According to KPMG, the evolving uncertainty of the COVID-19 pandemic has impacted the Australian economy and businesses in an unprecedented manner. The food and agribusiness sector has been affected to varying degrees with some food companies experiencing rapid increased demand for products as panic buying escalates across the country and in some cases import competitors are restricted. Imported inputs such as packaging are posing a real risk in the supply chain, and imported ingredients could be disrupted through broader impacts on global distribution systems such as shipping and ports. Other key farm agricultural inputs such as chemicals and labour are severely impacted.
Demand for Australian products is decreasing in the short-term as worldwide travel restrictions and quarantine regulations in Australia’s major trading partner countries impacts consumption and spending. With closing borders and dropping global demand for imports, Australian agricultural trade is feeling the impacts of coronavirus. Coupled with the impacts of the recent summer fires and the persistent droughts across most of Australia, the agriculture industry will likely be restrained somewhat for the near future as it recovers from current and imminent trade shocks.
Additionally, decreased availability of labour – this remains a concern for the food and agribusiness sector in accessing foreign workers especially in horticulture, intensive agriculture and food processing industries.
Decreased demand for exports – as outlined above, the pandemic has presented both an opportunity for local manufacturers and direct and immediate negative impacts on agricultural sectors.
Longer lead times due to reduced supply of transport and logistics services and travel restrictions (decreased air and sea freight capacity) – this aspect is being monitored as it relates to imported products both food and manufacturing needs e.g. packaging, and impacts on agricultural chemistry and inputs availability. Supply has also been hindered through the closure of factories in China and across Asia more broadly including Japan, Korea and South East Asia where the impacts of the pandemic are still evolving.