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UNCLAS CAIRO 000981 
 
SIPDIS 
 
FOR USDA/FAS/OA/TERPSTRA,FAA/L. SEBRANEK, CMP/F. 
LEE, ITP/P.SHEIKH, EC.R.TILSWORTH 
USDOC FOR 4520/ITA/MAC/SAMS, TALAAT AND JACOBS/WIEHAGEN 
INFO:DLP/CMP/FAA/IO/AME/IS/OA/OGSM/APHIS/BRS/ DA/APHIS/HQ/ 
APHIS/OA/FSIS/KMS 
 
E.O.12958:N/A 
TAGS: EAGR BEXP ETRD EG USTR
SUBJECT:   AI CONCERNS IN EGYPT IMPACT MARKET CONDITIONS 
 
 
¶1.  Avian Influenza 
 
The poultry industry in Egypt is in severe crisis. Consumer 
fears, fueled by reports of the presence of avian influenza 
(AI) in neighboring countries, have caused a precipitous 
drop in consumption of poultry meat and eggs. The Egyptian 
Parliament has taken the unprecedented step of removing 
poultry from its in-house restaurant menu.  The United 
States does not export poultry or eggs to Egypt; however, 
these fears threaten U.S. exports of corn, soybeans, and 
poultry meal, including feather meal used in poultry diets. 
 
¶2.  Trade Impact 
 
There have been no reports of AI in Egypt, in humans or in 
animals; nevertheless, consumption of poultry meat, eggs, 
and grains has fallen by 40 percent, 30 percent, and 25 
percent, respectively. Egypt annually imports 5 million MT 
of yellow corn, (85 percent from the U.S.), one million MT 
of soybean meal (25 percent from the U.S.), and 400,000 MT 
of soybeans (35 percent from the U.S.).  In addition, there 
is a $25 million feather meal market, with U.S. suppliers 
owning over 50 percent of market share. Larger companies in 
all effected sectors (grains and poultry production) will be 
able to weather the current crisis, due to larger than 
normal capital reserves gained from significant profits 
reaped over the last two years.  Small, family producers, on 
the other hand, may not fare as well; larger companies have 
already begun to purchase smaller companies, positioning 
themselves for an eventual turnaround in market conditions. 
 
 
 
¶3.  Government Response 
 
The primary response from GOE officials has been to impose 
bans that prohibit the import of poultry and poultry by- 
products from all sources.  In late January, a three-month- 
old ban was extended for an additional 30 days, with another 
review coming at the end of this period.  An inter- 
ministerial committee (comprised of officials from the 
Ministries of Agriculture, Trade, Health, Environment, and 
Aviation) has consistently placed pressure on the Ministry 
of Agriculture to maintain all bans; however, MinAg was able 
to gain an exemption for imports of grandparent stock to 
guarantee broiler and layer production in 2007-2008.  The 
Ministry of Agriculture realizes the magnitude of 
restricting exports, but officials have had difficulty 
conveying the seriousness of the situation to members of the 
inter-ministerial committee.  In the current environment, 
industry contacts have given anecdotes of retail prices as 
low as 3 LE/kg for poultry meat, lower than the price for 
"foul" (an inexpensive fava bean dish widely consumed for 
its protein value). 
 
¶4.  Future Outlook 
 
However, there is a general feeling among industry players 
that the eye of the storm has passed.  They attribute this 
perception to more concrete steps being taken by the 
government and trade interests.  MinAg has increased its 
surveillance activities, dispatching teams to visit farms on 
a regular basis.  The Ministry of Health and the Poultry 
Union have launched advertisement campaigns to promote the 
safety of properly cooked poultry meat; television programs 
have also begun to reduce the rhetoric and take a more 
scientific approach to discussing facts about AI. 
 
Sustained GOE vigilance with regard to surveillance and 
early detection of AI must continue for consumption patterns 
to return to their normal levels.  The approach of warmer 
weather should aid in strengthening consumer confidence, as 
there should be fewer concerns about the flu. 
 
RICCIARDONE