Avian Flu - What we need to know

Avian flu stock index

Trend Macroanalytics, a research firm serving institutional investors, has taken its analysis a step further and created an "avian-flu index" comprising 17 stocks in the health-care sector that can be expected to see a surge in demand for their products should the flu become a threat to humans.

[...] Donald Luskin, chief investment officer at Trend Macro, said the index has gained 105% since its inception last Aug. 31 and is up 40.5% so far in 2006.

Source.

Bird flu and "free range" poultry

Jaap Von Dalen is one of the farmers who must make up his mind in the next couple of weeks whether he wants to vaccinate.

The birds used to roam the fields freely, but now the government has ordered all birds to be kept inside unless they are vaccinated, fearing they may come into contact with infected wild birds and spread the virus.

Jaap lost all his birds to the 2003 outbreak of bird flu and would like to protect his new flock, but knows that vaccination carries other risks.

"I want to vaccinate because I know what bird flu can do - after the last outbreak I didn't even want to be a farmer anymore. I started again, built up a new flock and now I export my eggs to Germany," he said.

"But I'm worried the Germans won't want to buy produce from chickens which have been vaccinated, and if I can't sell my goods then I'll be broke."

[...]Jaap's business thrives at present partly because his products carry the "free range" stamp - but if he keeps the birds inside, he knows he will probably lose that valuable label.

[...] France has already seen the negative effect of vaccinating birds - several countries have refused to accept imports of French poultry meat after farmers in Landes were given permission to vaccinate geese and ducks.

Critics of vaccination warn that current bird flu vaccines do not offer complete protection from infection and could, in some circumstances, "hide" the virus in affected flocks.

From BBC. The biggest concern is clearly that vaccines are simply hiding the disease - read more here.

But there is some irony in the fact that even a truly effective vaccine would probably hurt the poultry industry in Europe. This goes back to the pro-"organic" media campaign in Europe. The debate was never one between health officials / researchers, an honest comparison of facts and findings. Instead, EU farmers and politicians dominated the public discourse trying very hard to ingrain into people's minds the fact that organic foods and free range poultry were simply better, and non-organic foods should be distrusted on principle. The debate was not primarily driven by public health concerns, that was simply marketing. The unholly aura around non-organic / GM foods was a great tool for protectionism, limiting competition from US and other markets and lending a hand to EU farmers (who also receive huge subsidies). It is ironic to see this pro-organic campaign come back to haunt some of the same farmers farmers, who must now deal with bird flu.

Not surprisingly, there are now calls from European farmers to have a government-enforced, EU-wide, mandatory vaccination campaign, all for "animal health" concerns of course:

Klaus Osinga from the LTO, the Dutch Farmers Association, speaks for many in the Netherlands.

"It doesn't make sense for some countries to vaccinate but for other EU countries like the UK not to. It's a political and an economic decision. Perhaps it's time to think more about animal health and about stopping the spread of bird flu," he said.

Bird flu's impact on the poultry industry

France's poultry sector, the biggest in Europe, is now losing 40 million euros ($48 million) a month as bird flu hits sales at home and abroad, French officials said on Friday.

The Paris government has said more than 40 countries have restricted imports of French poultry following the outbreak of H5N1 at a turkey farm in the east of the country.

Germany's poultry industry has lost more than 140 million euros since last autumn because of bird flu, with demand down some 20 percent from previous levels. Germany identified more than 140 cases of wild birds with H5N1, as well as a cat.

Hungarian poultry producers said on Friday their sales had fallen by up to 20 percent since H5N1 was first found there in dead swans on February 21. Chicken sales were hardest hit.

From Reuters, read the entire article - it also contains situation updates from around the world. Effect Measure points out insurance companies do not typically offer policies covering bird flu to the poultry industry. At the end of last year there were some reports of avian flu life insurance policies being offered to individuals in China.

France reacts to poultry outbreaks

French President Jacques Chirac urged consumers not to panic Saturday, hours after the government announced the European Union's first outbreak of deadly bird flu in commercial poultry.

Chirac said chickens and eggs remained safe to eat as he munched a piece of the famously succulent chicken from the Ain region, where the lethal virus was confirmed in turkeys.

