00:00Yeah, we're seeing a huge amount of change across the economy, including in the agricultural sector.
00:04We've got geopolitics shifting, we've got new technology and AI coming across the horizon,
00:08we've got the renewables push and shift towards net zero, and we've got demographic changes,
00:12and all of those are impacting the farming sector a lot. What it means in practice is it means much
00:16more shocks, much more uncertainty and more risk that farmers need to navigate and deal with as
00:21do consumers. And so in the past, we might have seen a shock once every 10 years. Now we're seeing
00:25shocks every one to two years. So farmers need to plan for that and manage it. On the upside,
00:29there's a lot of opportunity for innovation and technological breakthroughs that could really
00:33unlock more potential in the sector. When tensions around the Strait of Hormuz escalated, a lot of
00:38farmers were reminded just how much we rely on overseas supply chains for things like fertiliser,
00:43fuel and machinery. What did that moment teach us about the resilience of Australian agricultural
00:48supply chain? It was a really interesting experience because if you look at Australia,
00:51we pride ourselves on being food secure, on being a big food producer and helping to feed
00:55other parts of the world, including in our region. So we see that as an important part of our identity
00:59in Australia. But when we saw this shock and we saw the Strait of Hormuz close off,
01:03it quickly became apparent that we actually do still rely very heavily on those international
01:07supply chains. We saw fertiliser at risk, we saw diesel at risk, and we still import the vast majority,
01:13about 80% of our diesel and a very large amount of our fertiliser as well. Around 65% of
01:17our fertiliser
01:18imports come through the Strait of Hormuz. So that put a lot of pressure into the system,
01:22and it put a lot of agricultural production at risk. So we've learned some lessons from that.
01:26The government's focused on trying to improve our food security and our fuel security. I think
01:30that's going to stay a key focus of government over the next few years.
01:33Absolutely. And our hindsight is 20-20 vision, isn't it?
01:36Oh, it is.
01:36Households are clearly watching every dollar at the moment. What is the CBA data telling you about
01:41how Australians are changing the way they shop for food?
01:43Yeah, we can see households are coming under a little more pressure. Again, we've seen three interest rate
01:47hikes. We've got house prices now falling and a lot of global uncertainty, higher fuel costs.
01:51All of that together is seeing consumption slow, and we can see that in our data.
01:55Typically, what happens when consumers start to feel a bit of that pressure is first,
01:59they hit into some of their savings buffers, and we can see that in our data. Some of the flows
02:02into
02:02our redraw and our offset accounts have come off a little bit. But the next thing they do is they
02:06look to prioritise essential spending and pull back on discretionary spending. So that means things
02:13like household goods start to drop away a little bit, recreation starts to drop away a little bit,
02:16whereas healthcare and utilities and rent and mortgage get prioritised.
02:20Food's an interesting case. In food, you don't see a big drop off in food. People need to eat,
02:24but you do see quite a big rotation in the food choices people are making. And you do see people
02:29searching for value and looking for those lower priced, better value options rather than the
02:35premium offerings.
02:36Governments are talking much more about food security and the resilience of domestic supply
02:40chains. What does that growing focus mean for Australian farmers and the role agriculture plays in
02:45the economy?
02:45Yeah, it's going to be a key watch point over the next few years. Food security is going to be
02:49top
02:49of mind as well as fuel security for many governments, including the Australian government.
02:53I think that presents opportunities for farmers. There's going to be a big focus on how can we become
02:56more resilient, more self-sufficient? How can we have more of those critical inputs that go into
03:01agriculture delivered and produced here in Australia? So I think that presents opportunities
03:05to strengthen our supply chains and take away some of that key risk that we face. But there's going to
03:10be costs
03:10associated with that. We have to pay for that extra insurance that we're taking out to make sure that
03:14our supply chains are resilient and that will have some impacts on the sector, but also through to consumers.
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