By Dominique Patton

BEIJING (Reuters] – China’s financial capital, Shanghai is locked down for a prolonged period. This slowing of China’s meat trade has been attributed to stringent COVID-19 restrictions. It also causes logistical problems in other sectors, indicating the growing disruptions to the business environment.

The challenge of moving food in and around Shanghai, whose residents are into a month-long stressful home isolation, highlights similar problems in many other Chinese cities as Beijing persists with its controversial zero-COVID strategy despite growing risks to its economy https://www.reuters.com/world/china/china-struggles-options-covid-threatens-economic-goals-2022-04-28.

China is the top buyer of meat in the world. It imported more than 950,000 tonnes of meat last year. That’s worth approximately $32 Billion.

Shanghai is a prime location for traders to distribute product throughout the country. However, a COVID-19 outbreak forced the closure of the city in March. This has made moving frozen or chilled products difficult.

Unloading containers is a good idea. The real issue is logistics out of the harbour, getting trucks and drivers to pick up the product,” said Soeren Tinggaard, Vice President at the Pinggu Retail & Foodservice business for pork processor Danish Crown.

Many drivers have been discouraged by frequent COVID testing, long quarantines, and lengthy clearance times for entry to Shanghai. Special licensing requirements mean that fewer refrigerated trucks can be purchased.

PREPARED IMPORTS

Others food products such as dairy and edible oils have been held in Shanghai ports, while beef imports to the city dropped 23% in March. The data, taken together with those from other COVID-19 cities, suggests that food exporters such as Brazil, Australia, and the United States are under pressure to trade with the second largest economy in the world.

Australian beef exports from China dropped 10% in March when the lockdown began, but overall pork imports decreased 70%.

The logistics issues could cause pork imports to plummet as high as 30%, according to Pan Chenjun at Rabobank, senior analyst.

U.S. meat processor Tyson Foods (NYSE:) announced this week that it had diverted meat shipment to other markets in order to ease the situation. A source revealed to Reuters that Brazilian exporters had cancelled shipments, and they stopped booking new cargo.

Customers throughout China are also affected by Shanghai’s port congestion.

A Beijing-based trader said, “Since April 1st I haven’t had a single piece meat.” He normally gets about 3 million Yuan ($453,995.16) of beef from Shanghai each month.

The trader said that a two-tonne cargo of U.S. chilled beef, worth approximately 400,000 Yuan, arrived over a month ago and is now a problem.

Because of the sensitive nature of discussing COVID, he stated that “if it’s still there, most of my clients won’t buy it anymore.”

‘NEW CHALLENGE’ EVERYDAY

The COVID restrictions have a sharply lower consumption, which is helping to keep prices down for now. However, it may become more problematic if the lockdowns continue.

Andrew Cox from Singapore, general manager for international markets, Meat and Livestock Australia, said that all these logistic issues add cost to the supply chain which eventually leads to food inflation.

Some traders are shifting product to China from other ports. However, deliveries are not as fast and costs can mount.

The product is sent to the designated central warehouses for testing for COVID-19 when trucks arrive in Beijing. Some importers are told that once the product is released they need to keep it there for at least 14 days before they can carry out additional COVID testing.

According to another Beijing importer, Tianjin needs COVID test for all frozen and chilled foods. This is a huge amount of money for a Wagyu beef bag that costs around 2,000 Yuan.

“Every day brings a new challenge for the F&B industry,” he said.

($1 = 6.4408 renminbi)

($1 = 6.6080 Chinese yuan renminbi)