February 13, 2020
China largest importer of meat in 2019, but disruptions to dampen trade in 2020
China was the largest importer of meat in the world in 2019, purchasing just under 6 million tonnes shipped weight (swt) of beef, sheep meat, poultry, pork and offal. It represents an increase of 46% on 2018, according to data compiled by Meat & Livestock Australia (MLA).
The strong demand for imported meat was accordingly spurred by a growing class of affluent consumers and lower domestic supply of pork due to African Swine Fever (ASF).
Several concurrent factors, however, are already disrupting the protein market in China and, hence, there may be some short-lived disruption in meat exports to China, MLA said.
Portents of worse things to come emerged in late 2019 with heightened market volatility over reports that some importers of South American beef were delaying payment, renegotiating and even cancelling contracts prior to port discharge following a spike then contraction in market prices.
Red meat exports in February is expected to experience longer seasonal lull, with increased shipments delayed and resuming only in March.
The novel coronavirus (nCoV), which originated in China, is now causing significant disruption to key areas, creating an impact on red meat demand, trade and distribution for all suppliers. "To date, China has been the focal point of potential disruption", MLA said.
A sharp drop in both international and domestic flights and services has been noted, and this may impact the distribution of the relatively small, but high-value, chilled air-freight beef trade to China. Road and rail freight will also be affected, particularly into and out of areas under lockdown, impacting domestic meat supply chains, MLA said.
The nCoV-related disruption has also seen a drop in the number of people eating out for fear of virus contagion. "There will be a significant flow-on effect on foot traffic through hotel food service, restaurants, cafes and bars. Catering and other food services associated with leisure venues and conferences will also be affected, from the commodity to the premium sectors of the market", MLA said.
With many restaurants also closed, online grocery stores with home delivery has become in demand, particularly in large cities such as Shanghai and Beijing, as consumers try to avoid going out to shops. A number of retailers have reported increased orders for fresh meat, but have been challenged by supply chain disruptions as well as staff shortages.
While the demand drivers that fueled unprecedented Chinese meat import growth in 2019 will still remain in 2020, "elevated levels of uncertainty stemming from several concurrent disruptors, not just in China but regionally and globally, mean close monitoring of markets and risk management strategies are more important than ever", MLA concluded.