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New Cases of HPAI Present Economic Challenges

Multiple states are reporting cases of Highly Pathogenic Avian Influenza (HPAI) and it’s popping up in more than just birds.

 Cal-Main Food, the biggest producer of eggs in the United States, culled their flock earlier this month in response to an outbreak.  One point six million laying hens and over 300,000 young hens were lost in an effort to stop the spread as quickly as possible; standard procedure in order to keep supply secure.

A commercial poultry plant located in Michigan was significantly impacted by the flu as well. Herbruck’s Poultry Plant is one of the largest egg suppliers in the Midwest with big name clients like McDonald’s and other area grocery store chains. They have not disclosed exactly how many birds were decommissioned.

Outbreaks were expected among poultry flocks this spring even with increased biosecurity measures. Since the flu is most commonly spread by migrating wild birds, it’s hard to avoid completely and the poultry industry has been on high alert; aiming for early detection and working hard to develop procedures that limit cross contamination.

This year’s migration has brought a twist. The bird flu has been confirmed in other animal species well as humans.

Dairy cows in Texas, Kansas, Michigan, Idaho, New Mexico and recently North Carolina have tested positive for HPAI. And, Minnesota confirmed goats living near infected chickens have also contracted Avian Influenza. As the virus jumps from one species to another the situation becomes more troubling. 

So far, HPAI appears less devastating to cow herds. Experts liken it to cows with head colds and don’t foresee detrimental complications with production timelines. Pasteurization of both milk and eggs makes the products safe to consume

What Does The Rapid Spread of HPAI Mean for Agriculture? 

HPAI has been the largest variable for egg price changes in recent years. Coming off of a season of high demand during the Easter holiday, it’s typical to see egg prices start to decrease as supply starts to increase. Avian Influenza has thrown a wrench in this trend for the last two years. As both commercial and backyard flocks contract the virus, egg supplies have been put under pressure causing purchasing prices to remain high. 

Biosecurity protocols have not eliminated HPAI as a market variable, but they have, at least, helped many poultry farmers stop the spread of the virus faster than two years ago. The quicker the containment, the less impact consumers will see on egg prices.

Impact of Avian Flu on the Dairy Industry

On a small scale, farmers will experience an economic loss.  The U.S. has already spent over $1 billion to compensate farmers who have lost flocks. Though the dairy industry is faring better than the poultry industry, sick animals impact bottom lines. Should the flu spread among dairy cows, it’s likely that more farms will make insurance claims.  Profit losses will make it increasingly difficult to pay back loans.  Decreased supply would be reflected in grocery store price increases for milk or milk related products.

If specialized farms that supply local business are impacted by HPAI it can be detrimental to regional supply chains. Currently, these are the most at risk businesses. If a small herd of dairy cows contracts the virus and produces less milk for several days or weeks, this would have a significant impact on the farm's profit margin. It would also impact buyers who depend on small specialized farms and produce cheese or other milk related products.

For both regional supply chains and global markets, the current situation is worrisome mainly because of transporting animals across borders. At the time of this article, there are no federal transport restrictions, though many states are refusing to receive cattle from places known to have the virus. So far the virus has not been found in beef cattle, but it appears many states are being cautious with livestock until more is understood.

Commercial operations tend to suffer in these types of situations because they reshape the global export dynamic. Several countries have banned imported chicken because they do not want to contract the virus in their country or are simply working hard to contain outbreaks. It’s a tough break for large scale poultry facilities because other countries consume parts of the chicken that are not in high demand here in the U.S. If more outbreaks of HPAI pop up in dairy cows or other livestock animals it’s likely more bans will be put in place.

Consumer confidence also shapes market prices. Stigma often accompanies viruses like HPAI. It’s possible that consumers will shy away from dairy products until more is learned and they feel truly safe.

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