China's poultry industry under pressure

PHOTO: China's poultry industry under pressure

Photo above: Pan Jianjing, 37, is worried about the cost of keeping his 16,000 unsold chickens on his farm.

BEIJING - After being woken in the early morning by his 16,000 chickens crowing in their coops, Pan Jianjing was unable to get back to sleep. Usually a sound sleeper, the 37-year-old breeder's rest has been disrupted by business concerns. The outbreak of the H7N9 strain of bird flu has resulted in the bottom falling out of the market and Pan hasn't sold a chick in the past two weeks.

Pan's 2,000-square-metre farm, in Tengqiao village, Wenzhou, Zhejiang province, an area well known for smoked chicken products, has turned from money-spinner to cash drain.

By Tuesday, the national and provincial labs had tested 47,801 samples from 84,444 collected nationwide, according to the Ministry of Agriculture. The 39 positive samples taken from live poultry all originated in the municipality of Shanghai and the provinces of Anhui, Zhejiang and Jiangsu, all of which confirmed cases of H7N9 bird flu.

So far, 77 cases have been confirmed nationwide and 16 people have died, according to Xinhua News Agency.

Rising losses

Feeding his chickens costs Pan almost 3,000 yuan (S$599) a day, including about 2,000 yuan for a dozen packs of feed, which cost 150 yuan each. The rest goes on wages and electricity charges. With no money coming in, Pan's loss is expected to reach more than 100,000 yuan within the month.

"I used to make an annual net profit of 40,000 to 50,000 yuan, which covered the family's daily expenses and helped to pay for the gradual expansion of my farm. Now I'm worried that I will spend all my savings in just one or two months," said Pan, the family breadwinner and father of a 3-year-old son and a daughter, 11.

The growth cycle of a chicken lasts about 60 days, which means that most of the meat chickens, as opposed to laying chickens, have to be sold within two months, otherwise keeping them will result in a huge waste of food and money.

At present, most of his roosters are 40 days old and need to be sold within 20 days to minimise the losses, which are rising daily.

By Monday, the losses experienced by poultry-related businesses nationwide had reached more than 13 billion yuan, according to estimates provided by the National Poultry Industry Association. Unsold baby meat chicks have so far cost breeders more than 3.7 billion yuan.

"I have no option but to pray that the scandal of the H7N9 virus will be controlled as soon as possible. That would save us from a severe dilemma," said Pan.

Meanwhile, Ye Guowang, who owns a chicken farm in the same village as Pan, is wasting money every minute on feeding 10,000 chickens that are ready to be sold.

"Most of my chickens have stopped growing, but they are still eating a large amount of feed every day, which is a waste for me," said 63-year-old Ye, who has seen his business expand over three decades from a few dozen chickens to around 20,000 on his farm at any given time.

Ye added that it is common to have a few cases of bird flu in the hennery every year, especially at springtime, but the unexpected new H7N9 strain has wrought huge damage on the poultry industry.

Industry brought to a standstill

Few willing to buy products

The outbreak has brought the industry to a standstill; few consumers are willing to buy poultry-related products, which has resulted in a sharp fall in the prices of chickens and ducks and even eggs.

"The price of an ordinary meat chicken has dropped from 12 yuan a kilo to four, but still no one wants to buy, even at such a low price," said Ye, who spends around 2,600 yuan a day keeping unsold chickens on his farm.

To ensure his chickens are healthy and safe to be sold at the market, Ye has to treat them with a vaccine twice a month to prevent the various strains of bird flu and other infectious diseases.

"I will have to buy more vaccine for these chickens in around a week, if the demand for chicks stays at zero," said Ye, who usually earns a profit of around 1.5 yuan for each chicken sold.

Compared with Ye Guowang, Ye Enlin, the managing director of the Wenzhou Minxin poultry cooperative in the village is suffering much greater losses; he has signed agreements to buy 5 million chickens a year from 80 henneries in the cooperative.

Three days ago, Ye Guowang, also a member of Wenzhou Minxin poultry cooperative, put 10,000 chicks in the hot house, where the temperature is constantly maintained at between 33 C and 35 C.

The chicks were sold to the cooperative as part of an agreement signed in January, so he hasn't lost any money on them yet, but that may change if the outbreak doesn't end soon.

"I signed the agreement to buy those chickens, so I am facing double the losses of farm owners," said Ye Enlin, who has lost more than 10 million yuan in sales during the past month.

Ye has slaughtered and frozen a few hundred mature roosters in the hope of selling them in two or three months, as a means of minimising his losses.

And it's not just the breeders who are suffering; poultry sellers who've been forced to close their stands at agricultural produce markets are waiting anxiously for an end to the outbreak, but the cases keep appearing.

"I am making some money by transporting vegetables to other agricultural markets, but we're struggling to make a living at the moment," said Xia Maochun, who sells poultry at an agricultural market in Gaoling Road, Shanghai, and regularly supplies nearby restaurants and residents.

Xia faces a monthly loss of about 40,000 yuan after closing his market stall. He is currently waiting for the local government to release information about reopening stalls and markets.


To ease the heavy burden on breeders, the regional governments of Shanghai and Zhejiang province have offered limited subsidies.

The Shanghai government issued a one-off subsidy on April 10, paying certified poultry breeders to keep their birds at their farms. Breeders will be paid 3 yuan for each egg chicken, 2 yuan for each meat chicken, 2 yuan for each pigeon and 0.20 yuan for each quail.

Meanwhile, on Wednesday, Zhejiang's provincial government announced that it will provide a similar level of subsidy to local large-scale poultry breeders.

"It is essential for the government to offer insurance support for the breeders, not only in terms of buying related insurance products, but also setting up a stabilization fund to insulate the breeders from huge losses if outbreaks occur in the future," said Wang Xujin, a professor at the insurance department of the school of economics at Beijing Technology and Business University, according to the news website Caixin.

Wang urged the government to launch a poultry storage system and subsidy measures to avoid sudden price fluctuations for poultry products.

However, there is a certain level of optimism in the industry.

Tony's Farm, an organic foodstuff supplier in Shanghai, has started selling organic vegetables and fruit with a wide profit margin to offset the losses incurred by the temporary closure of its poultry department.

"Supplies of organic vegetables such as garlic, onions, ginger and tomatoes that boost human immune and resistance systems have been increased as a replacement for poultry products," said Wang Shuai, the PR manager at Tony's Farm, which has launched a wider range of prepackaged vegetables to meet the rising demand from customers.

In addition, certain farmers are looking forward to making profits soon from the rebound in demands for poultry products.

"I would like to buy more chicks in August, if that's possible," said Sun Hongrong, 39, who runs a family farm in a suburb in Shanghai's Songjiang district.

Normally, Sun raises 1,000 free-range chicks in his paddy fields every year. All are priced at around 120 yuan, higher than normal, because they eat rice kernels rather than chicken feed.

"Hopefully, the bird flu will disappear as temperatures rise. By that time, the demand for chicken will rise again, too, so I expect to see prices surge because of the short supply," said Sun.

Xie Yu in Shanghai contributed to the story.