March 13, 2006

EU's poultry industry faces new reality: ever-present bird flu

Bird flu is here to stay and Europe's poultry industry, which employs half a million people, must be prepared to make drastic changes if they want to stay solvent, said analysts on Friday.

With the majority of the countries in the EU hit by H5N1 bird flu in wild birds, poultry sales have fallen across the region, some by up to 50 percent.

Poultry prices are expected to continue declining, threatening industry profitability around the world, experts said.

The act that the H5N1 virus had spread to Europe's wild bird population, means it could be around in Europe for years. The World Animal Health Organization (OIE) has also said it expects cases could appear in more farms across Europe.

Poultry processing firms need to be flexible, diversify into new markets and become multi-meat producers so that if chicken prices fall they can profit from growth in other meat sales, analysts said.

If bird flu becomes common in the EU, wider export bans will be increasingly common, experts say. Europe's main poultry markets are Russia, Saudi Arabia and Ukraine.

Europe already has an overproduction of poultry meat, and new bird flu cases in more countries can only make its sales worse.

A second way companies can adopt is to spread their production geographically so as to limit their losses as export bans are usually focused on the regions where outbreaks occur.