Egg crisis almost sparked a revolution in Iran

04-05-2018 | | |
Egg crisis almost sparked a revolution in Iran. Photo: Vladislav Vorotnikov
Egg crisis almost sparked a revolution in Iran. Photo: Vladislav Vorotnikov

Iran has lost 21 million birds due to outbreaks of the highly pathogenic avian influenza (AI) since the beginning of the current Iranian year, which started 21 March 2017, according to Dr Alireza Rafiepoor, the head of Iran Veterinary Organization. This resulted in a large price hike for eggs and protests in the streets.

AI was confirmed at 421 various sites, including many commercial poultry farms, slaughterhouses and processing facilities throughout Iran. Most of the outbreaks were registered in Isfahan, Guma and Yazd provinces, Dr Rafiepoor stated, speaking at a press-conference in late January 2018. Although the new wave of bird flu in the country has not brought any significant impact on the production of poultry meat just yet, it became a real challenge for the egg industry, as 73% of poultry culled as a result of the outbreaks were laying hens, according to Rafiepoor. Iran has lost nearly 30% of its laying hens during the past 12 months from its overall population of around 53 million layers, estimated in early 2017, according to the Tehran Chamber of Commerce.

35% price hike for eggs

Since May 2017 Iran has been experiencing a rise in egg prices which has never been seen before. Since early 2018 the price per 30 egg pack in retail ranges from IRR 126,000 to IRR 160,000 ($ 2.7 – $ 3.5). This is some 35% higher compared to the level registered in early 2017, according to estimations of the Iranian Central Bank. Iran annually consumes nearly 16 billion eggs, or 198 eggs per capita. So for a country where the economy is not in its best shape and the purchasing power of the population is low, such a sharp rise in the price level for a basic food stuff has had a major influence on citizens.

The egg price became a symbol for unrest

However, it seems that nobody was expecting that the price of eggs would become a symbol for Iran’s broader economic problems and that it would give a rise to the biggest wave of protests in nearly a decade that began on 28 December and are far from being completely over. The protesters claim that the price of eggs jumped from 50% to 200% depending on the province, compared to the previous year. Estimations, provided by the government authorities, in their opinion, were not completely accurate. Iranian authorities are taking urgent steps now to tackle the AI epidemic and bring the affected facilities back to business as soon as possible. It is believed that the riots that reportedly had already claimed the lives of 20 citizens would eventually calm down, once there is some kind of stability again on the domestic food market.

Bailout package

AI outbreaks caused losses of some IRR 20 trillion ($ 480 million) for Iranian poultry farms, according to Tehran’s Union of Producers of Egg-Laying Chicken. The current outbreak is worse than previous ones as losses have already reached record heights and keep on growing. The Iranian government allocated IRR 1 trillion (US$ 24 million) of state aid to be paid to the affected poultry farmers. This money was paid at the end of December to help poultry farmers, affected by the virus, to return to business despite the huge losses that they suffered.

The broiler industry wasn't affected on the same level as the layer business, but vigilance is in place. Photo: Vladislav Vorotnikov

The broiler industry wasn’t affected on the same level as the layer business, but vigilance is in place. Photo: Vladislav Vorotnikov

Iran hits the brakes on egg exports

Amid falling production performance in the industry and to take advantage of the soaring prices on the domestic market, Iran poultry farmers nearly stopped egg exports. The most up-to-date information shows that the country exported only 3,700 tonnes of eggs in the period from March to June 2017 and that was nearly 6 times lower compared to the same period in 2016. Iran exported 40,000 tonnes of eggs in 2017, nearly 55,000 tonnes less than the previous year, as Iraq and Afghanistan banned the import of Iranian eggs and chicken in early December 2016 following the first major AI outbreaks, Iran’s Union of Producers of Egg-Laying Hens estimated.

Iran had the capacity to produce 960,000 tonnes of eggs, Hassan Rokni, the deputy Agricultural Minister said during a press-conference in October 2017. At the same time, the domestic consumption was estimated at 850,000 tonnes, so there was some surplus of production volumes in the market, when industry was operating at full capacities, according to him.

Neither, government agencies, nor the Union of Producers of Egg-Laying Chicken have issued a forecast on the expected production performance in the egg industry in 2017. However, some local news media reported that AI affected capacities in the industry with the overall production performance of between 250,000 and 350,000 tonnes per year. This is expected to lead to severe domestic shortages up to 100,000 tonnes.

Iran turns to Turkey to fill the egg gap

On this background, Iran asked neighbouring Turkey to gear up the export of eggs to its market. Hasan Konya, the head of the Turkish Union of Egg Producers stated that the Iranian embassy in the country asked the leading egg companies in Turkey to arrange some shipments of eggs in order to close the gap between demand and supply in Iran. Mr Konya also said that due to the AI outbreaks, the prices for eggs in Iran jumped 2 to 3 times since the beginning of the most active phase of the epidemic in late 2016. He also suggested that the shortage of eggs in Iran would not be avoided within the coming five to six months. In the meantime, Iran agreed to cut import tariffs on eggs from 55% to 5%. Under these conditions Turkey will be able to direct 2,000 trucks with eggs to Iran in the months to come, according to Mr Konya. Turkey started exporting eggs to Iran in December 2017 and it was believed that these import supplies eventually would bring the prices for eggs at the Iranian market back to the normal level, Konya added.

Golemali Forhi, the spokesperson for the Iran Chamber of Commerce, confirmed in late January that Iran will have to import eggs within at least the coming six months. At the moment, the affected farms are growing chicks and recovering from the outbreaks, so the market should wait until the new poultry stock will be able to produce eggs.

Iran lost 21 million birds, mainly layers, and tries to control the AI outbreak with vaccinations. Photo: Vladislav Vorotnikov

Iran lost 21 million birds, mainly layers, and tries to control the AI outbreak with vaccinations. Photo: Vladislav Vorotnikov

AI not under control

Some experts state that the anticipated recovery of the market may never happen. Iranian veterinary authorities could well fail in their attempts to stop the spread of AI throughout the country. Mehdi Masoumi-Esfehani, the deputy head of Tehran Chamber of Commerce, told the local media IRNA that bird flu, which so far had been affecting mostly egg farms, was gradually becoming a threat to broiler farms too. He expressed concerns that the virus could somehow mutate and change its form, so it would put the poultry industry in even greater danger.

Iran is producing 2 million tonnes of poultry meat per year, according to official statistical information. The country had to cull 5.5 million broilers since the beginning of the crisis and this only pushed the prices up by 6% since January 2018 on year-to-year comparison, according to the information of the Iranian Central Bank. The Agricultural Ministry earlier estimated that Iran could become the biggest exporter of chicken meat in the Middle East. Habib Amini, a spokesperson of the ministry suggested that Iran could export up to 1 million tonnes of broiler meat per year to Saudi Arabia, UAE, Afghanistan, Russia and several other countries.

However, it seems that Iran should leave those plans behind for the time being. In the period from March to November 2017 the country exported only 16,000 tonnes of chicken, nearly three times lower, compared to the same period of the previous year. The outbreaks at broiler farms and the possibility of meat shortages in the future should also worry the government agencies. When meat was scarce in 2012 due to Western sanctions, it provoked an increased in prices for poultry at the domestic market by 25%, which led to the large-scale protests on the streets of Teheran, similar to the ones that took place just a month ago. It is of great importance to the Iranian government to satisfy the needs of its citizens by controlling the negative effects of AI on poultry production, as a revolt could have serious implications.

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Vladislav Vorotnikov Eastern European correspondent