Bird Flu Continues to Make Demand Forecasting Difficult
Last month Colombia became the first country to restrict beef imports due to the Highly Pathogenic Avian Flu, more commonly called Bird Flu. While Colombia does not import a significant amount of beef compared to other countries, the move seems extreme to many. And, it certainly underscores the fact that HPAI variables are influencing trade negotiations in unforeseen ways.
Will Trade Blocking be the New Normal?
Biosecurity, containment and stored up supplies of poultry created a predictable buffer in the poultry sector. Price increases were consistent with decreased bird populations impacted by spring outbreaks, and are expected to level out as migratory birds move further south. If the virus had not jumped species and been found in dairy cows it would have been a little easier to predict market timelines. As it turns out, trade deals now also encompass discussions of vaccinations, validity of virus testing and analytics, and ecosystems.
HPAI Vaccinations and Trade Negotiations
To vaccinate or not to vaccinate against the Bird Flu is a question all countries are pondering. According to current research, vaccinations may only hide the virus in which case birds would appear symptom free but could still transmit strains of HPAI. China and European Union countries have been vaccinating against the virus, while other countries like Brazil and the United States have been hesitant to vaccinate for fear it could impact trade. No one wants to bring a new strain of the virus into their country through birds, cows, or any other animal.
For the most part, trade restrictions are region specific, with many countries not receiving imports from known outbreak locals. The dynamic could have a compounding effect if more regions contract the virus. Despite domestic efforts to prevent spread of HPAI, countries are hesitant to receive imports of dairy products, and now apparently beef, from Idaho, Kansas, Michigan, New Mexico, North Carolina, Ohio, South Carolina and Texas. Protecting domestic supply of poultry, as well as dairy products and possibly beef could spark a decrease in prices as in-country supply builds up.
Scientific Data, Analytics, and Trade Deals
Colombia’s move to restrict beef trade is an interesting one. So far tests have proved that thermal heating or cooking makes poultry safe to consume, pasteurized milk is safe, and HPAI is not in beef cattle. However, the reactionary response is not entirely abnormal. The decision to block trade until the coast is clear is a trend we could see more governments adopt. In which case, more of the meat industry could opt to play the short game by liquidating HPAI free herds and flocks at current price points and build back populations in the coming year hoping that demand forecasting will have fewer variables. A lot of money has been put into HPAI testing and data sharing so that trade decisions can be made with real time information. Yet, as spokesman for the U.S. Meat Export Federation explains, these current scientific methods are not enough for some countries.
Environmental Impact of the Bird Flu on Trade Decisions
Environmental groups are also encouraging governments to view these agricultural trade decisions through the lens of ecosystem protection. The Bird Flu has become an animal flu impacting at least 26 mammals. The virus threatens to change predator prey interactions in several regions of the world which could impact the security of other food sources down the road. The push may prompt more countries to increase trade restrictions for the sake of containing complications to the poultry and dairy sectors and keep them from seeping into seafood markets.
The sea-saw effect of trade restrictions is far from over. Every new outbreak and scientific discovery adds layers to trade negotiations. As long as demand remains in such a volatile state, it’s likely we will see prices for poultry, dairy and even beef products remain high.
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