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In the food service industry, we’re no strangers to fluctuating produce prices, particularly in a country known to suffer harsh weather patterns; it’s all part of the job. However, we’ve had a rougher-than-average couple of years and reports from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) suggest it will only get worse before getting better.
Australia has suffered a few dramatic nationwide droughts through the decades, and smaller, more localised (but often more severe) instances in the interim. Always, the effects of these droughts is most severely felt in the agriculture industry.
The eastern half of the country is currently in the midst of a decidedly dire situation, with most of the eastern and northern states in severe drought and the aftermath of severe flooding in Queensland, the national cattle herd count is currently sitting at a 25-year low.
The high cost of our increasingly severe weather patterns has a knock on effect when it comes to the national economy.
The cost of running a farm and feeding livestock becomes next to impossible with limited water supply. Often, the only option for farmers is to de-stock their herds to offset the costs of running their property and avoid harm to their animals. Whilst WA is holding up the national average thanks to a record year, herd numbers are still sitting at 25 million head, the lowest recorded since the 90’s.
When prediction of extreme weather patterns begins, farmers must brace for the increased costs associated with raising animals and, without indication of improvement, will be forced to start sending animals for early slaughter. Temporarily, this results in an increase in supply and a decrease in cost for the consumer, however, this is a short-lived phenomenon as the reduction of stock will eventually lead to a shortage of product. It can take years for farmers to build herds back up to previous numbers, a process that only begins once increased rainfalls are predicted, meaning that high supermarket and provider prices will continue long after a drought ends.
In 2017, 98% of NSW and 66% of QLD (where 67% of the nation’s herd reside) were in drought and the trend has continued in the years following, and even though conditions saw a slight improvement over the 2019 financial year, it wasn’t enough to put Australia’s agriculture industry in the clear.
According to independent meat and livestock analyst, Simon Quilty, in the two years following the 2013-2014 drought, the costs of beef products doubled nationally. These increases are crucial in aiding farmers to rebuild their stock and manage the replenishment of their pastures.
Reports in the lead up to FY20 have shown that the Australian agriculture industry is facing an 11% decrease in export sales and upwards of 3% drop in production nationally.
So, while watching pricing trends steadily increase can feel like a huge hit to the end-consumer, understanding the trickle effect and what these increases mean for the future of the industry is crucial to helping support our nation’s ability to produce the premium products we’ve been proudly producing for years.
Image credit: National Museum Australia