Coronavirus' has "known unknows" for Victorian agriculture

Freshagenda director Steve Spencer said had started to move again in China, clearing the backlog of imports that had built up on ports.

"Global markets have slowed as a result, demand will be impacted, without any doubt."

Lockdowns in China had made it difficult to buy food.

'It's going to change the structure of demand, the traditional types of markets in those countries will be greatly affected.

"People are too scared to go outside, or mingle with others.

"It's hard to see how that will ripple around the world, as each country has a different approach."

The recent sharp drop in the oil price was also playing into uncertainty.

Credit markets were showing "risk aversion" to financing trade, because of the amount of money that would be tied up.

"In terms of dairy markets, any food company that is exposed to the major commodity markets is going to be thinking how it's going to play out."

"My sense is that it'll be at least the middle of the year, before we know the full impact."

He said dairy prices had fallen, since the third week in January, in response to the coronavirus outbreak.

The spot market had down by 10-15 per cent, although a weaker dollar also helped exporters.

"The fundamentals in the background are still quite good, in that the growth in milk output from the major players, is small," Mr Spencer said.

'We haven't seen a surge in milk production and we are not expecting one, so the general demand, before this uncertainty struck made sure the market stayed relatively tight."

Australian Meat Industry Council chief executive Patrick Hutchinson said there had already been a marked impact on Chinese sales, due to coronavirus.

"In China retail sales are through the roof, whereas food service is through the floor," Mr Hutchinson said.

"They are two different types of supply chain, in some instances with a range of different products, and different specifications."

Coronavirus (COVID-19) is a respiratory illness caused by a new virus.

Symptoms range from a mild cough to pneumonia, with the first outbreak recorded in Wuhan, China, in December, last year.

In 2018-19, Victoria's total food and fibre exports were valued at $14.2 billion, or 27pc of all Australian food and fibre exports.

Read more: Mamma mia, coronavirus hits Italian wool mils

Meat accounted for $4.1billion of exports, while China was the highest value market for horticulture, at $566 and wine $190m.

Shepparton orchardist Peter Hall said there had been some interruption to Chinese markets, due to movement restrictions on freight and people.

"'The main effect has been on logistics, and the confidence in being able to deliver to the markets where it's intended the product will go," he said.

He said there hadn't been a significant financial impact on fruit growers.

"Only if there is a difference in pricing, between alternate markets," he said.

There had now been a slight easing on movements, and confidence was returning.

China is also Australia's largest export market for table grapes accounting for 38.7pc of the 2019 volume, with much of that coming from Sunraysia.

Australian Table Grape Association chief executive Jeff Scott said demand for the product was still strong.

"Going forward there may be an issue getting empty containers, but apart from that there haven't been any major concerns," Mr Scott said.

"Demand in China, certainly, isn't slowing down."

But Mr Hutchinson said while goods were starting to move, it was still ro soon to understand the true domestic, and global, impact.

"There have been no drivers around, to get the containers off the ports," Mr Hutchinson said.

Mr Hutchinson said when Chinese supply chains were disrupted, exporters turned to Korea - Australia's fourth biggest market - to store chilled beef.

But that country had also been affected by coronavirus.

Mr Hutchinson said AMIC was also turning its attention to the impact on domestic markets.

"We are starting to work on initial scenarios," Mr Hutchinson said.

'We have 2000 retail butcher shops across Australia, what does the impact of coronavirus look like, if they can't get product?"

It could also affect abattoirs, if employees had to be quarantined for two weeks, resulting in lost production,.

The impact would be felt particularly in the "ready retail" market for smallgoods, which had a quick turnaround.

Disruptions to abattoirs could also result in animal welfare issues, in terms of a backlog of stock.

"There are a range of issues, around coronavirus, we are having to manage," Mr Hutchinson said.

And while Italy was a small market, Mr Hutchinson said the council was concerned about the impact if other countries followed suit, and quarantined the whole country.

