Impact of coronavirus will take months to figure out – Kerry boss

China is a country close to Edmond Scanlon’s heart and one he knows well. Before taking over as CEO of Kerry Group in 2017, Scanlon spent a number of years living in China, where he served in a number of roles for Kerry Group, including head of Kerry China and CEO of Kerry’s Asia-Pacific division.

In the final months of last year, meat exports from South America into China exploded with Brazilian beef prices almost surpassing Irish prices at one point

When the African swine fever (ASF) epidemic decimated China’s pig herd in the first half of 2019, Scanlon correctly predicted that global meat markets wouldn’t begin to feel the ramifications of this supply shortage until November 2019.

In the final months of last year, meat exports from South America into China exploded with Brazilian beef prices almost surpassing Irish prices at one point.

Speaking to the Irish Farmers Journal this week, Scanlon said that the shortage of pork in China caused by ASF will last for years, which will in turn affect global meat prices.

Uncertainty

However, the major unknown for 2020 is what impact the coronavirus will have. Kerry operates five facilities in China, which Scanlon said are back at work but are only operating at 30% capacity.

In a bid to get to grips with the coronavirus, Chinese authorities have placed restrictions on the movement of people and goods in and out of the country, which is naturally having an impact on global trade.

Importing product into China is quite difficult at the moment with the restrictions at ports

From an Irish perspective, this is very important as China is the world’s largest meat and dairy importer.

“Importing product into China is quite difficult at the moment with the restrictions at ports. China has been importing a lot of pork up to now but my sense of it is that there’s probably a lot of pork stuck in containers in the ocean waiting to dock at ports in China,” said Scanlon.

It will take a few months to fully understand the implications of the coronavirus

“You can’t disassociate the impact of the coronavirus and swine fever. They’re both going to have a big impact on Chinese demand so we’re going to have to see how it plays out.

“It will take a few months to fully understand the implications of the coronavirus,” he added.

Dairy outlook

This is equally true for the Irish dairy industry, said Scanlon. Right now, co-ops have no stocks to ship to China as this is the quiet part of their year but milk supply from farms will ramp up over the coming weeks.

Co-ops will begin processing milk at a significant scale in March and April so it could be closer to May before the Irish dairy industry feels any impact from logistics or demand issues in China, he said.

I would expect 2020 to be a good year for milk prices

However, the Kerry boss gave an upbeat, albeit cautious, outlook for milk prices in 2020.

“If you leave the coronavirus to one side for the moment, I would expect 2020 to be a good year for milk prices because of the fall in milk supply from New Zealand and Australia,” said Scanlon.