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Since December, American agricultural authorities have been wrestling with an outbreak of bird flu. Three strains of bird flu have affected the North American poultry industry and have thus far led to the culling of 38.9 million birds in the United States, twice the number of a major outbreak that took place three decades ago. The Pacific Northwest and the Midwest have been the regions most significantly impacted by the outbreak and Nebraska, Wisconsin, Minnesota, and Iowa have been forced to declare states of emergency. Scientists are not yet sure what is causing the outbreak, but the leading theory is that migratory birds might be spreading various strains of the virus. Although there is no threat to American public health at this time, health officials are remaining alert to any bird-to-human transmission of avian influenza, which took place in Asia in 2003. Due to the fact that the recent outbreak will raise consumer prices of egg-related food products in the short-term, that U.S. taxpayers will be paying millions in relief to poultry farmers, and handling the problem will test the leadership of Agriculture Secretary Tom Vilsack, extempers that specialize in domestic issues should be aware of the recent bird flu problem.
This topic brief will chronicle how bird flu has become a significant problem for the American poultry industry, discuss the economic impact of the bird flu outbreak, and then point out some issues that extempers should be aware of as they continue to follow this news story.
Readers are also encouraged to use the links below and in the related R&D to bolster their files about this topic.
The Emerging Bird Flu Problem
The current bird flu outbreak is thought to have originated in Asia, where migratory birds carried H5N2 and H5N8 across the Pacific where it then combined with North American strains of bird flu. Reuters writes on May 19 that thirty-five countries have been hit with recent strains of bird flu, with the H5N8 strain being detected first in Korea and China early last year. This strain then reached Japan soon afterward. The first place that was affected by the recent bird flu outbreak in North America was Canada as officials there were forced to quarantine several turkey and chicken farms in British Columbia on December 2 after an H5N2 case was confirmed. The New York Times reports on May 14 that the United States saw its first case on December 19 when a H5N8 outbreak was reported in Oregon. Researchers then proceeded to identify a strain of H5N2 among a group of 140 mixed birds in Washington and on January 23 H5N8 was detected in a commercial turkey flock of more than 100,000 birds in California. By April, an H5N2 strain was detected among turkeys and chickens in Wisconsin and Iowa and this month an H5N8 case was detected in Indiana. National Public Radio reports on May 21 that thus far the outbreak has affected fifteen states and 174 farms.
An outbreak of bird flu (or avian influenza) can be devastating for farmers because there is no vaccine for the recent strains, all of which are very lethal for chicken and turkeys. To stop the outbreak, poultry farmers are forced to cull their entire flocks and The Wall Street Journal reports on May 21 that 38.9 million birds have been killed so far. The United States had a similar outbreak of bird flu in the 1980s, which The Wall Street Journal explains on April 24 led to the killing of seventeen million birds. The Los Angeles Times reports on May 17 that flocks are being killed with either carbon monoxide gas or a water-based foam that asphyxiates the birds. Veterinarians say that foam is arguably a better option because it reduces the stress of the birds before they are killed. Disposing of the birds has been a problem in some locations and Iowa Governor Terry Branstad and U.S. Agriculture Secretary (and former Iowa governor) Tom Vilsack recently urged landfills to take bird carcasses. PBS writes on May 16 that some farmers are digging trenches to bury their birds, while National Public Radio reports that other farmers are trying to make the best of a bad situation by buying the dead birds and composting them into wood chips and corn stover. Large mobile incinerators have been brought into Iowa and other states to get rid of the dead birds as well.
When a case of avian influenza is detected at a location, it can shut down that poultry farm for eight to nine weeks. Birds have to be killed and disposed of and Bloomberg explains on April 23 that wood chips, bedding, and other materials must then be removed from the site. The buildings that housed the birds are then swept out and power washed and then when surfaces dry disinfectants are used to clean the area. The Globe and Mail reports on May 5 that after this is completed a new flock can be brought to the barn, but it takes nearly four months for a full-sized hen to be produced from new chicks. Additionally, when a farm is identified as having avian influenza a series of steps are taken by federal and state officials to try to limit the spread of the virus. Reuters notes on May 21 that quarantine zones and strict biosecurity measures at put in place to minimize traffic near infected sites, protect workers by mandating the use of protecting clothing and breathing apparatuses, and ensure the cleaning of equipment and vehicles before they leave an infected site. Reuters adds on May 1 that the declaration of states of emergency in Midwest states also allows state agencies to provide additional resources, supplies, and equipment to affected areas, as well as lift weight restrictions on trucks that are hauling culled flocks. The declaration of a state of emergency also allows for the establishment of checkpoints and roadblocks on roads that lead to quarantined farms.
