Trade Disruptions from Highly Pathogenic Avian Influenza

The current highly pathogenic form of H5N1 avian influenz a was first identified in Hong Kong in 1998 and reappeared in China in 2001. In late 2003, the virus surfaced again and spread to poultry in several Asian countries throughout 2004. In 2005, the virus reached Europe and in 2006, H5N1 appeared in Africa.

Trade disruptions from H5N1 AI affected two of the world’s major exporters of chicken meat, Thailand and China. Thailand’s broiler industry depends heavily on exports and was hard-hit by the bans. China’s exports are a small share of its chicken meat output, and the impact of bans on its exports was less significant nationally, although severe for producers focused primarily on the Japanese market.

In the 1990s, the principal driver of Asia’s poultry meat trade was Japanese demand for imports supplied by China and Thailand. The Japanese place a higher value on chicken legs than on white meat, a factor exploited by the Asian exporters that supplied such products as de-boned legs. These de-boned products competed successfully against the bone-in legs long supplied by the U.S. Thailand also successfully developed a large export market to the European Union.

(July-September) in 2001 after an H5N1 outbreak in China. Late in 2003 and early in 2004, H5N1 AI appeared in all of Japan’s large Asian suppliers, and their exports of chilled and frozen broiler meat ceased. South Korea, an emerging importer, also banned chilled and frozen poultry product imports from all major Asian suppliers.

A direct result of the outbreak was a large increase in Japanese imports from Brazil. Brazil had not experienced any AI outbreaks and, except for the U.S. bone-in legs, faced almost no competition for the frozen cut markets in Japan and smaller Asian importing countries. Brazil’s exports of frozen broiler meat to Japan shot up from 109,000 tons in 2000 to 403,000 tons in 2005.

In another shift, Chinese and Thai poultry-exporting firms refocused on increasing production of prepared and preserved broiler cuts. The heat treatment for such further processed cuts kills the AI virus if it is present. The share of further processed cuts in Thai poultry exports rose from 28% percent in 2000 to 88% in 2004 and 98% in 2005 (China still ships chilled/frozen poultry meat to its Hong Kong Special Autonomous Region). Poultry meat exports from major Asian suppliers to Japan and South Korea are now almost 100% prepared and preserved meat. In contrast, Brazil ships almost entirely frozen, unprocessed chicken meat to Asia.

China's improved disease reporting system has helped sustain China's broiler meat exports, particularly to Japan, China's largest export destination. Japan and China reached a consensus that if the 35 plants registered by Japan for eligible exports are free of HPAI, Japan would not stop imports. In the past, when HPAI occurred in China, Japan suspended imports from the entire country. China's poultry exports to Japan and Hong Kong accounted for 81% (292,000MT) in volume and 86.5% ($755 million) in value in 2005.
Source: Economic Research Service/USDA, Foreign Agriculture Service/USDA

To view the full report, including tables please click here

Source: USDA's Agricultural Marketing Service - 11th April 2006