Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Sunday, December 11, 2005

Avian Flu:
the impact on the chicken market

If Avian Flu continues to creep forward as a threat to human health, once it becomes a full-blown pandemic [see Tyler Cowen's latest posting on this topic], the ominivores among us will probably have to cut way back on the chicken we eat. The reason, though, will not be because of fear of transmission from the meat to humans. Rather, the reason will be that working with chickens will become increasingly risky.
Imagine being one of a team of 12 people who go into a chicken barn at midnight to catch 22,000 chickens in 4 hours so they can be shipped off to the processor. Chicken catchers are in constant contact with chickens. They get scratched, and despite wearing masks (which most do not do in our area), they breath a lot of pollutant material.
As the risk of contracting Avian Flu grows, people will be more reluctant to become chicken catchers. And those who do will insist on being compensated both for the increased risk and for the increased costs of wearing additional protection. These increased costs will greatly reduce the supply of chicken meat. They will also dramatically reduce the value of chicken production quota in jurisdictions like Ontario that practice supply management.

If I were a chicken farmer, I would be tempted to sell the farm and quota; I do not think the market has fully capitalized or adjusted to this risk.
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