Farmer's Weekly (South Africa)
AGRIBUSINESS PERSPECTIVE: The impact of COVID-19 on global poultry production
The global poultry industry is going through difficult times amidst the coronavirus disease (COVID-19) pandemic, especially in some of the largest producing countries such as Brazil and the US, as well as countries in the EU.
In Brazil, three large poultry plants were forced to halt operations due to outbreaks of COVID-19 among employees. In the EU, a leading European farming organisation, Copa-Cogeca, has expressed concern that 20 million chicks a week are not being placed on farms due to the pandemic. The lockdown measures implemented across the globe to help curb the spread of COVID-19 has also seriously curtailed almost all outof-home consumption in the EU, which previously represented 20% to 40% of production, depending on the member state.
Another concern for the global poultry industry is the significant jump in the number of COVID-19 cases among workers at meat plants in the US. As such, the US anticipates that production rates will decline, while operating costs will continue to spike. It is expected that this trend will continue until the effects of COVID-19 on meat companies, consumers, employees and the communities in which the industry operates, diminish.
TESTING MEAT SHIPMENTS
Another concerning issue is the recent development in China of major ports demanding COVID-19 tests for all containers of meat and seafood to prevent contamination. China is the world’s top meat importer, and the significant surge in COVID-19 cases among meat plant workers in many meat exporting countries is therefore worrying.
While meat packing plants have become COVID-19 hot spots in Brazil and the
US, there has been no reported cases of infections from meat products. In fact, while there are currently investigations being conducted by various research institutes worldwide on whether the virus can infect animals/ birds, there is still no evidence to suggest this is true. However, this has not stopped China’s authorities from conducting COVID-19 tests on all forms of meat imports entering the country. Since China started conducting testing on shipments of meat, fears have been expressed that other countries may follow suit, and that any positive test found would disrupt exports of meat and destroy consumer demand. This begs a fundamental question: what does this mean for the South African meat industry?
South Africa is relatively competitive in the global poultry industry from a production point of view. However, from an input cost perspective (primarily maize and soya bean, which are key chicken feed ingredients), the country falls behind the likes of Brazil, the EU and the US. Locally, chicken is produced at a significantly higher input cost/kg than in the US, the EU and Brazil.
HIGH IMPORT PRICES COULD SUPPORT LOCAL UPTAKE AND PRODUCTION
It is also worth mentioning that, while the value of poultry meat production is higher than the value of maize and wine grape production combined, the industry is unable to meet domestic demand. As such, 20% of chicken meat consumed is South Africa in made up of imports mainly from Brazil, the US and the EU.
It is therefore no surprise that in recent years, these countries have found themselves at odds with the local poultry industry over chicken meat exports to the South African market, which has ultimately led to South Africa increasing tariffs on poultry imports, in an effort to stimulate local demand to supplant unfair trade imports.
Due to the tariff increases, the pandemic, and the fact that some countries in the EU are currently experiencing avian influenza outbreaks, chicken meat imports are expected to remain relatively flat in 2020.
In addition, local prices are currently lower than import prices, which should further support local uptake, and strengthen local production.