Coronavirus: A Seafood Analyst’s Perspective

As the coronavirus outbreak continues to spread, The Fish\r\nSite caught up with Dr Beyhan de Jong, food and agribusiness specialist at\r\nRabobank, to try and assess its impacts – in China and beyond.

 “I was asked to give\r\na presentation on this at last week’s North Atlantic Seafood Forum. The\r\ncoronavirus is still very much a wildcard – we don’t know how much it will\r\nspread so it’s hard to read the markets right now – but we came up with four\r\ndifferent scenarios, none of them good,” reflects Dr de Jong.

Rabobank's Dr Beyhan de Jong

“And since I first prepared the presentation, we’ve already\r\ngone from the least bad option to somewhere between the third and second\r\nworst,” she adds.

As a result, looking at the macro-economic situation, Dr de\r\nJong predicts that the impact of the virus looks likely to be closer to that of\r\nthe 2008 global financial crisis of 2008-2009, rather than to SARS – due to the\r\nfact that the Chinese and global economies are much more closely linked since\r\nthe outbrak of the latter, back in 2003.

“The Chinese economy and the global economy are so closely\r\nlinked, with many countries heavily dependent on China for manufacturing their\r\ngoods, as a market for their exports and as a source of tourists,” she explains.\r\n“If the forecast for the Chinese economy to grow 2 percent slower than\r\nanticipated in 2020 is correct, then global growth rates will drop by 1\r\npercent.”

Looking at the food and agriculture sectors, Dr de Jong\r\nnotes that the restaurant and food service businesses are being hit the hardest\r\n– a trend compounded by the timing of the outbreak in the run-up to Chinese New\r\nYear. And, although many provinces of China are beginning to lift movement\r\nrestrictions, there’s no sign of an immediate recovery.

“The initial forecast was for the Chinese economy to start\r\nto rebound in Q2, but we now think that it’s not going to happen until Q3 or\r\nQ4. And, looking ahead, while industrial production is beginning to rebound,\r\nconsumer spending is lagging behind,” explains the Rabobank analyst.

And the slow rebound in consumer spending is not just\r\nhitting the Chinese food service sector.

“The Chinese food service sector is being hit as consumers\r\nin China are eating at home, while the sector in countries such as Singapore,\r\nThailand and Vietnam is being impacted too, due to the decrease in tourism\r\nnumbers,” she says.

Looking specifically at the seafood sector, Dr de Jong says\r\nthat local production has not been too severely impacted other than in Hubei –\r\nthe province at the heart of the outbreak – where freshwater production of\r\nspecies such as crayfish has been reduced by the raft of governmental\r\nrestrictions.

The impact of the virus is likely to be greater that the\r\nsecond best case scenario, as envisaged by Rabobank back in late February

In terms of seafood imports to China it is, once again,\r\nthose typically destined for the food service sector that are being hit the\r\nhardest.

“Demand for products such as oysters, lobsters as well as\r\nthe tuna and salmon that are favoured for sushi and sashimi has declined the\r\nmost, while demand for the sort of products that are more commonly cooked and\r\neaten at home – like pangasius and tilapia – has not been so impacted,” says Dr\r\nde Jong.

And, given that China is already experiencing something of a\r\nprotein shortage, due to the impact of African swine fever on pork supplies,\r\nthere’s scope for some growth in sales in products such as these. However,\r\noverall, Dr de Jong believes that “even in the best case scenario, the trend in\r\nChinese seafood consumption in general will be flat”.

Looking beyond China, Dr de Jong says it’s too early to\r\nquantify the overall effect of the pandemic.

“It’s too early to say what the impact of the spread of the\r\nvirus will be on other countries – such as Italy, for example,” she says.

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However, despite the global concerns about the virus, there\r\nis some cause for optimism – with China’s containment strategy appearing to\r\nbear fruit. As Fish Site contributor, Ronnie Jin, told the site today: “no\r\nprovinces have reported any new cases for the last three days except Wuhan. For\r\nthe rest of us the lockdown is over and everything is back on track.”

Source: The Fish Site