China’s poultry sector to be stronger post COVID-19

The poultry industry that is emerging in China post-COVID-19 will be stronger and better able to cope with a variety of challenges.

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Wet markets will continue to function but what they can sell has been restricted. MonicaNinker | iStockphoto.com
Wet markets will continue to function but what they can sell has been restricted. MonicaNinker | iStockphoto.com

China is the first country to return to normal, or a new normal, following the COVID-19 outbreak. But what will that mean for the country's poultry meat production and consumption?

Post-COVID-19, government-led measures should see poultry and other producers better protected from disease threats and with more secure inputs. Demand for poultry meat is forecast to rise this year as the country's economy recovers. However, this recovery may be uneven, favoring some segments over others, and producers are unlikely to return to the strong growth experienced in the second half of last year.

First in, first out

China imposed stricter measures at its COVID-19 epicenter bringing it under control quicker than many other countries have been able to. Consequently, the country is the first to be returning to normal. Even in China's most affected province Wuhan, students have gone back to school and life is slowly returning to how it was before the virus emerged.

The calls of poultry farmers for emergency feed supplies, or reports of birds being killed, are now firmly in the past and by the end of March, the country's Ministry of Agriculture and Rural Affairs (MARA) announced that 83% of poultry slaughterhouses across 16 provincial-level regions had returned to work, while 87% of hog enterprises were up and running. Only a couple of weeks earlier the Ministry had announced that close to 90% of feed producers had resumed operations. Businesses may have resumed, but the world has changed.

Different world

China's economy shrank less than featured in the first quarter. However, the second has seen the country not only having to recover from its outbreak but also having to deal with the effects of the virus overseas, impacting exports and potentially key imports too. Not the most encouraging indicator of an economic upturn, but pollution levels in major industrial areas are now thought to have returned to pre-crisis levels. Against this, however, needs to be weighed China's increasing levels of unemployment.

Various support measures have launched across sectors, and poultry has not been overlooked, with new measures designed to modernize and strengthen the sector.

More robust

The livestock sector initially suffered greatly under China's quarantine restrictions, and the lessons learned would appear to be shaping the current policy. The poultry and livestock sectors should now become less vulnerable to disease threats and supply issues and ultimately more efficient.

Local authorities have been told to pay greater attention to poultry and other livestock production, to raise supply and encourage production capacity through helping small and medium-sized producers increase output.

To reduce human interaction with livestock, MARA has announced a modernization program that will see greater mechanization introduced across agricultural sectors. It is targeting a "50% mechanization rate by 2025", across agriculture, but higher rates where animal production is concerned.

Within the next five years, the ministry wants the mechanization rate in the breeding of broilers, layers and pigs to reach 70%. There will be greater integration of machinery and breeding practices, with a focus on the major livestock farming sectors. The ministry has also called for increased efforts to develop new machinery for improved disposal of livestock waste.

Modernization is expected to take various forms and improve various parts of the production chain and allied services. Plans are afoot for greater rural connectivity through increasing internet connections, for example. The Ministry notes that this will be harnessed not only for economic development but also for controlling epidemics. The greater application of artificial intelligence on farms and training schemes for agricultural workers has also been announced, and the country may also be heading towards greater independence from foreign breeding stock.

The U.S. Department of Agriculture (USDA) cites Chinese media reports that one of the country's largest poultry companies announced a breakthrough in white feather broiler genetics last year and started performance testing. Should this testing be successful, the reports said, the birds would be registered with MARA, allowing the company to supply grandparent stock both domestically and internationally and helping to solve some of the supply issues that China has faced in securing genetic stock.

In a further move to strengthen supply chains, the government has recently asked companies to increase their stocks of grains and oilseeds to above normal levels. This is said to be partly driven by concerns over the impact of COVID-19 in Brazil in particular and fears that access to feedstuffs may become more difficult in the future.

Off the menu

Where preventing the emergence of new zoonoses is concerned, the government has drawn up a list of animals that may and may not be consumed, in effect banning wild animal consumption and bringing their sale for food to an end.

More than 750,000 pieces of information about wildlife trade have been removed or blocked from e-commerce platforms, and 17,000 online stores or accounts have been closed, but there are fears that these measures are simply driving trade underground.

For the time being, this will not mean an end to wet markets, but it will for wildlife markets such as the Huanan Seafood Wholesale Market, thought to be where COVID-19 emerged.

Live chickens are on the approved list of species and their sale will continue in those areas where it was banned under avian influenza control measures. Yet long term, all physical retail outlets are expected to lose ground to e-commerce platforms.

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The trend of eating at home is expected to continue. thesomegirl | iStockphoto.com

Market outlook

For much of this year, agricultural prices in China have been falling. In late April, for example, MARA noted that the while price of chicken was down by 0.9% on the previous week, while that of eggs had decreased by 0.4%.

By late May, egg prices had fallen to multi-year lows. Reasons cited included new entrants to the market at a time when consumption was falling. Retail and wholesale prices for eggs fell to their lowest level since 2017, while retail and broiler prices fell to their lowest since mid-2019. Falling pork prices, due to rising imports, have seen consumers able to access their favorite meat easier.

Nevertheless, looking at 2020 as a whole, the USDA believes that poultry meat production, consumption and imports will still rise, driven by the gap in animal protein caused by African swine fever.

It notes that poultry production will rise by 15% this year to reach 15.8 million metric tons (MMT), while consumption is forecast to reach 16.1 MMT. Yet, if the novel coronavirus has taught us anything it is that forecasts may be subject to constant revisions.

Demand from restaurants, schools and canteens was badly hit at the start of this year, and the speed at which this sector re-opens will impact how quickly the white feather industry grows. But there will be other influences that come into play.

Market research concern Nielsen notes that 86% of Chinese consumers say that they will eat more at home following the COVID-19 outbreak. While this does not necessarily equate to cooking at home, this could favor a stronger recovery in the yellow feather sector than in the white.

While China may be returning to work, until export markets are fully functioning, demand for Chinese goods will remain subdued at best. Should China see significant rises in unemployment, consumers will have less to spend, and this could be beneficial for cheaper meats like poultry.

Demand for chicken remains sensitive to supplies of pork. The government has said the country's hog production will be completely recovered by next year, however, 2020 has seen pork prices again reaching record highs making the relationship between poultry and pork somewhat difficult to predict.

In poultry's favor, the government has initiated several campaigns encouraging consumers to consume chicken meat, arguing that it is both healthier and more sustainable than pork.

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Poultry production will be more protected from disease under new government measures. wildpixel | iSotckphoto.com

 

 

 

 

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