By Max Andrews – Business Developer and Analyst
Recently, Australian agriculture has been challenged by global biosecurity threats. Four weeks ago, Australia discovered the varroa destructor mite. This mite comes from oriental bees generally from Asia.
Eastern bees have developed a technique of self-grooming, where they groom their hive colleagues, which results in the death of Varroa mites at the bottom of the hive. Western bees did not develop this technique, which is why the varroa destructor mite is a concern for the Australian agricultural industry.
How does the varroa mite affect ASX listed companies?
It is estimated that one third of the Australian diet requires insect pollination, and the bee forms the bulk of this process. Crops such as cherries, blueberries and almonds depend almost entirely on bee pollination.
In our opinion, Select Harvests is probably the most directly affected by the varroa outbreak. The varroa mite has arrived in the port of Newcastle in New South Wales. 50% of the pollination industry is based in New South Wales, which could lead to a shortage of bees in Victoria and South Australia, where Select has some of its almond orchards. The impact of the mite on the production of Select Harvests is difficult to quantify due to the many predictors of crop yield.
Last week, the AgFood Fund visited the Elizabeth Macarthur Agricultural Institute (EMAI), which is a biosecurity facility in New South Wales with the aim of improving food and fiber production. A chief scientist at the institute has noted a slowdown in varroa detections in new locations. In our opinion, it appears Varroa has been contained, but there may still be an impact for growers due to restricted flight hours for bees.
The 20e of July 2022, Federal Agriculture Minister Murray Watt reported Foot and Mouth Disease (FMD) in pork products in Melbourne retail stores. Australia detected foot-and-mouth disease in Australian international transport hubs in 2018, but not in retail outlets.
Currently, there has been no real threat from the disease, but airports are taking preventative action to stop any spread of foot and mouth disease in the Australian livestock industry. Foot-and-mouth disease was detected in Indonesia in May and has spread to Bali which is a popular tourist destination in Australia.
Current preventative measures to combat foot-and-mouth disease are sanitation mats at Australian international airports. It is believed that foot and mouth disease can be transmitted through the soles of shoes. Citric acid is placed on these mats which removes dirt from the shoe.
Australia also provided Indonesia with 1 million doses for its foot and mouth disease vaccination programme.
What does this mean for the Australian livestock industry?
Investors appear to fear the worst for FMD, with animal feed supplier Ridley’s share price falling 15% in the past five days. The impacts of an outbreak of foot-and-mouth disease are difficult to quantify, but we might see a decrease in demand for animal feed in the event of an outbreak.
In our view, the government appears to have strict measures in place, but we will be watching this space very closely for any further development.
Figure 1: Varroa at EMAI
The AgFood Opportunities Fund is a wholesale-only fund investing in listed and unlisted companies operating in the agriculture and food sectors in Australia, New Zealand and the rest of the world.