Avian influenza's impact on the US feed industry

Despite a greatly depleted flock, the effects of avian influenza have been localized and overall feed volumes will remain steady because of the increased demand for broiler meat.

Dennis Spelt | freeimages.com
Dennis Spelt | freeimages.com

Highly pathogenic avian influenza (HPAI) is responsible for the loss of nearly 50 million U.S. chickens and turkeys during the spring and summer of 2015. Though it began in the Pacific Northwest, the virus hit Midwestern layer and turkey operations the hardest — reducing the layer populations by 10 percent. The impact of this outbreak is still being felt by the American consumer and in the export markets served by the U.S. poultry industry.

“This is the largest animal disease outbreak in the history of North America,” reports Dr. John Glisson, vice president of Research Programs, USPOULTRY. “It spread easily and overwhelmed producers. The biggest lesson we learned was that we had to get better on the depopulation and disposal side to stop it.”

According to the USDA’s Animal and Plant Health Inspection Service (APHIS), 211 U.S. poultry operations were affected across 15 states. The disease cost U.S. tax payers nearly $1 billion.

While incidents of the flu tapered out by late summer, the threat — and potential severity — of an avian influenza (AI) outbreak in the broiler-rich South and Southeastern states has captured everyone’s attention. The risk, brought on by the autumn bird migration, has mobilized the government and poultry producers to do everything in their power to prepare for the worst. The disease has the potential to impact more than 500 commercial operations and millions of birds.

“In my 35-year career, I’ve never seen the poultry industry more focused on anything more than they are right now as they try to keep these birds safe [from avian influenza] or in the event that an outbreak does occur, to control it and eradicate it very, very quickly,” Glisson explains.

To date, the affected turkey operations have been able to repopulate faster than the layer farms. Combined, these segments represent about 40 percent of poultry feed consumption relative to the broiler sector.

Feed-specific biosecurity measures in place

Keeping the virus out through stringent biosecurity measures is the first line of defense for growers.

Large operations raising thousands or maybe millions of chickens in one location require a lot of people, equipment and vehicles to manage, and unfortunately, anything — and everything — has the potential to become a disease vector.

During the spring outbreak, no direct relationship was drawn between poultry feed and the spread of the disease. However, feed mills and their employees do play a huge role in ensuring on-farm biosecurity.

How Avian Influenza Spreads Infographic

“Feed delivery is one of the few things that happen on every farm, so feed trucks and drivers must ensure that their vehicles are clean when they come on to the farm,” Glisson explains, noting many operations have invested in new truck cleaning equipment.

In addition, biosecurity procedures have been emphasized with feed delivery employees, who have been trained in the seemingly simple steps necessary to prevent the spread of the disease, such as wearing protective footwear and frequent handwashing.

According to Glisson, the poultry industry’s financial investment in improving biosecurity and mitigating the potential risks associated with an outbreak have been “substantial.” 

Can feed spread avian flu?

The poultry industry is also aiming to safeguard against the threat of AI-contaminated feed.

The avian influenza virus, which is susceptible to heat, is killed during the pelleting process; however, the poultry industry has started to closely examine the safety of mash feeds commonly fed in the commercial egg industry for their potential to spread the disease.

“During the drying process a lot of corn is stored outside for a period of time, and the worry is that that corn could come in contact with wild birds and become contaminated,” Glisson explains. “Now having said all this, there’s no evidence that feed played any role in the spread of the disease during our current or our recent outbreak, but there’s still the worry there.”

To access these risks, USPOULTRY is currently conducting a research project exploring methods to decontaminate non-pelleted poultry feed in the event of avian influenza contamination. The results will be released by the end of November.

“We’re looking at practical ways to ensure that non-pelleted feed is not contaminated,” Glisson says. “There’s a lot of focus around feed, but again we have no evidence that feed was involved in the [spring-summer] outbreak.”

Effect on grain stocks and feed volumes

Early reports from University of Illinois economists estimated that “a feed consumption level greater than one bushel per bird, combined with a slow rate of flock repopulation, could support a 100-million-bushel decline in feed use.” Much of this impact on the feed industry was regional as companies hit by avian influenza sold off their feed supplies and commodity positions.

However, despite the decreased poultry population, U.S. grain markets saw very little effect on the national level.

“Based on the size of the adjustments in the animal numbers for the hens and the turkeys, we estimate a 20-million-bushel annualized reduction in corn feed, which is about half a percent of an annual feeding number or a fairly small impact on the corn side,” explains Chris Eggerman, vice president with Informa Economics’ crops group. “With protein meal, it’s a little larger because [the birds] eat more soybean meal than corn — so about 1 percent annualized impact on meal feeding. In the total aggregate, protein meal feeding has been larger than expected because meal consumption is up for all species combined.”

And the influence on the feed industry followed a similar trend.

“I don’t feel there was a material impact on the U.S. feed industry,” says Brigitte Sinclair, vice president, U.S. Bank Food Industries.“Strong demand for feed and ample grain supply offset any reduction in consumption on the poultry side.”

In terms of annual U.S. feed production volumes, Nan-Dirk Mulder, Rabobank International senior global animal protein analyst, agrees and predicts that 3 to 4 percent growth in the U.S. chicken sector this year will make up for some of the AI feed production loses.

Preparing for a resurgence

Currently, the goal of Southern poultry producers is early detection. Specifically, once an outbreak is confirmed, to cull and dispose of the flock within 24 hours.

“There’s been a tremendous amount of focus on depopulation preparation in every state,” Glisson says. “How you’re going to do it, how you’re going to euthanize the birds and how are you going to dispose of them. The equipment has been gathered; the people have been identified and trained county by county; and we have determined where each farm would dispose of the birds and their manure. All that homework has already been done.”

Meanwhile, as the egg industry rebuilds, it still has a long way to go before it makes a complete recovery.

Mark Jordan, Informa Economics’ director of poultry and eggs services, does not expect the layer operations to get back on track until late 2016 — or maybe early 2017: “By spring we’ll still be running probably 10 to 20 million hens below what we otherwise would have been without the outbreak. There’s definitely a carryover effect in terms of the deficits and the losses from AI.”



AI’s impact on U.S. exports

Dozens of countries banned U.S. poultry products due to avian influenza — and the end is not yet in sight.

“Poultry bans will continue to challenge exports — at least until after we see what happens with the fall migration,” says Sinclair, U.S. Bank.

While a vaccine does exist, producers fear preemptive treatment because it could pose a further trade barrier.

“Producers are expected to see margin compression continue into next year,” says Sinclair. “Production is forecast to increase year over year in 2015, and again next year with new plants coming online. While we expect another strong harvest will support moderate feed costs; increased production and a challenging export market will put downward pressure on meat prices."

Rabobank’s Mulder notes that while poultry segments not affected by AI may have indirectly benefited from the surplus of feed supplies, when you look at the pricing levels in the chicken industry they dropped because of the excess supply of meat — up to 10 percent more — on the domestic market due to the export restrictions.


Tap into the ongoing coverage of avian influenza, visit www.WATTAgNet.com/topics/171-avian-influenza

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