One of the most frustrating parts of the latest bird flu outbreak is that scientists are unsure what is causing it. The Christian Science Monitor reports on May 2 that even though the outbreak is in its fifth month, researchers are no closer to pinning down what might be causing the spread of bird flu from the West Coast to the Midwest. Researchers have found that a strain of H.P.A.I., a highly pathogenic avian influenza, is active among birds along the Mississippi migratory flyway, which The New York Times article previously cited from May 14 notes is used by 26,000 wild turkeys and stretches from the Gulf of Mexico to the northern Midwest along the Mississippi River Valley, so they think that birds might be spreading the virus as they fly along this route, shed feathers, and drop feces. However, there are other theories circulating about what could have caused the spread. The Christian Science Monitor writes that rodents and small birds that might be carriers of the virus may have infiltrated barns as they looked for food and infected flocks. Similarly, flies might be a factor since insects played a role in the Pennsylvania avian flu outbreak in 1983 and an avian flu outbreak in Japan in 2004. Still other scientists say that natural causes such as weather may play a role as wind may have blown infected dust and feathers into buildings through windows or air vents. The Los Angeles Times article previously cited also says that the cramped quarters that commercial poultry are housed in could play a role since free-range chickens have been shown to be less susceptible to the latest outbreak. Some scientists think that this might be due to the fact that these chickens are more exposed to smaller bits of bacteria and have developed stronger immune systems. The Washington Post writes on May 21 that there is also the possibility that human error could be at play, with workers unknowingly tracking infected debris into facilities with their shoes, vehicles, or clothing or using infected pond water to feed birds. Although farmers argue that their workers are properly sanitized before entering and exiting facilities, some farms have not followed official security protocols in Iowa so this theory might be plausible.
The Economic Impact of the Bird Flu Outbreak
Extempers should be prepared to discuss the impact of the bird flu outbreak on the poultry industry because the culling of nearly forty million birds will create some problems in the American food supply chain. The Wall Street Journal article previously cited from May 21 writes that of the 38.9 million birds culled so far, thirty-two million were egg-laying hens and this constitutes 10% of the U.S. egg-laying flock. Iowa, the largest egg-producing state in the country, has seen one-third of its egg-laying flock wiped out and it is thought that some egg producing companies will go out of business due to the outbreak because they cannot recover the costs of culled animals and do not have the funds to keep their facilities operating. The New York Times writes on May 21 that Post Holdings has lost 25% of its egg supply and this will make it difficult to supply egg products to other business. As a result, it will have to buy eggs on the spot market – the name for a commodities market where commodities are traded for immediate delivery – and this will likely drive prices on the egg spot market to new heights because Post will have to compete with other businesses in similar situations. The Wall Street Journal adds on May 20 that Hormel, one of the largest U.S. meat processors, has said that turkey sales will be hurt in the second fiscal quarter as fifty-five of the company’s farms have been affected by the outbreak. This is a blow for Hormel because its profits were up 29% from last year, but now it will face a situation where there is a strong demand for turkey products and some of the supply will no longer be available to meet demand. The Wall Street Journal notes the corporate consolidation of the domestic egg market is partly to blame for supply shortages as the country has fewer than two hundred commercial agriculture companies now versus having more than ten thousand in the 1970s.
Consumers are already beginning to feel the economic impact of the bird flu outbreak, especially if they live in the Midwest. The Wall Street Journal article previously cited from May 21 writes that in the Midwest, the prices for wholesale large shell eggs that are found in the average grocery store have jumped 85% to $2.20 a dozen. The price of wholesale turkeys has also increased to $1.14 a pound for a frozen sixteen-pound bird. This is 4.5% higher than last year. The prices for “breaker eggs” that are sold in liquid form to McDonald’s, Sysco Corporation, and other packaged-food producers have also tripled this month, selling for a record $2.03 a dozen. Crain’s Chicago Business, a weekly Chicago business newspaper, writes on May 21 that McDonald’s will be significantly hurt by this price level because it cannot easily pass on costs to its customers. The company makes 25% of its sales at breakfast time, which is double the rate of its competitors, and higher prices could reduce its market share. Crain’s adds that consumers will probably end up paying $7.5 to $8 billion more to buy eggs this year, an increase of 75% over last year and this could have a wider economic impact because it would divert consumer spending from other parts of the economy. Prices on other consumer goods that use liquid egg products such as ice cream, mayonnaise, cookies, and batter will also rise.
