What might be the effect of November’s lockdown on UK pork?

On Thursday, the UK will enter its second national lockdown. The expectation is that this lockdown will not have the same dramatic effects as the previous one.

Panic buying may be less prevalent this time. Consumers have seen the food supply chain operate effectively. British meat performs relatively well in retail, compared to imported meat over indexing in foodservice. Food service businesses (pub/restaurants) are more prepared now, and many have found a way of providing delivery/collection services. We begin this lockdown with takeaways in place, unlike in March.

Consumer confidence had not yet recovered to pre-COVID 19 levels, and so the foodservice market has less volume to lose, although significant disruption is still expected. Similarly, retail volumes are already elevated, and so are expected to increase but by less relative to last time. This second lockdown is likely to prolong some of the pain already being felt in the industry – have consumers pushed back their expectations of returning to “normal” where foodservice would function at full capacity and large social events etc. can happen again?

The supply chain would already have been gearing up for Christmas. As a result, there may be less available cold storage than in March to provide flexibility in the event of supply and demand mismatching. Any pre-Brexit stockpiling in the supply chain may also exacerbate this problem.

Slaughtering has remained remarkably resilient in the face of COVID-19, although processing capacity could be more vulnerable to a second wave, and the resultant staffing issues,  more than the second lockdown per se. However, schools are expected to remain open, which could alleviate some staffing pressure compared to the first lockdown.

What might be the effect on pork in particular?

Pork demand performed relatively well over the initial lockdown period. Sales of pork/pig meat were up 13% (57kt) in the 24 weeks ending (w/e) 9 August 20.

However, pig prices have been falling recently, and this is likely to continue. Prices continue to be vulnerable to EU oversupply in the wake of African Swine Fever, rather than a second lockdown. Imports would be expected to decline again, as foodservice volumes fall. Again, pork processing capacity generally could be challenged in the event of a second wave, not so much by the second lockdown itself.

What about Christmas?

It’s too early to say if the lockdown will be extended into Christmas. The first lockdown period covered Easter, and lamb in particular underperformed. This is likely to be repeated if the second lockdown extends to Christmas, and would cover all meats, especially roasting joints. Many planned events, from office parties to concerts and weddings may not take place. However, as they did over the summer, more people would likely remain in the UK over the festive period than usual, potentially boosting consumer demand.

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