COMMENT
Coping with shocks and stresses is more easily achieved when you have multiple options available.
If a business or industry is locked onto just one sales channel or a narrow customer base, for instance, there is a higher chance it will fail if circumstances change substantially.
We have seen this recently during the COVID pandemic.
Many enterprises had to pivot and rapidly grow a revenue component that may have previously been small, such as restaurants moving from in-house dining to takeaway.
Some who were unable or reluctant to change did not survive.
The Australian red meat industry has faced multiple shocks and stresses in recent years, including severe drought, flood, bushfires, COVID and trade hurdles.
One factor helping it to cope with these, and past, shocks is the availability of a variety of marketing options.
Mixed farming provides multiple sources of income; live exports create competition in a drought; and exporting meat to 100-plus countries ensures continuing sales even if one major buyer is lost - just to name a few examples.
Australia's red meat industry is now faced with fresh challenges, including exotic livestock diseases that have reached our biggest near neighbour, and diversity is one of the best protections.
In any set of circumstances that may unfold, market stability is more likely the wider the available customer base for our industry - with each customer seeking different products and having different requirements.
Australia is lucky to have diverse and resilient livestock export and meat processing industries sitting alongside each other, as each segment has different drivers of demand, key markets and product offerings.
With many trade protocols relying on Australia's status as "free from" lumpy skin disease (LSD) and/or foot and mouth disease (FMD) as an assurance of animal health, the red meat industry will face the risk of substantial disruption if an incursion occurs.
Significant effort is being put into avoiding and minimising the impact.
But until we are facing the reality, rather than speculation, it is impossible to know exactly how such an incident will play out.
It is certainly possible that the markets of today may not be the markets of tomorrow - particularly after a shock in the system.
They may change focus, grow or shrink, and it is important to have the flexibility built in to capture any opportunities and buffer any consequences that arise.
We know from drought, COVID and trade disruptions that it is when things are not good that flexibility and diversity become almost priceless - and I do not see why that would be any different if we had a disease incursion.
It is a basic tenet of maths and economics that removing constraints - or limiting them as much as possible - will maximise the benefits for businesses and consumers alike.
Resilient industries provide economic benefits without any need for subsidies or market interventions, and actions that encourage a greater number of options within those industries should be the aim.
