Another issue is labour. At ANZ, many of our customers tell us labour is at the top of their risk issues for the year ahead. Staff shortages due to the omicron wave should improve in the short-term but expect ongoing impacts for a few months.
Attracting and retaining talent is a challenge - whether it's a fruit picker or an accountant, labour is scarce and the war for talent is real. Ongoing border uncertainty does not help, particularly for an industry like agriculture.
Food prices will continue to be a COVID-related issue. Australia has recently seen grocery inflation at its highest level in a decade. Globally, increased commodity prices mean governments are starting to take action to reduce food prices. Look for the geopolitical response of food inflation to develop over the course of the next 12 months.
The second theme expected to play out in 2022 is the continued inflow of capital into the FB&A sector. The surge in merger and acquisition activity in 2021 is not something expected to come to an end - in fact, it will arguably continue for some time yet.
In 2022 look out for pension funds, offshore funds and family offices continuing to be active participants in the space. As Australia’s domestic superannuation industry continues to grow and to consolidate, expect it to play an increasing role as well.
Businesses looking to attract capital or maybe even sell are presented with a great opportunity. The trick is going to be investment readiness – having connections in place, knowing how to market a business and have all the data needed on hand.
The third and final trend is sustainability. Right through the food supply chain sustainability has become a critical issue for all businesses. In 2022, sustainability should go from being ‘theoretical’ to ‘practical’ for many in the industry.
Expect primary producers to rapidly educate themselves on carbon-farming projects and how they can develop carbon credit units for sale. And look out for supply chains to continue to invest more in digitisation and traceability so they can stand behind the sustainability claims they're making.
In 2022, it's going to be the businesses ahead of this trend that will see the real benefits.
Ian Hanrahan is Head of Food, Beverage & Agribusiness Australia at ANZ institutional
This article was originally published on ANZ’s Institutional Insights website