Your Agribusiness Strategy: Vanity or Sanity?

In the ever-evolving landscape of Australian agribusiness, the marketplace is becoming increasingly tough and shows no signs of easing.  

The domestic market for fresh food is fiercely competitive, with consumers demanding high quality at low prices. Export markets, while vast, present their own challenges, remaining difficult to access and highly competitive.  

As the highest-cost producer in the Southern Hemisphere, Australia faces unique pressures. Agribusinesses must develop market-driven, implementable strategies to navigate these challenges and stay ahead in a demanding and dynamic environment.

Market Driven and Implementable or Bust

In an increasingly tough marketplace, Australian agribusinesses face fierce competition and high consumer expectations. The domestic market for fresh food is highly competitive, with intense downward price pressure and limited growth potential. Simply mimicking competitors or relying on past successes won’t suffice. Although export markets offer significant opportunities, they remain highly competitive and difficult to access. Australian fresh produce export volumes have declined from 785,000 tonnes in 2019 to 699,888 in 2023, with similar trends observed in other sectors. As the highest-cost producer in the Southern Hemisphere.

Scale and Mechanisation: Far Too Simplistic

Relying solely on economies of scale is a simplistic and often naïve approach to agribusiness strategy. Increased scale does not automatically translate to greater efficiency or lower costs. Without careful control, scaling up can lead to inefficiencies and defects, driving down prices and increasing inventory levels, supply chain costs, waste, and market risk. Overproduction and defects can be catastrophic for competitiveness and profitability. While investment in mechanisation, automation, and AgTech is essential for reducing production costs and improving quality, these technologies do not provide a sustainable competitive advantage unless they are proprietary and protected by intellectual property. 

A Robust Agribusiness Strategy

A successful agribusiness strategy must be driven by the market, not by ego or investment alone. The Managed Investment Scheme (MIS) era serves as a cautionary tale of what can go wrong when strategies are not market-driven. A robust strategy requires an objective understanding of consumers, competitors, and the continuously changing landscape. Agribusinesses need a compelling value proposition relative to their direct competition and substitutes. Production volume should align with qualified demand, and delivery must meet specifications 100% of the time, more cost-effectively than any competitor. Strategic competitive advantage is most likely to arise from proprietary genetics, protected intellectual property, primary production expertise, or advanced management systems.

Strategy Implementation

Implementing a strategy is the toughest part. Operational management must feel ownership of the strategy and be involved in its development. Strategy must translate into actionable plans detailing what needs to be done today, this week, this month, and this quarter. Without a high-performing, engaged workforce, both permanent and seasonal, strategy remains theoretical. Designing a capable and engaged workforce is essential to provide the capacity to run day-to-day operations and drive strategic initiatives forward. 

The Summary

Australian agribusinesses face a challenging and competitive landscape. A robust, market-driven strategy that focuses on efficiency, innovation, and effective resource utilisation is essential. Successful implementation requires ownership, engagement, and detailed action plans. Those who can navigate these complexities will be best positioned to thrive in the tough marketplace ahead. 

If you want to discuss strategies that can benefit your agribusiness, please get with Simon Drum +61 407 567 250
Simon@psvcadvisory.com.au