High-Path Avian Flu Outbreak Hits Mexico's No. 1 Egg State

MEXICO - An outbreak of highly pathogenic avian flu in Jalisco state in late June caused the cost of eggs to increase sharply by the beginning of July, forcing the government to implement emergency price controls, writes Carlos Navarro of SourceMex.
calendar icon 18 July 2012
clock icon 5 minute read

The avian flu outbreak was reported on several large commercial farms in the municipalities of Tepatitlán and Acatic in the Altos de Jalisco region, Mexico’s principal egg-producing region. A total of 31 farms are thought to be affected.

Mexico’s poultry producer’s organisation, Unión Nacional de Avicultores (UNA), estimates that Mexico produces close to 2.5 million tons of eggs and 1.2 million tons poultry meat per year. Jalisco accounts for about 55 per cent of the nation’s total egg output.

In a report to the World Organization for Animal Health (OIE), Mexican health authorities said a series of tests revealed that a highly pathogenic H7N3 subtype of the avian flu was the cause of the current outbreak. The government’s animal health agency, SENASICA, has established intensiive control efforts in Jalisco.

Jalisco Governor, Emilio González Márquez said state and federal authorities had managed to keep the infected farms in isolation and halted the spread of the virus. About 2.5 million birds had died or been slaughtered since the flu outbreak. “We are still in a containment phase,” said Mr González Márquez. “We cannot yet ascertain the full magnitude of economic losses.”

To prevent the disease from spreading further, authorities announced they had acquired about two million doses of vaccine from China through the middle of July, and SENASICA director, Enrique Sánchez Cruz said Mexico expects to have about six million does available by the end of the month.

But that is only a fraction of the birds that will need to be inoculated. To remedy the situation, Mexico is expected to supplement the supply of vaccines against the H7N3 with output from its own laboratories. “Mexico is in the process of developing the vaccine, and, by August, we should be able to produce 80 million doses here at home,” President Felipe Calderón told reporters.

The situation forced SAGARPA and the Secretaría de Economía (SE) to intervene on two fronts. The first was to safeguard the poultry industry in Jalisco, which is worth about US$2.5 billion. Producers in Jalisco complained that other states had placed an embargo on all eggs and poultry products originating in Mexico, effectively shutting off sales to the rest of the country.

Government moves to prevent price speculation on eggs

The second action was to protect the interests of consumers, as the outbreak of avian flu resulted in numerous cases of price speculation even though Mexico has an ample supply of eggs and chicken to meet domestic demand. Eggs are an important staple of the Mexican diet, with consumption estimated at about 20.3kg per capita annually, reported the National Poultry Institute.

The sharp increase in prices prompted the federal consumer protection agency, PROFECO, to conduct an investigation, and inspectors found that speculation was especially rampant at distribution centers and at some supermarket chains.

Economy Secretary, Bruno Ferrari, said eggs sold for about 22 or 23 pesos (MXP; US$1.65-US$1.72) per kg before the news of the outbreak but later jumped to about MXP30 (US$2.25) per kg. There were some extreme cases, where the price of eggs increased by 140 per cent following the news of the avian flu outbreak in Jalisco state.

“Mexico is self-sufficient in egg production. In fact, we export eggs,” Mr Ferrari said, pointing out that the chickens infected with avian flu represent only 1.7 per cent of Mexico’s total number of egg-producing poultry. “So one can’t justify the rise in prices.”

Producers angry at government’s decision to boost imports

Still, the SE took immediate steps to halt price increases and cracking down on speculators and expanding the supply of eggs by temporarily increasing imports for this year. A week ago, the SE said the quota for egg imports this year would be increased to about 211,000 tons, almost 60 per cent above the original target of 132,000 tons.

A share of the imports would come from the US and Canada, Mexico’s two partners in the North American Free Trade Agreement (NAFTA). But Mr Ferrari said Turkey, Poland, China and Ukraine have been identified as countries that export eggs at competitive prices. Imports from these countries would be facilitated by eliminating tariffs, which are currently as high as 45 per cent.

But the decision to boost imports did not sit well with the Mexican poultry industry. Ricardo Estrada, president of the Asociación de Avicultores de Tepatitlán said the imports are a new threat to Jalisco poultry producers, who already have to deal with the outbreak of avian flu.

“There is no shortage of eggs,” Mr Estrada said in an interview with the Mexico City daily business newspaper, El Economista. He blamed authorities in neighbouring states for contributing to the price speculation by banning imports of eggs and poultry products from Jalisco, regardless of whether they came from the infected farms.

Mr Estrada and other local leaders are pushing for the state and federal governments to create a special contingency fund to compensate the affected poultry producers and the workers who have lost their jobs as a result of the outbreak. By some estimates, the outbreak has already cost 1,800 jobs in Los Altos de Jalisco and other parts of the state.

Further Reading

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Further Reading

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