Markets information – what’s really important?
By now you will have picked up that one of ABDI’s focus areas is around “where’s the money”. This is both at the production level, as well as the business level. An important part of the equation is around high-value customers, in high value markets – seeking a high-value product – over the long-term.
In the last fortnight, I’ve had two very timely and fascinating meetings to cover this very topic, with:
- The MLA markets team – including those involved in domestic and international beef markets, as well as consumer perceptions.
- Phil Ruthven, Director and Founder of IBISWorld – Australia’s foremost business strategy and forecasting company.
A wealth of information, data and forecasts were discussed during these meetings. It would take some people years to accumulate what I heard in two days. Let me summarise my interpretation…
The Long Term …
We hear much about the continued growth of China. Yet, there are strong growth prospects in countries like Indonesia, India, Malaysia, the USA and so on. These are all based around Global Megatrends – where increasingly wealthy (in a relative sense) consumers are increasingly seeking high quality food products. The data is telling us that there will be less growth prospects in other parts of the globe – although there always remain specific opportunities.
Phil Ruthven and the team at IBISWorld have a particular skill in looking ‘over the horizon’. At this bigger picture level, they observe that there are clear global trends towards consumer demand for high value food products, in areas of sustained growth. This incremental growth, given high population numbers – and Australia’s capacity to produce finite quantities of high-quality food products – sets us up well to focus on areas of high value.
Accordingly, it is reasonable to expect that this growth will be sustained and increasing over a longer period as these countries continue to develop, and the population of discerning customers looking for quality food continues to increase.
Any changes to any business – in particular the beef industry – can find great value an understanding how these global megatrends might play out. This is because changes to a beef production business to meet these demands may require years to come to fruition – considering the planning, relationship building and production and logistical changes required.
Medium Term planning…
Similarly, an awareness of Medium Term trends are also important. There is increasing potential for industry disruption in the domestic and global marketplace. An example scenario would be to imagine what would occur if the live export trade was to be adversely affected – as a result of politically motivated decision making, either in Australia or globally.
In terms of risk assessment, it is important to have planned and assessed the upsides and downsides of this situation to your sector of the industry and your business specifically. Would this be relevant to you – particularly after digging into the knock-on effect across the beef industry? Would you be prepared for such an occurrence? Does your business have short, medium and long term risk management strategies in place that might cover such an eventuality?
What are the take home messages?
There are several important learnings here:
- It is important to be proactive. To take responsibility to investigate, and then analyse market information to understand the impact this may have on your business. For any business, it is critical to think through the varied scenarios and get objective data from authoritative sources to support your thinking. Our webinar next week touches on this topic.
- Develop business risk management strategies for short, medium and long-term. This includes assessing market trends and opportunities, recognising the time lags (often years) to make changes on property (or elsewhere in the business) to reflect changing market circumstances. For this reason understanding and assessing longer-term megatrends may pay off in the long run – as will considering the potential medium term trends and their implications.
- Finally, the core tenant of doing business, no matter what sector. Putting all our eggs in one basket is a high-risk strategy. There is nothing worse that the call from a major customer saying … ‘just letting you know we won’t be needing your product anymore’ – or worse still ‘to continue taking your product, we are going to have to reduce the price’.
Webinar – “Unlocking the beef Value Chain – where could the greatest profits lie?”
Recently ABDI hosted a webinar – “Unlocking the beef Value Chain – where could the greatest profits lie?”
This webinar explores the beef value chain, and the touches on the importance value-adding to your beef product.
By Gordon Stone