Volatile Markets: The Norm in Food Production
Volatile Uncertain Chaotic Ambiguous
When VISY Chairman Anthony Pratt addressed the Global Food Forum in Melbourne in May (2022) he had a very simple theme for anyone in the global food supply chain, be prepared for a ‘V.U.C.A’ world.
The past six months have highlighted the reality of a VUCA world. The invasion of the Ukraine by Russia has seen the geopolitical influence on world food prices become a reality, heat waves in the Northern Hemisphere, chronic labour shortage in food processing, and the threat of Foot and Mouth Disease. All these factors are currently impacting Australian producers at present.
This volatility will always be ongoing and has been a constant over the past few decades. From volatility comes opportunity and we need to be agile to position ourselves in a fast moving world.
Why Low Cost of Production is KEY to a VUCA World…
Cost of production is the lost metric of lamb production. For many new age consultants, it has become ‘rear vision metrics’, and many changed the drivers of lamb production. Production in lamb is a lucrative focus, with lambing percentage, lamb survival, condition score, and food on offer becoming the normal points of discussion among many lamb producers. While not discounting many of the benefits a focus on these points brought to lamb production, many were driving cost of production up, not down.
Leading producers can produce lamb under $4kg dressed weight. This allows significant volatility in end market price and these low cost producers can still make money. From my experience, simple low cost systems with clear production goals win every time in lamb production. When taking advice, question its relevance to cost of production, as opposed to simply production.
This article was originally published in the 2022 LAMBPRO Newsletter.