How will the coronavirus affect Australian agriculture?

In 2020, Australia sends approximately 28 percent of our total food and agricultural exports to China. So, how has, and how might, the coronavirus impact producers in Australia?

“It used to be said that when the US sneezed, Australia would catch a cold. So what happens when China, our biggest export partner, catches a virus?”

Financial Review

Mr Hunt of Rabobank told Beef Central that the first round of impacts will be on those ag industries relying on perishable food service channels in China, particularly chilled red meat. Both the virus and the Chinese Government’s response has disrupted supply chains, trade and production.  

Imported meat and other commodities into China is coming under pressure. Last week, a shipping company reported that 6,000 refrigerated containers of imported chicken, pork, beef and other protein remained unclaimed in Chinese ports (Beef Central).

Disruptions are being experienced across the entire F&A (food and agri) supply chain” with the virus – which has infected more than 40,000 people to date – disrupting trade, production and supply chains as well as having a significant impact on out-of-home food consumption with the closure of many foodservice outlets.

Rabobank

Trade closures may make goods cheaper here too as supply increases domestically, affecting negatively on producers.

Rock lobster experienced immediate pain (95 per cent of Australia’s rock lobsters go through China) with tonnes of lobster stranded in export holding tanks forcing producers to look for alternative markets to offload stock. As a result, lobster has been cheaper for Australian consumers as domestic supply sharply increases.

Sonia Einersen from Cairns told the ABC, “The coronavirus has really affected the whole fishing industry — we do lobster and live coral trout… Boats are tied up, they can’t go out — All of the fishermen are not able to go to work and we’ve had staff we’ve had to put off.”

The virus is also impacting Australia’s fruit exports, with scheduled shipments being cancelled due to a reduction in trading activities.

Lisa, a plum exporter from the Queensland Food Corporation explained that at the largest fruit market in Guangzhou there are usually hundreds of trucks moving in and out of the market trading fruits during the busy morning period, but “you hardly see any right now”.

Fruit prices remain stable but they lack of activity makes the forecast unpredictable (Fresh Plaza).

There was wool market uncertainty in the first week under the influence of the outbreak.

However, as noted by Farm Online this week, “Many had expected a bit of carnage in the auction rooms, but instead, the market showed considerable strength across virtually every micron group and quality type, as buyers from all parts of the globe had a crack.”

The article continues to note that while people assume Chinese consumers are all quarantining themselves at home, the real picture may be quite different. Whether they are out visiting retail stores or buying online, the wool market, “at least temporarily, has shrugged concerns”.

Uncertainty about the severity and duration of the outbreak has left economists and analysts making best-guess estimates.

Bloomberg

The cropping sector is watching on to see whether the virus will affect the availability of crop protection products.

As noted in Farm Online, China is the major producer of both ready-made pesticides and the active ingredients that form the base of products formulated in Australia. Disruptions in Chinese supply could create herbicide shortages in our winter crop sowing window.

The virus outbreak is also affecting the agricultural workforce, both in Chinese ports and here in Australia.

Many red meat processing plants employee Chinese workers who have not been able to return to their work following the Lunar New Year festive period.

Sheep Central explained that although meat processors are reluctant to disclose the exact numbers of workers on visas from China, their absence has forced affected meat works to cut shifts or attempt to source other workers domestically.

If the outbreak continues to spread, second round impacts could be on meat, dairy, grains, and fibre as a result of potential Chinese income drops and stagnation in premium spending and protein consumption.

A weakened China would almost certainly translate to a weakened Australian economy. With the full impact of the bushfires yet to be quantified, a long and disruptive virus is the last thing Australia needs.

Business Insider

In conclusion, yesterday, experts told ABC AM that Australian farmers have small window before coronavirus impact, with Tim Hunt from Rabobank warning that if the virus isn’t contained within eight weeks, “our agricultural market could face major losses”.