February 27, 2017 / 12:50 AM / 6 months ago

RPT-China egg producers brace for pain from bird flu crackdown

(Repeats story from Friday with no changes to text)

* China in throes of worst-ever bird flu outbreak

* Egg producers keeping hens alive longer as poultry markets shut

* That boosting their costs when already dealing with supply glut

* Most egg producers are small, family run businesses

By Hallie Gu and Josephine Mason

BEIJING, Feb 24 (Reuters) - With many poultry markets closed in the wake of China's worst-ever bird flu outbreak, local egg producers are being forced to shell out to feed and water chickens long after they would normally have been killed and sold for meat.

That is piling pressure on producers already grappling with tanking demand from a public spooked by fears over bird flu, deepening what some farmers say is one of the biggest crises to ever hit the egg industry in China, the world's top supplier.

"You want to sell your chickens, but you can't. You have no choice but to keep raising them and watch losses accumulate every day," said Zhang Dong, who has 10,000 laying hens in the central province of Hubei.

Chinese companies that churn out eggs for commercial sale typically sell hens at live poultry markets after 400 to 500 days of laying, when they begin to produce less regularly.

But regional authorities have shut poultry markets and restricted the transportation of birds as they fight the spread of the H7N9 virus that has killed around 100 people since October.

That is nearly three times more deaths than the last major bird flu outbreak in the country in 2013, worrying the public even though nearly all fatalities have been among people that have had direct contact with chickens. There is no evidence the virus can be caught from eating uncooked meat and eggs, or spread easily between humans.

Unlike many other strains of the virus, hens with H7N9 are difficult to identify as they show little or no signs of symptoms, meaning that mass cullings seen during recent bird flu outbreaks in places such as South Korea and Japan have not so far been repeated in China.

The added time that producers must spend looking after birds beyond their prime will also drag further on prices for eggs in the world's top supplier after they hit seven-year lows this week below 4 yuan ($0.58) per kilogram, with chickens that have dodged slaughter stoking a supply glut as they keep on laying.

"The industry's at a crossroads," said Feng Cheng, a 31-year-old farmer in the southern province of Anhui, who has a flock of 200,000 hens.

He is paying to feed 30,000 chickens that are past their prime and losing value, while sinking egg prices have halved his income since Lunar New Year at the end of January.

China's egg industry is dominated by small family-run businesses, with little leeway for enduring hard times.

In an assessment of current market conditions based on an egg price of 4.4 yuan per kg and feed costs of 2.3 yuan per kg, a farmer would lose 32.5 yuan over the lifetime of every hen in his or her flock, the government said this week.

"Eggs prices are falling sharply. Prices of feed materials like soymeal and corn are still rising. Life is so tough," Feng said by phone from his farm.

CHICKEN AND EGG

Four years ago, the nation's egg-laying flock shrank by 10 percent as farmers reduced their flocks after an outbreak of H7N9 flu slashed prices of eggs and chicken meat. The virus did $6.5 billion in damage to the whole agricultural sector.

It is not clear how many hens from the nation's current flock of over 1 billion have been affected by the recent spate of market closures.

Shi Qing, an egg wholesaler in Hubei, said sales had been hit hard by the oversupply and concerns about catching bird flu.

In the month after 2016's Lunar New Year, he sold 80,000 boxes of eggs, around 28.8 million eggs, but this year he has sold about half that.

And there are strong fears it will take some time for the industry to recover.

"Usually, farmers will reduce stocks, which would help support prices," said Jim Huang, chief executive of China-America Commodities Data Analytics Inc.

"But ... with (this virus), farmers are being forced to keep the spent hens, as live poultry markets are closed and people are scared of eating chicken, which further increases supplies."

($1 = 6.8782 Chinese yuan renminbi)

Reporting by Hallie Gu and Josephine Mason; Editing by Joseph Radford

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