TFGA Matters - Tasmanian Country Article - 3rd June 2022

03 June 2022


TFGA Matters - Tasmanian Country Article

As featured in the Tasmanian Country Newspaper on 3rd June 2022

“More sheep and beach” — managing the risks of farming in a disrupted world

In today’s article you would expect me to discuss the budget, I should discuss each spending announcement and how wonderful, or not so wonderful, the budget is for Tasmanian agriculture. To meet expectations I’ll sum up the latest budget — there is some more funding for water development (I think it is a mix of previously announced funding) and there are no surprises.

Fourteen or so years ago when Tasmanian Irrigation Pty Ltd, with John Lord as the chair, was just trying to push through the early schemes, such as the Midlands Water Irrigation Scheme, TFGA members responded with sentiments like:

“I am investing in irrigation water as I want to control the uncontrollable – the weather.”

“I want the confidence to plant crops, or feed stock, if the season cuts out.”

“I want greater control of the variables that impact my business.”

Tasmanian Irrigation’s website says that by 2025 they will have the potential to deliver more than 168,998ML of water through various schemes across the state.

More than a decade into major water investment in Tasmania our member now face a dramatically different set of ‘uncontrollable variables’ and we are now grappling with how a very different set of production risks. The ramifications of a global pandemic and a war being waged in the northern hemisphere sees Tasmanian farmers facing issues such as: the fundamental breakdown of the global freight system, volatile input prices (including, but not limited to skyrocketing fuel and fertiliser prices) and dramatic fluctuations in cereal and seed pricing, to name just a few.

It is difficult to predict when we might see a ‘return to normal’ with freight costs.

AgriFutures’ Uncovering and minimising the impacts of COVID-19 logistics disruption (November 2021 –January 2022) report listed six key insights into freight. Number five was as follows: “Global supply chain stakeholders, such as economists at HSBC and Bloomberg, are making a number of predictions as to when global supply chain congestion will return to pre-pandemic levels. The three scenarios circulating across markets and industries are (1) following Chinese New Year in February 2022; (2) midway through 2022; and (3) in early-to-mid-2023.

As we are now officially in June 2022, and the prospect an easing of freight disruption is not in sight let’s hope HSBC and Bloomberg' third scenario proves to be correct.

In regards to the war in Ukraine, the Financial Times discussed how General Mark Milley, the US Chair of the Joint Chiefs of Staff, told a closed congressional hearing, in the early hours of the conflict, that Kyiv could fall within 72 hours. After three months of war, Milley has been quoted as saying: “the big can’t just destroy and invade the weak and the small”

At a distance of more than 15,000km from the war zone, as the immediate impacts of COVID 19 appear to be easing, TFGA members are adjusting to a disrupted world with their usual aplomb. One member I spoke with recently said he was planning more “sheep and beach”, others are reducing dairy herd numbers and some are exploring increased opportunities in the oilseed market by upping their canola area.

Tasmanian farmers are, as we know, adept at assessing risk on the go. We constantly adjust our operations in response to global influences. And while we have little control over risks associated with freight and input pricing, access to a reliable supply of water has been secured for those who have invested in the irrigation infrastructure that has transformed Tasmanian agriculture. The TFGA supports the Tasmanian Government’s continued backing of irrigation development in Tasmania.