China poultry sector losses exceed $1.6 billion on bird flu scare

BEIJING Tue Apr 16, 2013 4:59am EDT

An employee sprays to sterilize a poultry farm in Hemen township, Jiangsu province, April 8, 2013. Picture taken April 8, 2013. REUTERS/Stringer

An employee sprays to sterilize a poultry farm in Hemen township, Jiangsu province, April 8, 2013. Picture taken April 8, 2013.

Credit: Reuters/Stringer

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BEIJING (Reuters) - China's poultry sector has recorded losses of more than 10 billion yuan ($1.6 billion) since reports emerged of a new strain of bird flu two weeks ago, an official at the country's National Poultry Industry Association told Reuters on Tuesday.

Authorities have slaughtered thousands of birds and closed live poultry markets in Shanghai and Beijing in an attempt to reduce the rate of human infection and allay growing fears about the H7N9 virus.

However new cases are being reported daily. In total 14 people have now died from the bird flu virus and 63 have been infected, the official Xinhua news agency said on Monday.

Most of the cases to date have been in eastern China, where poultry consumption is down by more than half, according to Liu Yonghao, president the New Hope Group, the country's largest producer of animal feed.

Prices have dropped on weaker demand. High-quality chicken is selling for 4 yuan per kg, down from 16 yuan per kg, Liang Zhong, the poultry association official, told the China Daily newspaper.

However National Bureau of Statistics data released on Monday showed that average whole chicken prices nationwide were down only 1.5 percent to 18.8 yuan per kilogram in the first 10 days of April, compared with the preceding 10-day period.

China is the world's second largest poultry market after the United States, and poultry is the country's fastest growing meat sector. But a spate of food safety scandals in recent months has hurt consumer confidence in the industry.

"Chicken prices are falling which will lead to losses for breeders," New Hope's Liu said last week. "There are more than 100 million farmers raising chickens who will need to be supported."

The recent decline in demand is also having a negative impact on imported poultry.

"We thought that people would try to avoid domestic chicken, and have more preference for imported chicken, but this is not the case. Across the board, people are being more cautious," said Sarah Li, director of the USA Poultry & Egg Export Council's Hong Kong office.

"According to our importers, (wholesale) sales for both imported and domestic chicken products have declined by 80 percent."

(Additional reporting by Niu Shuping and Michael Martina; Editing by Michael Perry)

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