Current threats to our biosecurity


 

Rob Gordon

CEO, SunRice


Emma Germano

Managing Director, I Love Farms


Rob Gordon joined SunRice in February 2012 as CEO. Rob has more than 30 years of senior strategic experience, including as President South-East Asia and Senior Vice President of Viterra Inc; CEO and Managing Director of Dairy Farmers Ltd; Managing Director of Goodman Fielder, Consumer Foods; and has held various senior executive positions at Unilever. Rob is also a Director of Inghams Group Limited. 

The SunRice Group is a major Australian branded food company with approximately 2000 employees across multiple businesses. With more than 30 major brands in around 50 countries across the world, SunRice’s operations and assets span Australia, New Zealand, the Middle East, the United States, Papua New Guinea, the Pacific Islands and Asia. 


Emma Germano is the Managing Director of her family mixed farming operation, I Love Farms in Gippsland. I Love Farms has a firm focus on sustainability and strives to connect consumers with Australian famers to increase community understanding of food and fibre production.

Emma is the Vice President of the Victorian Farmers Federation and Chair of the VFF Horticulture Group.

Emma was awarded a Nuffield Scholarship in 2014, and her research examined global export opportunities for Australian primary producers.


Question 1: What have been the causes of the food shortages on supermarket shelves during the COVID-19 pandemic? 


Rob Gordon, Sunrice 

Changes to consumer shopping patterns leading to significantly increased demand has been the biggest driver, however, there have also been some supply chain impacts across various sectors which have at times contributed to the shortages. 


Emma Germano, I Love Farms 

Panic buying! I really struggled to understand why people were panic buying anything, let alone perishable goods. Then I reflected at the time the sense of security I was feeling because I was a farmer. It was an overwhelming security actually, one that I had never connected with in quite the same way as during the initial stages of the pandemic. The panic buying really highlighted the lack of understanding that the general consumer has of the supply chain in Australia, and I reflected on the things that I felt ‘panicked’ about. It was the things that I felt I didn’t quite understand or where I felt I have no control. 

Some horticultural products would have been in relatively short supply without COVID-19. We had smaller numbers of vegetables planted and lighter fruit yields on the back of drought conditions up the eastern seaboard.

What totally overwhelmed me was the fact that we as a population have a very limited understanding of the basic principle of supply and demand. Some farmers, wholesalers and retailers definitely took advantage of the situation by price gouging. Sadly, it is always the vulnerable people who suffer. We know that food security issues are real for over 3 million Australians.


Question 2: How has your sector been impacted by the COVID-19 pandemic? 


Rob Gordon, Sunrice 

There has been a range of supply and demand impacts. From a demand side in Australia, we saw unprecedented demand for a range of rice products, in some cases more than 200% above forecasts. The increased demand has exacerbated existing shortages of Australian rice due to the last two years of extremely low domestic production, caused by drought, low water availability and high water prices. Approximately 98% of Australian-grown rice is produced in the Riverina region of NSW, and SunRice processes and markets almost all of that production. The crop that has just been harvested represents less than 25% of Australia’s annual rice consumption, which has led to an increasing reliance on imported rice. While we have ramped up production at our Riverina facilities to respond to the additional demand, if current levels of demand continue, we may now exhaust remaining supplies of Australian rice towards the end of 2020. SunRice has significant capability and expertise in international rice supply chains, and is flexing that capability to meet increased demand in Australia, but we have observed instability and risk to international rice supply chains in key markets where we operate as a consequence of COVID-19. This includes some major rice exporting nations restricting exports to shore up food security, and impacts to shipping which have lengthened the delivery time of international supply chains. . 


Emma Germano, I Love Farms 

Horticulture, like the rest of agriculture, has been a mixed bag in regards to the impacts of COVID-19. There were some very solid prices for farmers initially, though some specific commodity lines did crash after the panic buying settled. Lines like bananas, avocados and baby leaf vegetables that had come to the fore in recent times thanks to the food service sector were dumped or ploughed in. Consumers didn’t eat smashed avo on toast at home as often as they did at their favourite café.

We were also inundated with people looking for work. Recently laid-off workers from many sectors flooded our farm gates and inboxes. An interesting phenomena was the number of Australian ‘local’ workers applying. Once the JobKeeper program was announced, interest from Australians died off, though backpackers were still desperate to replace their hospitality work on a farm. 

Horticulture industry representatives rallied together to ensure that the Seasonal Worker Program and Working Holiday Maker visa holders would be granted extensions to shore up our harvest labour force – an ongoing concern for industry recently.


Question 3: What longer-term policy questions do you believe the COVID-19 pandemic will provide the opportunity to address (e.g. global trade or increased domestic food processing)? 


