The novel coronavirus (COVID-19), while not infecting poultry, has had a significant impact on China’s poultry industry.
Developments in the disease’s spread and progression have been fast moving with the virus now spreading more quickly outside of China. While much of the country was expected to have returned to work by the end of March, as of late February the outlook for China’s poultry industry looked particularly poor and was expected to worsen.
The favorable conditions enjoyed by China’s chicken producers last year have gone and the outlook is again deteriorating. 2020, far from being a year of predicted strong growth for the chicken and egg industries, has to date seen producers have to cope with movement restrictions and paralyzed supply chains resulting in large inventories and falling prices.
A tale of two viruses
China’s poultry producers had been enjoying all the benefits accruing from the swine sector’s difficulties.
With African swine fever (ASF) decimating the swine herd, demand and prices for chicken rose dramatically last year with producers unable to keep pace. In mid 2019 per capita chicken meat consumption was forecast to rise by 9% and local production to be up 5% by year end.
With no signs of ASF being brought under control, growth was expected to continue strongly throughout 2020. COVID-19, however, has changed everything.
How COVID-19 has spread since first emerging in Wuhan is well reported, as are the movement restrictions imposed by China and which have been replicated on a smaller scale in some other countries. Impacts on production, however, have tended to focus on how international supply chains have been disrupted rather than on how production in China itself is being affected.
Movements restrictions, while varying in severity, have hampered production in China and the day to day running of businesses. Soya Yuxuan Songyang | iStock.com
Hubei province, home to Wuhan, the center of the disease outbreak, is home to 60 million people told to stay at home to stop the virus spreading. Often overlooked, however, is that it is also China’s sixth largest poultry producing province.
Under the quarantine measures cars were banned indefinitely and only a single person from each household was allowed to leave home every three days to buy food and essential items. Such restrictions clearly have implications for the functioning of any business.
While not all areas of the country were as tightly restricted as Wuhan and Hubei, as of mid February four provinces had issued official notices for lockdown policies while numerous highways, railways and other transport systems have been closed.
Such restrictions have obvious implications for any type pf production, be it in sourcing supplies and labor or in selling finished goods.
It is little surprise, therefore, that at the end of January the Hubei Poultry Association wrote to the China Animal Agriculture Association (CAAA) saying that its members were “very distressed” with feed supplies not reaching them. The CAAA, in turn, called on feed producers to send 18,000 tons of corn and 12,000 tons of soybean meal to Hubei.
By early February there were reports that without much needed feed reaching Hubei’s farmers “millions of chickens may soon perish” and some farmers in the province had to euthanize young birds while others had halved the amount of feed fed per bird.
According to the state-owned media outlet Global Times, there are approximately 348 million chickens in Hubei and the province is also an import egg producing province.
But similar situations have played out in other regions. The shutdown in several provinces has hit supply chains with transport restrictions stopping feed from reaching farms, according to Chinese state media, because roads and highways have been closed.
According to one foreign analyst: “This is going to create massive problems in the livestock sector. Even if a local plant has resumed operations it will still be longer than normal for delivery due to logistics problems."
Beyond production
Obtaining feed is not the only problem facing China’s poultry producers.
With the origin of the virus thought to have been a seafood market, the Chinese government has again closed wet markets. Numerous foodservice outlets have also suspended trading. Fifty to 80% of revenue was lost in the foodservice sector over the Chinese New Year, according to a report from Rabobank, which noted that the difficulties were set to continue.
Wet markets have again been closed in an attempt to halt the spread of the novel coronavirus. estherpoon | iStock.com
The combined impact of the extended holidays, movement restrictions and paralyzed supply chains resulted in the poultry prices plummeting, leaving farmers with large inventories of birds and eggs.
While workers in less affected provinces may have started returning to work, China’s agriculture ministry has warned that the supply of chicken and eggs would continue to be hurt during the second and third quarters of this year, adding that one company has already recorded losses of US$14.3 million.
China started to look overseas some time ago to help resolve the shortfall in animal protein caused by the outbreak of ASF. However, coronavirus has also affected imports with reports that ports have run out of space due to insufficient port staff to unload containers and insufficient cold chain. Overseas chicken producers have not seen the upturn in sales to China that was expected with priority being given to shipments of medicines and pork.
With much of the country expected to have returned to work at the end of March, production should slowly return to normal across industries, but where live animal production is concerned returning to normal will be more difficult.
