The past few weeks have presented Ireland’s agri-food industry with unprecedented challenges as the COVID-19 pandemic has swept across Europe and North America. Speaking to industry leaders over recent weeks, the mood is undoubtedly downbeat as companies try to get to grips with the virus.

The first major challenge for the Irish food industry is people. Keeping employees safe and healthy at this time is at the forefront of every employers mind.

It’s a credit to the professionals in our agri-food industry that they’re keeping the show on the road without a hitc

The invisible nature of the coronavirus means the last few weeks have been incredibly stressful for frontline staff in the food industry, be they stacking shelves in supermarkets, collecting milk from farms, working in meat or dairy processing factories or delivering animal feed to farmers. It’s a credit to the professionals in our agri-food industry that they’re keeping the show on the road without a hitch.

As a route to market, foodservice accounts for almost 50% of all the food sold in Ireland, the UK and continental Europe

The second major challenge for food companies has been market disruption. The shutdown of the foodservice sector (cafés, restaurants, hotels, canteens and fast food outlets) right across Europe has dealt a major blow to many food companies. As a route to market, foodservice accounts for almost 50% of all the food sold in Ireland, the UK and continental Europe.

China’s economy has entered the restart phase

While the spike in retail demand has offset some of this, the loss of the foodservice channel is still painful for the industry and its shutdown has put major strains on beef and dairy prices in the last fortnight.

But is there light at the end of the COVID tunnel? In the last week, China’s economy has entered the restart phase as the country emerges from just over two months of lockdown caused by the COVID-19 pandemic.

Reopening

Speaking to the Irish Farmers Journal this week, Bord Bia’s China manager Conor O’Sullivan who is based in Shanghai, said China is reopening after the lockdown and people are returning to work. This is positive news for Irish farmers and food producers as China has become one of our most important markets for dairy, pork, seafood and increasingly beef exports.

The foodservice industry is not quite back to normal

“Things are returning to normality here in China after the lockdown. The foodservice industry is not quite back to normal. We estimate that food consumption in restaurants in Shanghai is back to between 50% and 60% of normal levels.

Conor O'Sullivan, Bord Bia's China manager.

For instance, 90% of McDonald’s and Starbucks stores are now back open for business in China, whereas these same chains remain closed here in Europe.

Although Chinese health authorities are now lifting restrictions and things are returning to some degree of normality in China, O’Sullivan says many consumers are still very wary of being in confined spaces such as restaurants or shops with other people and many are still nervous of having their food prepared for them by someone else.

The restart of the Chinese economy should also give a boost to Irish meat and dairy exporters

As a result of this nervousness, Bord Bia’s team in Shanghai estimate it could be another two months before cafés, restaurants and fast food outlets in China will be back to normal capacity.

The restart of the Chinese economy should also give a boost to Irish meat and dairy exporters with food and beverage manufacturers back in the market looking for pork, beef and specialised dairy powders.

Containers

With Chinese ports reopened, trade should begin to flow into the country once again provided we can solve the container issue here in Europe.

Since the lockdown in China, shipping containers have become very scarce as they are tied up at port or stuck on ships docked at sea.

Chinese pork imports for January and February are more than double what they were for the same period last year

Yet despite the constraints on logistics, the demand from China is there. Data released this week shows Chinese meat imports for the first two months of 2020, when the country was in the height of its lockdown phase, were extremely strong.

Chinese pork imports for January and February are more than double (+163%) what they were for the same period last year at just under 545,000t, while beef imports by China are up more than 40% year-on-year to just over 290,000t.

Irish pork exports to China are up more than 50% in the first two months of 2020, at close to 9,000t, while beef exports have more than tripled to just under 1,800t.

When it comes to sourcing specialised milk powders, China looks to Europe for a large quantity of its supply

On the dairy side, there was a notable decline in Chinese import demand in January (-28%) but imports rebounded strongly in February (+37%). Overall, Chinese dairy imports for the first two months of 2020 are down 2% at just under 630,000t. When it comes to sourcing specialised milk powders, China looks to Europe for a large quantity of its supply, which should help the European dairy market recover in the weeks and months ahead.

Irish exports of infant formula to China were down 10% for January and February, but exports of certain products such as UHT milk, cream, skimmed milk powder, cheese and whey powder are all up.

Hope

Although we’re still at the worst part of the COVID-19 crisis in Europe, the situation in China does offer hope.

China is about a month ahead of Europe and the US in terms of its restrictions to handle the spread of the virus

The east Asian country is slowly restarting its economy, which will bring with it renewed demand for European meat and dairy as China’s restaurants, cafés and foodservice industry reopens for business.

Remember, China is about a month ahead of Europe and the US in terms of its restrictions to handle the spread of the virus, meaning we could be looking at a similar phased restart of economies in Europe and the US by late May or early June.

This would help to reopen the all-important foodservice channel for meat and dairy, and hopefully fuel a recovery in prices.