Challenges associated with the COVID-19 pandemic and ongoing African swine fever (ASF) in the pork industry will affect the global poultry industry in 2020, however potential growth could be seen if rising supply chain challenges can be managed, says Rabobank in the latest Poultry Quarterly.
“In terms of markets, we expect more at-home poultry consumption and higher sales of non-perishable poultry products. Labor availability and logistics issues, such as those impacting distribution, will likely affect supply in the coming months. Coronavirus will also affect the global supply of poultry inputs (like feed additives and animal health products), due to disruptions at Chinese and other suppliers,” Nan-Dirk Mulder, Senior Global Specialist – Animal Protein, Rabobank, explained.
The COVID-19 pandemic is expected to cause a global economic slowdown. Trade will be more volatile than usual this year, with destinations, origins and pricing all affected.
The biggest challenges associated with the COVID-19 pandemic would be potential disruptions in supply and demand associated with quarantine and logistics issues from Chinese and other suppliers and a rising consumer demand towards at-home consumption and for non-perishable products.
“The Q1 2020 performance to date has been mixed, with China the biggest driver of volatility. China has been heavily hit by supply shocks driven by coronavirus-related transport restrictions in early February, which restricted farmers’ access to inputs (feed, medicines, DOC) and sales of finished birds. This was more or less solved by a new regulation placing priority on food production, but the impact on supply will last for several months,” the report said.
Global economic growth for 2020 will slow to 1.6%, down from 2.9% in 2019, Rabobank noted. The market should recover to 3.2% by 2021. Some supply chains could feel longer-term impacts on supply and demand, depending on the intensity of outbreaks.
China will feel the greatest impact and growth is predicted to be 2.4%, down from 6.1% last year. Although its economy is already starting to recovery, a full recovery depends on more buoyant business demand and investment globally.
However, protein demand should still remain strong and poultry may even benefit because of its price competitiveness compared to pork and beef.
ASF an opportunity for poultry
The experts at Rabobank predict a further drop in pork production in Asia this year due to ASF challenges. This could be an opportunity for the poultry market if rising supply chain issues caused by COVID-19 can be managed.
China’s pork production could drop by 15-20% in 2020 due to ASF, experts predict. Last year, production number declined 22%.
“Under normal circumstances, this would mean a further significant expansion of poultry production in China, by 15-20% YOY, but this will be delayed by the impacts of coronavirus,” the report said.
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