Coronavirus to have long-term repercussions on China’s aquaculture sector

Published on
February 28, 2020

The ongoing outbreak of COVID-19, commonly known as the coronavirus, is expected to have a long-term impact on China’s seafood sector as everything from aquaculture to processing is being affected by labor shortages and wary Chinese consumers.

The Chinese government has mounted a major propaganda offensive this week to convince seafood processing factories to recommence work, with good news stories appearing in local media nationwide of workers arriving back at factories.

One such story centered around trawler crew and processing workers arriving at the Cangnan port near the city of Wenzhou to a televised welcome party with banners and distribution of free masks and vitamin supplements.

The government has teamed up with the China Aquatic Products Processing & Marketing Association (CAPPMA) to launch a new channel on WeChat allowing farmers, processors and buyers to share information on pricing and seafood availability. The platform is intended to “maximize the distribution of supply,” according to a statement from the fisheries bureau at the ministry of agriculture.

Producers of freshwater species, however, are taking a big hit in the fallout from China’s coronavirus outbreak as there are a lot of fish and shrimp that can’t be harvested.

“Yet they need to be fed, which erodes the financial wellbeing of producers, and also because people potentially would be concerned with the fecal-mouth transmission risk and not purchasing them,” Jane Bi, business development director for Asia at the Global Aquaculture Alliance (GAA), said.

Particularly hard hit will be crayfish, given the peak season for crawfish consumption starts around May and lasts through the summer, Bi told SeafoodSource. The epicenter of the outbreak, Hubei province, is also the largest production area for crayfish in China.

Some producers attribute part of the struggles to dramatic reporting of the virus, which has led to misunderstandings, a major producer of tilapia based in Hainan told SeafoodSource.

The producer sees the island province as retaining an advantage, in that it’s cut off from the mainland by the Qiongzhou Strait, while feed is generally sourced locally.

Thanks to that isolation, all key tilapia processing factories on Hainan Island reopened a week ago, though ongoing labor shortages mean plants are operating at average of just 25 to 40 percent of normal output, with the goal of getting to 50 to 80 percent output by the middle of March. 

“Of course, a plant could be closed by the detection of a single case,” said the processor, who buys fish from local producers in addition to producing in-house. There have been 168 cases so far in Hainan compared to nearly 65,000 cases in Hubei.

The processing plants and feed mills have had to push back the date that production can be resumed, or it’s taking longer for them to get back to full capacity.

“Farmers are and will be hesitant to stock,” Bi said. “The delay puts a big financial burden on the producers.”

She added that she also foresees delays in BAP certification work in China. “We are preparing for higher volume of audits later in the year.”

Producers of premium aquaculture species have, for the moment, halted expansion. Despite that, prices have held steady, according to a fast-expanding producer of sea cucumber, with operations in northern and southern China.

“Our workers are stuck in their province and work has not been resumed on construction,” said Djames Lim, CEO and chief aquaculture officer at Lim Shrimp Organization – which has invested USD 25 million (EUR 22.7 million) in a massive indoor sea cucumber farm at Yingkou Free Trade Industrial Zone in Liaoning province.

The company had completed two out of a planned 22 units at the site when work was halted.

“Due to COVID-19, we were forced to harvest the sea cucumber and sell, so that we do not face any problems later when circumstances disallow us to access our facilities,” Lim said. “China is very cautious now, so we better be prepared for any drastic change, therefore we’d rather stop culture and wait and see for now. Logistics is also a problem now in China. [There are not] many choices.”

Nonetheless, Lim explains, finding buyers for the cucumber has been easy. “And prices are still high.”

Singapore-based seafood trader Stephen O’Sullivan thinks COVID-19 is a ‘Black Swan’ event which will take a toll on sales into China for some time to come.

“From what I've heard, some traders are down as much as 90 percent in China,” O’Sullivan said. “It’s not looking good there and unlikely to improve in the short term.”

That’s also the view from Vietnam where the trade of pangasius to Chinese buyers has collapsed in only two weeks.

“It is no problem in pangasius for exporting to the world. But we do not export to China at this moment,” said Nancy Huu, sales manager at Hung Hau Agricultural Corp – which had come to rely on Chinese buyers for export sales.

A much longer-term impact of the virus could be a shift in Chinese consumer’s attitudes toward frozen seafood and live seafood markets – which traditionally have been dominant in China – since the virus is believed to have originated at a live market in Wuhan.

“The crisis propelled frozen aquaculture seafood consumption, demand for food safety and traceability, and online shopping for frozen farmed seafood,” explained Jane Bi. “The retailers are faring much better than the restaurant sector, and restaurants, especially those with a big fresh or live seafood focus are suffering greatly. Consumers probably will now have a second thought about live or fresh wild seafood before purchasing.”

Bi added that she believes her organization “can be an effective part of the solution for providing more food safety and traceability in seafood.”

O’Sullivan meanwhile sees a potential role in the current situation for an app he’s designed to connect seafood professionals and traders.

“Communication and market sentiment are important,” he said. “For sure there are great opportunities to mop up excess stock from a cancelled Chinese New Year and identifying opportunities and helping facilitate those trades is where the app would help. Also whether sourcing or selling products in China, you would now potentially be looking to other markets to hedge, and again this is where our platform can help in identifying other partners … [to] help support the relationship and keep the wheels of commerce turning when we can't be there in person.” 

Photo courtesy of Yung Chi Wai Derek/Shutterstock 

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