The Impact Of Drought And Climate Change On Australian Agribusiness

Agriculture is Australia primary method of using our vast supply of natural resources

to produce food, drink and clothing for trade in the domestic and international markets. A significant proportion of these goods are exported.

There are a number of major issues that impact on agribusiness each year, and need to be taken into consideration for any good agribusiness strategy in Australia. Two of the biggest factors that currently impact the Australian agribusiness in 2012 and are projected to continue to impact into the future are drought and global warming due to climate change.

Drought

A drought is a prolonged, abnormally dry period where there is not enough natural sources of water for normal needs. In an agricultural business this primarily impacts irrigation systems and the ability to provide food and water for animals and livestock. Drought is not just defined as low rainfall, but is more closely tied to the availability of water in general, and the capacity for these water resources to contribute to normal agricultural business operation.

Drought disrupts cropping programs, reduces breeding stock and can threaten permanent erosion of soil and thus the resource base for the Australian agricultural industry. The risk of serious environmental damage, specifically complete degradation of the fertility of soil and compromising the quality of available water, is extremely high during periods of severe and serious drought. As the landscape is dried out the risk of bushfires that can destroy crops and livestock increases.

The vast majority of Australia is desert and sees a very low annual rainfall meaning that living with drought is a harsh reality for many Australian agribusinesses.

Global Warming

Global warming relates to the rise in average temperature of Earth's atmosphere and oceans since the late 19th century, and the rapid continuation of this increase projected into the 21st century.

Although agribusiness technology and processes have improved dramatically over the centuries the industry itself is still very much impacted by the weather in that region in terms of productivity and quality of natural commodities.

Fortunately the overall observed impact of regional climate change has been relatively limited. In a country like Australia, though, which is so dependent on weather for agriculture this needs to be something that is very important to be prepared for. Various projections conclude that without sufficient adaptation to climate change the production from agriculture is likely to face a decline over the next 30 years.

A successful agribusiness, partnered with relevant organisations, will have strategies and plans in place to minimise the damage caused by the above issues.

Drought and global warming caused by climate change can have a dramatic impact on the finances and profitability of any agribusiness in Australia, regardless of the sector. It is important, then, than agricultural businesses in Australia align themselves with financial experts that understand this, and can provide strategies and assistance that is adaptable to the ever changing climate both literally and figuratively.

by: Peter Rowe

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