Recently, Australian agriculture has been challenged by global bio-security threats. Four weeks ago, Australia was introduced to the varroa destructor mite. This mite originates from eastern honeybees typically from Asia.
Eastern honeybees have developed an auto-grooming technique, where they groom their fellow members of the hive which result in dead varroa mites at the bottom of the hive. Western honeybees have not developed this technique, this is why the varroa destructor mite is a concern for the Australian agriculture 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 honeybee makes up most of this process. Crops such as cherries, blueberries and almonds almost solely rely on pollination from the honeybee.
In our opinion, Select Harvests is probably the most directly affected by the varroa outbreak. The varroa mite arrived in the Port of Newcastle in NSW. 50% of the pollinating industry is based in NSW, which could lead to a shortage of bees in Victoria and South Australia, where Select have some of their almond orchards. The impact of the mite on Select Harvests production is hard to quantify due to the many factors for forecasting crop yield.
Last week the AgFood Fund visited the Elizabeth Macarthur Agricultural Institute (EMAI) which is a biosecurity facility in NSW with the aim to enhance food and fibre production. A chief scientist at the institute noted a slowdown in detections of the varroa mite at new locations. In our opinion, it seems the varroa mite has been contained, however there may still be an impact for growers due to restricted flight hours for bees.
On the 20th of July 2022, the Federal Agriculture Minister Murray Watt, reported foot and mouth disease (FMD) in pork products in Melbourne retail stores. Australia detected FMD at Australian international transport hubs in 2018, but not in retail settings.
Currently there has been no live threat from the disease, however airports are taking preventative measures to stop any spread of FMD into the Australian livestock industry. FMD was detected in Indonesia in May and has spread to Bali which is a popular Australian tourist destination.
Current preventative measures to tackle FMD are sanitation mats at Australian international airports. It is believed FMD can be carried through on the soles of shoes. Citric acid is placed on these mats which removes dirt from the shoe.
Australia has also provided Indonesia with 1-million doses for their FMD vaccine program.
What does this mean for the Australian livestock industry?
Investors seem to be fearing the worst for FMD, with animal stock feed supplier, Ridley share price falling 15% in the past five days. Impacts of a FMD outbreak is hard to quantify, but we could see a decrease on the demand side for animal feed if there was an outbreak.
In our opinion, the government seem to have put strict measures in place, however we will be watching this space very closely for any more developments.
Figure 1: Varroa mite at EMAI
The AgFood Opportunities Fund is a Wholesale-only fund that invests in both listed and unlisted companies operating in the Agriculture and Food industries within Australia, New Zealand and the Rest of the World.