China's pig fever outbreak a boon for chicken farmers

[September 17, 2018]  By Dominique Patton

BEIJING (Reuters) - An outbreak of African swine fever in China is proving to be a windfall for chicken farmers, helping drive up prices of the country's second-most popular meat to two-and-a-half year highs.

With pork in short supply as authorities try to contain the highly contagious disease, shoppers are turning to chicken as a substitute, with some diners also concerned about safety.

The turnaround is a boon for farmers in the world's top poultry producer after tepid demand growth in recent years following a series of food safety and bird flu scares.

Broiler prices in top producing region Shandong hit 9.7 yuan ($1.41) per kilogram earlier this month, their highest since March 2016.

"The recent African swine fever outbreaks have pushed up buying of chicken from cafeteria and restaurants to some extent. More people might choose chicken now, especially in the infected regions with African swine fever cases," said Li Jinghui, managing director of the China Poultry Association.

Swine flu cannot be cured and is often fatal for pigs. After more than a dozen outbreaks since the country's first case was reported in early August, Beijing has slaughtered around 40,000 hogs and banned transport of live hogs from and through infected areas.

The moves have tightened supply in the populous south, leading to soaring prices just as demand rises ahead of a week-long holiday in October.

Chicken is a cheaper substitute for pork and prices typically rise when pork prices increase.

Some cuts like chicken breast bones, used in school and work canteens, are already at record highs, according to Pan Chenjun, senior analyst at Rabobank.

Anecdotal reports suggest some consumers are also worried about catching swine fever from infected pork, even though the disease cannot be passed to humans.

"Although there is no official notice about the [swine flu] epidemic, I feel that pork is unsafe," a student in southern Guangzhou city surnamed Zhuang told Reuters. "Now, I choose chicken dishes when I am out for a meal."

Share prices jumped in August at companies including poultry producers Fujian Sunner Development Co. Ltd and Shandong Xiantan.

Stock prices and broiler prices have eased somewhat this month as more chickens were sent to slaughterhouses ahead of the holiday period, said Alice Xuan, an analyst with Shanghai JC Intelligence Co. Ltd.

This comes despite a shortage of breeding stock, that has already helped support chicken prices this year, analysts and industry participants said.

Beijing's anti-dumping tariffs on imports of chicken meat from Brazil, implemented in June, have also underpinned chicken prices in China.

Average prices for chicken meat product reached 11.15 yuan per kg in early September, up 13.2 percent on the year, according to Boyar, an agribusiness consultancy.

(Reporting by Dominique Patton; additional reporting by Beijing Newsroom and Hallie Gu; editing by Richard Pullin)

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