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News and analysis on the global poultry
and animal feed industries.
on October 3, 2008

Hong Kong embarks on live poultry buyout plan

Bird flu is forcing some countries to completely re-appraise the way they produce and market poultry.

All countries affected by bird flu want to be free of the virus, but few are prepared to take the ultimate steps required. Hong Kong is different having never mentally recovered from the 1997 outbreak of H5N1 HPAI (highly pathogenic avian influenza) with 18 human cases (6 fatal) and leading to the destruction of its entire poultry flock. Several subsequent brushes with H5N1 HPAI have successively hardened attitudes, but the latest in June 2008 was clearly the last straw.

Hong Kong authorities promptly embarked on a series of buyouts across the poultry industry with the clear eventual aim of clearing Hong Kong of all live poultry whether on farms or in the marketplace.  The government has just announced how over 70 percent of poultry stall owners handed back their trading licences (by extended deadline date of September 24, 2008) under their scheme to cut public exposure to live chickens, said a report by The Standard (Hong Kong).

Poultry famers seek buyout payments 

According to the Hong Kong government’s official website more than 600 applications have now been received for live poultry trade buyout payments. Poultry farmers, wholesalers, retailers, and transporters have applied seeking total ex-gratia payments of US$77.25 million in compensation under the government’s compensation scheme.

Secretary for Food & Health Dr. York Chow told reporters on September 25, 2008, how 29 farmers had applied to surrender their livestock-keeping licences and permanently cease rearing live poultry. This represented 56 percent of the eligible farmers, he said. In addition, 50 out of the 71 eligible live poultry wholesalers and 199 out of the 250 eligible transporters had also submitted their applications to cease operation permanently at the Cheung Sha Wan Temporary Wholesale Poultry Market.

In this latest phase of the buyout plan, 333 live poultry retailers, comprising 172 market tenants and 161 fresh provision shop licensees, applied for permanent surrender of their permission to sell live poultry. This represented 72 percent of all 464 live poultry retailers, said the authorities.  Retailers who have applied for ex-gratia payments have already ceased their live poultry business while poultry farmers, wholesalers, and transporters must cease their business and surrender the licences or tenancies concerned within three months from the date of approval of their applications. Local workers affected by closure of business by farmers, wholesalers, and transporters can submit their applications for the one-off grant 21 days after the latter's surrender of licences or tenancies. So far, 835 applications have been received.

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Live poultry count to drop 

Following the buyout exercise, the number of live poultry retailers will drop to 131, comprising 46 fresh provision shops and 85 market tenants, said Dr. Chow. Meanwhile, the government has also reached an agreement with mainland authorities to reduce the import of live chickens to 5,000 per day. This means the total number of live chickens available in Hong Kong on a daily basis will plummet to 10,000, clearly putting pressure on prices, which is a point acknowledged by the Hong Kong government. Dr. Chow said the price of live chickens could rise by up to 20 percent. According to The Standard, a “catty” (about 605 g) of chicken was selling on September 25, 2008, at the Cheung Sha Wan Wholesale Market for $2.95 after running at an average of $2.32.

At a street market in Tai Po, the retail price of chicken had increased from $4.51 to $5.15 per catty. Some shoppers at the market said they would be buying less chicken. Dr. Chow said it was for consumers to make the call on whether they switch from live to frozen poultry. The Standard asked Dr. Chow if the government had bowed to political pressure by paying out compensation despite not meeting the initial target of 80 percent of stall operators giving up their licences. He replied by describing the return rate of 72 percent as ideal. "I don't think with such policy you can achieve the exact percentage that you plan," he told The Standard.

Avian influenza transmission reduced 

Dr. Chow said the move will help reduce the risk of transmission of avian influenza and that the Government's central slaughtering plan will proceed as soon as possible. "Since only a small number of poultry operators will continue to run live poultry business, the scale of the proposed central slaughtering plant will need to be adjusted," he said. The government says it will make a decision soon on the scale and operation of the planned central slaughtering facility. Clearly in a culture like Hong Kong that likes its food as fresh as possible the authorities have made quite astounding achievements so far.

As well as wreaking considerable death and destruction in poultry industries around the world, H5N1 HPAI is also forcing some countries to completely re-appraise the way they produce and market poultry. Hong Kong is a prime example.

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