The document discusses how the SARS-CoV-2 outbreak has impacted China's agriculture supply chain. Farms producing poultry, livestock, and grain have been hit as transportation and logistics networks are disrupted. Prices for pork have risen significantly. The wildlife trade ban presents challenges for that industry. Spring crop planting may also be affected by quarantine measures limiting labor and input delivery. Purchases of US grains have occurred to fulfill trade agreements. Fruit and vegetable production amounts to over 700 million tons annually in China.

1. Seminar Guide,
Dr. S.K. Soam
Joint Director
National Academy of Agricultural
Research Management, Hyderabad
Submitted by,
Aiswarya Santhosh
PGDM 1904
National Academy of Agricultural
Research Management, Hyderabad
PGDM 630 – Seminar 1
The Effect of SARS-CoV-2 on the
Agriculture Supply Chain of China
ICAR-National Academy of Agriculture Research Management
Rajendranagar, Hyderabad-500030

2. What is a Supply Chain?..
• Supply Chain as a sequence of (decision making and execution) processes and (material, information and
money) flows that aim to meet final customer requirements, that take place within and between different
stages along a continuum, from production to final consumption.
• The Supply Chain not only includes the producer & its suppliers, but also, depending on the logistic flows,
transporters, warehouses, retailers, & consumers themselves. In a broader sense, supply chains include also
new product development, marketing, operations, distribution, finance & customer service.
Input Supplier
Producer
Processor
Retailer
Input Supplier
Retailer
Retailer
Processor
Input Supplier Producer
Producer Consumer
Consumer
Consumer
Consumer
Schematic diagram of a supply chain within the total supply chain network

3. Traditional Supply Chain Model &
Complexities
One traditional view of a Supply Chain is the so-called ‘cycle
view’. In this view, the processes in a Supply Chain are
divided into a series of cycles, each performed at the
interface between two successive stages
Supplier Producer Processor Retailer Customer
The traditional view of supply chain processes: cycles (the
triangles represent inventories of products)
• Poor Infrastructure
• Underexposure of Organized Logistics
• Absence of Adequate Warehouses
 Sheltered Warehouse
 Cold Storage Facility
• Access to finance
• Market access
• Lack of system integration

4. Components Of An Organised Agri- Supply
Chain:
c) Vertical integration
• Long term storage
• Packaging technology
• Cold chain management
• Energy efficient transport
• Quality and safety
 Application of Efficient Consumer
Response (ECR) System
a) Electronic scanning of price and
product at the point of sale
b) Streamline the entire distribution
chain
 Procurement or sourcing
 Logistic management
a) Transportation
b) Material management
c) On the premise of supplying
mostly from production not stock
d) Warehousing
e) Logistics Network modeling
 Organizational management
a) Contracting
b) Strategic alliances and partnerships
Agriculture Supply Chain
Network

5. Inefficient Agri Supply Chain
Post harvest Losses
Plate food wastage
Hunger
Farmer’s value realization

6. Contrasting supply chain management with traditional
management
Element Traditional Management supply chain Management
Inventory management approach Independent efforts Joint reduction in channel inventories
Total cost approach Minimize firm costs Channel-wide cost efficiencies
Time horizon Short-term Long-term
Amount of information sharing and
monitoring
Limited to needs of own current
transactions
As required for planning and monitoring
purposes
Amount of coordination of multiple
levels in the channel
Single contact for the transaction between
channel pairs
Multiple contacts between levels in firms
and levels of channel
Joint planning Transaction-based On-going
Compatibility of corporate philosophies Not relevant Compatible at least for key relationships
Breadth of supplier base Large to increase competition and spread
risk
Small to increase coordination

7. The trade-off between efficiency and responsiveness
in supply chains
Characteristic Physically efficient (lean) process Market-responsive (agile) process
Primary purpose • Supply predictable demand efficiently at the lowest
possible cost
• Respond quickly to unpredictable demand in order to
minimize stock outs, forced markdowns, and obsolete
inventory
Manufacturing focus • Maintain high average utilization rate •Deploy excess buffer capacity
Inventory strategy • Generate high returns and minimize inventory
throughout the chain
• Deploy buffer stocks of parts or finished goods
Lead time focus • Shorten lead time as long as it does not increase
cost
• Invest aggressively in ways to reduce lead time
Approach to choosing
suppliers
• Select primarily for cost and quality • Select primarily for speed, flexibility and quality

