April 23, 2013

After an outbreak of bird flu, feed demand from China's poultry industry may slump 20% in the second quarter from a year earlier.

This is according to research firm Shanghai JC Intelligence Co.

The H7N9 virus, which has killed at least 17 people in China since the beginning of March, has caused more than RMB16.7 billion (US$2.7 billion) of losses to the nation's poultry industry as consumers avoid chicken, a news agency said April 16, citing the China Animal Husbandry Association. Poultry feed is mostly made of corn and soymeal.

Poultry-product sales have dropped almost 70% since the end of March as government asked its citizens to avoid contact with live animals, research firm Shanghai JC said in a report on Apr 17. Farms are reducing flocks and selling off broilers, birds under 13 weeks old that constitute almost all commercial chicken production, according to the report.

"The industry has been dealt a blow so severe that it will not be able to shake off the impact at least until late May or June," said Li Qiang, managing director at the Shanghai JC Intelligence Co.

An average Chinese urban resident gets 28% of annual protein from pork, 14% from poultry and 13% from eggs, according to Shanghai JC. In rural areas the figures are 39%, 12% and 15%, respectively.

Interest in raising poultry has "drastically declined," the China National Grain & Oils Information Centre said in a report on Apr 17. Feed demand may decrease by 4.4 million tonnes, including two million tonnes of corn, if the outbreak lasts to May, while impact on June and after may be small, it said.