China's poultry prices to rise as H7N9 wanes

Prices of poultry products in China could rise sharply as early as next month as the waning H7N9 virus helps consumers regain confidence in poultry meat and eggs, experts said.

Since late March, authorities have closed many poultry markets in eastern China to curb the spread of the virus and many consumers have stayed away from poultry products due to fears of being infected by the deadly virus.

Since the beginning of May the number of new infections has been decreasing, according to health authorities.

The new strain of bird flu, which has killed 33 people among 130 confirmed cases nationwide, has led to huge losses for the country's poultry industry and driven many farms out of business.

Due to the H7N9 virus, the country's poultry industry has suffered losses worth more than 40 billion yuan ($6.5 billion), according to the China Animal Agriculture Association.

"Many breeders in Shandong, a major poultry production province in eastern China, have reduced or killed all their breeding stocks in response to losses," said Cui Zhizhong, a professor at Shandong Agricultural University.

"In a couple of production cycles, poultry prices could go up sharply and this could affect the market order nationwide," said Cui.

He estimated that prices could go up in June or July.

Qin Fu, director of the research institute of agricultural economics and development under the Chinese Academy of Agricultural Sciences, shared this viewpoint. "As consumer confidence regains, the ensuing shortfall in supply of poultry meat and eggs will trigger big rises in prices," he said.

"The whole industry was severely hit over the six weeks after the first H7N9 human infections were reported," said Qin.

The price of eggs, for example, slumped 30 to 40 percent in the first three weeks after the virus emerged, and only started to recover during the past week, he added.

The prices of broiler chickens plunged to 0.24 yuan from 3 yuan within the first week of April and for each broiler of 2.5 kg in weight, poultry breeders lost up to five yuan, according to the Shandong provincial animal husbandry bureau.

For each kilo of eggs, poultry farmers could have lost 1.2 yuan, and for a farm with 10,000 hens, the monthly loss could have amounted to 30,000 yuan, said Ma Wenfeng, an analyst with Beijing Orient Agribusiness Consultant Ltd.

As a result, many breeding farms face financial woes as some have to pay back loans with high borrowing costs and therefore many choose to get out of the business to avoid further losses.

It will take many years for a poultry farm to recover if its fund chain breaks, said Wang Shouchun, chairman of Shandong Xiantan Co, a poultry breeding and meat processing company.

The State Council, or cabinet, has ordered that poultry farms are provided with short-term discount government loans to help them get through the hard times and to stabilize the industry.

Qin suggested that the Chinese government step up the development of policy-oriented agricultural insurance and launch futures contracts of poultry products in a bid to reduce losses and risks for farmers.

Special report:

H7N9 avian influenza