Panic among consumers is "totally unjustified," Chirac said during a visit to open the annual Paris Agriculture Fair. "The virus in question ... is automatically destroyed by cooking. So there is absolutely no danger."

[...] Japan's decision Friday to suspend imports of French poultry and poultry products, including foie gras, signaled the potential impact even before the confirmation that the deadly H5N1 virus had decimated a farm of more than 11,000 turkeys at Versailleux in southeastern France.

Hong Kong also has temporarily suspended imports of French poultry, Brenda Chan, a spokeswoman of Hong Kong's Food and Environmental Hygiene Department, said Sunday.

In France itself, there has been a drop of up to 30 percent in poultry purchases in recent weeks. Chirac noted the "economic and social consequences" of panic and said the French must not fall into such a trap.

Source.

Another paper on the costs of a pandemic

This one is from the Lowy Institute for International Policy. The paper focuses on the macroeconomic impact of a pandemic. Hat tip to Pablo Halkyard.

The latest from Europe

Romania was deemed particularly at risk of human infection, the World Health Organisation (WHO) announced Friday. With bird flu reported at 31 separate sites, "Romania runs the risk of human contamination at any moment," WHO expert Guenael Rodier said at the end of a four-day inspection tour.

[...] France joined a growing list of European nations with confirmed or suspected bird flu cases when two dead ducks were discovered in a wildlife reserve north of Paris. Tests results showing whether the birds carried the H5N1 strain were expected later Friday.

A fresh avian outbreak was also reported at a poultry farm in the southern Russian province of Dagestan, the second such case in the region this week.

[...] Sales of chicken have dropped up all across Europe, threatening to throw the continent's huge poultry industry into crisis.

One sign of mounting concern was the flood of orders pouring into the world's number one manufacturer of respiratory masks in France.

Germany, the Netherlands and Slovenia joined other European nations Friday by ordering all poultry kept indoors to ensure that domestic hens, ducks and geese do not come into contact with infected wild birds.

The other countries are Denmark, France, Greece, Luxembourg and Sweden.

Source.

EU increases compensations to poultry farmers

EU farm ministers agreed on Tuesday to increase compensation payments to poultry owners for costs incurred in fighting against bird flu and focus on lower-risk strains to stop the virus spreading, officials said.

The EU funding will be used to compensate farmers who have to slaughter poultry or other captive birds due to a risk of the disease, destroy contaminated feedstuffs and animal products, or have to disinfect plants and equipment.

Starting in January, the EU will pay half the bill presented by farmers who are battling against both high and low pathogenic strains of bird flu in their poultry flocks.

[...] In the Netherlands, which saw a devastating bird flu outbreak in 2003 that wiped out over a third of the flock, the total losses -- including from export bans -- reached around 500 million euros.

Source. The fact that low pathogenic strains of bird flu are included in the new compensation plan could make this a hugely expensive program. If you know of any good estimates of the new subsidies please share them in the comments.

World Bank, European Union announce new bird flu aid packages

World Bank member countries on Thursday endorsed $500 million in aid to help countries deal with bird flu, ahead of next week's meeting in Beijing where additional funds will be sought, a senior bank official said.

Jim Adams, the bank's vice president for operations policy and country services, told Reuters that Kyrgyzstan is the first country to benefit from the new funding and will receive about $5 million in February to prepare for bird flu.

Read the full story in this Reuters article.

The European Union pledged another $100 million in aid.

The US expands embargo list

Kazakhstan, Romania, Russia, Turkey, and Ukraine are the latest countries to make the list - read the official announcement on the CDC site.

Bird flu increases Kimchi sales

Blame it on the Internet, the anxiety of life in the 21st century, or a volatile combination of the two, but publication of a minor study by a South Korean academic last spring has apparently triggered a minor run on kimchi, a daily staple of the Korean diet that the bland-of-palate are likely to avoid like a global pandemic.

Which presents a potentially difficult choice given the work of Kang Sa-Ouk of Seoul National University, who took 13 chickens infected with avian flu virus and a couple of other diseases, fed them kimchi juice and found that 11 of the birds recovered.

Read more in the Washington Post.