China's producers under threat

Although the nearest case of bird flu is hundreds of kilometers away, the Asian epidemic is a very real threat for the 3,000 workers at Huadu Broiler Corp (華都肉雞公司) in Beijing.

The company's chicken exports, normally 700 tonnes a month, have dropped to zero since the deadly H5N1 virus strain was confirmed last week in the Guangxi region near Vietnam.

And more bad news may be on the way. "If there's also a large decline in the home market, and we can't sell all the chicken meat we produce, we'll have to start laying off workers," said Chen Yuanfeng, a company spokesman.

China is the world's fifth-largest exporter of chicken and shipped 420,000 tonnes abroad last year, only slightly behind Thailand's 500,000 tonnes, according to

figures from the US Department of Agriculture.

Both countries are among a small group of developing nations that have emerged as major players in the global poultry trade, winning market share from the US, the world's biggest producer, consumer and exporter.

China's growing clout in the chicken business could be in for its worst challenge ever, judging from the flood of reports the China Meat Association has received over the past week from chicken producers across the nation.

"Losses will be at least in the billions of yuan," said He Zhonghua, a spokesman for the association.

When China's chicken exports are hurting, so is its entire agribusiness sector, since local producers estimate chicken products make up 50 percent of total meat exports.

Japan is traditionally China's most important overseas market for chicken, and has typically accounted for 70 percent in past years.

However, previous bird flu concerns caused Japan to halt imports from China, and they were not resumed until last August.

"Japan has been opening and shutting the door for some time already," said Sarah Li, director of the Hong Kong office of the US Poultry and Egg Export Council.

Since Japan opened the door again in August, exports have been slow to pick up as Chinese chicken producers have found it difficult to get certificates from their own extremely cautious quarantine officials.

"The Chinese don't want one single case that could close the whole trade down," Li said.

According to Japanese media reports, officials in Tokyo are considering allowing imports of processed chicken from China and Thailand.

This could mean all the difference to many of China's largest exporters, who often process and package American chicken before re-exporting it to Japan and other markets.

Tom Scott, the chair of poultry science at the University of Sydney, doubts that will happen.

"There is the possibility of meat from inside China being processed at the same plants [as the US chicken meat] and Japan is very careful and suspicious of the meat it imports," he said.

Companies such as Huadu Broiler are preparing themselves to rely more heavily on the domestic market. China consumes more chicken than any other country except the US, having devoured 9.8 million tonnes last year, according to US figures.

But not all in the industry are optimistic, fearing a loss of appetite for chicken even at home.

"Because of all the media coverage, bird flu has had a real impact on China's chicken industry," said Jin Guangjun, an official with the China Animal Agriculture

Association.