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Avian Flu Will Cost Producers Millions

Food: Chickens and turkeys are destroyed to halt the second-worst outbreak of the virus.

July 11, 2002|From Bloomberg News

Cargill Inc., Pilgrim's Pride Corp. and three other poultry producers will lose at least $108.4 million from the second-worst outbreak of avian flu in U.S. history, an industry group said.

About 4.74 million chickens and turkeys at 197 farms in Virginia's Shenandoah Valley were slaughtered to halt the outbreak that began in March, the National Turkey Federation said. Including $30 million in losses from individual farmers, the loss from the virus totals at least $138.4 million, it said. The other companies are Tyson Foods Inc., Perdue Farms Inc. and George's Inc.

Pittsburg, Texas-based Pilgrim's, the second-largest U.S. poultry producer, said profit for the quarter ended June 29 would plunge to between 2 cents and 5 cents a share, from the previous estimate of 27 cents to 32 cents. Greater-than-expected costs from the chicken flu outbreak helped cause the drop in earnings, Chief Financial Officer Richard Cogdill said.

The company so far has destroyed 1.37 million turkeys, or 1.7% of total annual production, and 826,000 chickens, which is less than 1% of its annual production, said Kenneth Patrick, director of finance for the company's Virginia operations.

Avian influenza, which struck six counties in Virginia, is a highly contagious virus that slows growth rates, limits egg-laying capacity and reduces the value of turkeys and chickens. Birds must be destroyed and farms must be quarantined to prevent the disease from spreading.

The disease isn't harmful to humans.

Privately held Cargill, which raises about 50 million turkeys a year worth $1 billion, has lost about 1.2 million turkeys and breeding stock in the Virginia outbreak, said John O'Carroll, president of the company's North American turkey operations in Springdale, Ark. Losses probably will exceed $5 million.

Tyson Foods, the world's largest poultry processor, lost about 50,000 broilers on two of its 493 Virginia chicken farms, spokesman Ed Nicholson said.

The outbreak is the second-worst in U.S. history. The most destructive was in 1983-84, when more than 17 million chickens and turkeys were destroyed.

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