2024 APAL Industry Forum - an insight by Jen Riseley
Business profitability, effective financial analysis and effectively using labour were key themes of the APAL industry forum for 2024. WA were well represented at the event, but for those who could not attend we have the below summary and more detailed information will be published in APAL’s Industry Juice newsletter.
Demographer Simon Kuestenmacher – Workforce shortages are predicted to worsen in agriculture. In mixed cropping enterprises, 26% of the workforce are aged 55-64, 27% are 65 +, indicating an approaching workforce ‘cliff’ and potentially huge loss of knowledge without effective succession planning. Generational differences will be key to attracting workers, generation Z (born mid ‘90s to early 2010s) have a global first, local second mindset. For horticulture to appeal to these employees, farming businesses must show they doo good for the wider community and world rather than simply act as a source of income. In terms of consumers, Gen Z and Millennial shoppers increasingly see apples and pears as snack food rather than a cooking ingredient, so keep this in mind for appealing varieties of the next 20 years.
NAB Agribusiness - Insights showed debt in agriculture increased by 9% last year, second only to the transport sector. Banks consider Character, Collateral and Capacity when assessing a loan, and climate change mitigation by individual businesses is emerging as a key transitional risk for banks before they consider lending.
Orchard Business Analysis project by Agfirst – Inputs costs have far outstripped returns for apple growers from 2010 to 2023, with a 1% increase in returns and 24% increase in CPI. On average the largest costs are labour at $0.62/kg, post harvest at $0.72/kg and insurance costs are rapidly rising. What are the key areas to look at?
Efficiency of labour, this does not mean cheapest possible labour as profitable businesses often had a higher labour cost per hectare
Premium packout, upper quartile businesses were achieving at least 50T/ha at a 70% class 1 packout.
Related to tonnage, efficient labour and packout relates to trellising and planting density. Dense plantings are more efficient in use of labour related to yield
Be aware of your costs and make changes during the season in response to changing conditions
Panel discussion:
Sue Finger – Analysing costs and expertise, decided to close the packing shed and focus on growing. Sometimes it is best to leave a block empty and not rush into choosing a replacement variety, this decision has a 20 year impact. One outcome of APAL orchard census is identifying which varieties may have been overplanted when growers consider their risk.
Ross Wilson – Apple markets can feel like a fashion market, with trends moving faster than a 15-20 year tree cycle. After carefully analysing returns, rejections and the demands of the Asian export market (judged as the most profitable export market for NZ), Ross removed Jazz varieties despite a 90T/ha yield. Yield alone was not enough to drive profitability.
Labour, Stephen Burdette – If you use Pacific workers, keep an eye out for the APAL summary of this presentation. Stephen’s information was dense and insightful. An increased compliance burden with the program means record keeping will be essential. Some new changes include mandatory domestic violence leave, having evidence of 120 hours of work a month being offered (including evidence of shift refusal), updated definitions of overtime and more. The most effective way to recruit workers is to visit in-country and recruit in person. Be aware that workers with pre-existing health conditions will have specific needs.
APAL quality program – Contrasting with the WA quality program, information on quality pass/fail scores are circulated among the top 20 packhouses in the east coast market to promote transparency. Testing is conducted monthly, with identifying information on fails only published after 3 fails in a row. June is the first month to see three fails in a row for multiple packhouses, so the transparency test will certainly be in place. Nardia Stacy gave an overview on the WA quality program, before the program was implemented the fail rate was similar to what APAL has seen on the east coast. It is a testament to WA growers that these rates have declined significantly and the industry has taken on pre-harvest testing to ensure quality results. Over the same period, WA is the only state to see both consumption of apples per person increase, but also average spend.
Motivational speaker, Stuart Gregor of Four Pillars Gin – Stuart co-founded Four Pillars Gin in Yarra Victoria at a time when gin was not at all trendy and there were no Australian manufacturers. This presentation was thoroughly entertaining and despite the topic not being fresh produce, had some useful takeaways:
Your business is not owed an existence by anyone but you, you as the brand manager must demonstrate business value to others.
If you start a tourism outlet, be sure to have a high traffic location or destination nearby.
People on your team are vital to your success, invest in your staff and ensure they are good ambassadors.
Reputation relies on repetition and relationships
Negotiation with supermarkets, Neil Rechlin and Anthony Grant of Nextgen – Key to negotiation with supermarket chains is understanding buyer KPIs will always be prioritised before the relationship with a producer. Prepare for negotiations by having context, build power and use tactics. The Code of Practice for retailer-producer dealings is often poorly understood by producers, but remember that dealings must be ‘reasonable’ and that communications by email rather than text message can more easily be used as evidence in the event of a dispute.