Supply chain coordination in Queensland agriculture | KPMG | AU

Supply chain coordination in Queensland’s agriculture sector

Supply chain coordination in Queensland agriculture

We explore how the Queensland agriculture sector is uniquely positioned to meet the rising global demand for agricultural produce.

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Lead Partner, Planning & Infrastructure Policy

KPMG Australia

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Agriculture supply chain illustration

Global demand for primary produce is expected to grow by at least 58 percent and as much as 98 percent by 2050 as the world’s population increases from 7.6 billion people to over 9.7 billion people.1,2 Queensland’s agriculture sector is uniquely placed to capitalise on the rising demands of this global market, particularly in the Asia-Pacific region. However, its current infrastructure system constrains the opportunity to reap the benefits. How Queensland positions its supply chains to meet this boom in demand will play a significant role in the sector’s, and Queensland’s, future prosperity and liveability.

The Queensland agriculture sector forms the backbone of many of the State’s regional communities. The activities of the sector incorporate supply chains that flow from the Darling Downs through to Toowoomba and the Port of Brisbane, as well as agricultural production in Central Queensland through to the processing and distribution facilities in Rockhampton, among others.

Queensland is a major producer of agricultural products, with the State recording $15.54 billion in primary sector produce at the farm-gate in 2016-17.3 The total value of Queensland’s primary resources, combining gross value of production and first stage processing, is set to reach $19.95 billion in 2016-17.3 Exports make up a significant portion of this, with over $9 billion in rural goods exports reported in 2016-17.4

Queensland agricultural supply chains have a complex mix of users engaged in numerous layers of interactions with stakeholders. With over 30,500 businesses in the supply chains engaging in agricultural activity, there are significant challenges with ensuring that all stakeholders meet the timely and efficient delivery of agricultural produce.7 These challenges are most prominent in the issues with the transfer of information within the complex mix of the supply chains’ users.8 In particular, the interactions between freight providers and agriculture producers are becoming increasingly inefficient throughout the State’s agriculture supply chains, as users compete for capacity on the freight network or favour specific modes of transport.

A solution to Queensland’s agriculture supply chain inefficiencies could be introducing supply chain coordination. This would require supply chain stakeholders to collaborate with an objective to achieve: cross coordination, collective action, information sharing, and long-term planning. In particular, introducing a Supply Chain Coordinator (SCC) could be catalytic to achieving more productive outcomes for the agriculture sector and the wider economy by unlocking latent capacity in the supply chains (and incidentally the freight network).

Our report Supply Chain Coordination in Queensland: How Queensland could meet a boom in agriculture highlights supply chain gaps and the economic potential of supply chain coordination (particularly transport efficiencies) in the Queensland agriculture sector.

It also demonstrates the initiatives’ strategic alignment to government priorities – specifically, better use initiatives of existing infrastructure and strategic objectives to deliver a more efficient freight network. The report discusses current challenges with respect to supply chain efficiencies across freight modes particularly emphasising the role an integrated supply chain coordinator can play in improving transport and logistics costs in the agriculture sector.

References

  1. Valin, H. et al. (2014), The future of food demand: understanding differences in global economic models. Agricultural Economics, 45: 51–67. doi:10.1111/agec.12089
  2. United Nations Department of Economic and Social Affairs (2017), World Population Prospects
  3. Department of Agriculture and Fisheries (2017), Queensland AgTrends update April 2017
  4. Queensland Government Statisticans Office. 2017, Exports of Queensland goods overseas (PDF 39KB), June 2017 Accessed 6 September 2017.
  5. Retrieved on 27/06/17 from www.business.qld.gov.au/industries/farms-fishing-forestry/agriculture/overview
  6. Department of Agriculture and Fisheries’ Queensland AgTrends 2016-17 (2017)
  7. Retrieved on 27 June 2017 from https://www.business.qld.gov.au/industries/farms-fishing-forestry/agriculture/overview
  8. This could also be considered informational asymmetry, which refers to situations where there exists differencesin the information available to different parties, which distorts market power and increases uncertainty, leading to imperfect market outcomes

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