By Ruma Paul

DHAKA, Feb 1 (Reuters) - In less than a year, bird flu has spread to nearly half of Bangladesh's 64 districts, threatening the livelihoods of millions of people reliant on the poultry industry and driving up food prices.

Health experts blame official neglect and lack of timely action to contain the bird flu virus, which continues to spread in Bangladesh and the neighbouring Indian state of West Bengal.

Battling ignorance among millions of farmers is another worry, the experts say.

"Many villagers still hold their dead chickens with bare hands and throw them away without burying them. That helps spread the disease," said a health official in Barisal district on the coast.

Abdur Rashid, a surgeon in the flu-hit coastal district Bhola, said authorities had been distributing leaflets about bird flu but many villagers had ignored the warnings.

Some farmers also tried to sell sick chickens because the compensation paid by authorities was often too low.

"They can sell a chicken for 130 to 150 taka ($1.90 to $2.20), while they get around 80 taka in compensation that often takes a long time to get," a poultry owner said.

Touching or eating sick poultry is the most common way to become infected by the H5N1 bird flu virus that has killed more than 220 people globally since late 2003.

So far, no human infections have been reported in Bangladesh, a densely populated nation with millions of backyard poultry and thousands of chicken farms.

CRITICAL SITUATION

"Now we are facing a critical situation, as bird flu struck at a time when commodity prices from rice, flour to milk powder and edible oil had already nearly doubled," said Shahedul Alam, a government employee.

Chicken prices in markets in the capital dropped 25 percent over the past two weeks, selling at 80 taka per kg, while the price of eggs has fallen 20 percent or more.

"I have stopped buying chickens and instead I get fish. To replace eggs, we have started taking more vegetables," housewife Ayesha Begum said on Friday at Dhaka's Kawranbazar market.

The government says it is doing all it can to fight the virus.

"The government has taken aggressive measures to stop the spread of the disease and the situation is still under control," Salehuddin Khan, a director of the government's livestock directorate, told Reuters.

Yet the virus has spread of nearly 100 poultry firms in 30 districts. More than 350,000 chickens and ducks have been culled since March last year.

It is a major blow to the poultry industry, which is worth nearly $1 billion. More than 4 million people are involved in poultry farming and many have no other job to earn a living, industry officials say.

In the past six months, nearly 40 percent of Bangladesh's 150,000 poultry farms have closed because of the falling chicken and egg prices, poultry owners say.

Livestock and health ministry officials say 225,000 volunteers have been deployed to tighten surveillance and alert security forces along the borders with India and Myanmar.

All vehicles carrying poultry would also be sprayed with disinfectant before entering any urban area. Vehicles arriving in Bangladesh from India would also be sprayed, they said.

Late last month, the U.N.'s Food and Agriculture Organisation said the virus "appeared to be endemic in the country, and surveillance and control campaigns have so far not succeeded in interrupting virus transmission between provinces".

Livestock officials said bird flu was still spreading and had resurfaced in the Feni district southeast of Dhaka. The government has ordered culling of all chickens and ducks in one kilometre radius surrounding all affected farms.

"Sometimes we are neglecting people to save the poultry industry. We have to choose priority. There is no other option but to destroy chickens," said a virologist, who asked not to be identified. (Writing by Anis Ahmed; Editing by David Fogarty and Alex Richardson)

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