Business urged to prepare as bird flu gets closer

2006

With the confirmation this week that avian flu has arrived in France and Austria, British businesses have been warned that they need plans to cope with the impact that it could have on their trade and income if the disease spreads to the UK.

In its latest Risk Index, credit insurer Atradius says that even the smallest outbreak of avian flu could have far-reaching consequences across a number of sectors, harming business in areas ranging from food manufacture and restaurants to the leisure industry and travel.

While claims have been made that if the H5N1 bird flu strain does mutate into a virus that can be spread between humans, extreme control measures may be needed, such as the banning of public events and travel restrictions, the truth is that we do not and cannot know the full impact.

What we can be sure of, Atradius argues, is that commercial confidence can plummet with each new rumour or "revelation", and that companies must be prepared.

Already, outbreaks on mainland Europe have resulted in culls of both domestic and wild bird populations, and countries have also seen consumer confidence in poultry products fall, with sales dropping by as much as 50 per cent.

"The important message is that firms should not panic, but they must understand the potential risks to trade that an outbreak of bird flu could have and ensure they have business continuity plans in place," said Atradius' Will Clark.

"Poultry producers and associated businesses will obviously be well aware of the issue and should be familiar with government guidance. But as cases of bird flu elsewhere in the world have shown, as well as with the outbreak of SARS in Asia a few years ago, such health problems have a much wider impact on business and commerce."

Human victims of the H5N1 strain have so far been limited to people handling diseased birds, and health experts maintain that eating chicken is safe.

Yet the fear of contamination has already triggered a drop in the sales of poultry by 40% in Italy, plus a 50% fall in the number of eggs sold in Greece, when bird flu was found in those countries.

Reports in the media, such as estimates of a possible 350 million deaths worldwide if the virus were to become contagious for humans and trigger a pandemic, do little to increase consumer confidence.

In the UK, the government has ordered all the country's commercial bird keepers to register with the food and agriculture agency Defra.

There is estimated to be around 200 million birds on farms across the UK, of which 20 million are believed to be free range. If H5N1 is detected in the UK, free-range farmers could be forced to lock up their flocks, with scant regard for the ensuing space and stress issues.

As with the foot-and-mouth outbreak of 2001, bird flu could also have a knock-on affect to suppliers to the poultry trade, as well traders of the meat and commercial customers, such as food manufacturers and caterers.

In its Risk Index, Atradius says that businesses directly involved in these industries should keep up-to-date with developments to ensure they do not suffer trading difficulties, cash flow problems or bad debts if they or their customers are affected by bird flu.

For those firms that either rely on supplying the poultry trade or the sale of poultry products, Atradius says they should try and reduce the risk of bad debt by diversifying their businesses and looking for customers in different sectors, or by identifying new sources of food. For example, concerns over chicken meat in Europe have already triggered an increase in the sales of Nordic salmon.

Although an outbreak of bird flu in the UK is unlikely to have a major impact on travel and tourism as was experienced during foot-and-mouth, if H5N1 mutates into a human form, the impact could be devastating.

Leading bank HSBC has estimated that half of its employees could be absent from work if a pandemic took hold, so firms must know how they will operate if their staff are off sick or if they need to work from home to reduce the risk of infection.

During the SARS outbreak in Asia in 2003, major exhibitions, conferences and other events were postponed, airlines cancelled flights and many hotels and restaurants suffered a massive drop in the number of guests. Companies in the leisure trade and even retailers should review their contingency plans to cope with a drop in footfall.

Atradius reminded employers that information on how poultry companies should prepare for bird flu is available on the Defra websites at www.defra.gov.uk whilst more general information can be found at www.preparingforemergencies.gov.uk.

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