November 22, 2006

 

FAO predicts impact of future animal disease outbreaks

 

 

Major poultry-producing regions like the US, Brazil, and the EU would lose their poultry exports for six months if the bird flu virus were to strike these countries, the FAO released in a report during the Twenty-first Session of the intergovernmental group on meat and dairy products.

 

The fact that Brazil, the United States and the EU together supply nearly 80 percent of global poultry trade, implies that any outbreak or consumption shock in those countries could generate large global market shocks, the report said.

 

The report also assesses some preliminary scenario results of three broad animal disease scenarios involving AI, FMD and BSE outbreaks.

 

Bird flu in 2003/2004 coincided with the occurrence of BSE in the US. At the same time FMD outbreaks in Brazil and Argentina in late 2005 caused ripples in the market.

 

Limitations on exportable supplies initially supported meat prices, with poultry prices rising over 30 percent over the 2004 and 2005 period. However, as the disease began to spread and consumption was adversely affected, prices began to fall.

 

While more than 220 million birds are estimated to have been culled since the onset of the disease, this accounts for less than 1 percent of the 52 billion birds slaughtered annually.

 

The pork sector in Brazil has been more disadvantaged by the FMD outbreak than the beef sector, which actually experienced the outbreak.

 

This is because Brazil's pork sector depended heavily on the Russian Federation market, where 65 percent of Brazil's total pork go to.

 

Russia's extension of the ban to Santa Catarina (the only State in Brazil which has the status of being completely free of FMD without vaccination) and Rio Grande do Sul, has led to serious damage to the industry as prices on the Brazilian domestic market fell by 30 percent, well below the costs of production.

 

While exports were reported down more than 25 percent in the first half of the year, a resumption of trade to Russia from Rio Grande do Sol in mid-year implies some export recovery.

 

The report covers the impact of animal diseases all 3 meat groups in major regions around the world and an assessed impact.

 

For the full FAO report, please click here.