AI Continues to Plague Turkish Poultry Sector

UNCLAS SECTION 01 OF 02 ANKARA 001524 SIPDIS STATE FOR EUR/RUS, OES/STC, EB/TPP/ATP, EB/TPP/BTA HHS FOR WSTEIGER/PBUDASHEWITZ USAID FOR BLANCHET, TROSTLE AND CARROLL FAS FOR ITP/MACKE/THOMAS, CMP/Molstad FAS PASS FSIS AND APHIS VIENNA PASS APHIS BRUSSELS PASS APHIS/FERNANDEZ GENEVA PASS HEALTH ATTACHE E.O. 12958:N/A TAGS: ETRD EAGR KPAO TBIO AMED TU CASC EAID SENV ECON SUBJECT: AI Continues to Plague Turkish Poultry Sector Ref: (A) Ankara 5119 (B) Ankara 6105 (C) Ankara 6138 (D) Ankara 6232 (E) Ankara 6291 (F) Ankara 6430 (G) Ankara 6514 (H) Ankara 6605 (G) Ankara 7034 (J) Ankara 7318 (K) Find number and other #s ¶1. (U) Summary. The AI outbreak continues to plague the poultry sector in Turkey albeit at a reduced pace. AI has been confirmed in 151 locations in 28 provinces throughout Turkey, according to the most recent report from the Ministry of Agriculture and Rural Affairs. Poultry consumption remains down although some poultry companies have shown more resiliency than others. End summary. -------------- Turkish Provinces with Confirmed AI cases -------------- ¶2. (U) According to the Ministry of Agriculture and Rural Affairs, Avian Influenza has been confirmed in 151 locations in 28 provinces throughout Turkey as of March 15, 2006. Only one outbreak has occurred in a commercial poultry unit and that was in a small-scale commercial (broiler) poultry flock in eastern Anatolia. All other outbreaks occurred in backyard (village) poultry flocks. The Government of Turkey (GOT) instituted strict quarantine measures and was successful in eliminating the virus in 64 of the 151 locations. There are six additional suspected cases of AI in backyard flocks. There are also 24 positive cases and eight suspected cases of AI in wild birds. As of March 15, 2006, a total of over 8,000 birds have died from the disease and almost 2.3 million birds have been culled since the first outbreak in October 2005. -------------- Government Action -------------- ¶3. (U) The GOT compensated the poultry sector for losses incurred due to the culling of 13.5 million spent hens. In addition, according to poultry industry contacts, the GOT may allow spent hens, primarily from the egg industry, to be sent to rendering facilities. In the past, spent hens were traditionally sold to small farm holdings. Since the outbreaks, spent hens were culled and destroyed. Under this plan egg producers will at least be able to recoup some costs. Producers and rendering facilities will be paid YTL 0.30 and YTL 0.10 per chicken, respectively. In Turkey, there were a about 40 million layers before the initial outbreak in October ¶2005. It is estimated that there are now about 26.5 million layers. -------------- Consumption Still Down -------------- ¶4. (U) Consumption of poultry products, which decreased significantly as a result of the first outbreak in October, is beginning to recover. However, it is currently estimated that poultry meat and egg consumption is still 30 - 40 percent below last year's levels. Poultry meat and egg prices are currently about equal to the cost of production and are expected to increase during the next couple of weeks. Industry sources are expecting a major recovery of the poultry sector during spring and summer when poultry consumption tends to increase. -------------- Feed Costs -------------- 5 (U) On March 11, 2006, the GOT increased the import duty on soybeans from zero percent to 10 percent and on soybean meal from eight percent to 13.5 percent. The duty increase will significantly increase the cost of poultry and egg production. Any hopes of a quick recovery in the sector will be hindered by the duty increases. Since Turkey grows only very small quantities of soybeans (ranging between 30,000 and 50,000 MT in recent years) with no domestic substitute the duty will immediately affect production costs. Industry sources are projecting that the total additional cost to the industry will be around USD 40 million. They are also concerned that the GOT might cancel support previously pledged to the poultry sector as a cost savings measure. -------------- Comment -------------- ¶7. (SBU) Comment: Although overall consumption remains lower than normal, some poultry companies are showing more resiliency than others. Some of the larger companies have spent the last several years differentiating their companies from the competition, particularly on poultry quality. As a result, while many companies are suffering major losses, a few companies have been able to weather the storm because their products as associated with better quality. The increase in soybean duties is particularly disturbing since, according to several sources, Foreign Trade officials made the decision to increase duties unilaterally without any consultation with the Ministries of Agriculture and Industry as well as the private sector. It is even more disturbing that Foreign Trade officials have publicly stated that corn can be substituted for soy in feed rations, which shows a total lack of understanding of the poultry and feed sectors. End Comment. WILSON