AUSTRALIAN producers export about 72 per cent of the total value of agriculture, forestry and fisheries production.
But 62pc of that exported primary production goes to just eight of our largest markets in Asia - China, Japan, Singapore, Indonesia, Vietnam, Republic of Korea, India, and Hong Kong.
Supply chain issues - a legacy of the global COVID-19 pandemic - and changing political landscapes between Australia and its trade partners, particularly China, continue to create challenges for agricultural producers, RSM Australia's The 2022 State of Agribusiness in Australia report pointed out.
Australia's supply chain to and from the rest of the world has been "completely turned on its head", according to RSM's national leader agribusiness Ross Paterson.
"From an accounting and business perspective, we've always run the mantra that it (supply chain) should be just in time," Mr Paterson said.
"But with the supply chain completely turned on its head, we need to make sure our supply chains are protected.
"We also need to anticipate what's going on and actually carry more stock than normal to make sure we're not going to be left out of the game.
"So that's a big game changer."
Before the pandemic the world shipping system was already finely tuned, so as soon as blockages appeared it resulted in lengthy delays and in a tripling or quadrupling of costs to some destinations in some cases, according to Moora Citrus orchard manager Shane Kay.
"The cost of sending a shipping container to the United Arab Emirates, for example, now costs more than $6000, compared to its previous cost of $1700," Mr Kay said.
"This (additional) cost comes straight off the bottom line.
"Delays are another major issue facing the industry.
"Journeys that would previously take three weeks between leaving a port and arriving at a destination may now take up to eight weeks.
"For producers of perishable items, this adds further concerns as it is difficult to guarantee the condition of products on arrival."
Disruption to the global supply chain has exacerbated already significant challenges for agribusiness and every business in the sector has been impacted - with the flow-on effect critical, according to Fraser Cuthbertson, chief financial officer The Pentarch Group which has agriculture and forestry interests.
"What may seem like a small challenge in one part of the industry can have more damaging flow-on effects in another," Mr Cuthbertson said.
"We export up to 8000 containers annually and booking space and price is becoming increasingly difficult, meaning uneconomical decisions are being made all over the place.
"Where before COVID-19 we would have spent minimal time on logistics, including supply chain and distribution, we're now spending a significant amount of our time managing this.
"The complicated nature of these delays also means that processes that would previously have been automated and considered reliable are now being conducted manually.
"This affects our ability to conduct other areas of business, reducing productivity and efficiency across the business and the wider industry."
Elders managing director and chief executive officer Mark Allison said the biggest issue for the company had been buying products out of China and the cost of production inputs, particularly crop chemicals, animal health products, general merchandise and fertiliser.
"We've had a sea freight issue with container availability," Mr Allison said.
"That was impacted significantly through COVID-19 across all industries and with the Russian-Ukraine war, it's got worse."
He said in terms of actual supply of product out of China for crop protection, delays went from eight to 12 weeks.
"That has now come back to about 10 weeks, but we've been able to get all the product we needed," he said.
Mr Allison said prices had stayed high, especially for fertiliser, with Russia being the world's biggest exporter.
Apart from supply chain delays and cost increases, growing levels of protectionism from countries worldwide linked to the pandemic also pose significant risks to Australia and its reliance on an open global trading environment, the RSM report stated.
By April 2020, export prohibitions or restrictions had been introduced by 80 countries and customs territories as a result of COVID-19, it stated.
As a result of these political and logistical challenges, producers have been forced to consider alternative export markets to recover lost costs.
Diversifying the supply chain and export markets helps to mitigate risk and ensure continuity of supply in most situations, as well as helping to boost both market performance and competitiveness, the report stated.
Mr Kay said changing export markets had forced Moora Citrus to closely examine its production base to help maximise the best opportunities for exports.
"For example, domestic buyers like Coles or Woolworths, or more premium Japanese or Chinese markets, may not accept what they consider to be a second-grade fruit, though these might be bought by the United Arab Emirates market," he said.
