*This is a joint statement from Beef + Lamb New Zealand and the Meat Industry Association.
As you will be aware, demand for red meat in China has been affected as a result of movement restrictions designed to control the spread of the disease and people avoiding restaurants and crowded public places.
There remains some disruption to the supply chain due to labour shortages in China, which has made it more challenging to get product from the ports into further processing establishments and retail. Port clearance times have also been slower than usual due to lower staffing levels.
However, Chinese authorities have given assurances that essential items such as food are being prioritised for port clearance. Feedback from the market also indicates that people are beginning to resume normal activities as the situation stabilises.
There have also been some issues with the availability of cold storage in China. Cold stores were already fairly full with Chinese New Year stock prior to the outbreak and are now are at full capacity in key ports, such as Shanghai and Tianjin.
However, there are indications some ports such as Dalian, Qingdao, Liaoning, Xiamen, Guangzhou and Shenzhen still have some space for refrigerated containers.
Unfortunately, the supply chain disruption impacting China ports/logistics is beginning to have downstream impacts on key transit ports in Asia that are essential to get product to other markets such as the Middle East and the European Union.
Some shipping lines are not confident they will be able to unload containers in China and are choosing to by-pass the country in favour of other Asian ports.
In New Zealand, meat processing companies are actively working to align their processing capacity with the ability to get product to market and manage inventories. Most are continuing to dispatch product to market or hold product in NZ.
Product is also being diverted to other markets where possible and there has been an increase in trade to markets such as the United Kingdom, the EU, the United States and Saudi Arabia for sheepmeat and the US, Canada, Taiwan and Indonesia for beef.
While market diversification helps to alleviate some of the pressure, it is important to note that most meat exporters from other countries are facing similar challenges and this has put downward pressure on pricing.
The dry conditions in parts of the country are also causing pressure on processing. Processing plants are working at capacity and animals are being moved to other plants to help ease the load where possible.
The Coronavirus situation has led to global pricing volatility and uncertainity in the markets. Interestingly, in China there has been a shift to purchase red meat on-line as people choose to cook at home. Ongoing social media analysis by B+LNZ suggests that consumers are “experimenting” with new recipes and looking to try cooking beef and lamb dishes in their homes.
They are also looking more closely at the health/nutrition benefits of food, which may further benefit NZ grass-fed red meat exports. In the long-run, we may see Chinese consumers once again looking at imported product as the preferred choice in terms of safety and quality.
It’s important to remember the long-term outlook for the red meat sector remains positive and the underlying demand for protein is still strong.
We are continuing to monitor the markets and we are working closely with the New Zealand Government.
We will continue to keep you informed of any developments.