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. Last Updated: 07/27/2016

Chicken Farmers Sneeze at Bird Flu

ReutersPolice stopping a car near a sign reading "Quarantine Bird Flu" in the flu-affected village of Oktyabrskoye on Thursday.
The domestic poultry industry is keeping its cool as a lethal strain of bird flu sweeps across the country toward European Russia.

Even as health officials scramble to contain the disease amid reports that it has crossed the Urals, market players say that Russia's centralized, highly regulated meat industry will be able to withstand the outbreak without any serious economic damage.

"I don't see a catastrophe, I see an incident," said Iosif Rogov, board chairman of the Russian Meat Union. "The hundreds of tons that have been affected are not having an effect on production as a whole."

Since the first case of the H5N1 strain of avian flu was spotted in Siberia in July, some 11,000 birds have died from the virus and more than 121,000 have been culled, according to the Emergency Situations Ministry.

However, only one commercial operation -- a relatively small hatchery in the Altai region -- has been affected, Rogov said. The vast majority of the birds killed so far have been on small private farms, and the total death toll represents less than one-tenth of 1 percent of the country's total chicken population of 233 million, according to the Institute of Agricultural Market Studies, or IKAR.

"It is the small producers who have been affected. I don't see a threat for the Russian economy," said Yevgenia Serova, an economist specializing in agriculture at the Institute for the Economy in Transition in Moscow.

Russia's poultry industry has seen double-digit growth rates over the past four years, Serova said, attracting both Russian and foreign investors. However the domestic industry still supplies a bit more than half of the country's $5 billion poultry market, according to IKAR.

"Russia is very different from other countries that have been affected," said Albert Davleyev, Russia director of the U.S.A. Poultry and Egg Export Council.

In Russia, all stages of poultry production typically take place at one location, making the disease easier to keep under control, he said.

In Western Europe, however, the production chain is spread out geographically, making it more susceptible to infection. In the Southeast Asian countries affected by an outbreak in late 2003, most chickens were raised on small private farms.

The same H5N1 strain, which can infect human beings, took the lives of more than 50 people in Cambodia, Indonesia, Thailand and Vietnam. The outbreak led to the culling of more than 140 million birds at an estimated cost of up to $12 billion.

Besides having consolidated broiler production, Russia boasts a veterinary service that is centralized and efficient, Davleyev said.

"It is one of the better legacies of the Soviet era," he said.

While nobody denies that there are serious risks for producers, industry players consider them localized to individual farms.

Sergei Roldugin, deputy director of the Ravis Sosnovskaya factory farm in the Chelyabinsk region, said the appearance of bird flu in the region had affected neither production nor demand.

He also said his staff had no reason to be concerned about catching the virus. "Only a fool would be worried," he said, speaking by telephone.

Davleyev said a worst-case scenario would be if one or two major facilities were infected by the end of the year. Infection would require that all the birds in a plant be culled, which for a large farm would cost millions of dollars.

That risk, Davleyev said, is prompting many producers to ensure factories have safety levels higher than the legal requirement.

In any case, the industry is buffered from a sudden drop in demand. For one, Russia exports virtually no poultry and is not vulnerable to any foreign bans. Furthermore, chicken is the cheapest meat on the market, meaning many consumers will have no alternative.

Russians are less sensitive to health scares than Westerners, said Marat Ibragimov, a retail and consumer goods analyst at UralSib brokerage.

Ninety percent of Russians are aware of the outbreak, according to a recent poll conducted by the Public Opinion Foundation. But only 28 percent said they were ready to limit their consumption of domestic poultry.

The country's top epidemiologist, Gennady Onishchenko, said on Thursday that meat from poultry plants in the infected regions was safe to eat, Interfax reported.

"The large poultry plants in the Russian regions where bird deaths from avian flu have been registered have not suffered from this virus," thanks to the timely actions of veterinary authorities, he said.

Some regions have imposed barriers on interregional trade, but these measures have been haphazard and uncoordinated, said Dmitry Rylko, general director of the Institute of Agricultural Market Studies. However, villages where outbreaks were recorded have been put under quarantine.

In July, the virus was confirmed in poultry and wild birds near Novosibirsk, in Siberia. On Tuesday, cases were confirmed more than 1,000 kilometers to the west in Chelyabinsk. The majority of Russia's industrial chicken farms are located west of the Urals, in the European part of the country.

Incidences of the disease have been confirmed in 35 towns and villages in six regions, the Agriculture Ministry said Thursday. Officials denied reports that the disease had spread westward to Bashkortostan and Kalmykia, Interfax reported.

Nevertheless, the European Union is taking precautions due to concerns that migratory birds could carry the disease across borders.

Earlier this week, the Dutch Agriculture Ministry announced a temporary measure obliging poultry farmers to keep their birds in buildings in order to prevent them from catching the flu from wild fowl. The German government on Thursday announced that it had assembled a team of experts to monitor the development of the disease in Russia and to come up with an emergency plan in the event it reached Germany.

"We are in close contact with the Russian veterinary authorities. We have a rapid alert system within the EU, and when the time comes, if we need to put other measures in place we will," said Antonia Mochan, the European Commission's spokeswoman for health and consumer protection issues.