8. Modern practices of supply chain management in the
agri-food sector
• Collaborative demand planning and
replenishment: retailers and manufacturers work
together to assess consumer demand and to
determine the most appropriate supply
management and replenishment approach to
meet this consumer demand;
• Collaborative production: manufacturers and
suppliers work together to harmonize the supply
of raw materials and the production of end
products in such a way as to minimize the stocks
within the supply chain and maximize the
responsiveness;
• Collaborative logistics planning: coordinating
transport and warehousing between the various
parties involved, including shippers, logistics
service providers, carriers and recipients.
Areas for collaboration in the supply chain

9. Critical success factors for supply chain
management
Define single point of contact for each trading partner; this ensures that the information is neither lost nor deteriorates during its flow
between the trading partners.
Define agenda for collaboration (short-medium-long term); stabilizing the collaborative goals across the time.
Expand collaborative projects (scope and complexity); to gain critical mass the initiative must expand its scope and complexity
across time.
Ensure continuous sharing of information; the need to keep continuous information flow is paramount.
Trust develops: a real trust-based relationship will only prevail after a relatively lengthy period. Meanwhile, small barriers are
removed from the path, which brings confidence to the trading partners that their long-term vision is tangible.
Expanding the scope of collaboration: expand the number of processes, increase the number of products, the level of detail and/or add
trading partners
1
3
2
6
5
4

10. Value proposition
Connecting the Dots..
Farmers
Rural Produce
Collection Centres
Quality
Inspection/ Grading
Cleaning /
Packing
Routing
Long haul
Transportatio
n
Urban area
Distribution centre
Small retailers
Local
vendors
Food Processing
units
Exports
Bulk buyers (Hotels
/ Caterers /
Retailers)
Compost/Manure
from waste
eFarm Common Services
Planning &
Coordination
Research
Call centre /
Communication
Technology
Training &
support
Local
Distribution
Every stakeholder is alternately a buyer or seller of agro
goods, linked together by a common system.
Thus :
 Develop Online supply chain Technology backbone
with offline distribution mechanisms
 Create a network of farmers, intermediaries, logistics
providers, distributors and retailers
 Provide common support services like marketing ,
training , technology and agri business consulting
 Organize’the ‘un-organized’rural to urban supply chain
 Manage the network to ensure sustainability across the
chain

11. Case: How SARS-CoV-2 has affected
China’s Agriculture Supply Chain
??..

12. Corona takes over China
• On December 31, 2019, the Chinese government issued an alert to the
World Health Organization about a new illness that was spreading
through the city of Wuhan. Patients were coming down with dry cough,
and pneumonia and some were dying. The source was a new virus,
named SARS-CoV-2.
• A leading hypothesis is that the virus emerged from animals at a market in
Wuhan, China. In 2003, a virus very similar to SARS-CoV-2 emerged from
a market in Foshan, China. It caused the SARS disease, which spread to
dozens of countries and killed nearly 800 people.
• As of March 31st, SARS-CoV-2 has reached 19 countries and has killed
more than 42,000 people, most of them in Italy, Spain and China.
• The R0 Value which indicates the reproduction rate contagiousness, of
SARS-CoV-2 is supposed to be 2-3 i.e, an infected person on an avg can
infect 2-3 other persons. R0 value of common cold is 1.8.
SAR-CoV-2, a microscopic image

13. History of China’s Wildlife Trade
In 1970s famines were widespread in China & killed
36 M people. The Chinese population was exploding
with over 900M.
In 1978 the Chinese regime allows private farming of
wild animals (adopted by peasant farmers) for
sustenance. New animals meant new pathogens.
In 1988 China enacted the Wildlife Protection Act,
designated wildlife as natural resources of State &
encouraged their breeding.
Thus the Wildlife Industry was born. More animals
were funneled into vet markets for profit.
This legal wildlife market in turn provided cover for
illegal trafficking of exotic animals into China like
tigers, rhinos etc.
In 2003, a virus very similar to SARS-CoV-2 emerged
from a market in Foshan, China causing the SARS
disease, which spread to dozens of countries & killed
nearly 800 people
c
But months after the SARS outbreak China lifted the
temporary ban on wildlife market & allowed trade
of 54 species incl civet cats (in which the SARS virus
was traced).
1
3
2
4 8
7
5
6
China amended its Wildlife Protection Law recently
2018. But, the legislative focus is on the protection
of precious, endangered, & those of economic and
scientific research import.

