Further Assessing the Impact and Implications of Coronavirus on China's F&A
While infection numbers seem to have slowed in recent days in China, Rabobank is expecting an ongoing impact on the various F&A sectors. According to the RaboResearch report, Further Assessing the Impact and Implications of Coronavirus on China's F&A, supply chain disruptions have eased somewhat, but still remain. We expect the impact of disruption to spread across the whole value chain and to last for at least another four months.
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Chinese authorities have reported recent figures that seem to suggest that the spread of the coronavirus (Covid-19) has continued, but slowed down. By March 3, the virus had already infected more than 80,000 people, with 2,984 fatalities in China. It is increasingly likely that the virus outbreak in China will extend beyond Q1 2020, but could be contained within Q2 2020. It is certain that supply chain disruptions, along with weakened demand and consumer confidence, is having a significant impact on China’s already slowing economic growth in 2020. The longer the outbreak lasts, the harder it will be for China’s economy to bounce back.
Ever since massive lockdowns, travel restrictions, and imposed quarantine and self-quarantine China has been resuming business activities, albeit very gradually. The government has also issued a series of measures to accelerate the resumption of work in most industries. For example, the government made efforts to ensure the continued manufacturing and transportation of key agricultural products, including seed, fertilizer, feed, and agrochemicals to facilitate spring ploughing. It also waived all road tolls across the country to ease transportation bottlenecks and ensure a smooth circulation of agricultural products. Despite these efforts, according to Ping Chew, Head – RaboResearch F&A Asia, Rabobank “estimates that the entire F&A chain will still need at least four months to return to a full resumption of operations in China, with the lingering impact likely to continue for longer.”
Where to go from here
Ping ChewHead of RaboResearch Food & Agribusiness - Asia Read more
Stacie WanAnalyst – Supply Chains and Beverages
Chenjun PanSenior Analyst - Animal Protein Read more
Sandy ChenSenior Analyst - Dairy
Michelle HuangAnalyst – Consumer Foods Read more
Jingyan SunAnalyst - Farm Inputs
Lief ChiangAnalyst - Grains & Oilseeds