The Impact of the Worsening Bird Flu Crisis on Global Markets

Since February 2022, the bird flu virus has spread throughout poultry farms around the world, with 60 countries now reporting cases of infection, including the US, which produces 17% of the global output. According to the World Organisation for Animal Health (WOAH), the 2022-2023 outbreaks have resulted in the death of 200 million birds. Between October 2022 and February 2023, the virus resulted in the loss of over 100 million poultry, more than three times the number recorded in the same period a year earlier, which ended with record losses from the disease.

The US has been the most affected country, with a loss of 58 million birds including layers, turkeys, and backyard poultry. A total of 43 million laying hens were either killed by the virus or culled to prevent the disease from spreading. According to the United States Department of Agriculture (USDA), this loss of laying hens resulted in the country’s egg supplies falling to 7.74 million dozen in 2022, a reduction of 233K dozen compared to 2021. Consequently, end of year prices for eggs rose to USD 2.78/dozen, a staggering increase of 210% compared to the previous year. Egg prices continue to soar in 2023, with a dozen of grade A eggs costing a record USD 4.77 in January, rising from USD 1.93 the previous year, a 150% increase. According to the US Bureau of Labor Statistics, this surge in egg prices makes grade A eggs more expensive than beef for the first time in history, with a pound of beef costing USD 4.64 in January 2023, 2.8% less than a dozen of eggs.

Source: Tridge, USDA

Most governments are now considering reversing their opposition to vaccines as other methods of control such as culling birds or locking them inside have failed to prevent the bird flu from returning to destroy commercial flocks year after year. The cost on affected countries has been significant, making vaccinations an attractive option. For example, France spent a staggering EUR 1.1 billion (USD 1.2 billion) in 2022 compensating poultry farmers for their losses. Besides the cost of culling millions of birds, there is the possibility that the virus could mutate and spread to humans. Initially, it was feared that vaccinations could mask the spread of the virus and impact exports to countries that have banned vaccinated poultry on fears that infected birds could slip through the net.

Countries are reacting to the current situation differently. Mexico began emergency vaccinations in 2022, Ecuador plans to inoculate more than two million birds in 2023 after the virus infected a 9-year-old girl, and France aims to begin vaccinating poultry in September 2023. According to the European Commission, the EU also agreed to implement a vaccine strategy across its member states, with Brussels normalising its poultry vaccination rules, expected to come into force in March, ensuring that poultry products and day-old chicks can be traded freely within the bloc. China, on the other hand, has been vaccinating against bird flu for nearly two decades, a strategy that has managed to sharply reduce outbreaks.

While vaccines could bring down death rates, reports from WOAH suggest that some vaccinated birds could still contract bird flu and spread it, effectively masking the spread of the virus. As a result, many global markets have banned imports from countries where vaccines are used, for fear of bringing in the virus as well. Due to these trade restrictions, bilateral negotiations would need to be conducted to allow exports to markets such as South Korea and China. As a result, France is currently negotiating with its non-EU trade partners to permit exports of vaccinated poultry.

The bird flu is expected to continue spreading to other countries in 2023 with fresh outbreaks reported in Cuba and Slovakia in February, putting global poultry supplies at further risk. There is currently no definitive date as to when the current bird flu outbreak will be contained. However, the US, the most impacted country, seems to have a positive outlook on the situation, with the American Egg Board forecasting that the price of eggs could stabilise in 2023. Despite this, it remains unclear as to the exact timeline of the price decline. Hence, Tridge expects unaffected countries like Brazil, the only top 5 global poultry supplier, will benefit from the situation by increasing their poultry exports, taking advantage of supplying countries affected by the disease.

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