14. CHINA – An Outlook
• China contributed roughly 18% to the world GDP in 2019
according to IMF.
• According to the "China Agricultural Sector Development
Report 2019" released by Mei, the agriculture-food
system contributes to about 23.3% of the country's GDP
and 36.07% of its employment.
• China ranks first in the world in terms of the production of
cereals, cotton, fruit, vegetables, meat, poultry, eggs and
fishery products.
China agro-ecological zone map

15. China’s Agriculture Moves into New Regions
Soil
erosion
Aquifer
protection
Water
pollution
threaten the production
in the congested areas
As cropland availability dwindles,
China faces a number of agriculture
challenges
Soyabean Rice And corn
acreage have
expanded in
rural North
eastern
provinces
To help address these issues China is
shifting places where some of the
major crops are grown.
The cotton industry has
boomed in Western China
which
produces 80%
of China’s
total.
Farmers are growing more
crops like potatoes that are
more nutritious and requires
less water.

16. India China Agriculture Trade
India imported agriculture items
worth $109.74 million from China
in 2018-19, with 7 products incl
kidney beans, bamboo, cassia,
fresh grapes, live plants and plums
and sloes accounting 84%of that.
Out of this only bamboo & kidney
beans has been imported in bulk
out of India’s total imports from
the world.
Indian exports to China,
i.e, mainly cotton linter &
mango pulp may get
impacted. India exported
agricultural products
worth $ 191 million to
China in 2018-19.

17. Wildlife Industry
• According to a report released by the Chinese
Academy of Engineering, the wildlife industry is valued
at $74 billion, and employs more than 14 million
people.
• Since the coronavirus epidemic began, the National
Forestry and Grassland Administration has confiscated
39,000 wild animals and “cleaned up” more than
350,000 sites such as restaurants and markets where
the animals are traded.
• Wild animals have been used in China for
Fur farming Medicine
Food Laboratary research

18. Wildlife industry
0 2000 4000 6000 8000 10000 12000 14000
2004
2018
wildlife industry(in billion¥ ) GDP of China (in billion¥)
• Though the wildlife industry contributes only a tiny bit to the
China’s GDP, the lobbying power of wildlife traders is so high
that Chinese Govt has been promoting wildlife trading.
• Majority of China’s population does not feed on wild
animals.
• In 2003 SARS took over the nation and its origin was traced
to civet cats. Soon after the outbreak China banned the trade
of wild animals, but a few months after the withdrawal of
SARS the Chinese Govt lifted the ban on wild animals
including civet cats.
• The origin of the current outbreak of COVID-19 is traced to
pangolins which has been supposed to feed on bats. The
virus can easily jump from one species to another. Pangolins
and bat are common delicacies in Chinese wildlife markets.
The outbreak of COVID-19 in the form of a
pandemic has called for the permanent
ban on wildlife trading in China, from
various countries and platforms.
GDP contribution of wildlife industry with Total GDP of
China
Source: China’s wildlife trade, South China Morning Post, March4,2020

19. China’s poultry, livestock farmers hit..
• China is now the world's largest producer, consumer, and importer
of meat. While quarantines are necessary to contain the disease, they often
lead to disruption of market chains and trade of agricultural products, with
significant impacts on the populations that depend on them for their
livelihoods & their food & nutrition security.
• The logistics network is understaffed and faced with travel restrictions. This
means farmers are struggling to feed their livestock, while many of the live
and wet markets where they sell their animals or the slaughtered meat remain
shut.
• Trucking network has effectively collapsed. Ports are running out of power
points to keep the meat frozen, further stoking fears of damage to the food
supply chain.
• A 2-3 MMT supply gap of soybeans(feed) is predicted in March, with crushers
in the country slowly returning to operation, but still suffering from logistical
problems.