Trade will be affected because other nations have refused to import American poultry products due to the bird flu outbreak. The New York Times notes that poultry exports were $6 billion last year, but nations such as China, Mexico, South Korea, Angola, and Canada have banned poultry imports from the U.S. so this number will decrease. Mexico is a significant loss as it is the largest importer of American poultry having taken in more than $1.2 billion in product last year. The side effect of this loss is that it may leave more of a domestic supply of poultry products for use, but only 5% of eggs produced in the U.S. are ever exported, so a large number of eggs and egg-related goods are not being placed back into the supply chain.
While some of this economic information sounds dire, economists caution the public not to get too anxious about the outbreak and its economic impact. The Washington Post writes on May 13 that even though the country’s egg-laying bird population has been hardest hit, only one in twenty hens have been infected and that is not enough to affect the United States egg supply substantially. And what about the potential of the bird flu to create a turkey shortage before Thanksgiving? Well, The Guardian argues on May 15 that most of the turkeys affected have been larger male toms that are typically served as deli meat. Turkeys for Thanksgiving tend to be frozen and most of those turkeys have already been slaughtered this year. Therefore, the bird flu outbreak should not adversely affect turkey prices for the holiday season in November except for those Americans who wish to buy their turkeys fresh.
Issues of Future Concern
What is important for extempers to remember about this outbreak is that there are three strains of bird flu working across the country simultaneously: H5N2, H5N8, and H.P.A.I. Time writes on May 13 that in 2007, there was a minor outbreak of H5N2 in West Virginia that ended in the culling of 25,600 birds, so American health officials are familiar with it, but dealing with three different strains makes the task of limiting the spread of the bird flu somewhat difficult for federal and state authorities. The big fear is that there may eventually be a mutation of the bird flu and that this may be transmitted to humans. In 2003, Asia saw this problem emerge and international public health officials scrambled to keep the virus isolated so as not to create a global pandemic. The H5N1 avian influenza strain that hit Asia carried a 50% mortality rate so the possibility of a transmission of avian influenza to humans concerns public health officials. Thus far, the Centers for Disease Control and Prevention say that there is little risk of these latest avian influenza strains crossing over to humans, but Time explains that health authorities are still preparing for the possibility.
Another issue for extempers to follow is whether the humid summer weather vanquishes the current outbreak. Scientists are betting that avian influenza will not survive the summer because of increased solar activity and exposure to ultraviolet radiation and that this will give poultry farmers a respite in which to resume activities. However, The New York Times reports on April 28 that it is possible that the latest strains of avian influenza have become endemic (meaning regularly found in a particular being) among wild birds and that when these birds migrate south in the fall they could bring influenza strains to poultry farms on the East Coast, South, and Southeast that have thus far escaped the current outbreak. If this does happen, then the United States could face a wider avian influenza emergency and there could be even broader economic impacts on the American poultry industry. In addition, a wider outbreak would tax the federal government for resources. The Wall Street Journal article previously cited from May 21 notes that the U.S. Department of Agriculture has set aside just under $40 million to cover the claims of poultry farmers that have had their flocks culled, but some say this is not going to be enough to repopulate egg-laying farms in the Midwest and West Coast. In addition, the federal government has earmarked $400 million to assist in cleanup and disease testing, but Congress may be pressed to commit billions if bird flu continues to spread. Therefore, extempers should continue to monitor the bird flu outbreak this summer because it may be something they have to talk about in more detail in the fall.
Handling the bird flu outbreak will test the capabilities of Agriculture Secretary Tom Vilsack, who is one of two remaining members of President Obama’s original cabinet (Secretary of Education Arne Duncan is the other). Vilsack’s support for large-based commercial agriculture could come under fire if the bird flu outbreak grows and comes to imperil a poultry industry that has become very consolidated over the last several decades. Also, frustrations over the lack of USDA findings about what caused the latest outbreak are creating tensions between states and federal officials, especially from the farmers who have lost their entire flocks. Anything that looks like administrative incompetence on the federal level will be blamed on Vilsack, so he will be on the front lines for trying to contain what has become a growing problem in the Midwest. If he succeeds, he may bolster his public reputation for higher office later (he did seek the Democratic presidential nomination briefly in 2008), but for now he is wrestling with arguably the biggest crisis of his tenure.
The good news is that some of the momentum behind the outbreak appears to be slowing. The Minneapolis Star Tribune writes on May 21 that Minnesota’s Board of Animal Health has stopped issuing daily updates and aside from Iowa, no new cases were reported across the Midwest last week. This may be a sign that the latest bird flu outbreak is coming under control, which would be a relief for the poultry industry, but it is highly encouraged that extempers continue to monitor this volatile situation in the months ahead.