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China's Industry Squeezed by Bird Flu, Global Crisis

by 5m Editor
4 March 2009, at 9:26am

CHINA - Poultry numbers have fallen by around one-third as the industry has been hit hard by falling demand and avian influenza.

The impact of bird flu and the economic slowdown may have cut China's poultry numbers by about a third or more in the last month, executives in the poultry feed industry said on 3 March, reports Reuters.

Although China has not disclosed any significant outbreaks of bird flu or the extent of the impact on the industry, feed company executives say the sector has suffered a dual blow from disease and a drop in demand that could keep stocks in short supply into the third quarter.

"There have been very few re-stocks after the Chinese Lunar New Year. Poultry stocks could have fallen by 30 to 40 per cent compared to last year," said one executive from a leading feed and poultry producer.

Families traditionally feast over the Lunar holiday, which fell at the end of January this year, causing a bump in demand.

Consumption has also taken a big hit from weakening demand.

"Overall demand is falling, particularly from migrant farmers, who used to be the major force in poultry consumption. Urban consumption has also seen a decline," said the executive, who declined to be named.

Traders told Reuters that weak poultry breeding is to blame for a sharp fall in prices of soybean meal, a protein-rich feed, which has prompted some cancellations of US soybean cargoes from China, the world's top buyer.

Chinese officials have said 20 million migrant labourers have lost their jobs after factories making export goods such as toys and textiles closed because of the global economic recession. That has slashed demand from factory canteens.

The party boss of Henan province, one of the provinces with the most labourers, said on Monday that 3 million migrants out of a total of 20 million in the province were unable to find jobs.

Migrant labourers generate the majority of income for rural families.

"With many migrant labourers returning home, consumption of meat and eggs has fallen and pig prices are also down a lot because of the high stocks of pigs and low consumption," said Sun Zhiqiang, an official with China Feed Industry Association.

He said many chicken slaughter houses are closed, including half of those in the largest poultry producing province of Shandong, mainly because of outbreaks of bird flu.