"However, it's essential to also consider the shipping cost alongside the value of the export.
"As shipping prices rise, exporting second-grade produce to smaller markets for a lower cost may result in losses for producers."
Mr Cuthbertson said working across both forestry and agriculture, they'd seen different changes across each sector, with neither unaffected by the pandemic and changing political landscape in the past couple of years.
"In addition to tariffs on certain products, the Chinese market also shut off importation of logs from Australia which has had a disruptive impact on the business and the sector as a whole," Mr Cuthbertson said.
"(But) while the Chinese market changes have presented significant challenges to Australian industry, it has been positive in other respects.
"One such positive effect is that it has accelerated and facilitated change and diversity in terms of market reliance.
"For example, we've found opportunities in markets including Korea, India, and Japan.
"However, each market has a different way of doing business and it's critical to understand how that impacts on the business."
According to the RSM report, as a country with a high cost of production, especially in sectors that are as labour-intensive as Australian horticulture, our export industries can only survive with the support of premium markets.
"It is critical for producers to assess the benefits of - at least temporarily - eliminating second-grade produce to minimise challenges and instead focus more attention on those premium markets," it recommended.
It is essential to continue to engage with the Chinese market, though important to also recognise that this could change in an instant for any number of reasons, it stated.
"Shifting focus and growing other premium markets, like Japan, can help to alleviate pressure for some producers," the report suggested.
However, it noted that while the opportunities exist, COVID-19-related restrictions are still also affecting producers' abilities to harness those opportunities, especially in terms of growing their networks and contacts.
Networking with existing and potential new clients was, until recently. one of the casualties of domestic and international border closures due to COVID, Mr Kay said.
"In the past, we would have a chance to build up contacts and relationships in the industry and outside, both domestically and internationally, when we travelled," he said.
"This is no longer the case.
"While some of the contacts remained the same, we haven't necessarily been able to make new connections and we've needed to maximise domestic opportunities as much as possible.
"At the same time, it's critical to find the best way to get the most out of the export markets we still have.
"In some cases, this may mean taking a loss here and there to protect the best markets in terms of cost recovery."
Mr Cuthbertson pointed out opportunities did still exist.
"While there are major challenges facing the industry and each new and existing market has its own idiosyncrasies, there are still opportunities and potential for plenty of growth across the globe," he said.
"Being a farmer or otherwise involved in the Australian agricultural industry is still a good place to be, despite its challenges."
Bega Cheese chairman Barry Irwin, who heads Australia's third biggest dairy processor, is another who sees positives ahead, despite the dairy industry still facing challenges with capacity alignment.
"If you look at the international markets it's very strong in terms of global demand (for dairy products)," Mr Irwin said.
"In terms of dairy as a commodity it's much improved this year and the outlook looks strong."
In its favour was strong global demand, a competitive Australian dollar and positive seasonal conditions, he said.
"The challenges back down on the farm are increased fuel and fertiliser costs and grain prices that are at historical highs," Mr Irwin said.
"But overall, those increases in costs are being reflected in (milk price) increases in the market.
"The other challenge for the industry is competitive land use."
"So where traditionally dairy farmers were probably the ones likely to buy beef farmers out, that's now the other way around.
"Processing is still highly competitive because there is little growth in milk supply and most dairy companies have spare capacity, a situation that has existed for some time.
"That competition could lead to some margin challenges in some products, but I think the bigger issue was the impact of food inflation, with the high commodity prices being passed on to the domestic market and the impact that was having on the end consumer."
For Bega, its suite of strong retail brands acquired since 2017, including Vegemite and Lion Dairy & Drinks, provided the company with a diversity of food and drinks products and access to a number of market segments, Mr Irwin pointed out.
Japan remains its largest market followed by other Asian countries including China, Indonesia and Malaysia and the Middle East.
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