Australia’s largest meat-processing cooperative has been caught up in the coronavirus outbreak in China.
The Northern Cooperative Meat Company (NCMC) in Casino in northern New South Wales has product stuck on the docks in China waiting for Chinese government and business employees to go back to work.
The Chinese Government has ordered workers to stay at home and shut ports as part of a range of measures to control the spread of the virus, and it’s affecting a range of Australian industries.
Brett Hosking from the Grain Growers lobby group said the outbreak “posed a real challenge for agriculture” as permits were not being issued or vessels unloaded and some manufacturing plants were being affected.
“If not shutdowns, we’re seeing slow downs,” Mr Hosking said.
“Vessels that have already sailed, loaded with fresh Australian, healthy agricultural products are not able to be unloaded or processed as timely as possible.”
NCMC chief executive officer Simon Stahl said there was likely to be a backlog of products when the ports reopened on Sunday.
The meat processor sends its product to half a dozen of the major ports in China, including Shanghai, Ningbo, Shenzen, Quingdao, Dalian and Guangzhou.
Mr Stahl said once the ports opened, there might be other restrictions on the movement of product if areas inland were in lockdown.
“It’s going to be problematic of how much product can then actually go into market and into warehouses within these cities,” he said.
He was unaware of the amount of beef product of the cooperative was waiting to be unloaded at the ports.
“There will be some in the supply chain but as yet, we haven’t been contacted to say that our containers are not going to be cleared or renegotiated,” Mr Stahl said.
The co-operative has reduced exports to China by just 5 to 10 per cent so far, diverting product into other markets.
“Operators, including ourselves, that are processing will look to other markets but as you can imagine the rest of the world will be thinking the same as well, so the opportunity to fill those markets is going to be limited,” he said.
Employees in quarantine in Australia
Mr Stahl confirmed two of the cooperative’s Australian employees, who recently returned from China, were in isolation and working from home.
“They had been near Wuhan and the other provinces — one in Shanghai and the other doing a bit of travelling in the north,” he said.
The five staff at its Shanghai office are also being affected by the coronavirus outbreak and working from home.
“Many of the districts within Shanghai are now in isolation up until about February 17, as I understand it,” he said.
Mr Stahl is impressed the Chinese Government’s efforts to control the outbreak.
Mr Stahl said his planned visit to China in March would depend on the advice from the Federal Government at that time.
Chinese wool processors shut down
Wool processors across mainland China have been shut down due to coronavirus fears, with the impact on Australian woolgrowers still uncertain.
With about three-quarters of wool produced in Australia sold to China, producers are concerned about a slowdown in demand.
Landmark’s North-East Wool manager, David Hart, said the situation in China was volatile.
“Most industries there are shutdown for at least another week, if not longer.
“The banks are also closed, so opening letters of credit for exporters to ship wool into China has been nigh on impossible.”
Despite the concern, there is surprise in the industry that wool prices in Australia have risen slightly in the first month of trading for the year.
“It’s extraordinary what we are seeing and it’s a complete reversal of what we were expecting,” Mr Hart said.
“All the talk has been negative and the only question being asked was, ‘How far can it fall?'”
Demand from other countries had kept prices high but Mr Hart said there was concern about the longer-term damage to the Chinese economy and consumer confidence.
Coal up, iron ore down as Chinese production stalls
Deepak Kannan, a coal analyst from S&P Global Platts, said the demand for Australian coal had gone up as Chinese production dropped off.
“The Government extended the holidays to ensure that the virus doesn’t spread and there has been a slowdown in production,” he said.
It is not good news for iron ore producers however.
Finance reporting service Small Caps said the big miners were being affected by the falling price of iron ore as the delays in industrial orders hit physical demand.
They are also seeing falls in non-mining stocks that depend on trade with China, including infant-formula stocks.
That could be due to Chinese consumers prioritising things other than infant formula during the crisis.
The Australia China Diagou Association said they were experiencing lower demand for powdered milk as Chinese customers looked for face masks, hand sanitisers and vitamins.
President Matthew McDougall said about half of the Diagou trade between the two countries centred on powdered milk products.