Economic cost of Bird Flu

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The new bird flu is another animal disease spreading like a wild fire of jungle in many countries of the world. The mad cow, SARS, which has already drastically decreased the exports and revenues of many countries of Fareast region and now new bird flu menace has badly hit the economies of many countries around the globe. The spreading avian flu has hit poultry exports from China, Taiwan, Thailand and Indonesia particularly hard, India’s poultry products. The virus has spread at an incredible rate over the course of the past month hitting about ten countries in East Asia and killing 8 humans and tens of millions of fowl. As of January 27, 2004 it has claimed South Korea, Japan, Vietnam, Taiwan, Cambodia, Pakistan, Indonesia, Thailand, China, and Laos. Numerous other countries in the area are at risk and are taking aggressive precautions such as Australia and Singapore. The bird-influenza crisis, which has now spread over 10 Asian countries, not only may affect the Chinese economy but also may cause a revolution in the eating habits of millions in the world’s most populous country.

Even in Pakistan, in the city of Karachi more than 6 million chickens have been died from new bird flu virus. The virus has now moved in to the territories of Balochistan. There are three to 4 hundred thousand people indulged/linked with poultry business/industry in the country and approximately Rs.5 to Rs.7 billion is invested in the poultry industry per annum. The owners of poultry farms are very worried and anxious from the belt from the blue in the shape of new bird flu virus.

The bird-flu crisis bears chilling similarities to the outbreak of severe acute respiratory syndrome [SARS] in 2003. Since last November 2003 5 to 6 million chickens have died on 3,000 farms in Sindh province, around the southern Pakistani city of Karachi, but Pakistan’s Agriculture and Livestock Minister, says that only thousands of those deaths can be attributed to bird flu. The rest can be blamed on more conventional diseases, like Newcastle disease. Poultry industry has badly hit in Punjab too after publication of news items of bird flu as people avoiding to take consume chicken or eggs. The rates of chicken live fell from Rs.58 to Rs.42 per Kg, chicken meat now available at Rs.62, which was Rs.90 last week. Eggs farmy are available at Rs. 28 per dozen which were being sold at Rs.40 now. According to official statement there are no established proof of H5N1 in Pakistan only H7 and H9 viruses have been found which are not supposed to be fatal for human beings.

The growing affluence of the population has seen meat consumption jump fivefold around the globe and especially in China in the past 20 years. Already, China has become one of the prime investment destinations for the Thai-based Charoen Pokphand Group, the world’s largest chicken producer and animal-feed miller. China risks losing exports to Japan and the EU if import bans initiated after the discovery of the outbreak remain in place. The damage to China’s reputation would also hit other food exports and affect a tourism industry that has just recovered from the SARS crisis.

Many countries have closed to import poultry items from infected regions including Pakistan, India and Bangladesh. Many Governments have lost precious foreign reverses due to total ban on the export of poultry items to Middle East and Far East countries. The west Asian countries will be the biggest markets for India and Pakistan; of hatching eggs, processed meat and day-old chicks. India has imposed ban on the imports of poultry items from Pakistan. In a desperate measure, the government scrambled to slam the lid on the epidemic by barring all processing plants from imports and outsourced birds and products. Even commercial birds within the country, reared for the market, have been given Z-grade security, meaning complete isolation. The country’s health ministry said that poultry farms on the India-Pakistan border had been closed to ensure that the disease did not spill over. Malaysian share prices fell 0.42% as concerns over the spread of bird flu across Asia deepened. The Kuala Lumpur stock exchange composite index dropped 3.42 points to finish at 819.85, off a low of 814.40. Singapore share prices closed down 2.19% in the line with the sharp losses seen on other regional bourses. The Straits Times Index closed 41.71 points lower at 1,862.84. Indonesia share closed 0.69%, Hong Kong down 2.40%, Taiwan 0.03% low, Seoul 0.40% lower, Tokyo 0.69% Australia 0.98% New Zealand 0.17%, Philippine 1.02% lower.

Poultry farmers in many countries now find themselves at the mercy of what their governments will do. Authorities in Thailand and Indonesia are reluctant to confront the bird-flu problem. Millions of chickens have been placed in plastic bags and buried in an effort to halt the epidemic in its tracks. If the bird-flu virus continues to mutate, it could latch on to a human influenza virus, exchange genetic material and create a new, uncontrolled people-killer, according to the World Health Organization [WHO], which fears that the disease will spread into Myanmar and Laos next, if it has not already done so. Indonesia announced that at least 400 farms in its territory have suffered outbreaks. Meanwhile in Thailand, the government expanded the bird-flu crisis zone to 10 of its 76 provinces. Troops have been dispatched to slaughter millions of chickens in an effort to halt the spread of the disease.

