Chicken meat industry pulls out of sharing avian influenza costs

Egg prices are set to soar with producers and consumers set to cover the full 20 per cent of the industry’s share of response costs.

Egg producers will have to bear the bulk of avian influenza outbreak costs, as the chicken meat sector withdraws support.

The chicken meat industry is pulling the plug on covering 70 per cent of the poultry industry’s share of avian influenza recovery costs due to repeated outbreaks on free-range egg farms.

Egg producers warn the move will exacerbate the blowout in egg prices, as higher levies are imposed to cover the shortfall.

The Australian Chicken Meat Federation ended compensating egg producers for bird losses in 2020, following three Victorian free-range egg farm AI outbreaks, but had agreed to continue covering 70 per cent of response costs.

But another 14 AI outbreaks in Victoria, NSW and the ACT since May last year – nearly all of which have been linked to wild birds infecting free range hens – has prompted the ACMF to go one step further.

Last week ACMF chief executive Mary Wu said: “Looking ahead, the chicken meat sector has made it clear that each industry should be responsible for its own sector’s response and compensation costs.

“This needs to be formally renegotiated under the EADRA (Emergency Animal Disease Response Arrangements), so we’re working with Animal Health Australia and the other poultry sectors to progress this.”

The decision does not bode well for egg producers or consumers, given they will now have to cover the full 20 per cent of the industry’s share of response costs, which are far higher than compensation payouts.

Industry sources say the cost of compensation and recovery for last year’s Victorian outbreak alone was close to $70m, most of which was spent on contractors, staff resources and overtime to undertake trace backs, manage quarantine, destroy birds, clean and disinfect each site and dispose of carcasses.

Eggs Australia spokeswoman Kelly Seagrave said the “processes under the EADRA arrangements were confidential and Aus Eggs was not in a position to comment on any cost sharing discussions or outcomes”.

L.T’s Egg Farm producer Brian Ahmed said he and other caged-egg producers were also voicing their concern at having to share in the cost of AI outbreaks on free-range farms.

“If free range is reaping the rewards of higher profits, then they should also be responsible for their own clean-up costs,” Mr Ahmed said.

As it stands he said egg prices would have to go up, as the frequency of AI outbreaks increased, pushing up compensation, recovery costs and levies.

Under the national EADRA cost-sharing arrangements the federal and state governments cover 80 per cent of compensation and recovery costs, with the remaining 20 per cent recovered from the poultry industry via levies.

Of that 20 per cent, each poultry sector’s contribution was previously based on its gross value of production, which meant the chicken meat growers were paying the largest share – about 70 per cent.