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Rabobank: Biosecurity to become major theme for many companies

Companies should adapt new strategies for biosecurity, production relocation, market portfolio.

The severity of disease outbreaks is elevated and set to remain so in many parts of the world, pushing biosecurity measures to a new level of importance and shaping business strategy, according to a new report from Rabobank.

In its “Global Animal Protein Outlook 2019,” Rabobank said tackling disease outbreaks requires strong biosecurity and industry leadership, especially since disease outbreaks are recurring issues that have affected the entire sector -- from livestock to poultry to aquaculture -- in 2018.

“We expect biosecurity to become a major theme in many countries and for many companies in 2019, while it continues to impact global trade flows,” the report noted.

Rabobank said African swine fever (ASF) – now a worldwide threat – is expected to change global trade flows and catalyze the consolidation of farming in some countries.

As of right now, the bank said ASF’s impact on China is still unclear but could become devastating. A decline in the pork supply, rising prices and higher imports are already expected in China in 2019 and beyond, the bank said.

ASF will greatly affect China’s domestic production, Rabobank said, adding that the outbreaks have affected all farm types in the second half of 2018, particularly smaller farms that have had to exit. Further, the banks said the ban on live hog transportation following ASF outbreaks has also restricted herd replenishment.

“Due to ASF, China will increase pork imports in 2019, presenting an opportunity for [European Union] pork exports to increase significantly. The EU is currently well placed to supply China, provided the spread of ASF in Europe is kept in check,” Rabobank said.

While ASF outbreaks have not yet affected production in the EU, Rabobank said any decline in EU exports could depress prices in a market that is already oversupplied.

Another worldwide threat, avian influenza (AI), will also continue to be an ongoing business risk for most poultry companies, as it causes consumer concern, pressures global trade volumes and leads to significant volatility in trade streams, Rabobank reported.

“Companies should anticipate the reality of ASF, AI and other diseases and adapt new strategies for biosecurity, production relocation and market portfolio,” Rabobank recommended.

However, the bank also pointed out that the threats provide opportunities for well-managed players and newcomers with strong biosecurity management.

“Governments are strengthening biosecurity requirements and responses, while companies are investing in developing new medicines and vaccines. While most measures are believed to be effective, some can distort markets if biosecurity becomes a non-tariff barrier for trade,” the bank concluded.

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