A Strain of Bird Flu Has Broken Out in a Southeast

question 39

Essay

A strain of bird flu has broken out in a Southeast Asian country, killing flocks of chickens and sickening scores of rural dwellers. Raising and selling chickens (both live and butchered) to local townspeople is the main livelihood of many rural farmers.
(a) Does the chance of chicken flu in healthy looking chickens pose problems for transactions between farmers and local buyers? Explain.
(b) What regulatory actions might the government take to improve the performance of the chicken market?
(c) A New Zealand poultry firm, Kiwi, Inc. raises all of its produce in domestic facilities. Five years ago, it decided to outsource, that is, obtain about 15 percent of its chickens (at reduced cost) from the largest food processor in the Southeast Asian country. What are the pros and cons of this strategy? How should Kiwi deal with the food processor to address thebird flu problem?

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