Avian Influenza Outbreak in Mexico Raises Concerns about Price Speculation

MEXICO - The dreaded avian influenza has returned to central Mexico again this year, this time causing significant poultry deaths in Guanajuato state, writes Carlos Navarro, Editor of SourceMex.
calendar icon 1 March 2013
clock icon 5 minute read

The outbreak of the H7N3 virus—which had forced poultry farmers in the state of Guanajuato to destroy more than 2 million birds as of the end of February — affects municipalities in northern Guanajuato as well as in Jalisco state.

SENASICA, the national food safety authority, said the outbreak originated at a broiler breeder farm, initially spreading to 17 breeder farms owned by the firm Bachoco. The virus was later discovered on 20 other farms in the area. (A Pilgrim’s Pride breeder farm was also affected).

Health authorities worked hard to prevent the influenza from spreading to neighboring Aguascalientes and Jalisco, the latter Mexico’s largest egg producing state. Jalisco suffered a major outbreak in the summer of 2012 which resulted in heavy price speculation in eggs.

Jalisco accounts for about 52 per cent of Mexico’s egg production, compared with only 3 per cent for Guanajuato, according to statistics from Mexican National Poultry Union (UNA). Puebla state ranks second in egg production with 17 per cent of the national total.

Authorities slaughter over 3 million birds

As part of its emergency measures, SAGARPA, the Secretary of Agriculture, Livestock, Fishing and Rural Development, announced that health authorities had destroyed 1.2 million egg-producing chickens (breeders and layers), along with 900,000 meat chickens. (These numbers keep rising on a daily basis).

In addition, SENASICA established a quarantine zone in the affected area of Guanajuato to prevent the virus from spreading outside the more than three dozen poultry farms where infections were found. Health inspectors tested 4 million birds, of which 1.3 million were initially deemed not to be infected by H7N3. Poultry lack natural defenses against the H7N3 virus, and officials said the vaccine is the only way to protect the birds. SENASICA director Enrique Sánchez Cruz told reporters that the inoculation campaign "has functioned extraordinarily well.”

The UNA, which is working closely with SAGARPA and the Secretary of the Economy (SE) to prevent the virus from spreading outside the quarantined areas, agreed that the inoculations have been effective. "Vaccines are being used successfully in the farms in Guanajuato, creating a protective circle and limiting any potential problems," Jaime Crivelli Espinoza, president of the UNA management council, told the Mexico City daily newspaper La Jornada.

Agriculture Secretary Enrique Martínez said SAGARPA is close to controlling the outbreak, but noted that this was "a complex task since it deals with a very pathogenic virus that requires great efforts to prevent its spread."

Even with the strict measures implemented by federal authorities, agriculture officials in Guanajuato state said the number of infected farms continued to increase within the quarantined zone after the initial outbreak, with a total of 38 poultry farms within the quarantined area infected as of the end of February. But authorities are confident that the situation has been stabilized. "The outbreak is under control, and that’s what’s important," said Javier Usabiaga Arroyo, Guanajuato’s agricultural development secretary.

Egg prices rise as much as 10 per cent

The SE said the number of poultry that needed to be destroyed was just 0.3 per cent of the total inventory of egg-laying chickens in Mexico. Even though the number is miniscule compared with the national inventory, news of the outbreak caused some price speculation for eggs. And there was some concern that prices might also increase for chicken.

In the aftermath of the outbreak, egg prices in Mexico City rose by as much as 10 per cent in some areas. In self-service stores, prices rose as high as 41 pesos (US$3.21) per kg, said CANACOPE, a chamber of commerce association. A more typical price was 28 pesos (US$2.19) per kg.

But authorities moved quickly to prevent large scale price increases. "The SE will apply all the instruments at its disposal to maintain the stability of prices and protect consumers," the economy ministry said in a statement.

The SE noted that the consumer-protection agency (PROFECO) has intensified monitoring efforts throughout the country but especially in Guanajuato state. Officials said all violators would face stiff sanctions.

The retailers organization ANTAD also vowed to do its part to prevent unjustified price increases. "Our stores are making every effort to offer the best prices and at times sacrifice profit margins so they don’t hurt consumers during crucial times," ANTAD president Vicente Yáñez Solloa said in an interview.

Yáñez said egg and chicken supplies should remain ample because of the small area of the outbreak and the move by authorities to quickly create the quarantine zone.

But some market analysts said the long-term trends point to inflationary pressures on egg and chicken prices. Pablo Sherwell, an analyst at Rabobank in Mexico City, said the 2012 outbreak in Jalisco brought egg prices to a new level, rising to about 30 pesos (US$2.35) per kg, from about 22 pesos (US$1.72) previously.

"In the long run, the price of eggs will not return to the levels before that outbreak," Sherwell told the Mexico City daily newspaper Reforma. Sherwell said chicken inventories were falling, which would have repercussions for consumers during 2013. "We expect the price of chickens to continue increasing as long as inventories remain low."

Further Reading

You can visit the Avian Flu page by clicking here.

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