Global Economics

A Pox of Fear on Europe's Farms


Avian flu scare stories pop up in the European press every day. Since the beginning of March, new cases of the dangerous H5N1 virus have been discovered among waterfowl in Switzerland, Poland, Greece, and northern Bavaria. Transmission from wild birds to farmed poultry is still scarce, but in late February, France reported infected turkeys on a farm in the southeast. Cats in Germany and Austria also have contracted the disease, after eating infected birds, and it has spread for the first time to another mammal in Germany, a rodent called a stone marten.

Creepy stuff. Still, for most Europeans, bird flu remains largely an abstraction -- a worrisome potential public health problem that may or may not turn into a human epidemic. Sadly, for Europe's poultry producers, the problem is not abstract: They're facing one of the worst crises ever to hit their industry. Despite the fact that H5N1 outbreaks among commercial birds are virtually nonexistent -- and that adequate cooking kills the virus -- consumers on the Continent are turning away in droves from chicken, turkey, duck, and other fowl.

EVEN FOIE GRAS. If public distain continues -- or if H5N1 spreads into commercial flocks -- millions of birds may have to be slaughtered. The potential economic impact is even worrying monetary-policy mandarins (see BW Online, 2/27/06, "Europe's Delicate Dance on Rates").

No country faces greater risk than France, the leading poultry producer in Europe, which sells some 900 million birds per year. Commercial breeding is a $7 billion industry in France, employing nearly 100,000 people, one-third of them farmers. After news broke in February of France's first H5N1 case, sales of poultry products plunged 30%, according to the Federation of Poultry Industries (Federation des Industries Avicoles).

Wholesale prices also fell, further harming producers. And more than 40 countries around the world slapped immediate bans on French poultry-product imports, including even canned foie gras. (Some of the restrictions have since been lifted.)

NIGHTLY NEWS RITUAL. Sensing disaster in the making, politicians and industry representatives are pleading with consumers not to panic. At the big annual Parisian Salon de l'Agriculture food and livestock fair in February, the usual chicken displays were nowhere to be found. But French President Jacques Chirac toured the expo and reminded TV reporters that it's safe to eat cooked fowl (see BW Online, 3/1/06, "French Food-Fair Politics").

Supermarkets have slashed prices, which helped restore sales to 15% below normal. Consumer attitudes, however, will take longer to heal. "It's scary to think of the possibilities," says Nicole Laurent, a mother of two children, shopping at a Monoprix market in Paris. "They talk about it every night on the news, so, yes, of course I am staying away from poultry."

Not everybody is so concerned. Jean Omassu, 48, a shopper at a Franprix supermarket in Paris, is taking advantage of lower prices to load up his cart with whole chickens. "I've been eating chicken my whole life, and I'm not going to stop now," he says, recalling that a similar bird flu panic in 2003 quickly died down.

NOT ONLY FRANCE. French foie gras producers are banking on the fact that their product is cooked for a half-hour at more than 100 degrees Celsius (212 degrees Fahrenheit). "We're not worried," says Jean-Claude François, part-owner of a small producer in the Landes region in southwestern France. François notes that Japan has already rescinded the highly publicized ban on foie gras imports it announced in late February -- especially welcome news because Japan alone consumes 10% of France's foie gras output.

The impact on farmers isn't confined to France, though. Germany's Friedrich-Löffler-Institute, or Federal Research Institute for Animal Health, figures that the H5N1 virus has already infected 168 birds in six of Germany's 16 federal states, mainly in the north. So far, it hasn't affected farm chickens. But to prevent potential spread of avian flu from migrating wild animals to their commercial brethren, the government has ordered all farmed poultry to be kept inside coops.

Such measures haven't done much to protect Germany's $4.8 billion poultry business, Europe's third largest. Since last October, when Avian flu reports hit the media, poultry sales have plummeted by 20%. This has cost German producers $168 million in lost revenues. The price per kilo for live fowl has also fallen 20%. The government says that as many as one-quarter of the 40,000 jobs in the poultry sector could be lost if demand doesn't revive.

RELYING ON REGULARS. "The whole situation is a catastrophe," says Jürgen Christ, who visits local open-air markets with his mobile chicken roastery, Christ Hänchenbraterie. Every other customer asks whether the chickens are safe, Christ says, despite the fact that they're cooked at 250 degrees Celsius (482 degrees Fahrenheit). He has added an extra half-hour of roasting, just to be on the safe side. Even so, business has dropped by 50%.

"We are only surviving because we have a lot of regular customers, who know our chickens come from protected farms," he adds. To make up for lost business, Christ is also offering an expanded selection of pork roasts. One of his competitors wasn't so lucky, and has already laid off 16 of its 35 workers.

It's a different story in Britain, Europe's No. 2 poultry producer. Migrating birds haven't yet brought the H5N1 virus across the English Channel, and thus there's little sense of panic among consumers. Besides, some 90% of Britain's poultry is reared indoors, protecting it from potential infection by wild birds. As a result, Britain hasn't seen a decline in sales -- though wholesale prices plunged by half in the last week of February, when French farmers dumped millions of unsold birds onto the British market.

"HELP STAVE OFF HYSTERIA." For now, the British government is taking a wait-and-see attitude. To prepare for the eventual arrival of H5N1, it has asked all farmers who keep more than 50 fowl to post their inventory levels in a national registry. Until then, the 50,000 Britons who earn their living from poultry farming are holding their collective breath.

Can anything be done to help the industry? The most commonly mooted solution is vaccination, but it's controversial. In France, the government has spent nearly $2 million procuring 3 million doses of a bird flu vaccine that it will distribute to farmers (see BW, 1/9/06, "Preventing the Pandemic").

Foie gras producer François welcomes the move. "Vaccinations should help stave off hysteria," he says. But some farmers worry that consumers will be turned off by vaccinated birds.

TICKLISH TRADE-OFFS. British and German officials have a different fear. Vaccination could actually mask symptoms of the disease, protecting birds from falling ill while still allowing them to spread H5N1 to other birds. Even worse, an apparently healthy bird population could incubate a more lethal strain of H5N1 that might be transmissible to humans and go undetected until too late.

Of course, that's the real issue. Worry about the economic livelihood of poultry farmers and processors is a valid concern, but the need to protect society at large is greater. Just as cattle farmers lost billions during the mad-cow and foot-and-mouth scares of a few years ago -- and have now recovered -- so, too, poultry farmers must face the harsh truth that to save human lives, their flocks may have to be sacrificed.


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