MONEY

Farmers wiped out by bird flu struggle to rebuild

Donnelle Eller
deller@dmreg.com

Iowa chicken and turkey farmers hoping to rebuild flocks after avian influenza wiped out 31 million birds face a raft of uncertainties, agricultural and industry leaders said.

Among the key questions producers face: When will federal officials decide their facilities are safe for new birds? And will chicks or poults be available when they get the green light to reopen their businesses?

And possibly most pressing: Will they restock only to risk losing their flocks again in the fall, when the deadly disease is expected to return along along with migratory birds?

“Iowa is the leading egg producer, and in the course of four weeks, we lost half our industry,” said Dave Rettig, president of Rembrandt Foods, a large egg producer based in Spirit Lake. The company lost about 8 million egg-laying hens to the disease in Rembrandt, Ia., and Renville, Minn.

“It came in like a tsunami and decimated the industry,” he said. “And experts expect this virus to come back in the fall. Who knows where it will go? But it could impact the entire country.”

The disease this spring destroyed about 30.3 million egg-laying chickens in Iowa and about 1.1 million turkeys. Nationally, about 42 million layers and 7.5 million turkeys were killed.

Despite that, there have been no human infections from the virus, and the food supply remains safe, health officials said.

“We can’t bring 40 million birds back overnight. The capacity just isn’t there,” said Rettig, whose operations face weeks or months before they can begin accepting birds. “Even without a reintroduction of the virus this fall ... it’s going to take a year or two to get back to full production.”

The cost to consumers

That’s likely to affect consumers as well. Egg prices more than doubled with the outbreak but have retrenched at still high prices.

Midwest shell egg prices were around $2.30 a dozen this month, said Brian Moscogiuri, a market reporter at Urner Barry, a New Jersey commodity research company. The prices are about 90 percent higher than April, when the outbreak began in Iowa.

Only a handful of the 71 Iowa chicken and turkey farms stricken by bird flu are close to reopening, with many of the remaining facilities facing months before they’re back in business.

Randy Olson, executive director of the Iowa Poultry Association, said members tell him they could get birds back in their facilities “this calendar year, with eggs being produced at the start of next year.”

Bill Northey, Iowa’s secretary of agriculture, said about three or four chicken and turkey operations are close to getting the approval to restart operations from the U.S. Department of Agriculture .

Infected facilities must undergo intense cleaning and disinfection, heating the buildings to high temperatures to kill any virus, then sitting empty for 21 days, the time needed for the virus to incubate. Several tests are taken to ensure no virus remains.

Producers are waiting to see if even a fragment of the virus remains, Northey said.

“We have more barns that are not very far behind them,” he said. “But there are others that are very far behind them. They might not be done with cleaning and disinfection until this fall.”

Olson and Northey expect some supply challenges as farms becoming operational.

“There are some layer operations that might not be able to get birds right away because demand is all coming at once,” Northey said. “It could be hard to supply all the birds that are needed.”

Can supply meet demand?

Tom Jorgensen, general counsel at Hy-Line International, said the West Des Moines chicken genetics company and a sister supply business see strong demand.

“Demand for product is high, and product availability is low,” he said. “And that’s aside from the avian influenza situation.”

Hy-Line expects demand for both chicks and breeding stock needed to build new flocks will grow as infected operations are able to restart. Hy-Line North America ships out over 100 million chicks annually.

The business is building a new hatchery, expected to open next year in eastern Iowa, based on demand before bird flu struck.

The company doesn’t expect growers to see shortages.

Layer operations will likely stagger the birds’ arrival, Jorgensen and others said. For example, chicks must grow for four or five months before they move into an egg-laying house.

Layers typically produce eggs for two years before they’re replaced.

High prices are a strong motivation to rebuild flocks.

“Producers will do everything they can to get back on the market,” said Dermot Hayes, an Iowa State University agricultural economist. “The first people to get back will make some money.”

Worrying about the spread

But consumer could run into other trouble if the virus spreads this fall beyond Iowa and Minnesota, the states that felt the brunt of the disease.

Industry leaders worry the disease will hit states such as Georgia, Arkansas and Alabama, which leads in broiler production.

Rettig said many in the egg-laying industry support using a vaccine, a move the broiler industry has resisted because of concerns it would prompt export bans. Broilers are chickens used for meat.

Rettig said he and other producers are looking for ways to better protect facilities. But he and others “don’t know how we were infected.”

USDA scientists say droppings from wild birds introduced the deadly virus, and it was spread through on boots and equipment, rodents or small birds, and dust, feathers or even the wind.

Biosecurity was already tight at Rembrandt’s operations, Rettig said. Measures included workers showering and changing clothes and footwear the company provided them before they could enter an egg-laying operations.

The industry is talking with leaders in other countries that have struggled with the virus to learn if there are more biosecurity measures that can be adopted.

“Outside of a vaccine, I don’t know that anybody has a clear way to stand at the fence and stop this,” Rettig said.

Lessons learned

With bird flu possibly returning in the fall, the federal government, industry leaders and producers are working to better prepare to prevent the disease and its spread, including running worst-case scenarios and how to handle them. They plan to meet July 28-29 in Des Moines to discuss last spring’s outbreak and response.

Here are some issues:

Response: With large outbreaks amassing in days, the U.S. Department of Agriculture and its contractors -- 3,400 altogether -- struggled to help producers euthanize chickens and turkeys, compost and dispose of dead birds, and clean-up facilities. USDA plans to hire 450 temporary employees for the fall, and increase surveillance of wild birds to spot the virus.

Disposal: The USDA lobbied some landfills in Iowa to take millions of the dead birds that overwhelmed neighbors with flies and odors. They also moved in a large incinerator to dispose of birds as well as composted and buried them on-site. “Our experience in the Midwest showed that the biggest roadblock to efficient depopulation -- which is key to reducing the spread of the virus -- is the lack of ready sites to receive and process dead birds,” said John Clifford, deputy administrator of veterinary services at the U.S. Department of Agriculture.

The USDA says it wants site- and county-level plans developed for landfilling and composting birds going into fall.

Vaccines: USDA has said existing vaccines do not closely enough match the virus in last spring’s outbreak to be effective in fighting the disease, although studies are continuing. Scientists, including those at Harrisvaccines in Ames, are working to develop a vaccine that might better protect birds from the virus.

Trade: If a vaccine were used, USDA’s Clifford said, some additional trading partners could ban all U.S. exports of poultry and eggs, at least temporarily, including states not infected by bird flu. The loss of these markets could cost U.S. producers at least $3 billion in trade revenue.

Costs: USDA says it has paid producers more than $190 million to help cover the cost of birds, cleanup and some lost production. It plans to make $500 million available for the outbreak. Rembrandt President Dave Retting said he’s worried the federal indemnification program fails to account for egg production that farms lose with a laying hen, which can produce eggs for two years.

The Spirit Lake company has been forced to cut 200 workers in Iowa and Minnesota while work has idled. Rettig is unsure when Rembrandt will be able to rehire them all.

The economic impact has been estimated at over $1 billion in Iowa, with an estimated 1,500 Iowans losing jobs in the egg industry. Goldman Sachs calculates the cost to U.S. consumers to be close to $8 billion.