Food trade's nervous eyes on China's slight seafood lift

Seafood sales crash is ag's coronavirus `canary in coal mine'

Agribusiness
Victorian rock lobster fisherman, Neil O'Connell, Portland, pulled his traps out of the water in January because export demand vanished. Photo: Anthony Brady

Victorian rock lobster fisherman, Neil O'Connell, Portland, pulled his traps out of the water in January because export demand vanished. Photo: Anthony Brady

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Pricey rock lobster markets are the "canary in the coal mine" for Australian food producers - and they're fallen off the perch

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Despite continuing fears about the impact of the coronavirus pandemic on Australian food exports, a trickle of orders has again started to flow to China from Australia's premium priced seafood sector.

Unfortunately for exporters, however, prices on offer from the few importers willing to buy have halved.

Much of the freight and distribution infrastructure to handle fresh, chilled product also remains at a standstill because so many workers are in self imposed quarantine at home, or cannot travel to work.

The seafood industry, particularly the gilt-edged rock lobster and abalone market, is something of a "canary in the coal mine" for Australian food producers because it tends to be the first to reflect good and bad spending trends in Asia's luxury markets.

"There may be some farm export businesses who could be significantly impacted if this continues for much longer, or by an economic downturn," said National Farmers Federation chief executive officer, Tony Mahar.

"We're watching it very closely and are very conscious of the long term risks to a host of farm industries."

Thanks to the China-Australia free trade agreement, China's rock lobster imports soared 200 per cent in value in three years to be worth more than $730m in 2018-19, or 97pc of the industry's total export value.

However, fresh seafood sales to China shut down almost instantly on January 24 as restaurants, shopping centres and public places, including wet markets, became no-go zones for Chinese shoppers scared of exposure to the disease.

"There is widespread dysfunction within China at the moment with road closures and inability to process paperwork or export documentation as increasing numbers of workers stay at home," a Seafood Trade Advisory Group market update warned last week.

Our average prices have gone from about $110 a kilo (landed in China) to $50 for live lobster - Nathan Maxwell-McGinn, Seafood Trade Advisory Group.

Abalone exports, worth about $83m last year, remain at a standstill, but the southern rock lobster industry in Tasmania, South Australia and Western Australia has been heartened this week by a limited number of fresh orders sent to major cities such as Shanghai, Guangzhou and Shenzhen, albeit at vastly cheaper prices than normal.

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"Our average prices have gone from about $110 a kilo (landed in China) to $50/kg for live lobster," said Nathan Maxwell-McGinn, the co-owner of West Australian exporter, JSJ Seafood and chairman of the Seafood Trade Advisory Group.

"The shipment and processing losses being carried by processors are enormous at the moment.

"We've also still got some logistic issues in getting product to markets outside central Shanghai.

"Some of my customers saying clients have not left their apartments for a month, although they are starting to see more people on the streets now."

Rock lobster fishing in WA

Rock lobster fishing in WA

He said quite a bit of home delivery activity and supermarket sales had replaced overall demand from top end restaurants and special event venues in China, although much of this cheaper product was supplied from other countries.

Big numbers of the classy, red and gold coloured southern lobster were still in waiting, alive, in tanks or sea cages in Australia or New Zealand, and mainland in China and other oversupplied Asian markets such as Hong Kong and Singapore, hoping for the luxury trade to recover soon.

In Adelaide, Southern Rocklobster executive officer, Tom Cosentino, said while there were now more domestic buyers, they paid much less than exports previously fetched, leaving processors and boat crews with big overhead costs.

We're expecting prices to be under pressure for a while, but that is the cost of doing business in China - Tom Cosentino, Southern Rocklobster

Depending on local market prospects and how far they were into their local fishing season, most SA, Tasmanian and Victorian lobster fishers had opted not to land a catch for almost a month.

Almost 200 boats were potentially now idle.

"We're expecting prices to be under pressure for a while, but that is the cost of doing business in China in a fairly special market category," he said.

"We saw the same problems during the SARS epidemic (17 years ago)."

South West Victorian rock lobster fisher, Neil O'Connell, Portland, removed his 70 pots from the water late last month when demand crashed, leaving his fishing efforts unviable.

Mr O'Connell said the Victorian government's decision to let fishers' unfilled quotas roll over to next season was a relief, as he was set to lose $100,000 on leased quota he couldn't earn a living from.

Sales of coral trout have also plunged in Queensland with up to 40 boats being pulled from the water, according to Queensland's Seafood Industry Association.

Trade recovery initiatives wanted

Aside from immediate cash flow concerns, the fishing industry has pressured Trade Minister, Simon Birmingham, and Austrade to activate special initiatives to help reinvigorate the damaged seafood trade as soon as coronavirus concerns eased and economic activity revived in China.

NFF's Mr Mahar has received frequent briefings from Mr Birmingham's office and provided feedback on farm sector concerns.

The NFF was acutely aware of the potential long term damage to China's economy and consumer spending, and subsequent risks to Australia's high value red meat trade and horticulture sales, as well as other commodities.

"We're not alarmed by an immediate threat to farmers, but aware of the big disruption to the seafood industry and very keen to do whatever we can to reduce the long term impact for farmers," Mr Mahar said.

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The story Food trade's nervous eyes on China's slight seafood lift first appeared on Farm Online.

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