China's poultry prices to rise as H7N9 wanes

Qin Fu, director of the research institute of agricultural economics and development under the Chinese Academy of Agricultural Sciences, shared this viewpoint. "As consumer confidence regains, the ensuing shortfall in supply of poultry meat and eggs will trigger big rises in prices," he said.

"The whole industry was severely hit over the six weeks after the first H7N9 human infections were reported," said Qin.

The price of eggs, for example, slumped 30 to 40 percent in the first three weeks after the virus emerged, and only started to recover during the past week, he added.

The prices of broiler chickens plunged to 0.24 yuan from 3 yuan within the first week of April and for each broiler of 2.5 kg in weight, poultry breeders lost up to five yuan, according to the Shandong provincial animal husbandry bureau.

For each kilo of eggs, poultry farmers could have lost 1.2 yuan, and for a farm with 10,000 hens, the monthly loss could have amounted to 30,000 yuan, said Ma Wenfeng, an analyst with Beijing Orient Agribusiness Consultant Ltd.

As a result, many breeding farms face financial woes as some have to pay back loans with high borrowing costs and therefore many choose to get out of the business to avoid further losses.

It will take many years for a poultry farm to recover if its fund chain breaks, said Wang Shouchun, chairman of Shandong Xiantan Co, a poultry breeding and meat processing company.

The State Council, or cabinet, has ordered that poultry farms are provided with short-term discount government loans to help them get through the hard times and to stabilize the industry.

Qin suggested that the Chinese government step up the development of policy-oriented agricultural insurance and launch futures contracts of poultry products in a bid to reduce losses and risks for farmers.