Beijing’s Latest Virus Outbreak Disrupts Tyson Foods and PepsiCo

(Bloomberg) -
China discontinued poultry imports from a Tyson Foods Inc. facility that tested hundreds of employees positive for Covid-19, raising concerns about the broader impact on U.S. and global meat exports.
Customs will confiscate all products from the Springdale, Arkansas, Tyson facility that are about to arrive in China or have arrived in the country's ports. The suspension announced on Sunday is a turnaround from a few days ago when Chinese officials said it was unlikely that food would be responsible for another virus outbreak in Beijing.
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The move is a potential new threat to meat plants around the world who have had slaughtering disorders due to the virus. Hundreds of workers have fallen ill in the United States and dozens have died. Recently there has also been an increase in infections in facilities in Brazil and Germany.
"In China, there are concerns about serious corona virus outbreaks in the United States," said Lin Guofa, senior analyst at Bric Agriculture Group, a Beijing-based consulting firm. The public is concerned about imported frozen products, since almost all cases in Beijing have been linked to a wholesale meat and frozen fish market, he said.
A new outbreak in China was due to imported salmon after the head of a food market where clusters were discovered claimed the virus was due to a cutting board used by a fish seller. The fear that food could transmit viruses led to the boycotting of salmon in the Asian country.
Trade disruption
If China continues to cut supplies due to corona virus cases reported in processing plants, this could also undermine the promised agricultural purchases under the Washington-Beijing trade agreement.
Tyson said in a statement on Sunday that he had reviewed the report and cited that the World Health Organization and disease control and prevention centers say there is no evidence that virus transmission is linked to food. The company announced late Friday that 13% of its employees in northwest Arkansas plants tested positive for the virus.
Tyson's shares fell 3.5% in New York on Monday morning. Lean hog futures in Chicago even fell 3.9%, with the most active August contract hitting a record low.
China had withdrawn from its previous position of associating food with virus cases. A customs official said at a briefing on Friday that the country had followed the advice of international organizations that the risk of transmission of the virus through imported food was low and that no food restrictions were imposed.
But trying to block the Tyson broadcasts contradicts this and leads the country again to step up its control over imported food. In the meantime, a German slaughterhouse voluntarily stopped exporting pork to China last week after finding that workers were infected.
China's customs department said over the weekend that a UK poultry company had reported cases of Covid-19. While the UK is not allowed to export poultry to the Asian nation, its authorities have agreed to take measures to prevent the virus from contaminating pork and beef exports to China and will notify the Asian nation if exporters have outbreaks .
Test imports
China's customs officials had started testing all shipments of imported meat for the virus, while officials in some major cities also checked the products on domestic markets. In a statement last week, Chinese customs said that all 32,174 samples of imported seafood, meat, vegetables, fruits and other related products were tested negative.
Control of the country could have a major impact on global food deliveries. Rising meat imports had helped boost US and Brazilian poultry, pork and beef producers both before the virus broke out in January and when world trade had started to recover in recent weeks and the country was closed left.
By April, U.S. exports of poultry meat and egg-free products to China were $ 152 million, after only $ 7 million in the comparable period in 2019, according to data from the U.S. Department of Agriculture.
However, China's market is faced with its own production surplus chicken and stagnating demand, said Lin of Bric Agriculture. China also imports most of its poultry from Brazil, while the US accounts for only a small percentage of imports, so the stop will have little impact on the domestic market, he said.
On Sunday, PepsiCo informed China that it had closed a food factory in the Chinese capital after a case of the virus was confirmed earlier this week. The company conducted tests on all of the plant's employees and quarantined 480 employees, although all were tested negative, one of its officials, Fan Zhimin, said at a local government press conference. PepsiCo China later said in a WeChat post that none of its beverage factories in the country had reported cases of the virus.
(Updates with share prices in the eighth paragraph)
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