An article written by QFF Corporate Partner BDO
Operators within the Australian Food & Agribusiness sector face a multitude of challenges that place immense pressure on the industry. From inflation and soaring costs to unpredictable weather conditions and labour shortages, industry players must proactively find effective strategies to overcome these obstacles. The success of this sector is vital to Australia’s economic health, with the industry contributing significantly to employment, exports, and domestic consumption, accounting for 20 per cent of Australia’s domestic manufacturing sales and service income. Our advisers have the expertise to help you understand the biggest challenges that you are facing and provide insights on how you can navigate these turbulent times.
Inflation and soaring costs
The Australian Food & Agribusiness sector is experiencing inflationary pressures and soaring costs driven by several factors, including:
- Increased energy prices
- Transportation costs
- Global supply chain disruptions.
These factors put immense pressure on profit margins, especially for small and medium-sized agribusinesses. To help combat these pressures, consider optimising your supply chain network, implementing cost-saving measures, and exploring alternative sourcing options. BDO’s team of expert advisers can offer valuable insights and expertise in identifying cost-saving opportunities, analysing supply chain risks, and developing effective strategies to manage inflationary pressures.
The Australian climate means that our Food & Agribusiness sector is highly susceptible to the impact of unpredictable weather conditions, including droughts, floods, and bushfires, all of which cause devastating damage to crops, livestock, and infrastructure, disrupt supply chains and result in significant financial losses.
In the coming months, weather experts from the Bureau of Meteorology are predicting:
- Below median rainfall
- Warmer maximum and minimum temperatures
- Extensive warming of the central and eastern tropical Pacific Ocean
- Drier than average conditions for virtually all of Australia.
Adopting climate-smart agri-practices, investing in sustainable infrastructure, leveraging technology for early warning systems, and better resource management is crucial in mitigating the impact of adverse weather conditions. BDO’s advisers can provide guidance on risk management strategies, insurance coverage, and accessing government assistance programs to support agribusinesses build resilience in the face of climate-related challenges.
A shift in demographics, increasing competition from other industries, migration, childcare, and housing are all factors making it harder for employers to find staff, particularly in regional areas.
With skilled workers particularly hard to find, innovating within the sector has never been more important. Tech-enabled farming methods, such as small-footprint vertical farming, are on the rise and in addition to being less resource intensive, have the added benefit of requiring less labour while improving productivity. Implementing automation and digital technologies to improve efficiency and reduce reliance on labour-intensive processes can significantly support you in overcoming the workforce shortage.
Fostering partnerships with educational institutions and promoting careers within the sector can also help attract and retain skilled talent.
The key factors to overcoming agribusiness challenges are:
- Embracing innovation and change
- Building resilience
- Being proactive
- Having risk management and mitigation strategies in place
- Adopting sustainable practices.
While these challenges may seem daunting, organisations can overcome them through proactive measures and strategic planning. By leveraging the expertise and guidance of BDO’s Food & Agribusiness advisers, industry players can gain a competitive edge, build resilience, and thrive in the face of adversity. Together, by fostering collaboration and innovation, we can secure a prosperous future for the Food & Agribusiness sector.
Interested in learning more?
At BDO, we understand the unique challenges those within the Food & Agribusiness sector face. That’s why we specialise in helping businesses in the Food & Agribusiness sector to drive growth and profitability. Contact your local BDO adviser to learn more.