February 24, 2020
China's increased poultry production impacted by coronavirus
A transport lockdown on people and goods due to the coronavirus has affected China's poultry industry, resulting in the possible drop in meat output after the African swine fever caused dwindling pork supplies, reported Reuters.
Poultry production increased 12% in China to 22.39 million tonnes in 2019 as the government offered incentives to poultry farmers in an effort to supplement falling domestic pork supplies caused by ASF.
Instead of integrated operations, half of China's poultry industry consists of individual farmers that make up only one or two steps of the poultry chain. Because of this, the industry was susceptible to the movement restrictions and shortage of labour caused by local government's efforts to halt the spread of coronavirus in the country.
Even though the central government has called for transportation bans to be lifted for food, livestock and livestock feed, many routes continue to be blocked.
In addition, slaughterhouses and feed mills are either still closed or reopened but with fewer workers after the extended holidays.
All these factors have caused a ripple effect on the poultry supply chain in China.
Prices for day old chicks from hatcheries have dropped below cost to 1.4 RMB to 2.5 RMB (~US$0.20 to US$0.35) per chick from 6.8 RMB on average in 2019.
Zhang Yanguang, Beijing Lvyan Poultry Centre manager, a breeding farm located northwest of Beijing said transportation is still blocked, so he cannot sell his chicks. Plus, many slaughterhouses located in China's northeast and northwest are still closed so he cannot discard unwanted poultry as well.
He estimated slaughter capacity at only 30%, adding that the entire market is shutting down.
Pan Chenjun, Rabobanksenior analyst said the pressure on farms like Zhang's can mean more poultry farms go out of business and hatcheries may have to dispose of day-old chicks and eggs. She said the fall in production is not an issue yet as schools, restaurants and factories are still closed, but supplies may be tightened further once those reopen.
Wang Lianzeng, Huayu Agricultural Science and Technology chairman, one of China's biggest hatcheries for laying hens, said they are now selling chicks at only 1.5 RMB instead of 4 RMB.
The cheaper prices could assist farmers like Li Shunji, who is selling eggs below cost as the transport disruptions mean he cannot send his eggs to Beijing and Tianjin. Li is based in the Shandong province.
Li said there's nothing that can be done but wait.
An agricultural ministry official said that the effect of China's lower poultry production could only be seen in either the second or third quarter of the year.