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Coronavirus Decline Export Poultry Meat

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Ports in China are overstocked, commodity chains almost do not work, carriers and suppliers bear large losses, Coronavirus decline export poultry meat.

The situation with the spread of coronavirus has complicated the work of the commodity distribution network in China. In particular, there were cases of serious interruptions in the operation of major ports, which caused significant delays in shipments. Andrey Terekhin, head of the export Department of Cherkizovo, told about this. “In addition, the shortage of refrigerated containers that arose due to the actual closure of certain ports led to an increase in tariff rates for transportation to China,” he says. — In this situation, we can’t rule out adjustments to our plans for shipments to China. We hope that disruptions in the transport infrastructure will be short-term.”

Coronavirus is the reason of decline export poultry meat to China
Poultry production in China will decline, but demand will increase

At the same time, according to Terekhin, the company sees no reason to reduce demand for its products in China. On the contrary, an outbreak of avian influenza in one of the largest provinces of China against the background of a continuing shortage of animal protein in the country associated with a reduction in pork production due to African swine fever (ASF) will increase demand for imported poultry products, including from Russia, he calculates.

By the end of 2019, Cherkizovo group sent 14 thousand tons of chicken to China — which is more than 40% of the total volume of poultry products that the company shipped to foreign markets. This year Coronavirus decline export poultry meat and the holding intends to increase exports to China by expanding its product range and creating new sales channels. Damate company, Russia’s largest producer of poultry meat, also plans to increase supplies to China: there is interest and orders from importers who are ready to increase the volume of purchases, says a company representative. “China is one of the main export destinations for the company. From 1,4 thousand. this region accounted for 50% of the products exported in 2019, ” she said. Now Coronavirus decline export poultry meat.

The demand for poultry meat in China is huge, confirms the President of Agrifood Strategies albert Davleev, but almost all ports in China are completely clogged. Poultry products come in frozen form in refrigerators that need to be connected to outlets in ports, but there are no free outlets because the goods delivered earlier do not move through the distribution network, and new containers are sent to the ports of neighboring countries — Singapore and Vietnam, he knows. “Both carriers and senders incur large losses,” davleev emphasizes. — Although China has said that it will partially compensate for the damage, how quickly this process will go, and whether this situation will discourage current exporters from working with China is still unknown.” According to him, a number of major Russian exporters have suspended deliveries to China precisely because if containers are idle in ports, they will incur losses amounting to several thousand dollars daily.Coronavirus decline export poultry meat likely to affect Russian Real Estate Business

The spread of the coronavirus coincided with the celebration of the Chinese New year, the government was forced to extend the holidays, officially-until February 10, but still not everyone in China has returned to work. As a result, there was a significant destabilization of both the external and internal logistics chain, says General Director of the national Union of poultry farmers Sergey Lakhtyukhov. ” Coronavirus decline export poultry meat. We risk facing a shortage of refrigerators to continue deliveries: due to the fact that they can not be unloaded in a timely manner in Chinese ports, they do not return to circulation,” he said. — In addition to the logistics infrastructure, the banking sector did not work for a long time, and our contractors could not pay for deliveries on time.” In addition, the main products that go from Russia to China — paws and wings-are delivered mainly to the HoReCa segment, continues Lakhtyukhov. “Since the full recovery of this sector is unlikely in the near future, we risk a significant drop in demand. The Chinese are already suspending the purchase of new shipments from Russia, ” he regrets.

Coronavirus is the reason of decline export poultry meat to China

In quarantine zones, the movement of people to the street is restricted, which means that they can also go to stores, where products are mainly purchased through delivery services. As a result, the cost of meat has increased significantly recently, not everyone is ready to buy it at a high price, comments Konstantin Korneev, Executive Director of Rincon management. At the same time, he recalls that in General, imports of poultry meat to China last year amounted to only about 700 thousand tons, while domestic production exceeded 20 million tons. “It should be understood that in addition to the problem of coronavirus in China, there is another aspect that negatively affects the global balance of meat-the tense veterinary background is global: outbreaks of ASF and avian influenza are already in Europe, and may happen in Latin America. The problem may be more global, and the issue will not only be in the prices of consumption, but also in the availability of products in principle, ” he warns. Coronavirus decline export poultry meat.

