The coronavirus outbreak is already having a severe impact on China’s foodservice and on-trade channels. Also, according to leading agribusiness banking specialist Rabobank, this could become “more serious and longer-lasting” if the virus is not contained in the next six to eight weeks.
But the extent of the impact on Australia’s agricultural sector will be limited in the short-term and will depend on how quickly the virus is contained, it says.
In a just-released report by the bank’s China-based research team, Recent Coronavirus Impacts on Chinese F&A, Rabobank says “disruptions are being experienced across the entire F&A (food and agri) supply chain” with the virus – which has infected more than 40,000 people to date – disrupting trade, production and supply chains as well as having a significant impact on out-of-home food consumption with the closure of many foodservice outlets.
With the virus outbreak arriving at the peak of 2020 Chinese New Year activities, it has had a large impact on out-of-home dining in the country, the report says.
While the report says a quick and effective containment of the virus could lead to a rapid bounce-back, the longer the virus is uncontained beyond March, the more extensive, sustained and structural the impact will be on the F&A chain.
Regardless of when coronavirus is contained, Australian-based head of Rabobank Food & Agribusiness Research, Tim Hunt says it will “almost certainly” have a larger impact on food and beverage industries than the global SARS (Severe Acute Respiratory Syndrome) epidemic in 2003 – including in Australia.
Discussing the current and potential impacts of the virus on Australia and New Zealand’s food and agribusiness industries in a podcast, Coronavirus: How worried should we be, Mr Hunt says coronavirus has already spread more widely than SARS but it is Australia’s “much larger exposure to China” that is the biggest difference between current events and SARS. “If we go back to 2002 just before the SARS crisis, Australia sent eight per cent of its ag exports to China”, Mr Hunt says. And this was largely in the form of fibre to be processed for export.”
Fast forward to 2020, he says, and Australia sends around 28 per cent of its food and agricultural exports to China, much of which is consumed within China. “Add to that, the stronger links that have been developed between Australia and China in terms of exports, tourism, education and investment, we have a very different environment in which we might see the potential impacts of coronavirus this time compared to SARS in 2003.”