The chicken industry was and is one of the strongest financial pillars of Thailand, pumping more than US$1.5 billion into the economy each year through exports to many countries of the region and around the globe. Virtually overnight, however, it has been wiped out because of blockades against importing Thai chicken in Europe, Japan and elsewhere. Chicken exporters slumped on Bangkok’s stock market. More than 3 million Thais, mostly on farms, are also reeling from the sudden slaughter of their poultry and the industry’s implosion. In December 2003 the Korean authorities reported slaughtering 1.1 million ducks and chickens.

At least eight people have already died from bird flu in Vietnam and Thailand after officials failed to protect their citizens while haughtily assuring them the virus was not present. Ten countries have reluctantly reported bird-flu strains: Cambodia, China, Indonesia, Japan, Laos, Pakistan, South Korea, Taiwan, Thailand and Vietnam. More than 20 million chickens have been slaughtered in Thailand alone.

A quarter of all Dutch poultry were slaughtered in 2002-2003 to eradicate the highly infectious bird flu at a cost of hundreds of millions of euros, and part of the industry is unlikely to ever recover from the disaster. The Netherlands, the European Union’s largest poultry exporter, slaughtered 30.7 million birds at some 1,300 farms to contain an outbreak of avian influenza that was first discovered in March 2003 and led to one human death. Total costs incurred by the government for killing the animals and payments to affected farmers amounted to 270 million euros [$344 million]. But overall costs for the sector, including poultry farmers, slaughterhouses and related businesses, amount to about 400-500 million euros, according to the Agricultural Economics Research Institute [LEI].

The avian flu is wreaking havoc in the meat market in Japan. The total embargo on poultry imports from Thailand and Indonesia is causing many families to give up eating poultry altogether. The reduction in consumption has generated a decline in the cost of poultry meat to 15 percent.

In Pakistan it is estimated that the prices of poultry meat has decreased up to 30 to 35% and owners of poultry industry is losing million of rupees every day. Thailand produces a quarter of the poultry in the world after the United States, Brazil and the European Union and is the largest exporter of bird meat to Japan. In the 2003 the discovery of the avian flu in imported Chinese duck meat provoked the nearly total arrest of bird meat imports from China in Japan. The embargo on imports from Thailand came one month after the embargo on imports of beef meat from United States and Canada, due to the discovery of some cases of “mad cow disease” in North America and in Canada. The deadly avian virus, “bird flu” or H5N1 influenza, spreading throughout Asia is now found over nearly half of Vietnam’s provinces. The WHO [World Health Organization] confirmed the disease has now been detected in 25 of Vietnam’s total 58 provinces.

It is estimated that about 20 per cent of the total number of poultry farmers have partially closed down their businesses and the industry has lost about Rs 3.5 billion due to over-production of chicken, lack of export facility, levy of additional taxes and furthermore, due to emerging new bird flu in the country. Thailand’s poultry industry stands to lose at least $2.6bn if the country’s chickens have caught avian flu. Japan, which imports 60 per cent of Thailand’s $1.5bn [£813m] worth of poultry exports, has banned chickens from Thailand because of fears that a disease that has killed at least five people in Vietnam will spread. Following the ban on Thai chicken imports, there is increasing pressure on UK farmers to supply more quality assured poultry meat at a time when prices are below the cost of production. Poultry farmers’ margins are being squeezed with high feed costs due to the doubling of grain prices over the past year [£55 to £110]. Brazil, the world’s No.2 poultry exporter, banned imports of poultry and poultry products from countries afflicted by bird flu.

The U.S., the world’s largest chicken exporter, has begun filling Asia’s supply gap as it exports have begun to rise. A year ago the U.S. is estimated to have exported $2 billion worth of poultry and eggs, and stands to gain significantly this year in light of everything. People are very worried and reluctant to make believe on official clarification on the issue of bird flu. Concrete efforts should be made in order to eradicate the new bird flu form the territories of the country, which may increase the ratios of poverty, employment and substantial reduction in foreign exchange reserves and tax collections.

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