While U.S. poultry producers enjoyed one of the most profitable years on record in 2014, averaging margins of 13 percent before interest and tax, concerns are mounting within the industry as Avian influenza (AI) continues to spread worldwide, including to a number of states in the U.S.
Though the current outbreak of AI in commercial flocks is unique to poultry producers, pork producers who have suffered problems related to porcine epidemic diarrhea (PED) virus, and cattle raisers who have confronted a number of animal disease problems including Bovine spongiform encephalopathy (BSE), hoof and mouth disease and Texas cattle fever, are reminders of how deadly pathogens can become a game spoiler if producers let their guard down or fail to respond to a potential animal health crisis.
In the very least, animal health issues should remain a real concern for agricultural producers as research indicates certain credible biosecurity threats could be near the top of the list of potential vulnerabilities to national and International security, especially given the current global climate of terrorists threats and problems related to domestic insurgency.
While the AI crisis that has rocked world markets in recent weeks is unlikely the result of bioterrorism, animal health and national security experts agree it should serve as a reminder to the U.S. food industry of how threats from pathogens can effect international trade and livestock, egg and poultry commodity markets.
Domestically, the current AI outbreak has caused poultry producers to tighten security procedures to help avoid growing global trade disruptions.
In January, China halted U.S. poultry imports and more recently, Mexico, the European Union and a number of other trade partners have stopped buying the meat originating from Minnesota, Missouri and Arkansas, where the outbreaks of the disease have occurred. Representatives from both Sanderson Farms and Tyson Foods report they have reinforced animal health precautions and say they are dedicated to removing the threat of the disease quickly.
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"At Tyson [Foods] we have biosecurity measures in place to protect our chickens from disease, including avian influenza," reports Worth Sparkman, a spokesman for the company.
Influenza type A, sub-type H5N2 can quickly decimate a poultry flock and create a major crisis in the poultry industry if it spreads, but there is a great deal of controversy on whether the virus can or can not infect humans. According to the Asian Pacific Journal on Biomedicine, emergence of new bird flu infections in recent years have led to concerns issued by a growing coalition of international medical researchers.
At a result, human H5N2 avian influenza is a controversial issue. The only reported case of human infection came from Japan following an outbreak of AI among chicken in Ibaraki in 2005. Research was inconclusive, and researchers generally continue to maintain that human populations are protected from the virus, except in rare cases involving the presence of seasonal virus and in which the human victim is significantly older.
But while Avian influenza is highly contagious among birds, the U.S. Department of Agriculture’s Animal & Plant Health Inspection Service said in a statement on its website that the virus has not been found in humans and isn't expected to become a public-health risk.
Regardless, from a producers standpoint, the threat it poses to the industry is more than substantial. Analysts say it could potentially end with a major market crash if the problem were to spread globally in a short period of time.
An earlier outbreak of AI this year in poultry was reported but contained in Oregon, Washington, Idaho and California. AI first surfaced in the U.S. when a case was confirmed in a turkey flock, marking the first case in the U.S. since 2004. However, the outbreak has grown and represents the biggest incidence of the disease since 1997. Currently cases of AI have been confirmed in Arkansas, Missouri and Minnesota.
As to how the disease arrived in the U.S., officials say it appears it originated after surfacing on a migratory route that follows the Mississippi River, and along the Central Flyway over the Great Plains. The most likely carrier may have been a flock of migrating geese. How the pathogen may have spread to agriculture production facilities is unknown.
To demonstrate the potential threat to the U.S. food industry, consider market reactions to stocks for both of the largest U.S. poultry providers, Tyson Foods Inc. and Pilgrim's Pride Corp., following news that confirmed cases have been discovered in Arkansas and Missouri. Tyson stock fell as much as 6.1 percent in New York trading on March 11, while Pilgrim Pride stock dropped 9 percent. Since then stocks have recovered, but imagine the damage than could be done if the AI problem were to continue spreading.
While AI has been reported in all four corners of the globe in recent months causing a significant impact in some global markets, so far the impact to U.S. egg and poultry industries has been minimal. In fact, the latest predictions for the industry are encouraging.
"The margin outlook for the global poultry industry remains upbeat, with continuing bullish drivers like high beef prices, lower feed costs and relatively strong demand in most regions except China," reported Rabobank representatives last week. "Poultry market conditions, especially in the U.S., Russia and Japan, are expected to remain bullish."
Security and agricultural experts are advising livestock and poultry producers to remain alert and well informed about potential animal health issues. Maintaining a solid working relationship with veterinarians and staying active in disease reporting procedures can help in the event of a serious animal health crisis.