Agriculture, Food & Beverages

A material lengthening of the working capital cycle in FY26, primarily driven by an increase in inventory holdings.

Australian agriculture, food and beverage operators faced mixed trading conditions in FY26, with favourable conditions in some protein and branded food categories offset by softer export demand, commodity price volatility and challenging seasonal conditions across other parts of the agricultural sector. Of our sampled companies, 69% delivered revenue growth in FY26, although the same percentage reported lower EBITDA margins, reflecting ongoing cost pressures across freight, energy and labour.

Average DWC increased by 16.2 days to 123.8 days in FY26, reversing the improvement achieved in FY25. The FY26 result was also above the five-year average. This deterioration was primarily driven by inventory holdings, with average DIO increasing by 12.4 days to 178.8 days. Despite more than half of sampled companies improving inventory efficiency, average DIO increased as these gains were more than offset by a smaller cohort of operators that recorded significant inventory build-ups associated with seasonal harvest timing, adverse weather conditions and softer export markets.

Debtors collection performance deteriorated slightly, with average DSO increasing by 2.9 days to 48.9 days in FY26 with a relatively even split of improvement and deterioration observed across the sample. Where DSO improved, this was generally supported by disciplined receivables management, while increases elsewhere reflected customer mix and higher-risk export exposures. DPO increased by 5.3 days to 80.2 days in FY26 as operators sought to offset larger inventory holdings through slower supplier payments, although the increase was insufficient to fully counter the inventory build-up.

Average DWC remains more than double international metrics driven almost entirely by inventory. DIO is well above all regional peers reflecting the seasonality of Australian agricultural production and the buffer stock required to support export markets.

Looking ahead to FY27, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) forecasts Australian agriculture production value to fall 5%, driven by lower livestock and crop production. Against this backdrop, operators are likely to remain focused on inventory management and cash flow preservation as uncertainty around trade settings, adverse weather events, biosecurity risks and ongoing input cost inflation continues to challenge the sector.