BEIJING/WELLINGTON, March 27 (Reuters) - The deadly bird flu that's forced mass bird culls and roiled the global egg and poultry trade has spawned one unlikely success – New Zealand, a rare source of disease-free birds and supplier for China's voracious chicken consumption.
When Spain reported an outbreak of H5N8 bird flu last month, it left New Zealand as the only source, albeit a tiny one, of disease-free birds to replenish China's white-feathered broiler chicken stock.
China, the world's second-largest poultry consumer, relies on imports for its supply of white feather chicken, which are favoured by fast-food chains for their more rapid development and plumper meat, compared with yellow-feathered birds, which are native to China and generally sold retail.
New Zealand's live chicken exports to China soared more than ten-fold last year and analysts expect rapid growth again this year.
The world's major poultry companies are looking to take advantage of the Pacific island's clean credentials, which could create an upstream boon for local industry.
"Geography's a disadvantage from a freighting point of view, but it's a big advantage because we're not on the major flyways of any birds that are likely to carry the disease down here," said Brent Williams, general manager of Bromley Park Hatcheries, a New Zealand-based firm that raises pedigree stock for Cobb-Vantress.
Century-old Cobb, headquartered in Arkansas, is one of the world's top poultry breeders, selling pedigree "grandparent" day-old chicks to Chinese companies.
Cobb-Vantress is seeking approval to build new breeding facilities in New Zealand, said Clark Baird, media relations director at the firm, though he declined to reveal the location or production volumes targeted by the new plant.
Other major global poultry breeders which have operations in New Zealand include United States-based Aviagen, which raises great grandparent stock in the country to supply Asian markets with their offspring.
Aviagen said it does not disclose information on its supply chain and production.
It's luck of geography that means New Zealand is now the sole supplier of breeder birds to China.
Its isolated location away from birds' flight paths means it has escaped an outbreak of the deadly viruses that have spread around the globe in recent months.
However, it has always been a relative minnow in the live poultry export trade. Exports to China surged last year but to a mere NZ$9.8 million ($6.78 million).
In 2016, New Zealand sold about 200,000 packages of grandparent chicks to China, according to industry sources. The packages, typically containing around 170 day-old chicks, currently sell for about $28 each.
That compares with about 300,000 from Spain in 2016.
The U.S. Department of Agriculture in a report warns the island can't offset the loss in production from elsewhere, depleting China's breeder stock and cutting China's output of meat by 11 percent this year.
The department said China's lack of new grandparent breeding stock will be the "greatest obstacle" to increasing its poultry production, a problem for a country of 1.4 billion that has rapidly developed a hankering for fast food chicken.
Meanwhile, ongoing disruptions from China's main suppliers will only add to problems.
A recent outbreak of bird flu in Tennessee in the United States suggests that Beijing is unlikely to lift a ban imposed in 2015 due to bird flu.
Before that ban, the United State was China's top supplier, providing 90 percent of its white-bird grandparent stock.
There is also the risk that New Zealand loses its status as a pristine poultry producer.
David Fyfe, Asia business director at Hubbard Breeders, another producer of broiler chicken breeds, owned by France's Groupe Grimaud, warns it may be "just a matter of time" before New Zealand reports a case of avian influenza.
His firm has "no immediate plans" to set up a breeding operation there, he added.
For now, however, Pan Chenjun, an analyst at Rabobank, expects prices will be "strongly supported" by the fall in production in China. That might help offset the demand-side hit the industry has taken in recent years, with prices languishing at decade lows due to China's own bird flu outbreaks and overproduction.
And over the longer-term, higher prices could give a further boost to chicken exporters, like New Zealand. (Reporting by Dominique Patton in BEIJING and Charlotte Greenfield in WELLINGTON; editing by Josephine Mason and Sam Holmes)