer to US shores.

"I cannot build a cage around the US," said Agriculture Secretary Mike Johanns. "For us, this is a situation where it is not about debating whether it will arrive, it's preparing for when it does arrive."

The Asian strain of H5N1 bird flu, which can be spread by wild birds to poultry, is already causing big problems for US chicken companies by damping foreign demand. Many consumers in countries where the virus has recently appeared in birds, such as France, Italy and Greece, are avoiding chicken, even though proper cooking kills the virus.

According to the World Health Organization, the H5N1 virus has killed 97 people since 2003 in the developing world, where people routinely live in much closer contact with poultry than they do in the West.

The USDA said Friday in its monthly update on world market conditions that it expects the US chicken industry to export 5.3 billion pounds of meat this year, down 5.3 percent from its projection in December.

The US chicken industry relies on foreign customers to buy about one-third of its production of legs and thighs. The wholesale price of so-called dark meat has plunged to about 14 cents a pound in recent weeks, compared with about 42 cents a pound last summer.

The export slowdown is forcing chicken-industry executives to consider reducing production, something historically they have been very slow to do when faced with market troubles. The US industry's biggest exporting rival, Brazil, is already making plans to cut chicken production by roughly 15 percent, but USDA economists continue to see US production climbing this year, up 2.3 percent.

"It needs to get really bad before they start to act," said Adriaan Weststrate, head of the poultry-lending sector in North America for Dutch banking giant Rabobank Group.

Many scientists believe that the deadly H5N1 strain, which originated in Asia, will most likely reach the US through Asian birds that migrate in the spring to Alaska, where they can come in contact with North American birds that also come there to hatch their young before returning south. The first wave of Asian birds could arrive within several weeks, which has Bush administration officials sounding the alarm.