News Article

Australia’s raging bushfires hurting business

Many companies are recording losses to business, with resorts closing their doors, cheesemakers scrambling to protect milk stocks and rising insurance claims, as Australia’s deadly bushfires continue.

Fire related insurance claims were made in the amount of A$375 million (US$260.3 million) since the beginning of November, according to the Compensation Council of Australia (ICA). Nevertheless, in many cases, the full cost of the tragedy is still too high and should not be identified for several weeks.

The fires also burned through more than 6 million hectares of land, killing 24 people, burning thousands of homes and leaving several towns without power and telephone service, in the two populous states of New South Wales and Victoria.

Aspen Group, which operates luxury parks in idyllic beach towns like Tomakin on the North South Coast of the country, has on Monday (Jan 6) switched vacationers off their rentals due to the fire and hopes to earn a minimum income of A$500,000.

“Fire behaviour along the NSW south coast has been disastrous with substantial loss of life, housing and infrastructure,” Aspen said in a statement.

It is not clear when the trading conditions would return to normal,” Tourists and citizens have been asked to leave the area. It is not understood when trading conditions will return to normal,” They have requested the visitors and the residents to leave the region.

Vitalharvest Freehold Trust, which leases farms to Australia’s largest classified Costa Group fruit and vegetable grower, said that fires had destroyed a packaging space, including equipment and vehicles on one of its berry farms.

The farm occupies around 6% of the berry plantations in Vitalharvest, he added, adding a full evaluation had yet to be carried out.

Kangaroo Island Plantation Timbers asked to stop trade on the stock until Tuesday awaiting statement on “current fire situation.” Kangaroo Island is a popular holiday resort in South Australia where two people died when dangerous fires were burned during the weekend.

Last week, the Insurance Australia Group reported that it expected to pay around A$ 400 million in natural disaster premiums for six months to 31 December. This constitutes more than half of its normal danger budget of A$641 million for the fiscal year.

Rival Suncorp said more than 1,500 reports had been submitted since the start of the fires in November.

Bushfires across Australia’s east bank are likely to inflict more misery for the dairy industry of the region, now hit by a prolonged drought, because the processors in one of the world’s largest exporters are facing shrinking milk supplies.

The flames burned over big milky fields along the south coast of New South Wales, with many factories suffering a third-year drought and West Gippsland in Victoria. The areas affected by the Bushfire account for nearly a third of the country’s milk production, the Dairy Australia industry group reports.

“It isn’t yet possible to get a full picture,” said Phin Ziebell, National Australia Bank agri-business analyst.

“Hundreds, perhaps thousands of cattle will have been lost. We have to wait for the full assessment, but the impact will be devastating.” Australia is the world’s seventh largest dairy exporter which primarily provides Asian markets with items such as fresh milk, butter and cheese and milk powder. Dairy is the fourth largest agricultural sector in the world and, according to government figures, worth A$3.3 billion (US$2.3 billion).

Even before the fires, milk production in Australia was set to drop to a 22-year low due to the drought, according to the chief commodity forecaster, leaving farmers scrambling for enough supplies to meet demand.

“The processors were already under pressure beforehand as Australian milk production falls,” said Rabobank dairy analyst Michael Harvey.

Most farmers are now struggling to obtain their livestock feed, which could impact both the production of milk and breeding.

“Many roads are closed so we can’t get fodder to farmers who need feed,” said Paul Mumford, the Won Wron dairy farmer, 210 km east of Melbourne.

“The fires have primarily killed the youngest in the herd. It will take years to rebuild,” he said.

Australian Prime Minister Scott Morrison said that almost 4,000 species had been destroyed by fires on Monday.

Bega Cheese, the largest Australian producer, said on Monday that the fires did not affect their production facilities directly, but affected several suppliers.

“We are working closely with our employees, dairy farm suppliers, and freight providers to ensure milk can be delivered and processed,” said Paul van Heerwaarden, Managing Director.

On Monday, Bega shares decreased by as much as 10%.

Some popular processors are Murray Goulburn, operated by Saputo in Ontario, and Fonterra in New Zealand.

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