With African swine fever (ASF) continuing to decimate China’s pig population, and the Covid-19 coronavirus outbreak halting the country’s processing sectors, whitefish exporters should find themselves well placed to capitalise on the market’s huge demand for protein, believes Rabobank’s senior analyst for seafood, Gorjan Nikolik.
In recent years, China has accounted for about half of world pork production, but the rapid spread of ASF in 2019 led to a massive decrease in supply with an estimated 10 million tonnes taken out of Chinese supply chains. While the further extension of the disease in the country has slowed or even plateaued, a further 10 million tonnes is expected to be lost in 2020.
Putting these figures into context, Nikolik told the recent North Atlantic Seafood Forum (NASF), held in Bergen, Norway, that a potential loss of between 20 and 25 million tonnes of pork is equivalent to losing ten times the total volume of salmon farmed globally, or three times the amount of groundfish produced worldwide.
Only half-way into the anticipated pork supply reduction, the Chinese market’s response has been a 250% increase in prices. “And we still have to lose another 10 million tonnes,” he said.
African swine fever, coronavirus gifts Chinese opportunities to the whitefish sector
Gorjan Nikolik also highlighted that ASF is currently spreading further into Southeast Asia with recent new cases reported in the likes of Philippines and Vietnam, making it now “an Asian phenomenon”. It has also been detected in some wild boar stocks in Europe, although he doesn’t believe the overall impact on that region will be too damaging.
In the meantime, the situation in China is “pulling other proteins up” in terms of both demand and price, Nikolik said. But while the lamb and beef sectors have seen demand and prices shift upwards, that’s not the case for chicken, which “is not a good substitute for pork” in that particular market.
Nevertheless, seafood exporters to China will find their competition becoming increasingly expensive.
Also playing into the hands of the whitefish suppliers is the consumer shift towards buying products through modern retail and food delivery systems that focus on imported and processed seafood.
Most traditional wetfish markets, which have always been preferred by Chinese consumers who like to buy live or very fresh seafood in pursuit of higher quality, have been closed amid the coronavirus crisis. Consequently, online retail deliveries of seafood have increased five-fold.
“Seafood was already a pretty strong category for online delivery. It’s estimated that around 4% of all seafood was delivered online before Covid-19. In the last few weeks this has probably risen to 25%. It’s showing the Chinese people new, interesting alternatives.”
The coronavirus situation is also likely to extend the time needed to rebuild China’s pork production. At the same time, a lot of consolidation in the sector is expected. Therefore, even assuming that the outbreak doesn’t last much beyond the first-half of this year, Rabobank surmises that the pork supply will remain low through 2021.
“After Covid-19 has gone there will still be a huge protein shortage. This is a great opportunity to distribute good seafood products with a good story,” said Nikolik.
He also suggested that together, ASF and coronavirus are accelerating China’s transition from a net exporter to a net importer of whitefish. This is particularly the case for freshwater whitefish – China has been net importer of these species since September 2019 with the trade underpinned by far larger quantities of Vietnamese pangasius entering the market.
In the longer term, Rabobank’s analysis points towards groundfish exporters having the same potential in the market and this could be supported by the strong prices brought by ASF.
“This is an opportunity for everyone. When Covid-19 and African swine fever are over, I think we’ll have a great opportunity to sell really good, sustainable, healthy whitefish to them.
“Also, if China continues to modernise in the way we are now seeing, it doesn’t make sense for it to be such a major global exporter of seafood. In fact there’s the big question of whether there should be any exports of any protein coming out of China,” Nikolik said.