"If other countries look at that model and take it on, it is a major issue for us, especially if it happens in the USA, the Middle East or Japan," he said.

"We are trying to align with local, state and federal governments and what they are doing, and what their program is."

AMIC covered everyone from abattoirs to processors and retail outlets, so had to plan for multiple scenarios.

"We are having to try and run as quickly as we can, on scenarios across the board," he said.

Red meat was a staple food.

"If we start to find problems in the way we circulate it, domestically, or internationally, it's going to have an impact on people's lives," he said.

One bright side was production had slowed, as supply had been reduced dramatically, due to the effect of rain.

Victoria also made up 77pc of all Australia's dairy exports, with the state making up 64pc of all Australia's dairy production, by volume.

In 2018-19, the major markets saw strong growth, especially in China (14pc), and Taiwan (14pc) with sales of $472 million and $67 million respectively.

Michael Harvey, Rabobank dairy analyst, said there was weaker market sentiment, due to uncertainty.

"Everyone trying to come to grips with the full impact coronavirus is going to have," he said.

"We have had reports of buyers being a bit more cautious with procurement, they are not looking to buy, or delaying buying product.

He agreed that a clearer picture would emerge, from April onwards.

But it would only be "business as usual" if nothing else went amiss.

"China is such an important market for the global dairy industry, it's the world's largest importer of dairy products," he said.

"The fundamentals have shifted, in the sense there are less imports in the chain, which puts pressure on prices.

"When you get reduced imports into China, milk has to flow somewhere."

Mr Harvey said there was a need for more data, to substantiate what was going on.

"It's really difficult to quantify it, at the moment," he said.

'It's why we are putting a lot of time into watching it, there is clearly a lot of risk around it."

He said most of the product traded onto world markets had a long shelf life

"But, if there are disruptions and delays, it does flow back up the chain, and manufacturers in Victoria will need to make decisions around what they do with the milk, they are collecting off farm.

Ryan Milgate, Victorian Farmers Federation Wimmera Grains Group councillor said he had heard some manufactures were having trouble in getting the active ingredients for key herbicides glyphosate and trifluralin.

He said he'd heard manufacturers had material ordered, and scheduled to come, were unsure as to the impact of coronavirus on supply chains.

"One supplier contacted us and said the job looks like it's going to get really tight," Mr Milgate said.

But he said it could also be because of the rain in NSW and Queensland.

"It's a combination of factors," he said.

"In isolation, coronavirus is not that much of an issue, but you combine it with the massive demand in NSW and it becomes a bit of a problem."

Nutrien Ag Solutions,managing director, Rob Clayton has said dwindling supplies of glyphosate had relatively little to do with the disease disruption issues in the Chinese supply chain and a lot more to do with the rain,

But Mr Milgate said he, and other cereal and oilseed growers, had decided to bring forward purchases of seeding chemicals.

He said he had now bought three quarters of what he needed.

"We would rather do that than scratching around in May, trying to track down chemicals," he said.

He said he hadn't heard of any issues with farm machinery, although one supplier had told him certain brands and sizes of truck tyres were "becoming tight."

And the Australian head of machinery and parts importer Case IH said the company was also adopting a "wait and see" approach.

Case IH Australia/New Zealand general manager Pete McCann said any impact would depend on how long the epidemic ran for.

"I guess it's more just a 'wait and see', and you'll find all manufacturers are keeping an eye on it," Mr McCann said.

'We are fairly well stocked, from a parts point of view."

Because componentry for machines was manufactured in many parts of the world, importers would not know how things would pan out for some time.

"Lots of components are assembled in Europe, with parts from all over the globe," he said.

"It's a real watch and see how it goes, and how it will continue.

"It's impossible to put a timeline on it, so we will just monitor it, at this stage."

Rain in Queensland and NSW was unlikely to see croppers buying new machinery, at this stage.

"I think some of those areas are going to be slow to recover, they will be cautious, which is completely understandable."