Meat + Poultry - February 2006 - 14

International News & Trends
Avian influenza challenging U.S. chicken processors

MEAT&POULTRY

February 2006

Harcharik in his
Georgia Dock Quoted Prices
opening speech
Leg Quarters - 01/05/05 to 01/11/06
at the Interna50
tional Pledging
Conference on
Avian and Hu40
man Pandemic
Influenza in Beijing, China.
"Countries in
30
Africa deserve
special attention"
he added. "In Turkey, the virus has
20
already reached
the
crossroads
of Asia, Europe
and Africa, and
Source: Georgia Dock Poultry Prices
there is a real risk
of further spread. If it were to become tion in demand.
rooted in the African countryside, the
According to U.S.D.A.'s "World
consequences for a continent already Agricultural Supply And Demand
devastated by hunger and poverty could Estimates" issued by the World Agbe truly catastrophic."
ricultural Outlook Board in January,
According to the U.S. Dept. of Agri- analysts estimated in December that
culture's Economic Research Service, 2005 broiler exports would be 5.336
November 2005 broiler exports were billion pounds, but now see last year's
440 million pounds, a decline of 5 per- shipments to be 5.211 billion pounds,
cent from a year ago. Cited as the chief 2.3 percent less than November's esreason is a number of countries in Cen- timate, but 8.9 percent ahead of the
tral and Eastern Europe and Asia have 4.784 billion pounds exported in
reduced their purchases of broiler meat. 2004. For 2006, exports are expected
As reports of H5N1 cases expand to be 5.405 billion pounds, off 3.4
geographically to parts of Turkey, it is percent from the 5.595 billion pounds
possible that consumers in neighboring estimated in December.
countries and nearby regions will exerDepartment officials and industry
cise a higher level of caution about eat- executives know the best way to stop
ing poultry. The H5N1 virus was dis- a further decline in poultry exports is
covered in Romania this past October. to halt the spread of the virus. That's
According to U.S.D.A.'s Foreign Agri- why in China this past month, at the
cultural Service, chicken meat demand Beijing International Pledging Conhad declined 40 percent by December. ference, the international community
Some of the decline was due to the pledged $1.9 billion over three years
holidays, when Romanians prefer other to assist poorer countries to prepare for
types of proteins, but a significant por- and fight the virus. The United States
tion of the decline showed Romanians announced it will provide $334 milwere staying away from chicken.
lion to support the global campaign.
Because of expected lower broiler The United State's pledge represents
meat demand by countries like Roma- the largest single nation contribution
nia, broiler export projections for the to global avian flu efforts and will exfirst and second quarters of 2006 were pand technical assistance to countries
altered by U.S.D.A. to reflect a reduc- threatened by the virus.

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01/11/06

12/07/05

11/02/05

10/05/05

09/07/05

08/03/05

07/06/05

06/01/05

05/04/05

04/06/05

03/02/05

02/02/05

01/05/05

Cents per pound

The dramatic decline of U.S. leg quarter
prices, falling from a high of 49 cents
per pound on Sept. 28, 2005, to 26.5
cents on Jan. 18, according to the Georgia Dept. of Agriculture's Georgia Dock
Poultry Prices, underscores the impact
avian influenza is having on the U.S.
poultry industry. Processors are quick to
note A.I. is not affecting domestic consumption, but elsewhere in the world
consumption declines are noticeable.
Earlier this month Pilgrim's Pride
Corp., Pittsburg, Texas, slashed its
earnings guidance for the first quarter
of fiscal 2006 and withdrew its earnings guidance for the full year. Export
interruptions prompted by declining
consumption in some international
markets were cited as a reason for the
altered earnings guidance by Pilgrim's
Pride executives.
"Our U.S. operations were negatively
impacted by sharp declines in the selling price for chicken leg quarters, which
declined from an average selling price
of 45 cents per pound in the fourth fiscal quarter of 2005 to approximately 29
cents per pound in the first fiscal quarter
of 2006," said O.B. Goolsby, president
and C.E.O. of Pilgrim's Pride. "We attribute this drop in selling price primarily to the effects focus and concern over
avian influenza has had on international
demand for poultry products."
Highly pathogenic A.I. has made its
way from Asia to Russia into Eastern
Europe and has wreaked havoc in Turkey, where the virus has jumped from
chickens to humans. The Food and Agriculture Organization of the United
Nations reported this past month that if
more stringent containment measures
were not taken in Turkey, the H5N1 virus could become endemic.
To make matters worse, F.A.O.
reported the virus could be further
spread by migratory birds coming from
Africa. The group is concerned that
with trade, "the movement of people
and animals and migratory birds, new
countries could become infected," said
F.A.O. Deputy Director-General David

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Meat + Poultry - February 2006

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