February 13, 2020

China to restructure meat supply system following animal virus health scares: Jefferies

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  • China preparing to restructure meat production and distribution system after latest coronavirus crisis
  • Move to benefit large state-owned meat importers

China is likely to restructure its meat production and distribution system by doing away with smaller producers in favour of large-scale animal farming once the coronavirus outbreak recedes, according to analysts at Jefferies. Producers of plant-based meat substitutes could benefit too, it said.

A Chinese meat market

The government is approaching some meat importers and offering them the opportunity to set up state-of-the-art meat and animal processing factories on the mainland, the analysts said in the February 10 report, citing sources. It is also bringing in specialists in setting up meat processing production lines to advise on international best practices for food safety, the report added.

“We expect that in the wake of recent issues, the government will make further announcements ending, once and for all, the practice of butchering animals in cities/markets,” its Hong Kong-based analysts wrote. This will put protein production “in the hands of large corporations and state-owned enterprises.”

The thinking follows a series of health scares that have plagued the nation’s meat supply and security, with the latest coronavirus epidemic adding to recent outbreaks of African Swine Fever and Avian flu. Five Chinese provinces have temporarily closed live poultry trading and slaughtering locations, according to Jefferies, while the swine fever has forced the government to cull most of its hog herd in 2019, stoking inflation.

“We believe that the current senior party officials do not want this to be seen as their legacy,” according to the Jefferies report.

Jefferies said large corporations and state-owned enterprises such as WH Group, Wens, Muyuan and Cofco, would be the chief beneficiaries of the plan. The shift is also likely to quicken the acceptance of plant-based protein, Jefferies said. That has a big implication for Hong Kong, which imported all of its fresh pork and 94 per cent of its fresh beef from mainland China.

(Source: South China Morning Post)

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