A major outbreak of bird flu in the European Union's poultry flock could close off exports worth $1 billion, force domestic prices lower but push up world market levels, a UN agency said on Tuesday.
The Food and Agriculture Organisation (FAO) said potential trade bans in the event of a widespread avian influenza outbreak in the 25-nation EU bloc, source of 13 percent of global poultry output, were already unsettling world markets.
"The close proximity of recent outbreaks in the European region to EU member states has raised considerable conerns about the industrial impact of potential outbreaks," the FAO said in a report distributed at a major bird flu conference in Geneva.
"International poultry prices would be expected to move up sharply. Internal EU prices would decline...as products intended for export, approximately 10 percent of production, swamp local markets," the report said.
It said the FAO's economic model had combined the impact of bird flu in Europe with the recent outbreak of foot-and-mouth disease (FMD) in Brazil, the world's largest meat exporter.
"Preliminary results of this analysis indicate that the potential short-term impact would be higher meat prices for all meats on world markets," it said, adding this would range from 7-8 percent for poultry and beef and 3 percent for pigmeat.
The study assumed EU exports had dropped to zero and Brazilian beef shipments were down by 800,000 tonnes, off 45 percent on projected exports of 1.8 million tonnes this year.
It noted that restrictions on exports from Asia during 2004 and the first half of 2005 had contributed to a 20 percent rise in world poultry prices, contrasting sharply with declining domestic prices in disease-affected countries.
The FAO estimated an 8 percent decline in international poultry trade over the period and that limitations on fresh/chilled products from Thailand and China in particular had caused Asian exports to fall to less than 1 million tonnes in the 2004/05 period, down from 1.8 million in 2003.
It said it had also assumed that internal EU demand for poultry was also steady. When news broke of the bird flu cases in Romania and Turkey, European consumers began switching away from chicken, although there were signs demand was now returning.
The EU ships around one million tonnes of fresh or fresh/chilled/frozen poultry products, valued at over $1 billion, to more than 150 markets around the world, with the main markets being the Middle East (27 percent), Africa (26 percent) and Russia (23 percent), the report noted.
The EU also imports 700,000 tonnes of frozen fillets and other chicken products, these would be expected to drop as internal EU prices declined relative to rising world prices.
Africa would be one export market particularly hit.
The FAO said poultry imports accounted for 20 percent of estimated regional poultry consumption of 4.2 million tonnes.