Coronavirus threatens meat processing as cool stores fill with export product

Thursday, 30 January 2020

China takes almost half New Zealand's meat exports and that amounted to 402,586 tonnes of sheep meat and beef last year.

Farmers are worried about the impact of the coronavirus after Silver Fern Farms talked of reducing meat processing because of cold storage shortages.

In an email to suppliers on Tuesday the company warned that congestion at Chinese ports caused by the health emergency had put considerable pressure on New Zealand cold storage space.

From next week it would reduce mutton processing in the 'very short term' to minimise the future risk of significant stoppages at its plants; alarming news for drought-stricken farmers wanting to cull stock to conserve feed.

Silver Fern Farms chief executive Simon Limmer said in a written statement on Thursday that production was back on track after finding extra cold storage, but he admitted problems related to the virus were not over.

Meat processor Silver Fern Farms has diverted product to other markets after the coronavirus made it difficult to get exports into China.

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'This is a dynamic and changing situation and we will continue to assess our options daily.'

Federated Farmers was concerned about the flow on effects to stock prices if meat processing was limited by the coronavirus. (File photo)

The company email said the virus meant Chinese businesses, ports and government departments were operating at restricted capacity so it was having to hold product destined for China in New Zealand.

Beef and lamb had been diverted to alternative markets, but there were few options for mutton because China was the main market globally.

The World Health Organisation has recorded 6000 confirmed cases of coronavirus in China,132 deaths and a further 9239 suspected cases.

Efforts to curb infection rates have seen widespread restrictions on travel in China and the closure of many food outlets, measures which saw the rock lobster industry halt exports to China last week.

Alliance Group's meat processing has not been affected by storage issues, but general manager livestock Danny Hailes said the virus outbreak had reduced red meat consumption in China, primarily in restaurants, and there was downward pressure on prices.

Meat Industry Association trade and economic manager Sirma Karapeeva said diverting meat destined for China to alternative markets was a costly business because of the need for new documentation and contractual arrangements.

'And there's always a risk that the product will be sold at a discounted price … it depends on where it is and what kind of product it is.'

New Zealand meat exports to China (worth $3.3 billion last year) have doubled over the last five years, and it now accounts for just under half of all our export meat sales.

Federated Farmers meat and wool chair Miles Anderson said the threat to processing was a major concern because it came during dry conditions.

The hope was that export problems arising from the virus would be temporary, and they highlighted the meat industry's heavy dependency on China.

'It's been a concern that we have such a high exposure to one market.'