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Covid-19 and the impact for the global meat industry

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Misinformation and a decline in purchasing power cand dictate over consumer's habits in the following months.

Posted on Mar 25 ,09:34

Covid-19 and the impact for the global meat industry

The global problem raised by covid-19 threat is about to have a deep impact on the global economy and our ways of life, according to FAO and OCED experts and data compiled from different markets felt under lockdown in front of the coronavirus threat.

"We know that the disease will eventually retreat, but we don’t know how fast this will happen. We also know that this shock is somewhat unusual as it affects significant elements of both food supply and demand: Supply will be disrupted due to the disease’s impact on people’s lives and well-being, but also the containment efforts that restrict mobility and the higher costs of doing business due to restricted supply chains and a tightening of credit; Demand will also fall due to higher uncertainty, increased precautionary behavior, containment efforts, and rising financial costs that reduce people’s ability to spend", said FAO in a statement regarding the initial impact of coronavirus crisis on the global economy.
In March, the OECD cut its forecast for global economic growth in 2020 from 2.9 percent to 2.4 percent, which would be the lowest level since the financial crisis a decade ago, warning that a prolonged and more intensive coronavirus epidemic could even halve this figure to a mere 1.5 percent.

UN experts presented a downside scenario, where UNCTAD sees a $2 trillion shortfall in global income, as “business as usual” is no longer an option in a world ruled by quarantine in front of coronavirus outbreaks. "We need to rethink the system, diversify production and shorten value chains," said Isabelle Durant, deputy head of the UN's Trade and Development Organization.

Healthy food to increase its cost.

While most of the consumers will try to adjust their budget spending to a period of insecurity in the market, sales of different products may be hard impacted by decreasing production levels due to a chronic lack of personnel and measures that could close small producers of meat. Also, we cand add the issue of shelf-life for fresh products.

Premium products have already been impacted in most of the EU countries as the food service has been closed as a precautionary measure. Now, rationing schemes may apply in several countries as the need to secure reserves for most of the buyers is increasing due to lower volumes of food, especially fresh food, coming from the countries that are hard-hit in this epidemic: France, Italy and Spain.
Food rationing is ma major topic in the UK nowadays, with the government delaying such a drastic measure, while scientists are urging officials to do so. "In the short term, the real cost of a healthy diet may rise because of the increase in the cost of perishable commodities, which would have a particularly adverse impact on lower-income households", according to FAO report.
Countries with high-commodity import dependence will also see price impacted by disruption on transport routes and eventual cases of processing plants closure due to infected workers found between their stuff.

A retailer's nightmare

Retail is also under siege, not only by panic buyers but the real threat of covid-19 affecting the personnel in this sector. A rise in eating at home is expected to increase the number of visits to the supermarkets, transforming this shopping free in a real threat to retailers.

"We work with multiple scenarios to see the impact on our businesses, especially if the personnel is exposed to virus carries. We are trying to do what ever it takes to mitigate these risks. We haven't decided in the Association to make a recomandiotion to close the assisted counters for food in the store but that is a decision to be taken by any retailer based on its risk assessments", said George Badescu, head of Romania's retail association (AMRCR), for EuroMeat News.
Measures aimed at avoiding the further spread of the disease might affect agricultural production and trade. For instance, many countries are implementing higher controls on cargo vessels, with the risk of jeopardizing shipping activities.
Measures affecting the free movement of people, such as seasonal workers, might have an impact on agricultural production, thus affecting market prices globally. Measures to guarantee acceptable health standards in food factories may slow down production.

 

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