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February 10, 2020updated 09 Apr 2021 9:30am

China could look to overhaul meat industry in wake of ASF, coronavirus – bank

A report from a US investment bank has predicted what will happen to China's meat industry as a result of the outbreak of diseases such as coronavirus.

By Leonie Barrie

A report from a US investment bank has suggested that China may look to restructure its meat industry following the outbreak of African swine fever (ASF), avian flu and the more recent coronavirus.

Once the coronavirus recedes the Chinese government will likely decide to “radically restructure the country’s meat production and distribution”, New York-based Jefferies Group argued.

“We anticipate clear government announcements ending the slaughter of all livestock in cities and towns, as well as a shift to international-style factory farm to shop meats and meat products.”

The coronavirus outbreak is believed to have started in a wholesale food market in the central Chinese city of Wuhan. 

Its research paper quoted US disease specialist Dr Jon Epstein’s theory that the coronavirus may have sprung from poor practices in the meat industry.

“As Dr Epstein highlighted on a recent conference call, zoonotic transmission of viruses was behind both nCoV [coronavirus] and SARS, with poor meat handling/consumption practices likely the reasons for the outbreaks. We believe that the current senior party officials do not want this to be seen as their legacy and, once the current outbreak is handled, will act decisively to prevent this from occurring again,” it said.

Jefferies noted that ASF – which has decimated China’s swine herd – was already a major concern for public officials before this recent issue [coronavirus] and “is causing significant issues in pork supply/prices and was already prompting government officials to start restructuring the swine industry”.

It said avian flu has also returned but the news has been lost in the coronavirus “noise”.

“According to the Ministry of Agriculture and Rural Affairs, China is experiencing an outbreak of bird flu. The disease has already killed 4,500 chickens in Hunan province alone, and the government has culled almost 18,000 chickens to prevent its spread,” it said.

Jefferies added: “Our sources say that the government is planning to reform meat production. Since the 18th National Congress in 2012, the CPC [Communist Party of China] Central Committee has treated food security as a top state issue. Our sources indicate that the government is approaching some meat importers and offering them the opportunity to set up state-of-the-art meat and animal processing factories on the mainland. 

“We also understand that the government is bringing in specialists in setting up meat processing production lines to advise on international best practices for food safety.

“A move to factory farming would support the bigger producers/SOEs [state-owned enterprises]. Chinese government policies are supporting the industrialisation of the meat industry.” 

Jefferies concluded: “We expect that in the wake of recent issues the government will make further announcements ending, once and for all, the practice of butchering animals in cities/markets – putting protein production in the hands of large corporations and SOEs.”

On Thursday (6 February), Tyson Foods, one of the world’s largest meat processors and a business with operations in China, reported its fiscal first-quarter financial results.

During a conference call with analysts, the company was asked for its thoughts on the long-term impact the coronavirus outbreak could have on wet markets in China.

Tyson CEO Noel White said he expected the incident to speed up China’s efforts to reduce the number of wet markets in the country.

“I think if anything it’s just going to accelerate the efforts that the Chinese have had to decrease the number of wet markets. I think that we’ll continue to see modern grocery continue to grow in China,” White said.

“I think both ASF and coronavirus will contribute to that. Short term, obviously there’s going to be some impact from coronavirus but that will pass. So we think on a much longer-term basis, it’s how we will service modern retail in China. And over the course of a relatively short period of time, we think that that will probably take place, particularly with the initiatives that the government has in place.”

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