Against the background of the spread of coronavirus and avian flu, production in China will decrease. Last week, the official representative of the Chinese agricultural Ministry, Yang Zhenhai, said at a briefing in the state Council that the supply of Chinese poultry and eggs to the domestic market will decrease in the second and third quarters, Reuters wrote. After the coronavirus outbreak, live poultry markets were closed, and transportation of young and live poultry was reduced, Yang Zhenhai explained. According to him, the losses for the poultry industry of the country will be very serious.

In connection with the coronavirus epidemic, the Chinese authorities have imposed restrictions on movement within the country. There is a gap in the country’s infrastructure at all levels of production and supply, which certainly affected the poultry sector, where every day is important, Davleev confirms. “The supply of day-old chickens for rearing, slaughtering poultry, keeping the parent herd, and supplying feed — this long technological chain was stopped at one point,” he says. — There are already photos on the Internet of a huge amount of incubated eggs that are being thrown away, since poultry farmers can’t provide food for the chickens, and the poultry houses remain empty.” The supply of not only the feed itself, but also its components — grain and soy-has been disrupted. Therefore, forecasts that the poultry industry in China will be suspended for two quarters are too optimistic, he said. “I believe that this will last a year and a half — this is how long it will take to restore the parent herds that suffer in the first place, until the egg can be incubated —” the expert estimates. — We expect a serious failure of the poultry industry in China and Coronavirus decline export poultry meat to China. Even the poultry that is produced now needs to be sold, but this will be difficult due to infrastructure restrictions, the closure of wholesale and open markets, where up to 70% of the total volume of poultry meat in the country is sold. Mini-markets in cities are also closed, and the sale of poultry meat at public catering establishments is also almost reduced to zero.”

Due to the inability to deliver feed to the Central part of the country and outbreaks of bird flu, farmers are forced to slaughter poultry: more than 100 million chickens have been destroyed recently, and the problem will grow until the restrictions are lifted, Lakhtyukhov is sure. “I think this situation will continue for several months,” he adds.

“As a rule, it takes about a year to restore a poultry enterprise from the moment of making a decision until it reaches full capacity, provided that all the necessary infrastructure is working,” Korneev says. — Perhaps the structure of production in China will change: the industrial poultry sector will expand and the volume of output in farms will decrease. However, this is due not only to the coronavirus, but also to the General desire of the Chinese government to improve biosecurity.

Recently, China opened its market for poultry supplies from the United States, zeroing the anti-dumping duty of 30%, and today the price of American poultry products can compare in value with the Brazilian one and compete with all suppliers that work with China. In addition, deliveries of live poultry — daily Chicks of the parent herd were opened. However, it should be borne in mind that due to the restriction of transport links, it will be problematic to arrange deliveries, Davleev said. In his opinion, it is likely to take another two or three months before all suppliers will restore full-fledged work with China.

Now it is much easier for China to unfreeze its strategic pork reserves and import it than to deal with poultry, even though it is cheaper, Davleev adds. The structure of meat consumption in China is dominated by pork, so the priority will be to restore the pig industry after ASF, and not poultry, Korneev suggests, specifying that there is no information about the adoption of any specific action program by the Chinese authorities yet.

Russia, like any other country, cannot profitably take advantage of the current situation in China due to overstocking in ports. Last week, Maersk (which specializes in Maritime cargo transportation and port terminal services) said that its turnover in China has fallen significantly: this country accounts for about 30% of the company’s total logistics turnover. Coronavirus is the reason of decline export poultry meat to China. “This is likely to reduce the cost of freight, including to other markets, especially South-East Asia, but other countries will not be able to absorb the volume of exports, and most importantly, the types of products — mainly offal, chicken paws and wings — that went to China,” Davleev argues. — These products may be popular in Vietnam and Hong Kong, but the ports of these countries are also Packed to the eyeballs.” Lahturov suggests that until June in China will be a decrease in consumption of poultry meat, followed by a rebound, which may allow Russia not only to restore but also to increase the supply.

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