French Response to Discovery of AI in a

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BRUSSELS PASS USEU FOR AGMINCOUNSELOR
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E.O. 12958: N/A
TAGS: EAGR ETRD EU KFLU TBIO FR
SUBJECT: French Response to Discovery of AI in a
Commercial Farm



1. Summary : Following the discovery of the H5N1
Avian Influenza (AI) virus in late February on a
commercial poultry farm in the Ain district, 47
countries have placed partial or complete bans on
French poultry imports, domestic poultry
consumption has dropped more than 30 percent,
poultry prices have fallen domestically and
overseas and hatcheries have begun voluntarily
destroying some production. French poultry
companies estimate that their losses could exceed
tens of millions of euros in 2006. The French
Government has raised over 60 million euros to
help poultry farmers and poultry companies. In the
meantime, more infected wild birds have been found
dead in the Ain district and more recently an
infected swan was found in the Bouches du Rhne
district, close to Marseille. End Summary


2. On March 5th, the Ministry of Agriculture
confirmed that France had additional cases of
highly pathogenic H5N1 virus in wildfowl (AI) near
the city of Saint Mittre les Remparts in the
Bouches du Rhne district, close to Marseille, and
in the Ain district, near the Swiss border. This
followed the announcement on February 25th that
France was the first EU country to find AI in a
commercial flock.


3. The origin of the outbreak on the commercial
l
farm remains unknown. French veterinary services
hypothesize that either journalists brought the
virus from the site of an infected wild bird to
the farm on their shoes or, that straw stored
outside was contaminated with droppings from
infected wild birds and was subsequently passed to
the commercial flock when the straw was spread in
the poultry houses. 11,300 turkeys were destroyed
as a control measure.


4. In an effort to combat the spread of AI from
wild birds to commercial flocks, France has
adopted preventive measures, including requiring
that commercial birds be kept inside, and in areas
of potential vulnerability to contamination from
migratory birds where it is impractical to house
these flocks, implementing a plan for preventive
vaccination. Reportedly, few farmers in the Landes
District have vaccinated their birds, to date.
Some farmers and poultry processors expressed
concern that they would have difficulty selling
the meat from vaccinated birds, especially abroad.


5. According to European Commission Decision
2006/148/EC, dated February 24, 2006, France may
not export any vaccinated live poultry, or
hatching eggs and day-old chicks originating from
vaccinated poultry. All intra-EU trade for
consignments of live poultry, day-old chicks and
hatching eggs must be accompanied by a health
certificate stating that the consignment
originated from holdings where no vaccination
against avian influenza had been carried out.


6. Over forty countries, to date, including the
United States, have reacted to France's
confirmation of AI in domestic poultry with
partial or complete bans on imports of live
poultry and poultry meat and products from France.
Christine Lagarde, French Minister of Trade,
publicly praised the United States for setting a
temporary ban on the importation of poultry and
commercial shipments of live birds, hatching eggs,
and unprocessed avian products only from the
affected Department of Ain and encouraged other
countries to take a similar approach in line with
OIE guidelines. (However, most bans announced to
date are more global in scope.) The U.S. ban will
have no impact on the French poultry industry as
no meat and poultry products are exported from
this region to the U.S.


7. France is expected to take export losses as a
result of these bans. The country exported 218
million U.S. dollars of poultry products to the
countries mentioned above in 2005. The French
Ministry of Trade estimates that about 14 percent
of total poultry meat exports and 10 percent of
total live birds exports will be affected by the
ban. So far, Saudi-Arabia, the largest non-EU
customer of French poultry meat, has not placed
any ban on French products, but, trade contacts
reported that Saudi orders for French poultry in
the first two months of 2006 were 20 percent below
their level of 2005.

Impact on the Industry


8. Reaction to the discovery of AI in a commercial
flock rippled swiftly throughout the industry.
Domestic poultry consumption experienced
immediate and significant declines, according to
various sources, in excess of 30 percent since
February 2006, which has negatively affected
French poultry prices. In response, French
poultry exporters are aggressively pricing their
products in some EU markets, such as the United
Kingdom, which, in turn, generates further
downward pressure on prices in the domestic French
market. According to the French Poultry Technical
Institute (ITAVI),commercial stocks of poultry
meat at the end of 2005 were 76 percent higher (at
21,200 MT) than in 2004.


9. To minimize losses, which could exceed tens of
millions of Euros in 2006, due to lower sales and
inflated stocks, poultry producers and
slaughterhouses have implemented measures to
reduce costs. These measures include: not
renewing temporary and interim work contracts
(which amounts to several thousand people
throughout France); putting some workers on
technical unemployment, which allows workers
suffering from a temporary loss of income (i.e.
not being paid by their employers due to technical
or economic difficulties) to claim partial
unemployment benefits from the Government; and
asking farmers to increase the time between flocks
from the average 2 to 3 weeks to 5 to 9 weeks.
Hatching eggs producers and hatcheries are
currently voluntarily destroying about one-fifth
of their production.

French Government Reaction


10. The French Government has responded to the
financial entreaties of the poultry sector by
providing 63 million euros in financial
assistance, earmarking more than 20 million euros
for poultry farmers and 30 million euros for
poultry companies. In addition, the French
Government will fund a 2 million euros TV
advertising campaign to support the purchase and
consumption of poultry meat. France notified the
European Commission of these subsidies in order to
avoid contravening EU internal market regulations.
So far, EU Agricultural Commissioner Mariann
Fischer Boel has ruled out an EU intervention to
sustain poultry markets.


11. On March 4th, the Ministry of Agriculture
announced the following assistance measures:

- An immediate cash advance of 1,000 Euros to
2,000 Euros for all specialized poultry farmers
(i.e. more than 25 percent of their income is from
producing poultry). Their losses between November
1st 2005 and April 30, 2006 could also be
compensated.

- Extra compensation to poultry farmers within the
quarantine district of Ain.

- Supplemental support for free-range poultry
farmers, no details provided yet. (Free-range
conditions are now prohibited in France so these
farmers lose their premium.)

- Social tax reductions for young poultry
producers.

- Tax rebates for poultry companies.

More subsidy announcements are expected shortly.


Stapleton