Avian Influenza Cost US Dearly

Outbreaks of avian influenza may not affect cattle producers directly, but the effect on affected poultry and egg producers and the economy cannot be denied.

The effects can, however, be hard to measure since mitigation and containment measures are so swift and effective.  It may take a large outbreak so see past the local producer’s plight, so the USDA’s Economic Research Service took on the task.

A report by the USDA-ERS took a look at the effects of the 2014-2015 outbreak of highly pathogenic avian influenza on the US poultry sector.  In this outbreak, more than 50 million US chickens and turkeys either died of Highly Pathogenic Avian Influenza or were destroyed to stop the spread of the disease.

Those birds accounted for about 12% of the US table egg laying population and 8% of the estimated inventory of turkeys grown for meat, the report said.

In response to the outbreak, many export markets for US poultry commodities put up trade restrictions on US poultry products, distorting markets and making economic losses greater.

Domestically, egg supplies were reduced markedly, and turkey production took a hit.  Prices for both went up.

 

EFFECTS DIFFERENT FOR EACH COMMODITY

 

The USDA-ERS study found that the overall market effect of the outbreak and trade restrictions differed for each commodity, reflecting a variety of factors.

Egg and turkey production decreased as a direct result of the large number of birds lost or destroyed during the outbreak.  (And flocks could not be repopulated quickly since it takes time to clean and disinfect buildings properly.)

Despite export market losses, egg and turkey prices rose.  These higher prices increased revenue for unaffected producers, but those who lost birds, as well as consumers who paid higher prices, were affected negatively.

 

OBSERVATIONS

 

Producers may be able to recover production levels after such a disease outbreak, but other market effects, like trade losses and price instability, can persist, the report said.  Poultry production returned to more typical levels by early 2016, but prices for many products remained at multi-year lows that year, because of lingering export weakness and other factors.

Despite its size, the localized nature of the HPAI outbreak had very negative effects on many producers.  Bird losses per operation averaged 50,000 for turkeys and more than a million for layers, the report said.

Many other egg and turkey producers lost no production, and they received higher prices in the short term without bearing the high costs of being affected directly by the outbreak.

But even related but unaffected parts of an industry can see lowered product demand and price pressure from a disease outbreak.  The broiler industry lost less than 0.01% of its inventory to HPAI, yet the threat of potential infection became the basis for trade restrictions that contributed to much lower 2015 and 2016 broiler prices, compared with pre-outbreak levels, the report said.  Many important markets remained closed into 2016.

 

CATTLE, BEEF RECAP

 

No fed cattle sold Wednesday on the Livestock Exchange video auction.

Cash cattle sold last week at $123 per cwt on a live basis, up $3 from the previous week and at $193 to mostly $195 dressed, up $3 to $4.

The USDA’s choice cutout Wednesday was up $3.48 per cwt at $208.62, while select was up $2.59 at $199.16.  The choice/select spread widened to $9.46 from $8.57 with 98 loads of fabricated product sold into the spot market.

The CME Feeder Cattle index for the seven days ended Tuesday was $155.90 per cwt, up $0.57.  This compares with Wednesday’s Jan settlement of $149.37, down $0.15.