Top five disruptions to Australia’s agrifood supply chain

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The Australian agrifood sector is no stranger to adapting to different challenges in supply chains.

AgriFutures Australia’s bimonthly report, ‘Uncovering and minimising the impacts of global disruption April-May 2023’ provides an understanding and awareness of the current challenges to the agrifood sector and avenues to overcome them. The April-May 2023 report outlines a summary of the major logistics disruptions that are currently impacting Australian industries:

1. Largest labour shortage in 70 years

Wherever you look, every sector in Australia is crying out for skilled workers. Delays in visa processing has led to a staggering one million visas languishing in visa purgatory while the horticulture industry is short 100,000 workers.

Inflexible and restrictive visa categories that hinder workers from accessing regional Australia have been targeted in a review of the visa system which recommends transitioning the visa category from a performance-based model to a cultural exchange model.

It’s a significant move in combating workforce shortages in the horticultural industry, according to AgriFutures Rural Futures Senior Manager, Jane Knight.

“Workforce is a major issue across agriculture and being able to get the right people at the right time is an ongoing problem so this is really, really important for the industry to be addressing,” said Jane.

2. Frozen vs fresh no longer a matter of preference for many

Adverse growing conditions and supply chain disruptions meant food inflation peaked at 9.8 per cent in March 2023.

A 2.4 per cent increase in fruit and vegetable prices caused by unfavourable growing conditions, coupled with the ongoing war in Ukraine continuing to drive up global food prices, is leaving consumers feeling the pinch. They’re prioritising affordability and loading the trolley with frozen alternatives as a cost-saving measure.

Food price inflation is also increasingly driving consumers to choose lower-cost proteins such as white meat and supermarket private labels over premium brands. Coles reported that its private label has experienced twice the growth rate compared with branded products in the March quarter.

3. Lower domestic cattle prices, higher global export opportunities

More domestic supply means Australian beef producers are receiving lower domestic cattle prices, while global prices remain high due to the limited availability of U.S. and Brazilian beef – and it’s good news for Australian beef exporters and consumers alike.

“Lower domestic cattle prices and elevated beef export prices are creating really positive conditions for beef processors,” said Jane.

“While in recent years we’ve seen the need for the national herd to be rebuilt, and the price of beef has been very expensive at supermarket level, what the report is suggesting is that in the future we may see that come down because the national herd has regrown and we’re balancing out again in that space.”

4. Too much of a good thing

Wine and avocados – two firm favourites for the average consumer. And they’re both in abundance, for very different reasons.

“Trade barriers have been a significant problem for the wine industry in recent years,” said Jane.

“Negotiations are underway in the barley sector for providing a pathway for removing tariffs, and Australian Minister for Foreign Affairs, Penny Wong, has stated that if successful, it may set a template for the removal of tariffs imposed on Australian wine by China in 2020.”

The report also found Australian wine exporters are likely to experience a challenging harvest ahead as a result of existing oversupply causing lower prices, as well as wet weather.

And when it comes to everyone’s favourite toast topping, booming production has led to a significant oversupply.

“The avocado sector is a really interesting one because it’s been a growth market and there’s an extensive amount of new plantings that have taken place,” said Jane.

“This will impact domestic prices and persist over the next four to five years.”

Farm gate prices are anticipated to remain stable, with domestic avocado demand expected to increase. This may partially alleviate the impacts of the supply surplus.

5. Sweet times ahead for Australian sugarcane growers

Since 2018, global sugarcane prices have averaged $400 a tonne. Today, Australian sugarcane exporters are securing forward prices of more than $800 a tonne for 2024 and 2025.

With poor growing conditions in Asia and Brazil leading to lower supply, Jane said the growth opportunity for Australian sugarcane producers is enormous.

“They’ve seen reduced supply chain costs and elevated global prices so this presents a really exciting opportunity and it will increase the profit margins for sugarcane growers,” she said.

“Australian sugarcane producers are in a strong position to benefit from the situation in other major growing areas like Brazil and Asia.”

Read the report here
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