Markets across the globe have been impacted by the recent coronavirus outbreak and Australia, unfortunately, will not be immune. Adverse economic disruption in China, Australia’s biggest export partner, will be magnified given the strong reliance and influence China has on a number of key Australian markets. As a measure to control the spread of the virus, the Chinese government has ordered workers to stay at home. This precautionary measure is affecting a range of Australian industries, including Agribusiness, as ports and factories continue to be shut down.
Whilst the Dairy industry is expected to escape the worst of the fallout given the largely processed nature of our Dairy exports, seafood, premium beef and lamb exports are forecast to be hit hard as China remains in a form of lockdown. Australian meat processors export to a number of major ports in China, including Dalian, Guangzhou, Ningbo, Shanghai, Shenzen and Quingdao. A number of vessels, loaded with Australian agricultural products, will not be able to unload, or will be subjected to lengthy and costly delays as they wait for Chinese business employees to return to work. Similarly, wool processors across mainland China have also been shut down. With approximately three-quarters of wool produced in Australia sold to China, producers are concerned about a slowdown in demand. Australia’s biggest lobster exporter has reportedly informed hundreds of fishermen to cease catching shellfish after widespread banquet and event cancellations across China.
Australia is still closely monitoring the outbreak, with the long-term impacts still unknown. The impact to the economy will largely depend on how governments respond to the crisis and how quickly the virus can be controlled. In the meantime, further disruption is expected to the Australian agricultural and export markets, as ready-made replacement export markets are not easy to come by.