Frozen king crabs are about to become scarcer in China. Concerns that frozen foods carry coronavirus is triggering food import bans. Structural changes in the local food industry are contributing to the risk of shortages and price rises.

China has suspended imports from more than 100 food companies in 21 countries where infections have been reported. Some cities have banned sales of imported meat altogether. Supermarkets have started separating imported foods from local products.

The curbs are accompanied by the tendency of anxious shoppers to avoid foreign food even when it is available. This has led to a decline in seafood imports, down nearly a third in December, and is accelerating earlier declines due to lockdowns.

Prices of key foods were already on the rise because of outbreaks of African swine fever. The world’s food price index reached its highest level since December 2014 late last year, said the UN Food and Agriculture Organization. Pork, rice and vegetable oil — all of which China would normally import heavily — have been among the most affected.

Monday Lex:

Shortages are on the cards. Floods and droughts in different regions of the country last year have wreaked havoc. Stringent virus testing of all imported frozen food products have caused logistical bottlenecks. It now takes up to a month for some products to get through customs controls.

Consider pork. China shipped in a record 4.4m tonnes of the meat last year to offset lost local production. December imports rose over 60 per cent. But prices have kept on rising, signalling a persistent shortage. Reserves that have been tapped since last year are thinning.

All that could exacerbate an impending long-term food shortage with a shrinking rural labour force. China is expected to face a grain supply shortfall of about 130m tonnes in the next five years. The knock-on effect would be lower availability of animal feed.

Local food companies rely on stable raw material prices and imports for steady profits. Disrupted times lie ahead. Shares in local pork producers including Zhengbang Tech are down 36 per cent from an August high, reflecting the challenges. Shares in China’s largest instant noodle maker Tingyi Holding are down more than a tenth. Investors should stay out of Chinese food stocks until the pandemic is under better control worldwide.

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