Tue Apr 07 2015
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Bird Flu Threat Lingers: USDA Confirms 7 Cases in Minnesota

Bird flu is highly contagious in nature and infects an entire flock very quickly. In fact, over the last two months, there have been several confirmed cases in Minnesota, Oregon, Washington, Arkansas, Idaho and California. This prompted countries like Japan, the Philippines, Taiwan, Singapore and Nicaragua to restrict the import of U.S. poultry.

The Downside Scenario

The avian flu outbreak could prove detrimental to meat producers like Tyson Foods Inc. (TSN – Analyst Report), Sanderson Farms Inc. (SAFM – Analyst Report), Hormel Foods Corp. (HRL – Analyst Report) and Pilgrims Pride Corp. (PPC – Analyst Report) that largely depend on the chicken segment for revenue generation. Moreover, the companies recently shifted their focus to this segment to cater to the growing demand for chicken over red meat and beef. Sanderson Farms has already barred outsiders from entering the affected farms to prevent the flu from spreading.

This could affect the export of U.S. meat companies with significant presence in the international market. These companies, which cater to markets in Canada, Central America, China, the European Union, Japan, Mexico, Middle East, South Korea, Russia, Taiwan and Vietnam, is expected to witness lower exports in the upcoming months.

The meat industry also fears that the rising number of such incidents might induce U.S. consumers to reduce the consumption of meat.

We apprehend that the outbreak will not only affect poultry companies but also those restaurateurs that source chicken from these suppliers.

Precautionary Steps 

The affected states on their part are working with poultry workers to take all the necessary precautions. The USDA is developing a vaccine to protect poultry from new strains of avian flu, including H5N2.

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