EGGS THROWN IN PROTEST AS AVIAN FLU PREVENTION

UNCLAS SECTION 01 OF 02 HONG KONG 001203

SENSITIVE
SIPDIS

STATE FOR EAP/CM, CA/OCS/ACS/EAP, AIAG, OES/IHA, MED
HHS FOR OGHA/STEIGER AND PASS TO NIH/FIC
CDC ATLANTA FOR COGH AND DIV-FLU
BEIJING FOR CHRISTENSEN/GREEN

E.O. 12958: N/A
TAGS: TBIO KFLU EAGR PINR CH HK
SUBJECT: EGGS THROWN IN PROTEST AS AVIAN FLU PREVENTION
MEASURES TURN CONTENTIOUS

REF: A. HONG KONG 1034

B. HONG KONG 1061

C. GUANGZHOU 351


1. (U) Summary: The Hong Kong Government (HKG) is proposing
significant reform in the live poultry trade following the
June 7 finding of H5N1 avian influenza virus in Hong Kong
markets for the first time in five years. These "farm to
table" changes include a ban on overnight stocking of live
poultry in markets (effectively a daily cull),and a proposal
to buy-back licenses from farmers, wholesalers and retailers
as part of a HKD1 billion plus compensation package. The
announcement of the overnight stocking ban on June 27
provoked a demonstration by chicken farmers who threw eggs at
the Legislative Council (Legco) and Government House
buildings in protest. Negotiations between the HKG and
poultry trade industry associations are contentious, with the
two sides 30-50% apart on compensation packages and license
buy-out figures. The HKG is planning to completely
restructure the industry as a means to prevent the spread of
avian influenza. End Summary.


2. (SBU) Comment: The June H5N1 virus is having implications
far beyond those originally anticipated, as the HKG seeks to
buy out the entire poultry trade industry as a means to
prevent the spread of avian flu. In the five years since the
virus was last seen inside Hong Kong's borders, the HKG has
grown confident that its prevention, surveillance and
detection measures are effective. The return of the virus
has shaken that confidence, resulting in this tough response.
The compensation package and license buy-outs, combined with
the overnight stock ban, and reinvigoration of the plans for
centralized slaughter seem to be enough to satisfy the public
and media for now -- it remains to be seen if they can stop
the virus from returning to Hong Kong. End Comment.

Chronology of the H5N1 Outbreak
--------------

3. (U) On June 7, the Hong Kong Agriculture, Fisheries and
Conservation Department (AFCD) announced that routine testing
and surveillance had detected the H5N1 virus in a Hong Kong
wet market. Subsequent comprehensive testing across 64
markets and 50 domestic poultry farms found no abnormalities,
however, the Secretary for Food and Health raised the
response level from "alert" to "serious", adopting a series
of public health protection measures: the cull of live
poultry at the infected market (over 2,000 birds),suspension
of live chicken imports and trade, inspection of mainland
China registered supply farms, and enhancement of
surveillance measures. On June 11, three more retail markets
tested positive for H5N1 avian influenza, resulting in
additional poultry culls and intense media and public opinion
pressure for action. Reports from mainland China of H5N1
outbreak in Guangdong Province (reftel C) only increased
scrutiny of the HKG response. While no human cases have been
identified, and no additional H5N1 virus identified in Hong
Kong, the HKG is seeking significant changes in the live
poultry trade.

Ban on Overnight Stocks Draws Eggs
--------------

4. (U) On Friday, June 27, the HKG gazetted a measure to ban
the practice of keeping live chickens overnight in wet
markets, effectively instituting a ban on overnight stocking
beginning on July 2. This announcement provoked protests at
the Legco and Government House buildings from chicken farmers
who fear that this measure will destroy their businesses.
Shouting "oppose the overnight ban, demand reasonable
compensation", farmers threw eggs and carried cages housing
dead chickens, but did not set live chickens free throughout

HONG KONG 00001203 002 OF 002


downtown Hong Kong as had been threatened. Note: That threat
remains, as farmers have expressed a plan to release live
chickens as part of their next protest rally on July 4. End
Note. The overnight stocking ban goes before the Legco on
July 2 and, barring opposition, will take effect immediately.


Poultry Trade Reforms
--------------

5. (U) Secretary for Food and Health York Chow began
negotiations with all sectors of the poultry industry on June
8 regarding compensation for birds culled and lost business
during the import ban. To the surprise of the industry,
these discussions are also focusing on closure of all poultry
farms in Hong Kong, daily culling at the retail level (para
3),and the buying out of retailer, wholesaler, and
transporter licenses. The HKG is proposing a HKD1 billion
(USD129M) buy out plan to reform the entire industry
comprised of 50 chicken farms, 71 wholesalers, 469 retailers,
266 poultry transporters and 2,500 workers. Meetings are
being held with each of the trade associations, with pressure
mounting to reach agreement before the import ban is lifted
on July 2 and live poultry trade resumes. Sessions between
the parties have been contentious, often ending with
walk-outs, or not even beginning due to boycotts. The HKG
and industry positions are quite far apart:

-- Farmers: The HKG wants to buy back all licenses and will
pay between HKD680,000 to HKD1.5M (USD87K to
USD193K)depending on the size of the farm. The HKG will also
pay HKD42 per chicken older than 30 days still in stock due
to the government closure of poultry markets. Farmers want
business to continue as normal and HKD50 per chicken older
than 30 days.

-- Wholesalers: The HKG wants a mandatory buy-out of licenses
for individual wholesalers and is offering from HKD1.5M to
HKD4.97M (USD193K to USD639K),depending on the size of the
operation. Wholesalers want to stay in business, but have
offered to increase cleaning. They wholesalers have agreed
to support a voluntary buy-out of the licenses with
compensation based on lost earnings.

-- Retailers: The HKG wishes to buy back the licenses of all
retailers, offering HKD750K (USD96,400) and will ban chickens
in stalls overnight. Retailers want the status quo with
chickens kept overnight and compensation for the 21-day
closure of markets. Most retailers will eventually agree to
the buy-out, but they are holding out for a better deal from
the government, according to Steven Wong, Chairman of the
Poultry Wholesalers and Retailers Association.

Looking Ahead
--------------

6. (U) Live poultry imports resume and the overnight stock
ban is expected to begin on July 2. The Legco will review the
HKD1 billion compensation package for the poultry industry
over the next several weeks. The deadline for poultry
retailers to surrender their licenses is July 24. On
September 24, farm owners and chicken transporters will be
asked to surrender their licenses. The poultry trade has
threatened to go to court to protect their livelihoods. A
court case could alter the timeline substantially.
Cunningham