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“First and foremost, when we talk about Ukraine, our hearts and thoughts and prayers go out to the Ukrainian people, and in particular the Ukrainian farmers who at the end of the day are family farmers exactly like we have here in Australia.” – Brett Hoskin, chair of Grain Growers Australia
“First and foremost, when we talk about Ukraine, our hearts and thoughts and prayers go out to the Ukrainian people, and in particular the Ukrainian farmers who at the end of the day are family farmers exactly like we have here in Australia.”
– Brett Hoskin, chair of Grain Growers Australia
Russia’s invasion of Ukraine has triggered a Western political, strategic, economic and corporate response unprecedented in its extent and coordination. While the invasion appears to be happening more slowly than experts had anticipated, Russia does not appear to be losing at this stage. It’s a terrifying time for the people of Ukraine, and those across Europe who are witnessing Russia – a major power – invading a European neighbour for the first time since WWII.
While the conflict in Ukraine does point towards Australian grain prices being set to rise, there will also be further pressure on farm input costs. Fertiliser costs are up by 90% in some cases, and the cost of fuel is reaching record prices. It’s a difficult time to make decisions about planting the crop for this year when everything in the budget is significantly higher than last year. If you haven’t already spoken with your Business Advisor and Agronomist, I recommend reaching out sooner rather than later.
According to Rabobank, the Black Sea region accounts for 34% of global wheat exports, which have been interrupted by the Ukraine crisis. Rabobank predicts Australian wheat prices may rise from the current $367 a tonne to $425 a tonne in the near term, however, Australia’s ability to meet increased demand will depend on our ability to shift an export bottleneck.
What does this mean for your agribusiness here in Australia from a business and accounting perspective? First and foremost, it’s important to put an Agribusiness Game Plan Strategy in place to ensure your livelihood and the future of the farm are protected, particularly during this time of extreme market volatility. Secondly, make sure you have started working with your Business Advisor, or scheduled in to have interim financial statements prepared so that you can proactively put in place tax planning strategies to maximise your profits and the end of the financial year. Finally, we don’t know what the future holds in terms of climate, politics and the pandemic, so ensure you have a farm succession plan in place to give you the peace of mind in knowing your family will be looked after, and the farm will stay in the family for generations to come, regardless of what the future holds.
All the best,
2nd March 2022
Wheat growers in Australia could experience a lift in prices if Black Sea supplies become unavailable due to the Ukraine crisis, but experts warn the country’s ability to meet increased demand will depend on shifting an export bottleneck.
The conflict in Ukraine and sanctions on Russia are expected to put further pressure on farm costs even as Australian agriculture is set to declare one of its most profitable years.
Gavin Smith presents to the local Esperance business and agribusiness community on Smith Shearer's Business Strategy Game Plan - how Smith Shearer assists your business not just to survive, but to THRIVE, regardless of what happens.
If you have any questions for me, or would like me to address a topic specifically, please email me directly at melissa@smithshearer.com.au. Alternatively, complete the form below and I'll be in contact.
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