Thursday, May 21, 2015

Industry Concentration Magnifies Impact of Bird Flu

Wall Street Journal:
The financial toll of the worst U.S. bird-flu outbreak in history is soaring, forcing some poultry companies to suspend operations and boosting prices for eggs and turkeys as supplies tighten.
Egg companies—the sector hit hardest by the virus—and turkey producers are spending millions of dollars to try to contain the disease. With eggs in particular, the problem is greatly complicated by the way the American industry is concentrated in the hands of relatively few producers...
Avian influenza has resulted in the deaths or extermination of at least 38.9 million birds, more than double the previous major U.S. outbreak in the 1980s. Of that total, more than 32 million are egg-laying hens, accounting for about 10% of the U.S. egg-laying flock....
The outbreak has had an especially pronounced impact because the industry is highly concentrated, with farms on average containing around 1.5 million birds, according to the trade group’s Mr. Gregory. When the virus is confirmed in one hen house, birds in all of the other nearby houses typically have to be killed to prevent further spread.
The U.S. has fewer than 200 commercial-egg companies, down from about 10,000 in the 1970s, Mr. Gregory said.
“One of the problems we’ve had through this outbreak stems from the massive population of chickens on these farms today,” said Marcus Rust, chief executive of Indiana-based Rose Acre Farms, one of the largest U.S. egg producers. “Our customer base is demanding the lowest cost possible and that causes us to put six million chickens on one farm. When something like this happens, just that one farm going out [of production] can cause the entire market for eggs to go up five cents a dozen.”
Mr. Rust said 8% of Rose Acres’ hens have been wiped out because the virus has hit one of its Iowa facilities, leading the company to clear nearby houses too.
Concentrated production is the cheapest and most efficient method, until it isn't.  Not only is production concentrated, but so is the infrastructure that supports it.  Most areas of the Corn Belt are bereft of livestock, but certain areas have way more than is good or sensible.  Much like with the droughts across the continent, this outbreak, and last year's PEDV problem are rather unsettling.  They seem to me to be making the case that we must rethink the operations of our food system to spread risks, reduce fragility and develop more robust and disbursed production strategies.  Should vast majorities of many fruits and vegetables be grown in the California desert?  Should 10 to 20 percent of egg production be concentrated in a dozen or so counties?  Should the vast majority of our most productive rain-fed agricultural land be used to produce two crops, more than a third of which is turned into motor fuel?  I think antibiotic and pesticide resistance, climate change, peak oil production, economics and other factors will threaten and eventually destroy the massive consolidation and specialization which has completely altered agriculture the last 50 years. And it won't just be agriculture which is impacted.

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