Dr. Tom Elam (thomaselam@farmecon.com) FarmEcon LLC May 29, 2015 HPAI: Market Impacts Dr. Tom Elam (thomaselam@farmecon.com) FarmEcon LLC May 29, 2015

Does not include losses with bird count reported as “pending” by APHIS. Does not include future effect of turkey breeding flock losses, estimated to be about the same as the current death loss.

Feed loss assumptions: Turkeys loss is all potential feed consumption for average weight birds. Turkey losses is significantly understated. Breeder hen losses are larger than is generally thought, affecting future poult supply through the end of the year and 2016 production. Layer loss is 12 months of total lost flock feed consumption. (Up from a prior 6 month estimate) The feed consumption impact now slightly exceeds the estimated losses from the recent PEDv outbreak in baby pigs.

Turkey loss is about the same as planned increase in 2015 production, but does not include all breeder losses. Turkey and egg losses will extend into 2016. Total turkey loss, including breeder loss effects, now estimated at 6.4% of 2015 production.

The replacement schedule gets bunched up in July and August. We do not have the poult production capacity to make this possible. Some growout facilities will remain empty longer than 90 days due to no poult supply to repop.

99% is shell egg laying flock and breeder hen losses

Conclusions Now by far the largest poultry flu outbreak in U.S. history, and still getting worse Significant financial impact for affected turkey and layer flock growers/owners HPAI losses to date represent small percent of U.S. feed use, slightly more than PEDv Export losses will help reduce production impacts on overall domestic turkey and egg prices Unless broiler flocks get involved, only downside price pressure for chicken from lost exports Dark meat turkey and chicken parts prices to remain depressed Positive for whole bird turkeys and breast meat prices, new record highs for May Ample holiday whole bird turkey supply, prices may be somewhat higher Significant impact on egg and egg products supply and prices 10+% loss (and growing) for period while affected flocks out of production 25+% loss of breaking supply Will take up to 12-24 months to get back to full production – limited pullet supply Table eggs likely to be diverted to breaking Egg and egg product prices increasing, setting new record highs daily

HPAI Flock Infection and Poultry Export Restriction Resources Flocks affected (updated about 3-6pm EDT weekdays): http://www.aphis.usda.gov/wps/portal/aphis/ourfocus/animalhealth/sa_animal_disease_information/sa_ avian_health/ct_avian_influenza_disease/!ut/p/a1/lZHLcoJAEEW_xUWW1IzDewm- QCUmGoOwodoBZKpgoGC0Sr8-- EjKLCRmdt1979Tt0yhEGxRyOLAdCFZyyM91qEXThUP6NibuZGWOsPv6OfaMuS4vHKUVBK1gMLEcRZ9jjBWDY HdoO0Pd9DB2tef8-MGz8F9- H4UopFxUIkMBVBlrIlpykXAR5WxbQ318wQ1E5b6O0pLum0sFnBWQR1kCucjuOzFrEmiSiPG0rIsLhOv4wID_6 Km4NVpZvk_4Cb6N5zAVZTEKtsRMsUYSSTb6ICl0K0uggioRNU7jmFJdlvVr-F_7TUZ2u994_qbPpgTP1Jugi- 9F0AEwaAnrDxGaClr9M_X0iZuS2ht4u_ZbEJl0pok2nZSv4zvKaNNB2bdR- O4vVc1CVbFeF4asLZ3TR1r4w6PV630Bp5beKA!!/?1dmy&urile=wcm%3apath%3a%2Faphis_content_library %2Fsa_our_focus%2Fsa_animal_health%2Fsa_animal_disease_information%2Fsa_avian_health%2Fsa_det ections_by_states%2Fct_ai_pacific_flyway Export restrictions by country of destination: http://www.fsis.usda.gov/wps/portal/fsis/topics/international-affairs/exporting-products/export-library- requirements-by-country