Food Processing Standards are Tested as Coronavirus Outbreak Intensifies Globally

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Feb 25, 2020, 09:00 ET

NEW YORK, Feb. 25, 2020 /PRNewswire/ -- The Coronavirus outbreak in China becomes a major global concern, which has pushed the food processing market to adopt to the new environment. A major advantage the food processing market has is its use of various methods and technologies to detect infectious diseases. New modern regulations, monitoring, adoption of technologies and integrity of farmers as well as food processing companies should help manage the outbreak, reducing risk of spreading infectious diseases. Over the course of the last decade, advancements in technology have helped transform the livestock farming market. Precision livestock farming technology made traditional livestock farming activities more efficient and economical. Additionally, the increasing global demand for both meat and dairy products, extended profitability and high yield and its minimal impact on the environment and climate change are fueling the growth of the precision livestock farming market. As a result, it directly impacts the global meat industry. Meanwhile, the market value of processed meat is expected to cross the trillion-dollar mark by 2024, which is a phenomenal increase from its 2019 valuation of USD 587.15 Billion, according to data provided by Market Data Forecast. And as the demand for meat rises worldwide, so must the production of meat. In fact, most of the world's meat is produced in Asia, which generated 140 million metric tons of meat in 2016. Pork and poultry are the most widely produced types of meat. And, with the increasing demand for meat products, demand for livestock behavior and health monitoring applications has also spiked. Within the precision livestock farming market, it is expected to have the highest CAGR during the forecast period of 2019 to 2014. China Xiangtai Food Co., Ltd. (NASDAQ: PLIN), Tyson Foods, Inc. (NYSE: TSN), Pilgrim's Pride Corporation (NASDAQ: PPC), Conagra Brands, Inc. (NYSE: CAG), Yum China Holdings, Inc. (NYSE: YUMC)

The Coronavirus outbreak is now a global challenge. The CDC recommends that travelers avoid all nonessential travel to South Korea, as there is limited access to adequate medical care in affected areas. And Italy is now the European epicenter for the novel coronavirus outbreak. By Monday, more than 215 had been confirmed and a sixth person had died. Clearly, infectious diseases spreading to livestock is a major issue for the farming industry. Eric Toner, a Senior Scientist at the Johns Hopkins Center for Health Security, explained to Business Insider that "Infectious diseases will continue to emerge and re-emerge. I think it's part of the world we live in now… We're in an age of epidemics because of globalization, because of encroachment on wild environments." The new coronavirus (named "2019-nCoV"), which originated in Wuhan, China, is the most recent example of a devastating outbreak. Poorly regulated live-animal markets mixed with illegal wildlife trade provide viruses with opportunities to spill over from wildlife hosts into the human population. "Most of the focus I think remains on an unknown impact of China's expanding coronavirus issues," INTL FCStone said in a note to clients according to Reuters. "We're all aware the hog markets have long been counting on massive export business to China as our outlet for record large pork production, but now they're seeing a sharp decline in consumerism, travel restrictions, and now even three port closings until mid-February, which heightens exporters' anxieties further."

China Xiangtai Food Co., Ltd. (NASDAQ: PLIN) announced today breaking news that, "through its primary operating subsidiary Chongqing Penglin Food Co., Ltd, entered into a business collaboration agreement (the "Agreement") with Chongqing Good Helper Commerce Co., Ltd. ("CGHC"), a financing company backed by the local government in Chongqing, China for a business collaboration for up to RMB35,000,000 on the expansion of operation scale and diversification of distribution channels.

Pursuant to the Agreement, both parties agreed to collaborate on the purchasing, packaging, sales of pork, beef and lamb, as well as handle staffing, renting and managing additional facilities. CGHC has agreed to provide the Company with financing up of to RMB 35,000,000 with an annual interest rate of 10% in considerations of equal profit and expense sharing.

Both parties are aware of the spread of [1]2019 Novel Coronavirus (2019-nCoV) and are focused on being detailed orientated by providing continued transparency, integrity, and keeping its pork clean, price fair and stable, and timely delivery of quality fresh pork and other freshly processed meat products to supermarkets in Chongqing every day.

Ms. Zeshu Dai, Chairwoman and CEO of China Xiangtai Food, commented, 'We appreciate CGHC's trust in PLIN, and are pleased to have reached this agreement. We need to increase our sale volume for premium quality product with diversified distribution channels to meet the strong domestic pork demand. This collaboration would offer us the opportunity to expand to new retail channels and access to considerable working capital for its business needs.'

