There are three key themes likely to dominate the food, beverage and agribusiness sectors in Australia in 2022 – and each is the continuing development of issues already reshaping the sector today.
The first of these is what I call the ‘second-order’ impacts of COVID. While Australia has moved away from the hard lockdowns and hospitality closures of previous years, the industry is very much still grappling with the impacts of COVID deeper into the supply chain.
Logistics is one. We've all read the stories about container shortages. It’s difficult to staff some of the ports around the world, and this is happening at a time where Australia has a large exportable surplus across most of its key commodities. On top of the domestic transport issues as a result of the current omicron surge, this adds to the challenges ahead for exporters.
Another issue is labour. At ANZ, many of our customers tell us labour is at the top of their risk issues for the year ahead. Staff shortages due to the omicron wave should improve in coming weeks, but expect ongoing impacts for a few months.
Attracting and retaining talent is a challenge - whether it's a fruit picker or an accountant, labour is scarce and the war for talent is real. Ongoing border uncertainty does not help, particularly for an industry like agriculture.
Food prices will continue to be a COVID-related issue. Australia has recently seen grocery inflation at its highest level in a decade. Globally, increased commodity prices mean governments are starting to take action to reduce food prices. Look for the geopolitical response of food inflation to develop over the course of the next 12 months.
The second theme expected to play out in 2022 is the continued inflow of capital into the food, beverage and agribusiness sector. The surge in merger and acquisition activity in 2021 is not something we see coming to an end - in fact, it will arguably continue for some time yet.
In 2022 look out for pension funds, offshore funds and family offices continuing to be active participants in the space. As Australia’s domestic superannuation industry continues to grow and to consolidate, expect it to play an increasing role as well.
If you're a business looking to attract capital or maybe even sell, this presents you a great opportunity. The trick is going to be to be investment ready – having connections in place, knowing how to market your business, and to have all the data you need on hand.
The third and final trend is sustainability. Right through the food supply chain sustainability has become critical issue for all businesses. In 2022 I’m looking for sustainability to go from being ‘theoretical’ to ‘practical’ for many in the food and ag industry.
Expect primary producers to rapidly educate themselves on carbon-farming projects and how they can develop carbon credit units for sale. And look out for supply chains to continue to invest more in digitisation and traceability so that they can stand behind the sustainability claims they're making.
In 2022, it's going to be the businesses ahead of this trend that will see the real benefits.
After an unprecedented 2021, this year will be a critical one for global markets. The post-COVID landscape is one of rapid technological change, a transformational shakeup of global trading orthodoxy and an increasing focus on sustainable business.
At ANZ Institutional, we aim to help our customers put themselves in the best possible position to take advantage of these forces. Our subject-matter experts provide thought leadership in a range of complex areas from across more than 30 markets.
As 2022 begins, we are asking our experts about the factors they see shaping markets and industry – and the opportunities and challenges within. We’ll be sharing the responses with you over the coming weeks.
Ian Hanrahan is Head of Food, Beverage & Agribusiness Australia at ANZ institutional
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