China's zero-tolerance policy on corona is increasing barriers to trade. In some countries, exporters are even forced to suspend the export of beef and pork for the time being. Analysts also see a link between the significant price drop on the Global Dairy Trade and the lockdowns in China. Meat exporter Vion recognizes the delay problem, but says it has the situation under control.
Problems seem to arise mainly at the important import port of Shanghai, sources report to the Reuters news agency. However, the main bottleneck does not appear to be in the unloading of the containers, but in the transport of products further inland. Due to the strict lockdown, residents of Shanghai, for example, have been forced to stay at home for a month, with all the consequences this entails for logistics.
Corona outbreak in March causes problems
The port of Shanghai is well positioned to bring products into the Chinese hinterland. However, since a corona outbreak at the end of March, logistics towards follow-up destinations has been a major challenge. A spokesperson for pork processor Danish Crown told Reuters: "Unloading containers is still going well. The big challenge is getting things out of the port; finding trucks and drivers."
In addition to meat, other food flows also appear to be affected by the problem. These include dairy products and oils. Meanwhile, imports of beef imported through the port of Shanghai were around 23% lower in March this year than in March 2022. American meat processor Tyson has already indicated that it is trying to divert product in transit to the country. This until the situation in China normalizes. Brazilian exporters have already canceled shipments and are currently not booking new shipments.
The dairy market also seems to be affected by the current situation. The Global Dairy Trade had to give up significant ground last week. Market analysts partly attribute this to weak demand from China caused by the lockdowns. Chinese import data also shows that the import of dairy products recently has fallen significantly.
In addition to the lockdowns, the Chinese government also applies strict import requirements for imported products. Goods would first have to be taken to central warehouses where corona tests would then be carried out on, and sometimes even in, the packaging. The procedures lead to high costs.
Vion recognizes problems, but has things under control
Meat exporter Vion does not hesitate to ask Boerenbusiness know how to recognize the problems in China and are currently also experiencing delays in shipments sent to China. However, it is indicated that delays occur more often. Moreover, the meat company still accepts orders from the country and ships goods. It is currently impossible to say whether the situation could have an impact on the pig price, a spokesperson said.