Company collapse warning

21 June 2024

The announcement this week that Houston Farms has entered into voluntary administration came as a surprise to many. However, as the news spreads along the bush wire it serves as a stark reminder of the agriculture industry's vulnerability within our economy and its supply chains. This situation highlights why supporting local agriculture is not just a consumer choice but a necessity in challenging economic times.

FTI Consulting, the appointed administrators, stated their intention to restructure or find a buyer for the business while it continues to operate. They described the business as already being in the advanced stages of the sale process at the time of their appointment.

Administrator Vaugh Strawbridge said, "We intend to continue this process, whilst exploring all available options, and are confident of completing a sale and/or recapitalisation of the business in an expedited timeframe with the support of all relevant stakeholders". 

This statement underscores the financial pressures facing all farmers. The move to voluntary administration was likely driven by several factors, including operational disruptions in the supply chain, and increased farm input costs such as insurance, labour, fertiliser, fuel, and energy.

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These factors, combined with rising capital costs and declining consumer demand for fresh produce driven by cost of living, may have negatively impacted sales, directly affecting the business's bottom line.

The rising cost of living is a reality that impacts us all, but it is particularly challenging for farmers and local producers. Tasmanian farmers are grappling with escalating drought, and high input costs, all of which are outpacing inflation.

Preliminary feedback from our current annual survey highlights that these conditions are not localised but are prevalent throughout the agricultural sector throughout the state.

In a recent discussion at the ACCC supermarket roundtable in Launceston, we heard stories from producers who voiced their struggles with unfair trading terms imposed by major supermarket chains. These conditions threaten the long-term viability of their businesses, which are vital to local economies. When a business that has provided jobs and supported local families fails, the ripple effects are felt throughout the community.

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The notion that farmers should absorb all additional costs to keep consumer prices low is not only unfair but unsustainable. This expectation places an undue burden on the very people who are essential to our food supply. If farmers cannot sustain their businesses due to rising costs and unfair practices, we risk losing local food sources altogether, leading to higher prices and less food security.

Consumers and government must understand the importance of buying locally. Let's not forget the lessons of the recent COVID pandemic, when there were local shortages in Australia because we no longer make things here and don’t support local industry. We cannot undervalue our local producers, or as a result, we risk losing the supply of local fresh produce in the future, particularly if we were to experience another pandemic.

Every dollar spent on local produce directly supports our community, funding everything from school supplies to household necessities for local families. This direct support strengthens our local economy and builds resilience against global economic shocks.