40% of Poultry Sector in Danger of Closing

Demand for chicken and turkey products was down already last weekend in supermarkets, but poultry sales dropped in particular in the outdoor markets.

Amiram Cohen
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Amiram Cohen

More than 40 percent of the businesses in the poultry, egg and meat sectors are in danger of going out of business as a result of the expected drop in sales because of the avian flu, according to estimates made by economists at Dun and Bradstreet.

Those in danger of bankruptcy include farmers, slaughterhouses, meat processing plants, hatcheries and food companies - including those that use eggs for bakery products. This means an almost doubling of the potential number of businesses likely to go under - which Dun and Bradstreet said stood at only 24 percent before the avian influenza struck Israel.

Demand for chicken and turkey products was down already last weekend in supermarkets, but poultry sales dropped in particular in the outdoor markets. Stall owners in Tel Aviv's Carmel market reported a 50 percent drop in sales on Friday. In a more upscale neighborhood supermarket in Tel Aviv the manager refused to supply figures relating to poultry sales, but it was clear there were very few customers in the fresh poultry department - much fewer than usual. There was almost no demand at all for fresh poultry, and frozen bird sales were way down.

The drop in sales came despite repeated statements from the health and agriculture ministries that there was no reason not to eat poultry or eggs that had been cooked properly. Ministry officials were worried the drop in demand would only get worse as more cases of avian flu were reported.

According to figures from the Israel Farmers Organization, sales of poultry for consumption are NIS 1.7 billion a year, egg sales are NIS 0.5 billion and turkey sales are also NIS 0.5 billion. The turnover of the market for raising poultry - chicks and eggs sold to farmers - is NIS 400 million a year. Altogether the poultry business for farmers is worth NIS 2.7 billion a year.

The value of poultry - chicken and turkey meat - sales to consumers is NIS 4.2 billion a year, according to Dun and Bradstreet. Fresh birds represent 80 percent of these sales, with the remaining being frozen and processed meat.

Among those facing the threat of financial ruin are 600 farmers who raise poultry for meat, another 1,000 who raise egg-laying hens - most of whom are located in moshavim in the Galilee and the Jerusalem Corridor - and another 80-90 turkey farmers - mostly kibbutzim.

In addition the poultry sector includes hundreds of other businesses, such as slaughterhouses, hatcheries, suppliers of agricultural supplies; along with various wholesalers and retailers, as well as truckers - and many more.

The moshav movement estimates that about 10,000 families make their living from the poultry business.

Yesterday the veterinary services of the Agriculture Ministry started destroying birds on those farms that have been infected, and today all poultry within a three-kilometer radius of those infected will be killed. The number of birds to be destroyed was estimated in the hundreds of thousands by the ministry. The large majority of the birds to be killed are completely healthy, but will destroyed due to their proximity to the infected areas.

Compensation

The law pertaining to the destruction requires the state to compensate the owners of the poultry farms. The law requires compensation for birds that are sick as well as healthy ones - in order to protect public health. The statute further determines the state must pay the farmer only half the value of birds that died from the disease or are sick; but farmers must be compensated for the full value of healthy birds destroyed only because they are suspected of being sick or mgiht possibly spread the disease.

The payment includes the price the farmer would receive - not the consumer price.

Today a farmer gets about NIS 4 per kilo for turkeys and NIS 7 per kilo for live chickens. This works out to an average of NIS 60 per turkey and NIS 15 per chicken.

The total to be paid out - based on a estimate of 200,000 birds affected is in the NIS 8-10 million range. The amounts do not include the expenses that will be require to restart production: sterilization, cleaning and new infrastructure.

The amounts include only those areas that have already been declared as infected. If the disease spreads, then the amounts will certainly rise by many more millions.

But the main damage to the poultry sector in the long run will not come from the destruction of the birds, but from an expected decline in demand for the products as consumers turn away from meat and eggs.

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