July 29, 2020

A brighter future? New markets for Aussie agri-exporters

How Australian producers can maximise their export opportunities in a COVID world.

Prolonged drought, a horror bushfire season and, just as they looked to have caught a break in the form of an above average 2020 season, a global pandemic. Even in a sector renowned for its challenges, the past few years have been gruelling for those running Australia’s 85,000-plus farms and rural enterprises.

But the human faces behind the nation’s agribusinesses aren’t known for running from a fight and, with green shoots sprouting amid the COVID-19 crisis, there are reasons to be optimistic.

Who’s up, who’s down?

While some sectors of Australia’s economy have been ravaged by COVID-19, including agriculture in relation to seafood exports and some parts of horticulture, the industry overall is faring better than others.

Australian grain growers achieved premium prices in March, when food security concerns and panic buying saw the market boom. Prices in the paddock have been less buoyant, but lower demand for livestock internationally represents an opportunity for cattle producers to restock herds to pre-drought levels.

The picture is somewhat less positive for our dairy and fibre exporters. As a small player on the global stage – Australia has the capacity to feed between 60 and 75 million people – we have historically positioned ourselves as a niche supplier of premium produce. This highly successful strategy may need to be revisited if deteriorating economic conditions cause the rising middle classes in our region to reduce consumption.

Similarly, international demand for Australian cotton and wool is likely to remain subdued. While clothing and footwear sales have rebounded perhaps stronger than might have been expected, consumers are likely to focus on necessities rather than discretionary goods during an economic downturn.

Meanwhile, China’s imposition of a barley tariff and beef ban earlier this year is a source of concern for dairy and wine exporters fearful their industries will be subject to similar action.

In the longer term, though, our strong focus on the East Asian and Southeast Asian markets should continue to serve us well. The nations in these regions have been relatively successful in their COVID-19 containment activities. That’s likely to mean they suffer less of a hit economically than countries elsewhere in the world which have experienced greater disruption.

New markets in a post-pandemic world

It’s too soon to say whether the pandemic will effect lasting changes to lifestyle and consumption patterns in our major export markets. But with uncertainty comes opportunity.

Livestock producers and meat processors in South America and the US, for example, have seen their operations disrupted by COVID-19. There’s potential for Australian operators to step into the breach – provided we can maintain our reputation as a reliable supplier in a low-risk location.

And with provenance and processing standards now under the microscope around the world, Australia’s clean and green image – reassuring for consumers – may also open the door to new opportunities.

Optimising your operations

COVID-19 has seen a number of terms enter the vocabulary, most notably from a business perspective ‘pivot’, which is used to describe the process of making sudden, major changes to the way a business operates, or to the products and services it offers.

While pivoting may be a challenging proposition for agribusinesses, given the nature of primary production, optimising their operations is not.

For those who haven’t done so already, now is an opportune time to examine your risk profile, including your level of reliance on single markets and commodities, and the outlook for those markets and commodities in 2021 and beyond.

Although recent decades have seen a shift towards specialisation – witness the demise of the combined grain/sheep holding once common across Eastern Australia – diversification over the medium term may be attractive to some producers. Others may look to reduce inputs and boost efficiencies, to enable them to compete more effectively in post-pandemic global markets.

Helping customers sell to the world

NAB has a long and proud history of supporting Australian farmers as they seek out global markets for their quality produce. Our dedicated agri-bankers have a deep knowledge of the sector and have forged strong bonds with farming families and agribusiness customers, many of which span generations.

In 2020, we remain deeply committed to regional and rural Australia, and to helping our customers navigate the evolving export landscape.

As they service established markets and explore new opportunities, we’ll make the journey with them, as trusted partners, providing the funding and support they need to progress now and in the future.

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