Rob Gordon, Sunrice

The global COVID-19 pandemic has highlighted that some of Australia’s manufacturing supply chains for key industries are not self-sufficient, and are in fact reliant on other countries. I note that the Federal Government is taking a keen interest in this, and that this was the focus of a recent National Press Club address from the Federal Industry Minister Karen Andrews. As above, this includes rice, in which Australia is not currently self-sufficient. While drought has been a major factor in low rice production during the last two years, we believe its impacts have been exacerbated by water policy settings in the southern Murray-Darling Basin. The way that policy settings have rolled out in the Murray-Darling Basin, there has been a focus on water flowing to the highest-value use for export crops like almonds, which has meant less water has been available for annual crops like rice. Unless there is a change, we may be in a position where we are reliant on global free trade and international supply chains to supply Australian consumers with key staples like rice – as we are increasingly now due to the extremely low levels of Australian rice production. And as highlighted above, we have seen increasing levels of instability in international rice supply chains in recent months – and throughout key markets in the Pacific, Asia and the Middle East we have had direct requests from sovereign states to secure safety stocks of rice for food security reasons. 

Here in Australia, our view is that there have been unintended consequences of national water reform which have disproportionately impacted annual cropping. In particular, we believe that the allocation yield of NSW General Security Water Entitlements – used to grow rice and other annual crops – has been significantly eroded as a consequence of water reforms including the Murray-Darling Basin Plan and other state-based policies. If governments want production of annual irrigated crops like rice in the southern Murray-Darling Basin at scale, we believe steps need to be taken to address those inequities. Over our 70-year history, SunRice has invested in significant assets in the Riverina of NSW to value-add and transform the high-quality Australian-grown rice into branded products, which has ensured that the production isn’t just exported as a commodity but also creates local jobs. In years of normal production, our value-added manufacturing directly contributes close to $400 million in those Riverina communities, employing some 600 full time equivalent staff. 

However, the future of those manufacturing jobs and our ability to continue supplying the domestic market with Australian-grown rice is entirely dependent upon rice production returning to normal levels. Our view is that governments need to have policy settings that stimulate diversity in the agricultural crops grown in the southern Murray-Darling Basin, as opposed to there just being a monoculture created by water flowing to the highest-value use, without any regard for the broader socioeconomic benefits other crops like rice deliver through localised value-adding.  


Emma Germano, I Love Farms 

In the long term we need reform in many areas of agricultural policy, as well as policy in general. Industrial relations reform will be vital, as we weigh up the risks of employing people with our desire for business and economic growth. The very act of trying to roster staff in pack houses in a new world of ‘social distancing’ highlighted the inadequacies of a rigid award system that no longer serves either the employer or employee.

Immigration reform will be required to ensure Australia has the right skills and people in the right places to underpin economic recovery. It will be essential that we don’t get into an ‘us vs them’ debate. For horticulture, we are reliant upon a migrant workforce as the foundation of the total employment of our supply chains. We must move away from the ‘they steal our jobs’ mentality to a ‘they enable and secure our jobs and our regional communities’ approach. We must not put all our eggs into one basket, with changes and restrictions to global movement we must be strategic in regards to our immigration intake. A diverse workforce is a strong workforce.

Just as we must diversify our immigration intake, so too with our markets. We must unite, we must have one Australian produce brand, and we need to ensure that our trade agreements reflect the needs of our sector, one that has underpinned a sense of security for our community – and, indeed, our politicians’ confidence in international relationships.

And we must take care of our environment. We must have a framework for the environment that is a founding principle of our economic recovery.


Question 4: Do you think the pandemic will result in lasting changes in consumer behaviour?  


Rob Gordon, Sunrice

In the short term, SunRice experienced unprecedented increase in demand for some of its products – and while we are now seeing demand levels normalise, the global COVID-19 pandemic remains a dynamic and fluid situation.  In terms of general consumer behaviour, while demand levels are normalising it appears that people were not just stockpiling; they were also using more of our products, as demand continues to still be higher than usual. In  particular, demand for our small packs is still continuing, which speaks to this behaviour being more than just about pantry stocking. 

In terms of longer-term changes, while ever social distancing measures continue, we will continue to observe significant changes to our food service channels. So there is likely to be more eating at home, which we expect may lead to continued higher demand for our products. However as above, the situation is extremely dynamic so it remains to be seen what the impacts will be. 


Emma Germano, I Love Farms 

We have a little retail shop at our farm gate where we had to reassure people that there would be plenty more vegetables each day, and grappled with how far under supermarket prices we should stay before we were in fact not being charitable but a being bit stupid in business. 

The takings skyrocketed for a fortnight and then settled back down, but to a higher amount than before, over a 100% increase. That has been sustained now for two months, despite everything being available on the major retailers’ shelves. I think this is because consumers had their relationship with food supply tested in a way that most of us haven’t in generations. We had new customers seek us out during that time who decided to stay on purchasing with us, no doubt because of the emotional attachment to food. Their trust that the supermarket shelves are always full was challenged.  

We have been locked down long enough to change habits. I think that there will be definite cultural shift that reflects a greater appreciation for food and where it comes from. Some people will even need to go out in the year 2027 and buy more tinned tomatoes! What is clearly evident is that agriculture constantly has the capacity to rise to the shifting demands, both here and abroad.