20. • China formally lifted a ban on US poultry products, paving the way for much needed protein imports in
the world’s 2nd largest economy. Local economies are often the hardest hit.
• Most affected might be medium-sized companies and small businesses as supply chains of their
products are disrupted due to restrictions on transportation and people's movements.
• This current coronavirus epidemic is also
happening in the aftermath of the African
Swine Fever (ASF) epidemic that started in
August 2018 and affected severely the
Chinese's pig industry, leading to an increase
in prices for consumers and income losses for
smallholder farmers.
• The price of pork – China’s most popular meat
– rose by 116 per cent last month, the biggest
increase on record.
China’s poultry, livestock farmers hit..
Source: Outlook Report, Organization for Economic Cooperation and Development, FAO,U.N
Per Capita Meat consumption (55kg by2026) in China

21. Grain Market
• China is the largest importer and exporter of grains in the worlds & exerts significant influence on the world
market.
• China’s overall feed demand and consumption are down due to reduction in the swine herd(40-60%) due to
African Swine Fever.
• On December 6, the National Bureau of Statistics (NBS) published MY2019/20 estimates for grain
production, including barley area and production.
MY2019/20 China Grain Acreage, Production and Yield
Acreage(Million
Hectares)
Change from
MY2018/19
Total production
(Million Hectares)
Change from
MY2018/19
Yield (tonnes/
hectare)
Change from
MY 2018/19
Grain 116.064 -0.8% 663.84 0.9% 5.720 1.8%
Rice 29.694 -1.6% 209.61 -1.2% 7.059 0.5%
Wheat 23.727 -2.2% 133.59 1.6% 5.630 4.0%
Corn 41.284 -2% 260.77 1.3% 6.316 3.4%
MY2019/20 China Grain Acreage, Production and Yield

22. Effect of Quarantine Measures on Grain Market
• Second and third week of March is the
spring cropping time for Rice and wheat in
China. The outbreak has made the spring
cropping doubtful.
• The massive disruptions to transport
caused by virus-containment measures
could affect the delivery of inputs such as
fertiliser on which farmers rely.
• The quarantine controls would prevent
seasonal workers from getting to farms
where their labour is needed for planting.
Chinese Crop Calendar
Source: USDA, 2019

23. China purchased a total of 1.206 MT of US grain
-USDA report
• The US and China have been in an ongoing trade dispute
since China raised import tariffs by 25% on US soybeans in
July 2018 in retaliation for US duties on Chinese goods.
• Later in Jan, they came forward to sign the 1st phase of trade
agreement.
• China has now purchased 1,206 MT of US grains, as a first
step towards fulfilling this pact which included,
 756,000 tonnes of corn delivery during 2019-2020 marketing
year
 340,000 tonnes of hard red winter wheat for 2020-21
market year
 110,000 tonnes of soybean during 2019-20 marketing year.

24. Fruit and Vegetable Market
China is the largest producer of fruits and vegetables in the world.
China's fresh fruit and vegetable production amounted to 708 million tons; up 3% compared to a year
earlier.
The country accounts for 39% of world's fruit and vegetable production, followed by India (10%) and
the US (4%).
The movement of fresh fruits and vegetables have been hampered due to the restricted movements
of transport due to lock down amid SARS-CoV-2.
Inspite of the government notification, declaring not to hamper the essential food supply chain, there
has been miscommunication among officials in various provinces leading to hampered transportation.

25. Wholesale Prices for Major Vegetable Oils Increased
in 2019 2018 to 2019 – RMB/ton
• China’s swine sector has begin to recover from the
impact of African Swine Fever, total oilseed
demand forecast to rise to 148 MMT in marketing
year (MY) 20/21.
• Soybean imports are forecast to reach 86 MMT
based on the recovering swine and crush sectors.
• MY20/21 Soybean production is forecast basically
unchanged at 17.3 MMT, based on stable acreage
and average yield.
• Vegetable oil use, which has shown robust growth
in recent years due to a booming hotel, restaurant,
and institutional sector, will grow more slowly in
both MY20/21 and MY19/20 due to the impact of
Covid-19.
• Rapeseed production is forecast stable at 13.2
MMT in MY20/21 with flat yield and planted area.
JanFeb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
8,500
8,000
7,500
7,000
6,500
6,000
5,500
5,000
4,500
Soy oil Rapeseed oil Palm oilSoy oil Rapeseed oil
Source: China JCI
Oil Seed Sector
• Imports of palm oil, the leading imported oil, are forecast
stable at 7.1 MMT in MY20/21 due to cost advantage.