[1]2019 Novel Coronavirus (2019-nCoV) is a virus (more specifically, a coronavirus) identified as the cause of an outbreak of respiratory illness first detected in Wuhan, China. Early on, many of the patients in the outbreak in Wuhan, China reportedly had some link to a large seafood and animal market, suggesting animal-to-person spread. However, a growing number of patients reportedly have not had exposure to animal markets, indicating person-to-person spread is occurring. At this time, it's unclear how easily or sustainably this virus is spreading between people. The latest situation summary updates are available on The Centers for Disease Control and Prevention's web page 2019 Novel Coronavirus, Wuhan, China.

About China Xiangtai Food Co., Ltd.: Headquartered in Chongqing, China, China Xiangtai Food Co., Ltd, is a food company primarily engaged in pork processing. The Company's operations span key sections of the pork processing value chain, including slaughtering, packing, distribution, and wholesale of a variety of fresh pork meat and parts. Primarily focused on pork products, the Company also offers other fresh and processed products, including beef, lamb and poultries. Through its core values, the Company is committed to maintaining the highest standards of food safety, product quality, and sustainability to provide high-quality, nutritious, and tasty food in a responsible manner through its portfolio of trusted brands. For more information, please visit http://ir.plinfood.com/."

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Tyson Foods, Inc. (NYSE: TSN) announced earlier in August that it has reached an agreement to invest in the foods division of Grupo Vibra, a Brazilian producer and exporter of poultry products. Once completed, the deal will give Tyson Foods more flexibility in serving customers in key global markets. "This investment will enable us to access poultry supplies in Brazil to meet the growing needs of Brazilian customers and of priority demand markets in Asia, Europe and the Middle East," said Donnie King, group president, international & chief administration officer for Tyson Foods. "It's part of our strategy to develop a more flexible supply chain and mitigate the volatility of our previous model, which relied primarily on U.S. exports." Since last year, Tyson Foods has expanded its global presence through the acquisition of Keystone Foods, which includes operations in China, South Korea, Malaysia, Thailand and Australia, and BRF's poultry businesses in Thailand and Europe. Over the next five years, it is estimated that nearly 98 percent of protein consumption growth will happen outside the U.S. "That's why we're growing our business outside the U.S.," said King. "As the world population continues to grow, Tyson will grow with it."

Pilgrim's Pride Corporation (NASDAQ: PPC) announced on October 15th, 2019, the completion of the previously announced acquisition of Tulip Ltd from Danish Crown. Tulip Ltd will operate as a business unit within Pilgrim's. The transaction was unanimously approved by the Pilgrim's Board of Directors and was funded with cash on hand, valuing Tulip Ltd at £290 million (or approximately $354 million based on a 1.22 exchange rate as of August 27, 2019). Tulip Ltd. is the UK's largest pig farmer and producer of pork and it is our fully integrated supply chain, affording complete accountability and traceability from field to fork, combined with customer focused approach to business.

Conagra Brands, Inc. (NYSE: CAG) announced last year dozens of new product launches across the four domains in which its iconic and emerging brands compete: Frozen & Refrigerated Meals, Snacks & Sweet Treats, Condiments & Enhancers, and Shelf Stable Meals & Sides. Following is a selection of some of the company's product highlights include the Slim Jim Giant Multipack comes from the No. 1 brand in meat snacks, with each box containing six giant size sticks. Available in Original and Mild flavors with over six feet of meat in one box. And the Pub Pies: An elevated take on the traditional pot pie with tender cuts of braised and roasted meat wrapped in a buttery shortbread crust. Flavors include Herb Roasted Chicken and Steak & Ale.

Yum China Holdings, Inc. (NYSE: YUMC) has exclusive rights in mainland China to KFC, China's leading quick-service restaurant brand, Pizza Hut, the leading casual dining restaurant brand in China, and Taco Bell, a California-based restaurant chain serving innovative Mexican-inspired food. Yum China also owns the Little Sheep, East Dawning and COFFii & JOY concepts outright. Recently, the Company announced that it signed a strategic cooperation framework agreement with the Shaanxi provincial government in Xi'an on September 25, 2019. This agreement consolidates the joint commitment of both parties to leverage their respective advantages to comprehensively deepen their cooperation. As part of the agreement, Yum China will bolster its fast-growing digital business by upgrading its Xi'an Customer Service Center to a Digital Service Center that will contribute to building Shaanxi's digital economy. In addition, Yum China will open more stores at prominent locations across Shaanxi, including new builds at historic and cultural sites, and introduce new and innovative business models, store concepts and services to the province. Yum China plans to leverage its expertise in supply chain management and cold-chain logistics to support the development of local businesses in Shaanxi and promote the sustainable growth of the local economy.

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