March 5, 2004

 

 

Japan Bird Flu Crisis Could Benefit EU Pork Industry

 

Japan's poultry industry is the latest sector to feel the effect of avian influenza. Reported outbreaks of the virus in the health-conscious country have eroded people's appetite for chicken and hammered down the price of poultry. Could EU pork exporters capitalise on this situation?

 

Agriculture ministry data on standard meat prices shows the average wholesale price of chicken legs in Tokyo fell to 494 yen (€3.67) per kg on Tuesday, down four per cent from 517 yen a week ago before the most recent confirmed case in Kyoto. The price has sunk by about 26 per cent so far this year.

 

One knock-on effect of the crisis has been an increase in the consumption of pork. Consumers appear to be eating more pork as a substitute for chicken and, to a certain extent, beef, following the BSE scares of last year.

 

In addition, concerns about a possible supply shortage have kept pork prices buoyant since the start of the year. Ministry data shows that the standard pork wholesale price was 511 yen per kg yesterday, compared with 425 yen in mid-January, just before the first bird flu case.

 

European pork exporters will be looking closely at this. Since 27 January, the EU has offered export refunds of 40 euros per 100kg on exports carried out before the end of April, in an attempt to improve the competitive position of EU pork exporters on the world markets. Japan is an obvious target.

 

But competitors on the world stage have warned that using the subsidy in this way could be anti-competitive. Ag-Pioneer for example quotes Martin Rice of the Canada Pork Council as saying that he thinks the subsidy should not be used for this purpose.

 

"We were given to believe, by our European contacts, that these subsidies would be exclusively used for exports to certain markets, such as Russia, which aren't quite as critical to (Canada) as other export markets like Japan and the US," he said.

 

Japanese agriculture officials have attempted to remain upbeat about the poultry situation, saying that the fall in poultry prices is in part seasonal. But this has not stopped some analysts from predicting a catastrophe for Japan's poultry producers. All the confirmed cases carried the H5N1 strain, which has killed at least 22 people in Thailand and Vietnam.

 

Asia of course is not the only region to have been hit recently by bird flu. The outbreak in Texas has hit the fortunes of poultry producers there hard. Shares of Tyson Foods, the country's largest meat company and top poultry producer, fell 39 cents to $15.01 on Tuesday last week. Shares of Pilgrim's Pride, the number two poultry producer, fell $1.05 to $19.26. This was the second day of declines for both firms after the discovery of a severe strain of bird flu in a Texas chicken flock was revealed earlier last week.

 

Japan is taking a close look at yesterday's outbreak of bird flu in Kyoto prefecture. The country confirmed its third bird flu case last Friday after the death of a large number of chickens at a different Kyoto farm.