March 13, 2006


Bird flu affecting Brazil's chicken industry



While the deadly H5N1 strain of bird flu has not been found in Brazil, the country's chicken industry is already feeling ramifications from the disease's spread throughout Europe.


In less than a week, three chicken meat processors have announced they were either going to temporarily cease operations or cancel investments in production.


Seara Alimentos said Thursday that it would lay off more than 220 workers in its Santa Catarina unit, according to local press reports.


On Monday, Aurora Alimentos said it would postpone investments of 100 million Brazilian reals (US$46.29 million) in chicken production this year due to bird flu fears in Aurora's main markets, Europe, the Middle East and South Africa.


On March 3, one of Brazil's largest chicken exporters, Avipal said it will suspend operations for the month of April in order to lower chicken stocks.


The reason: a drop in worldwide consumption due to the spread of bird flu in Asia, North Africa and Europe.


"It's just to control stocks at this point. The Middle East is our main market and they've reduced imports by 70 percent. It's all because of bird flu," Francisco Marques de Avila, investor relations director at Avipal said last week.


Brazil is the world's largest chicken producer and exporter, selling nearly 3 million tonnes of chicken to world markets in 2005. Numbers like that give Brazil 41 percent of the world's chicken market, so an excess of chicken here means world prices can fall.


Brazil's chicken exports fell in February to 190,300 tonnes, worth US$224.7 million, compared with 206,600 tonnes in January worth US$264.2 million. Exports also fell in comparison to February 2005 totals of 210,700 tonnes, worth US$219 million.


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