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Commission steps in to stem price drop in poultry sector

By Ahmed ElAmin , 29-Mar-2006

The European Commission stepped in today to help stem the fall in prices for eggs and poultry due to consumer fears over avian influenza.

The Commission today published its proposal to allow EU financial aid for the bloc's eggs and poultry sector. The proposal would to allow the European Union budget to be used to share the cost of market support measures in the sector.

Since the beginning of the recent avian flu crisis, consumption of poultry and eggs has fallen dramatically in some member states, leading to a sharp reduction in prices, the Commission stated.

 

The march of avian influenza across Europe has heightened the public's fears over the safety of the bloc's poultry. Poultry consumption has plunged in many EU member states, by up to 70 per cent in some countries.

 

Scientists are worried that the H5N1 form of the virus, which can be transmitted from poultry to humans, may mutate so that it can be transmitted from human to human and start a influenza pandemic.

 

The current regulations governing the eggs and poultry market allow the EU to co-finance compensation measures only in cases where there is a case of avian flu on a farm or where farmers are prevented from moving their poultry because of restrictions imposed on veterinary orders.

 

There is currently no possibility to provide EU aid to take account of market problems linked to a fall in sales caused by a loss of consumer confidence.

 

The measure would allow member states to compensate farmers for measures that temporarily reduce production.

 

"Because of the gravity of the current market crisis, the Commission now proposes to co-finance 50 per cent of the cost of market support measures linked to a drop in consumption and prices of eggs and poultry," a press release stated.

 

Current EU regulations only allow export refunds as market support measures. The regulations do not include the possibility to provide EU financial support to farmers affected by a drastic drop in consumption.

 

The Commission hopes the bloc's decision making bodies, the European Parliament and the Council, will adopt the proposals by the end of April.

 

About 100 people have died from the disease so far worldwide, including four in Turkey and three in Azerbaijan.

 

The UN Food and Agriculture Organisation (FAO) reported that recent avian influenza outbreaks in Europe, the Middle East and Africa have caused dramatic swings in poultry consumption, increased trade bans and sharp price declines. The UN agency expects poultry consumption shocks this year in many countries.

 

"A steady erosion of previously expected gains in per caput poultry consumption will likely push down global poultry consumption in 2006, currently estimated at 81.8 million tonnes, nearly three million tonnes lower than the previous 2006 estimate of 84.6 million tonnes," stated FAO commodity specialist Nancy Morgan.

 

According to the FAO report consumption shocks are ranging from a dramatic 70 per cent decline in Italy in mid-February to 20 per cent in France and 10 per cent in northern Europe.

 

These responses are similar to the European situation in late 2005 when widespread consumer concerns about bird flu outbreaks contributed to an annual one percent consumption drop in 15 countries in the EU.

 

 

In Africa, consumers in affected countries, such as Egypt and Nigeria, are moving away from poultry and egg products as are consumers in surrounding non-affected countries. In India reports of consumption drops of 25 per cent have caused domestic prices to fall 12 to 13 per cent.

 

Sharply reduced international poultry prices are raising uncertainty among exporters about trade prospects in 2006, the FAO stated.

 

"As consumers look for alternatives to poultry, global trade prospects will likely erode from the 10 per cent gains witnessed in 2005," the organisation stated.

 

In the US, export prices for broiler cuts, after rising to record levels in October, dropped 13 per cent as a result of declining shipments to Eastern Europe and Central Asia in November and December.

 

In Brazil, where exports account for approximately 30 per cent of total poultry output, the price of day-old chicks, an early warning indicator of potential production changes, is down sharply. Brazil and the US supply about 70 per cent of global poultry trade.

 

The largest poultry producers and exporters are the United States, Brazil and the EU.

 

The crisis has also affected the $42 billion dollar feed sector in Europe, with demand losses estimated at up to 40 per cent in some countries, the FAO stated.

 

Around 200 million chickens have been culled or have died of the disease worldwide since the onset of the crisis in late 2003.