26. • China’s insatiable appetite for pork has made it heavily
dependent on imports of soybeans, a key feed for China’s
swine.
• The oilseed, also used to make cooking oil and products like
tofu and soy sauce, has found itself on the front line of the
escalating trade dispute between the world’s two largest
economies as it is one of the few areas where the U.S. runs a
trade surplus — China accounted for 60% of its total soybean
exports in the 2016-17 crop year, according to the U.S.
Department of Agriculture.
• After Beijing hit American soybean producers with a 25%
import levy on July as part of the tit-for-tat tariff, China has
mostly been turning to Brazil for additional imports.
10%
51%
35%
4%
China's Soyabean exports country-wise
Argentina Brazil U.S. Others
Oil Seed Sector

27. Dairy Sector
• China’s 2019 milk production is around 33 MMT, with a
2.3% year-on-year increase.
• Consumption increased by 2.5% in 2019 to reach
33.7 MMT.
• Chinese imports of cheese in 2020 were forecast to reach a
record high 119,000 metric tons.
• The production of milk on farm is much above the existing
processing capacity and the halted logistics &
transportation has affected the procurement of milk
leading to large scale dumpings and spoilage, hitting the
small and medium scale farmers considerably.
• There could be a 3-10% drop in the Chinese Dairy products
in the coming 12 months due to SARS-CoV-2.
• The milk consumption of China is estimated to fall by
4% and cheese imports are likely to reduce by 5% -
Rabobank
• The global Dairy Trade Index had dropped as much as
3.9%-European Milk Board.
Fluid Milk Imports of China by Market Share 2018/19
Source: Dairy and products report, USDA

28. Problems faced by the Agriculture Companies
Sourcing of
materials on
the supply side.
Labour
shortages
Moving the
products.
Anticipating
the demand.
Panic buying
and stock
piling

29. How the companies are coping up
• Making simulations of how the demand may evolve and if and how they can satisfy this
demand based on production and warehouse capacity.
• Estimating how many workers cannot show up due to the lockdowns and which of the
transportation routes are cut.
• Updating demand planning data, produce what’s most in the demand and what is most
profitable.
• People are turning more into online buying due to lock downs, hence coping up with this.
• Supply chain planning tool- highly flexible and data driven. Managing as many variables as
possible to get accurate forecasts on demand and optimize the supply accordingly.

30. Information is crucial to efficient agricultural markets. The availability of accurate price and other market information helps to
reduce risks and transaction costs and enables market participants to plan and coordinate more effectively their production
and trading activities. Benefits of well-coordinated supply chains derive from stable markets that can result in greater
profitability and employment. Supply chain coordination can:
• Provide access to new market outlets and thus increase producers’ ability to match production and demand.
• Provide access for producers and small-scale enterprises to information on technology, financing, and market
requirements for qualities and quantities.
• Better control product quality and safety through tracking, tracing, and certification.
• Share risks among chain partners, especially for large investments.
• Reduce lead-time and losses of perishable products through joint planning and coordination of supply.
• Provide a means to pool production and thus develop economies of scale.
• Increase employment from enhanced participation in value-adding activities.
Conclusion

31. • Peter J. Li. 2020. Wildlife Trade of China, South China Morning Post.
• Barratt, M. & Oliveira, A. 2001. Exploring the experiences of collaborative planning initiatives,
International Journal of Physical Distribution & Logistics Management.
• Hobbs, J., Cooney, A. & Fulton, M. 2000. Value chains in the Agri-food sector. Department of
Agriculture Economics, University of Saskatchewan.
• FAO Report 2007, Food-Agriculture Supply Chain.
• Dairy and products report 2019, USDA.
• Oil Seeds Annual Report 2019, USDA.
• Provincial Data Shows China’s Shifting Agricultural Trends 2019, China NBS, Gro Intelligence.
• Wild Laws: China and Its Role in Illicit Wildlife Trade 2016, Wilson Center.
• http://ricepedia.org/china
• https://www.statista.com/China
References

32. Thank you