March 3, 2020

 

COVID-19 to have long-term recoils on China's aquaculture sector

 

 

The ongoing outbreak of COVID-19, commonly known as the coronavirus, is expected to have a long-term impact on China's seafood sector as everything from aquaculture to processing is being affected by labour shortages and wary Chinese consumers.

 

The Chinese government has mounted a major propaganda offensive this week to convince seafood processing factories to recommence work, with good news stories appearing in local media nationwide of workers arriving back at factories.

 

The government has teamed up with the China Aquatic Products Processing & Marketing Association (CAPPMA) to launch a new channel on WeChat allowing farmers, processors and buyers to share information on pricing and seafood availability. The platform is intended to "maximise the distribution of supply," according to the fisheries bureau at the ministry of agriculture.

 

Producers of freshwater species, however, are taking a big hit in the fallout from China's coronavirus outbreak as there are a lot of fish and shrimp that cannot be harvested.

 

"Yet they need to be fed, which erodes the financial well-being of producers, and also because people potentially would be concerned with the fecal-mouth transmission risk and not purchasing them," Jane Bi, business development director for Asia at the Global Aquaculture Alliance (GAA), said.

 

Particularly hard hit will be crayfish, given the peak season for crawfish consumption starts around May and lasts through the summer, Bi said. The epicentre of the outbreak, Hubei province, is also the largest production area for crayfish in China.

 

Some producers attribute part of the struggles to dramatic reporting of the virus, which has led to misunderstandings, a major producer of tilapia based in Hainan reported.

 

The producer sees the island province as retaining an advantage, in that it's cut off from the mainland by the Qiongzhou Strait, while feed is generally sourced locally.

 

Thanks to that isolation, all key tilapia processing factories on Hainan Island reopened a week ago, though ongoing labour shortages mean plants are operating at average of just 25-40% of normal output, with the goal of getting to 50-80% output by the middle of March.

 

"Of course, a plant could be closed by the detection of a single case," said the processor, who buys fish from local producers in addition to producing in-house. There have been 168 cases so far in Hainan compared to nearly 65,000 cases in Hubei.

 

The processing plants and feed mills have had to push back the date that production can be resumed, or it's taking longer for them to get back to full capacity.

 

"Farmers are and will be hesitant to stock," Bi said. "The delay puts a big financial burden on the producers." She added that she also foresees delays in BAP certification work in China. "We are preparing for higher volume of audits later in the year."

 

Producers of premium aquaculture species have, for the moment, halted expansion. Despite that, prices have held steady, according to a fast-expanding producer of sea cucumber, with operations in northern and southern China.

 

"Our workers are stuck in their province and work has not been resumed on construction," said Djames Lim, CEO and chief aquaculture officer at Lim Shrimp Organization–which has invested US$25 million (EUR22.7 million) in a massive indoor sea cucumber farm at Yingkou Free Trade Industrial Zone in Liaoning province.

 

Singapore-based seafood trader Stephen O'Sullivan thinks COVID-19 is a 'Black Swan' event which will take a toll on sales into China for some time to come. "From what I've heard, some traders are down as much as 90% in China," O'Sullivan said. "It's not looking good there and unlikely to improve in the short term."

 

That's also the view from Vietnam where the trade of pangasius to Chinese buyers has collapsed in only two weeks. "It is no problem in pangasius for exporting to the world. But we do not export to China at this moment," said Nancy Huu, sales manager at Hung Hau Agricultural Corp–which had come to rely on Chinese buyers for export sales.

 

A much longer-term impact of the virus could be a shift in Chinese consumer's attitudes toward frozen seafood and live seafood markets–which traditionally have been dominant in China–since the virus is believed to have originated at a live market in Wuhan.

 

"The crisis propelled frozen aquaculture seafood consumption, demand for food safety and traceability, and online shopping for frozen farmed seafood," explained Jane Bi. "The retailers are faring much better than the restaurant sector, and restaurants, especially those with a big fresh or live seafood focus are suffering greatly. Consumers probably will now have a second thought about live or fresh wild seafood before purchasing."