Identifier
Created
Classification
Origin
06CAIRO981
2006-02-16 11:38:00
UNCLASSIFIED
Embassy Cairo
Cable title:  

AI CONCERNS IN EGYPT IMPACT MARKET CONDITIONS

Tags:  EAGR BEXP ETRD EG USTR 
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UNCLAS CAIRO 000981 

SIPDIS

FOR USDA/FAS/OA/TERPSTRA,FAA/L. SEBRANEK, CMP/F.
LEE, ITP/P.SHEIKH, EC.R.TILSWORTH
USDOC FOR 4520/ITA/MAC/SAMS, TALAAT AND JACOBS/WIEHAGEN
INFO:DLP/CMP/FAA/IO/AME/IS/OA/OGSM/APHIS/BRS/ DA/APHIS/HQ/
APHIS/OA/FSIS/KMS

E.O.12958:N/A
TAGS: EAGR BEXP ETRD EG USTR
SUBJECT: AI CONCERNS IN EGYPT IMPACT MARKET CONDITIONS


UNCLAS CAIRO 000981

SIPDIS

FOR USDA/FAS/OA/TERPSTRA,FAA/L. SEBRANEK, CMP/F.
LEE, ITP/P.SHEIKH, EC.R.TILSWORTH
USDOC FOR 4520/ITA/MAC/SAMS, TALAAT AND JACOBS/WIEHAGEN
INFO:DLP/CMP/FAA/IO/AME/IS/OA/OGSM/APHIS/BRS/ DA/APHIS/HQ/
APHIS/OA/FSIS/KMS

E.O.12958:N/A
TAGS: EAGR BEXP ETRD EG USTR
SUBJECT: AI CONCERNS IN EGYPT IMPACT MARKET CONDITIONS



1. Avian Influenza

The poultry industry in Egypt is in severe crisis. Consumer
fears, fueled by reports of the presence of avian influenza
(AI) in neighboring countries, have caused a precipitous
drop in consumption of poultry meat and eggs. The Egyptian
Parliament has taken the unprecedented step of removing
poultry from its in-house restaurant menu. The United
States does not export poultry or eggs to Egypt; however,
these fears threaten U.S. exports of corn, soybeans, and
poultry meal, including feather meal used in poultry diets.


2. Trade Impact

There have been no reports of AI in Egypt, in humans or in
animals; nevertheless, consumption of poultry meat, eggs,
and grains has fallen by 40 percent, 30 percent, and 25
percent, respectively. Egypt annually imports 5 million MT
of yellow corn, (85 percent from the U.S.),one million MT
of soybean meal (25 percent from the U.S.),and 400,000 MT
of soybeans (35 percent from the U.S.). In addition, there
is a $25 million feather meal market, with U.S. suppliers
owning over 50 percent of market share. Larger companies in
all effected sectors (grains and poultry production) will be
able to weather the current crisis, due to larger than
normal capital reserves gained from significant profits
reaped over the last two years. Small, family producers, on
the other hand, may not fare as well; larger companies have
already begun to purchase smaller companies, positioning
themselves for an eventual turnaround in market conditions.




3. Government Response

The primary response from GOE officials has been to impose
bans that prohibit the import of poultry and poultry by-
products from all sources. In late January, a three-month-
old ban was extended for an additional 30 days, with another
review coming at the end of this period. An inter-
ministerial committee (comprised of officials from the
Ministries of Agriculture, Trade, Health, Environment, and
Aviation) has consistently placed pressure on the Ministry
of Agriculture to maintain all bans; however, MinAg was able
to gain an exemption for imports of grandparent stock to
guarantee broiler and layer production in 2007-2008. The
Ministry of Agriculture realizes the magnitude of
restricting exports, but officials have had difficulty
conveying the seriousness of the situation to members of the
inter-ministerial committee. In the current environment,
industry contacts have given anecdotes of retail prices as
low as 3 LE/kg for poultry meat, lower than the price for
"foul" (an inexpensive fava bean dish widely consumed for
its protein value).


4. Future Outlook

However, there is a general feeling among industry players
that the eye of the storm has passed. They attribute this
perception to more concrete steps being taken by the
government and trade interests. MinAg has increased its
surveillance activities, dispatching teams to visit farms on
a regular basis. The Ministry of Health and the Poultry
Union have launched advertisement campaigns to promote the
safety of properly cooked poultry meat; television programs
have also begun to reduce the rhetoric and take a more
scientific approach to discussing facts about AI.

Sustained GOE vigilance with regard to surveillance and
early detection of AI must continue for consumption patterns
to return to their normal levels. The approach of warmer
weather should aid in strengthening consumer confidence, as
there should be fewer concerns about the flu.

RICCIARDONE