- The Washington Times - Tuesday, February 24, 2004

The European Union and Mexico yesterday joined the growing list of trade partners that have banned U.S. poultry products after outbreaks of avian influenza in the United States.

State and federal officials Monday disclosed a virulent form of bird flu on a farm in Texas, prompting the latest bans. Although it is not thought to be a health problem for people, the Texas case amplified concern that the disease could be more widespread and dangerous than originally thought.

Agriculture and health officials also have traced milder cases of the disease to Delaware, New Jersey and Pennsylvania. None of the cases is directly related to a strain found in Asia that can infect humans and has killed 22 persons in Thailand and Vietnam, according to World Health Organization figures.

The 15-nation European Union, a relatively small importer of American poultry products, joined China, Japan, South Korea, Mexico and other major buyers of U.S. poultry with a ban on U.S. products. Other nations, such as the United States’ biggest customer, Russia, have banned live birds, chicken, turkey, eggs and other poultry products from individual states.

Countries that last year imported $1.5 billion in poultry have a complete or partial ban on U.S. products, according to U.S. Agriculture Department figures.

The loss of poultry markets is the second major blow to the food industry in two months. Almost all beef exports were shut down after a single case of mad cow disease was found on a farm in Washington state at the end of last year.

Cattlemen exported a record 2.57 billion pounds of beef in 2003, but might sell as little as 220,000 pounds overseas this year if bans remain in place, according to U.S. Agriculture Department estimates. Despite the lost markets, U.S. consumers are absorbing what would have been exported — about 10 percent of production — and prices paid for cattle appear to be no lower than a year ago.

The sudden shift of markets and the immediate dip in prices did take a toll on food processors. Springdale, Ark., pork, beef and chicken processor Tyson Foods, for example, last month reported $61 million in mad cow-related charges for the fiscal quarter ended Dec. 27.

“I think the real economic impact is probably falling a lot heavier on the meat-packing sector [than ranchers],” said Dan Murphy, vice president of public affairs at the American Meat Institute, an industry group.

The Agriculture Department’s chief economist, Keith Collins, yesterday told the Senate Appropriations Committee that he expected progress in “a matter of days” on getting Mexico and Canada to ease their restrictions on U.S. beef. Japan and South Korea, the number-one and number-three importers of U.S. beef last year, are expected to take longer.

For poultry, it is not clear how long export bans would last. The European Union ban, for now, is in effect until March 23.

“I have put the ban in place until March 23 but will keep it under review,” said David Byrne, EU commissioner for health and consumer protection.

Economic impact also is uncertain.

“I think it might be too early to have a handle on it,” said Toby Moore, spokesman for the USA Poultry and Egg Export Council, an industry group.

The United States exported 4.9 billion pounds of broiler meat last year, about 15 percent of total production, according to the Agriculture Department.

Russia, the largest market for U.S. poultry exports, has banned U.S. poultry from Delaware and Texas. China and Hong Kong, together the second-largest market, have banned all U.S. poultry products since Feb. 8, soon after bird flu was diagnosed on a Delaware farm. Mexico, the third-largest market, yesterday banned live birds and poultry products.

“It seems likely the market would reflect that by going down. But when and how much lower it might go, I think, is anybody’s guess,” said Russell Whitman, editor for Urner Barry publications, which tracks commodity markets.

Mr. Whitman said tight supplies and high prices give the industry a cushion to ride out a short-term loss of markets.

For companies such as Tyson Foods, Pittsburg, Texas-based Pilgrim’s Pride Corp. and Laurel, Miss.-based Sanderson Farms Inc., the avian influenza outbreak is a concern.

“Due to the recent incidences of avian influenza in the Northeastern United States and in Asia, Pilgrim’s Pride had previously heightened its biosecurity efforts to minimize potential risks to its commercial flocks,” the company said.

Tyson stock fell Monday by 2.9 percent and yesterday by 2.5 percent to $15.01 per share on the New York Stock Exchange. Pilgrim’s Pride fell Monday by 1.6 percent and yesterday by 5.2 percent to $19.26 on the NYSE. And Sanderson Farms dipped 3.6 percent Monday before climbing 1.4 percent yesterday to close at $54.92 on the Nasdaq Stock Market.

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