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Bird flu, rural downturn ravage China poultry numbers
March 3, 2009 / 8:14 AM / 9 years ago

Bird flu, rural downturn ravage China poultry numbers

By Niu Shuping and Tom Miles

BEIJING, March 3 (Reuters) - The impact of bird flu and the economic slowdown may have cut China’s poultry numbers by about a third or more in the last month, executives in the poultry feed industry said on Tuesday.

Although China has not disclosed any significant outbreaks of bird flu or the extent of the impact on the industry, feed company executives say the sector has suffered a dual blow from disease and a drop in demand that could keep stocks in short supply into the third quarter.

“There have been very few restocks after the Chinese Lunar New Year. Poultry stocks could have fallen by 30 to 40 percent compared to last year,” said one executive from a leading feed and poultry producer.

Families traditionally feast over the Lunar holiday, which fell at the end of January this year, causing a bump in demand.

Consumption has also taken a big hit from weakening demand.

“Overall demand is falling, particularly from migrant farmers, who used to be the major force in poultry consumption. Urban consumption has also seen a decline,” said the executive, who declined to be named.

Traders have said weak poultry breeding is to blame for a sharp fall in prices of soymeal <0#ASSOYMEAL-CN>, a protein-rich feed, which has prompted some cancellations of U.S. soybean cargoes from China, the world’s top buyer.

Chinese officials have said 20 million migrant labourers have lost their jobs after factories making export goods such as toys and textiles closed because of the global economic recession. That has slashed demand from factory canteens.

The party boss of Henan province, one of the provinces with the most labourers, said on Monday that 3 million migrants out of a total of 20 million in the province were unable to find jobs.

Migrant labourers generate the majority of income for rural families.

“With many migrant labourers returning home, consumption of meat and eggs has fallen and pig prices are also down a lot because of the high stocks of pigs and low consumption,” said Sun Zhiqiang, an official with China Feed Industry Association.

The executive said many chicken slaughter houses were closed, including half of those in the largest poultry producing province of Shandong, mainly because of outbreaks of bird flu.

“Feed demand has been very sluggish. Besides bird flu, there are also other chicken diseases. Our sales have fallen by 30 percent,” one official with a major feed producer in Shandong told Reuters. He asked that his company and name not be named.

“IT‘S WINTER FOR THE INDUSTRY”

China has not officially reported any outbreaks of bird flu among chickens, and Chinese media have not reported the number of birds culled because of outbreaks. China only reported eight human cases of bird flu in January. Five people died from the H5N1 strain of the disease.

But feed officials told Reuters that outbreaks have also killed much of the poultry breeding stock, driving up prices for young chicks.

Although poultry demand is under pressure, costs have been kept up by the Chinese government’s purchases of grains such as corn, a major ingredient of feed for chicken and pigs.

Analysts at Rabobank say animal feed accounts for two-thirds of corn demand in China. In the United States, by contrast, corn is widely used to make the biofuel ethanol. A slowdown in feed industry and a bumper harvest at home prompted the Chinese government to lift a 5 percent tax on exports last December.

Beijing’s massive purchases of corn, totalling about 80 percent of the harvest in northeast provinces have reduced supplies to the market in the north and south, where prices <0#ASCORN-CN> picked up over past weeks.

The price rise has prompted Beijing to drop the plan to purchase more corn for state reserves in northern China, the Shandong feed mill executive said.

The increase has prompted some feed mills in the south to consider switching to relatively cheaper imports. But the price advantage narrows because of quota limitations and higher costs associated with strict quarantine inspections for containers.

“Importing in containers doesn’t make for good prices and we really can’t afford to wait at ports for two months of strict quarantine inspection,” said the first executive.

Many small feed mills have been closed since late last year. Big ones have reduced production by 10-30 percent, he said.

“It is ‘winter’ for the feed industry. What we are trying to do is survive until next year.”

(Editing by Ken Wills)

((niu.shuping@reuters.com; +86 10 6627-1210; Reuters Messaging: niu.shuping.reuters.com@reuters.net)) Keywords: CHINA POULTRY/

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