Food processing standards are tested amid COVID-19 outbreak

The novel coronavirus outbreak in China is pushing the food processing market to adopt to the new environment. This market has at its disposal various methods and technologies to detect infectious diseases. New modern regulations, monitoring, adoption of technologies and integrity of farmers as well as food processing companies should help manage the outbreak, reducing risk of spreading infectious diseases.

In recent years, advancements in technology have driven transformation in the livestock farming market. Precision livestock farming technology made traditional livestock farming activities more efficient and economical. Additionally, the increasing global demand for both meat and dairy products, extended profitability and high yield and its minimal impact on the environment and climate change are fueling the growth of the precision livestock farming market. As a result, it directly impacts the global meat industry.

Meanwhile, the market value of processed meat is expected to cross the trillion-dollar mark by 2024, which is a phenomenal increase from its 2019 valuation of USD 587.15 billion, according to data provided by Market Data Forecast. And as the demand for meat rises worldwide, so must the production of meat. In fact, most of the world's meat is produced in Asia, which generated 140 million metric tons of meat in 2016. Pork and poultry are the most widely produced types of meat. And, with the increasing demand for meat products, demand for livestock behavior and health monitoring applications has also spiked. Within the precision livestock farming market, it is expected to have the highest CAGR during the forecast period of 2019 to 2014. 

The coronavirus outbreak is now a global challenge. The CDC recommends that travelers avoid all nonessential travel to South Korea, as there is limited access to adequate medical care in affected areas. Italy is now the European epicenter for Covid-19. Clearly, infectious diseases spreading to livestock is a major issue for the farming industry.

Eric Toner, a Senior Scientist at the Johns Hopkins Center for Health Security, explained to Business Insider that “Infectious diseases will continue to emerge and re-emerge. I think it’s part of the world we live in now… We’re in an age of epidemics because of globalisation, because of encroachment on wild environments.”

The new coronavirus, which originated in Wuhan, China, is the most recent example of a devastating outbreak. Poorly regulated live-animal markets mixed with illegal wildlife trade provide viruses with opportunities to spill over from wildlife hosts into the human population. “Most of the focus I think remains on an unknown impact of China's expanding coronavirus issues,’ INTL FCStone said in a note to clients according to Reuters. “We’re all aware the hog markets have long been counting on massive export business to China as our outlet for record large pork production, but now they’re seeing a sharp decline in consumerism, travel restrictions, and now even three port closings until mid-February, which heightens exporters’ anxieties further."

China Xiangtai Food Co., Ltd. (NASDAQ: PLIN) announced today breaking news that, “through its primary operating subsidiary Chongqing Penglin Food Co., Ltd, entered into a business collaboration agreement with Chongqing Good Helper Commerce Co., Ltd. (CGHC), a financing company backed by the local government in Chongqing, China for a business collaboration for up to RMB35,000,000 on the expansion of operation scale and diversification of distribution channels.

Pursuant to the Agreement, both parties agreed to collaborate on the purchasing, packaging, sales of pork, beef and lamb, as well as handle staffing, renting and managing additional facilities. CGHC has agreed to provide the Company with financing up of to RMB 35,000,000 with an annual interest rate of 10% in considerations of equal profit and expense sharing.

Both parties are aware of the spread of [1]2019 Novel Coronavirus and are focused on being detailed orientated by providing continued transparency, integrity, and keeping its pork clean, price fair and stable, and timely delivery of quality fresh pork and other freshly processed meat products to supermarkets in Chongqing every day.

Ms. Zeshu Dai, Chairwoman and CEO of China Xiangtai Food, commented, “We appreciate CGHC's trust in PLIN, and are pleased to have reached this agreement. We need to increase our sale volume for premium quality product with diversified distribution channels to meet the strong domestic pork demand. This collaboration would offer us the opportunity to expand to new retail channels and access to considerable working capital for its business needs.”

China Xiangtai Food is primarily engaged in pork processing. Its operations span key sections of the pork processing value chain, including slaughtering, packing, distribution, and wholesale of a variety of fresh pork meat and parts. Primarily focused on pork products, the Company also offers other fresh and processed products, including beef, lamb and poultries.

[1]2019 Novel Coronavirus (initially known as 2019-nCoV then renamed to Covid-19) is a virus identified as the cause of an outbreak of respiratory illness first detected in Wuhan, China. Early on, many of the patients in the outbreak in Wuhan, China reportedly had some link to a large seafood and animal market, suggesting animal-to-person spread. However, a growing number of patients reportedly have not had exposure to animal markets, indicating person-to-person spread is occurring. At this time, it's unclear how easily or sustainably this virus is spreading between people. The latest situation summary updates are available on The Centers for Disease Control and Prevention's web page 2019 Novel Coronavirus, Wuhan, China.