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Last Updated: Friday, 17 February 2006, 12:34 GMT
Counting the cost of bird flu
By Toby Poston
BBC News business reporter

A German chicken farmer
Politicians are advising shoppers that chicken is safe to eat

The first lorry loads of cut-price Italian poultry have arrived in UK meat markets, less than a week after a bird flu outbreak hit Italy.

With demand dropping in their home market, Italian farmers are seeking to offload supplies and are cutting back heavily on production.

In the UK, the cheap imports, although temporary, will make it harder for domestic poultry producers to make a profit.

Meanwhile, risk management training company, Business Forums International (BFI), is getting inquiries from thousands of companies across Europe who want guidance on how they should deal with an outbreak of the human variety of bird flu, should it hit the contintent.

The recent spread of the deadly H5N1 strain of the bird flu virus across Austria, Bulgaria, Germany, Greece, Italy and Slovenia is having a massive impact on businesses across the continent.

Kept indoors

In the short term, it is hitting farmers and food retailers.

Across Europe, poultry farmers are being asked to keep poultry indoors or vaccinate them.

Politicians are pleading with shoppers to keep buying chicken and other poultry meat.

But despite the advice that cooked poultry is perfectly safe to eat, sales in some countries have been hit.

This has led to farmers cutting down on the breeding of new birds, which is in turn hitting the sales of feed manufacturers.

A French chicken farmer
Poultry farmers are being told to keep their flocks indoors

"Poultry sales are down in Italy and the government is providing subsidised transport to export their oversupply to the UK," says Charles Bourns, a UK poultry farmer with a flock of 75,000 chickens.

Poultry prices

He says that although UK chicken has been selling very well, the imports will hit farmers who sell their produce wholesale at meat markets like Smithfield in London, which makes up about 25% of the total UK poultry market.

"The usual price is about 1.05 per kg, but by next week this chicken will be selling below 40p per kg.

"That is below the cost of production for UK farmers, so it is going to mean huge losses for the industry."

But what is really worrying politicians, and international organisations like the World Bank and United Nations, is the economic impact if the human variety of the bird flu virus turns into a global pandemic.

Last November, a senior World Bank economist estimated the bill at up to $800bn a year - knocking 2% off global gross domestic product (GDP).

A survey produced for the World Economic Forum last month found that a human bird flu pandemic now ranked alongside terrorism as the risk most concerning global businesses and political leaders.

It's no wonder companies like BFI are busy.

Risk management

Last month, the company staged an "avian flu summit" in London, attended by 300 public sector organisations and multinational companies from the retail, transport, pharmaceutical, financial and pharmaceutical sectors.

Dutch chickens being kept indoors
There are fears that the virus will spead to Europe's poultry farms

A keynote speaker from the UK Department of Health warned them to prepare for a worst-case scenario in which 25% of the population, about 15 million people, were affected.

BFI's Elizabeth Smith said firms had a wide range of concerns.

"They want advice on things like how to deal with 25% absenteeism, can their IT network cope if everyone wants to work from home, what happens if their Asian call-centre is knocked out and whether they should pay someone if they are under quarantine at home."

BFI has two more seminars planned in February and March, both of which look like being sell-outs.

The demand is "unprecedented", says Mrs Smith.

Meanwhile, organisations across the continent are busy drawing up their contingency plans, hoping they never get used.



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