The impact of Avian Influenza on international markets. 1 Commodities and Trade Division

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1 The impact of Avian Influenza on international markets 1 1

2 Why assess quantitative impact of avian influenza? Size of impact matters for attracting policy/societal/industry attention. Identify importance of key determinants of costs. may help prioritize and calibrate policy responses. Identify trans-border issues. may help in bringing nations together on ways to minimize impacts. Identify/measure cross sectoral impacts. help other sectors to plan/react.

3 FAO-OECD Work Programme Aglink-Cosimo model - global agricultural commodity model World poultry component with price, production, consumption and trade in both white and dark meat. World beef and pig meat components with three distinct markets. Pacific, Atlantic and Foot and Mouth Disease endemic market Linkages feed demand, food consumption. Annual outlook provides baseline for evaluation. FAO OECD programme will evaluate incidence of global situation, to gauge global market impacts of AI outbreaks in each country. 3 3

4 Avian Influenza Scenarios Some Preliminary Model Results Hypothetical Global AI Consumption Shift away from Poultry EU Outbreak with and without consumption impact Brazil Hypothetical Outbreak US Hypothetical Outbreak Scenarios illustrate impacts of major exporters. 4 4

5 World meat price impacts of 1% consumption shift away from poultry in 6 (% difference from ba Chicken Atlantic Beef Atlantic Pork 5 5

6 World chicken price impacts of 1% global consumption shift away from poultry in 6 % Change from ba White meat Dark meat

7 A global consumption shift away from poultry could have a large impact on markets Poultry market loss in USD billion 7 Note: assessed by change in international chicken prices and in poultry production 7

8 World feed price impacts of 1% consumption shift away from poultry in 6 (%Change from ba Maize Oilmeal 8 8

9 EU meat price impacts of AI outbreak with and without 1% consumption shift in % Change from base Chicken with 1% cons shift Chicken with no cons shfit Beef with 1% cons shift Beef with no cons shift Pork with 1% cons shift Pork with no cons shift 9 9

10 EU poultry market losses from AI outbreak in 6 with and without 1% consumption shift.5 Poultry market loss in USD billion With 1%consumption shift Without consumption shift

11 International meat price impacts of AI outbreak in EU in 6 with and without consumption shift away from poultry Chicken with 1% cons shift Chicken no cons shift Atlantic beef with 1% cons shfit Atlantic beef with no cons shift Altantic pork with 1% cons shift Atlantic pork wih no cons shift 11 11

12 World meat price impacts of AI outbreak in Brazil in 6 4 (%Change from ba Chicken Atlantic Beef Atlantic Pork 1 1

13 Poultry impacts of AI outbreak in Brazil in 6 (%Change from ba Production Consumption 13 13

14 World meat price impacts of AI outbreak in USA in 6 (%Change from ba Chicken Pacific Beef Pacific Pork 14 14

15 Poultry impacts of AI outbreak in USA in 6 (%Change from ba Production Consumption 15 15

16 Market losses of AI outbreak in 6 Brazil vs USA Poultry market loss in USD billion Brazil USA 16 16

17 What do we learn? Impacts of Avian Influenza outbreaks can be significant Key issues are trade dependence, type of disease, consumer responses, size of international market and trade linkages Also type of product dark vs white meat may be a factor Consumers may play affect impact of AI For both affected and non-affected countries Return to market equilibrium is quick and impacts die out rapidly Outbreaks affect agriculture throughout the chain, affecting substitute demand products, and feed markets