The increasing number of virus cases in Southeast Asia is forcing countries in the region to introduce or reimpose drastic measures to control the outbreak, said the analysts.
Impacts to food & agribusiness sectors extend beyond the lockdowns, as these measures have resulted in GDP slowdown, capital outflow, weak currencies, job losses, and overall weaker consumer confidence throughout the region, they added.
“We expect more negative economic impacts to come in terms of global recession and global decline for Southeast Asian export economies.”
Production, supply chains hindered by migrant exodus
Southeast Asian informal and formal economies are significantly supported by migrant workers, noted Rabobank.
Restrictive government measures, however, have resulted in the exodus of migrant workers back to their hometowns. The reduction of migrant workers in F&A sectors will severely disrupt production, supply chains, and distribution, forecast the market specialists.
“We also expect to see more logistics disruptions in the region, such as roadblocks, port congestion, and limited air freight capacity, if more countries extend or implement stricter measures to control the outbreak.”
Decline in beef, pork, poultry and fish consumption
The Rabobank team estimates that the economic slowdown will impact full-year beef consumption in Southeast Asia by 9% to 13%. Likewise, they see pork consumption as declining by 4% to 17% YOY.
“Southeast Asian full-year fish demand is also expected to dip by 6% to 11% YOY this year, as at-home meals will only partly compensate for the drop in consumption through foodservice.
“With weaker spending power, Southeast Asian poultry consumption is forecast to decline 1% to 4% in Indonesia, Malaysia, Thailand, and the Philippines, but still grow 4% in Vietnam this year.”
Lower use of wheat, corn and soybean meal in feed
The analysts predict that grain and oilseed (G&O) demand for animal feed will also decline due to expected reduced meat and fish consumption.
“We estimate demand for wheat, corn, soybean, and soymeal for animal feed in Indonesia, Malaysia, the Philippines, Thailand, and Vietnam to reduce by 6% YOY in 2020.
“Around 35% of total annual wheat, corn, soybean, and soymeal demand in these five countries is used for food consumption, while the remaining 65% is used for animal feed. Hence, the decrease in G&O use for animal feed outweighs the increase in G&O use for home consumption.
“We estimate total wheat, corn, soybean, and soymeal demand in these five countries will reduce by 3% YOY in 2020.”