(Bloomberg) -- An unprecedented global bird flu outbreak that has killed off 58 million birds in the US alone in a little over a year is causing pain in the world’s second-largest poultry producer: China is running short of baby chicks.

Since the start of the year, prices have soared in China, threatening to drive up food inflation but also exposing a weak link in Beijing’s efforts to shore up food security. The world’s largest market relies heavily on imported breeding stock for white-feathered broiler chickens, which account for more than half of the country’s chicken production.

Baby chicks from Shandong Yisheng Livestock and Poultry Breeding Co., the top chicken breeder in China, were quoted at around 6 yuan ($0.86) per chick this week, three times the price at the start of the year. 

“An underlying factor is inadequate imports of breeding stocks,” said Lin Guofa, head of research at consultancy Bric Agriculture Group. “Supplies are tight.” 

China’s imports of so-called grandparent breeding chicken stocks in 2022 have more than halved, according to industry estimates based on customs data — far from what is usually needed to meet production demand. 

On top of raging bird flu outbreaks, disruption to flights due to Covid curbs last year also restricted imports. 

The number of grandparent white broiler chicken renewed in 2022 fell by more than a fifth, according to official data. Industry sources say some breeders have been forced to resort to forced molting — a practice that extends the productive life of breeding chicken flocks.

China developed its first independent white-feather broiler breeds in 2021, after sourcing from overseas entirely for almost two decades. But Beijing still relies on foreign imports as limited domestic breeds have yet to take significant market share. 

There may now be an added incentive to accelerate those efforts, given the limitations imposed by bird flu sweeping the world, and leaving China’s options for breeder imports very restricted. Currently, according to a filing this month from breeder Yisheng, China can only import from one US state, Alabama, and New Zealand.

The shortage may have some way to run, too.

“Imports of grandparent breeding stocks have been low since May last year,” Shandong Minhe Animal Husbandry Co., Ltd, another top breeder in China, said in a filing last week. “The shortage of commercial baby chicks is seen expanding gradually from end of the second quarter or early third quarter. Prices will be strong.”

--With assistance from Kevin Dharmawan.

©2023 Bloomberg L.P.