Cargill Says China Offers Hope for Meat Markets Hit by Virus

 

    In China, protein demand is on the rise after lockdown hit

    In North America, company is shifting to supply grocers

 

By Isis Almeida, Bloomberg  

March 24, 2020

 

The meat and poultry shelves at grocers are running empty from Australia to Italy and the U.S. But Cargill Inc., the world’s largest agricultural commodity trader, says look to China for hope of a brighter future.

 

Frenzied buying has taken hold in many parts of the world where people are being asked to stay home to stop the spread of the coronavirus. Consumers are loading up on meat supplies to fill their freezers. But demand from restaurants is poised to drop as dining rooms are closed under lockdown orders.

 

China saw the same issues, just months ahead of the rest the world. After a supermarket rush that left empty shelves, and then a decline in meat consumption from the restaurant industry, life in the Asian country is starting to return to normal, and so is meat demand, said Brian Sikes, head of Cargill’s protein and salt businesses.

 

“We are starting to see demand in China come back, and that’s encouraging for us, thinking about the rest of the world,” Sikes said. “There’s certainly going to be sunshine again.”

 

Cargill’s poultry processing factory in China is running at a rate of at least 80%, up from the lows of 30% to 40% during the worst of the outbreak, according to Sikes. People are back in the streets and going about their business. Plus, China’s now said it will allow transportation to resume for Wuhan on April 8, effectively lifting a mass quarantine on the city where the virus first emerged.

 

In North America, panic buying is still setting in and Cargill is running meat plants at full capacity and shifting its business to supply grocery stores, he said. Consumers are stocking up on chicken, beef and pork, driving up short-term demand, as cities from Los Angeles to Chicago and New York go into lockdown and restaurants close in a bid to stem the coronavirus pandemic...

 

... To keep North American factories running, Cargill is paying an additional $2 an hour for employees that complete all their weekly shifts as well as a $500 bonus to the ones that work all their schedules through May 3. It’s also offering paid leave for two weeks for employees affected by the coronavirus through March 31.

 

“One of our beef plants feeds 22 million people per day, so it’s vital that these plants stay open,” MacLennan said...

 

... Cargill isn’t yet forecasting a drop in overall meat demand as retail buying helps offset declines from restaurants. Still, it’s likely that there will be a shift on what protein gets picked up because of the economic impacts from the virus, with purchases for poultry and seafood potentially gaining in some countries where it’s cheaper.

 

“There will likely be a slowdown at the retail level, just as freezers do fill up, but net-demand, we are not forecasting big changes,” Sikes said. “What we have to figure out is how much is going in the freezer versus what people are eating. Just because they are eating at home, it doesn’t mean they are eating less.”

 

China is miles ahead of other countries and a history of previous epidemics helped them respond rapidly to the virus, Sikes said. The nation dealt with an outbreak of severe acute respiratory syndrome, or SARS, almost two decades ago...

 

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https://www.bloomberg.com/news/articles/2020-03-23/cargill-shifts-north-america-meat-business-to-meet-retail-demand