August 27, 2012

Following an outbreak of bird flu, the Mexican government is taking a number of measures to control the rise in egg prices including credit facilities for affected producers to rebuild their flocks.

The bird-flu outbreak in June among egg-laying chickens in western Jalisco state that caused a drop in production, and higher imported chicken-feed prices caused partly by the drought in the US, have led egg prices in some parts of the country to double. Nationwide, egg prices are up 17% from what they were a year ago, government-inflation numbers show.

While the effect on overall consumer-price inflation, currently at an annual 4.5%, has been limited, the uproar over the price of the food staple has prompted top levels of government to get involved. After opening tariff-free egg-import quotas, the Economy Ministry this week lifted all import tariffs on eggs.

Mexican President Felipe Calderon said Friday (Aug 24) in an address from the presidential residence that he has, among other things, ordered the customs service to give priority to handling egg imports. He said the point of the measures was to "guarantee supply, stabilise prices and eliminate any speculation."

Close to 11 million egg-laying hens were destroyed as a result of the bird flu, caused by a strain of the virus that has no effect on humans.

Mexico has vaccinated 90 million birds and is beginning the phase of replenishing decimated flocks. To assist in that effort, the government is offering, through the development banks, credit and financial assistance for affected producers to restock and buy feed and special payment facilities for those who already have credit, Calderon said.

The noise about egg prices was accompanied recently by rumours of an impending increase in bread prices. Calderon said the measures include assistance for bakeries to obtain eggs for industrial use in order not to affect bread prices. The bread industry has agreed to keep prices steady, he added.

Mexico's poultry union estimated the bird-flu outbreak led to an 8% reduction in egg output in Jalisco state, which accounts for more than half of the country's egg production. Mexico is the world's biggest per-capita consumer of eggs, with an average of 380 eggs per person each year.