Entrepreneurship Zone: 20 April 2020: From Chinese meat demand to rocketing citrus prices, Covid-19 not all bad news for South African food producers

[Bulls n Bears]

South Africa went into lockdown three weeks ago with the aim of curbing the spread of the Covid-19 virus. While most businesses are closed, agriculture- and food-related enterprises are allowed to continue operations. To assess how the pandemic is impacting South African food producers, both on the domestic supply and export fronts, Global Trade Review recently hosted a webinar featuring representatives from fruit exporter Capespan and red meat company Beefmaster. Here are some takeaways from the discussion.

Meaty demand from China

Asked by the session’s moderator whether it is true that “China is mostly back to business as usual” in terms of imports, Beefmaster’s CEO Louw van Reenen responded, “China is back to business unusual because they’re actually buying more from us.” He says this is because many of China’s traditional source markets for beef products are currently not allowed to export.

Value of citrus is skyrocketing

The Covid-19 crisis has led to booming international demand for citrus, which is high in vitamin C and believed to boost people’s immune systems. As a major citrus exporter, Capespan is profiting from this trend. Antonella Da Cunha, Capespan’s group risk manager, says there is not only an increase in volume demand for citrus, but prices, too, have skyrocketed.

She explains that last week a carton of lemons was fetching prices of $50 to $60 in the Middle East, more than the usual “already generous” $15 to $20. Even in countries where certain types of citrus, such as grapefruit, weren’t widely consumed, shoppers are now buying “anything that looks like an orange or a lemon, even a grapefruit”.

On top of these high international prices, Capespan is also benefiting from a dramatic weakening of the local currency against the US dollar.

Rapidly shifting demand trends

To retain its revenues, Beefmaster had to adapt to rapidly changing demand trends. Just before South Africa went into lockdown, its products sold out in supermarkets within days due to panic buying. The company then suddenly lost most demand from quick-service restaurants – a large portion of its business – as many of them closed for lockdown. And following a spike in Easter-related domestic sales, demand has again shifted to export markets.

Shortage of vessels and shipping containers

Both Da Cunha and Van Reenen highlight the shortage of vessels and shipping containers as well as general port disruptions as major challenges in exporting their products. “We are struggling to get containers … We don’t have enough vessels coming into the ports and it’s mainly [because] the ports [are] running at 30% capacity,” says Van Reenen.—Howwemadeitinafrica



 

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