Elders CEO Mark Allison: Households caught between interest rate and inflation pressures

Mark Allison says households are feeling the pressure of one of Australia’s longest per capita GDP recessions.

Elders chief executive Mark Allison.

CEO SURVEY 2025: FULL COVERAGE

Economy

How would you rate the momentum of the Australian economy as we head into 2025? Australia is currently enduring one of the longest per capita GDP recessions in its history. This is placing pressure on households which are caught between higher interest rates and rising cost of living pressures. Consequently, momentum in the Australian economy is patchy with discretionary sectors such as Retail and Hospitality under significant pressure. A growing sentiment of uncertainty has emerged in agriculture with lack of clarity on key areas of agriculture and regional/rural Australia.

Official forecasts have Australia trimming interest rates from the first half of calendar 2025, is that consistent with your view?

Let’s hope so but recent data suggests a risk of higher for longer. The Reserve Bank is focussed on the Trimmed Mean measure of CPI which increased from 3.2 per cent to 3.5 per cent in October 2024, stubbornly above the target range of between 2.0 and 3.0 per cent.

What are you seeing around inflation in your own business? Elders cost base is weighted toward people, property leases and motor vehicles. The outlook for all three is for lower inflation in FY25 compared to FY24.

Outlook

What excites you heading into 2025? Are you likely to increase, hold steady, or trim your investment spend?

Elders will continue to acquire bolt-on businesses in line with its acquisition principles, with the aim of identifying and addressing geographic and product gaps in its service offering and network.

I am looking forward to seeing Elders recently announced agreement to acquire Delta Agribusiness to come to fruition in the first half of 2025, pending ACCC approval. It’s a significant step for us, and an opportunity to achieve some exciting synergies in our business, and improved service for our farming clients.

More widely, I am optimistic about the opportunities in Australian agriculture, particularly in relation to technology and emerging innovations that will drive greater productivity, efficiency and sustainability of the sector. Elders has been a part of the Australian agriculture landscape for 185 years when practices were incredibly rudimentary and manual, so to be part of finding solutions to problems being faced by producers now and for the future is extremely motivating. The global demand for food and fibre continues to grow, and Elders is a key player in Australia’s ability to respond to and benefit from this.

Reform

As we move into an election year, in your mind, what’s the single biggest lever that can/should be used to lift Australia’s competitiveness or productivity? This could be across any area from labour market, tax reform, training or other areas to encourage investment.

Keeping Australia’s business operating environment globally competitive must be a priority, including an ongoing focus on internal trade reform and boosting local productivity.

Over the last few years, we have seen far too many ideological driven policy decisions which have had major negative outcomes for Australia’s agriculture sector and regional/rural Australia. As a priority, we need to ensure that policy is driven through a strong and pragmatic evidence-based lens, providing a sound operating environment for Australian businesses. Without this approach, our ability to compete on a global stage becomes increasingly challenging.

Simplistically, government priorities appear upside down, with minority group social reform taking primary position, economic support and strength a poor second. The outcomes of this approach appear flawed as shown by our current declining economic position.

Geopolitics

Will a Donald Trump presidency have a potential impact on your business or sector (tariffs or streamlined regulation)? Does geopolitics drive a bigger part of your decision-making?

President elect Trump has “proposed” a range of punitive tariffs on a number of US major partners that, if implemented in full could have significant effects on global commodity markets.

They represent a starting negotiating position aimed at winning concessions on reducing trade deficits and influencing domestic policies (such as border controls). Therefore, it is doubtful that he would ultimately implement the full extent of his announcements. As the US has a trade surplus with Australia so its unlikely Australian imports will be a target for discriminatory tariffs. However, in a complex world trading system, substantial import tariffs by the largest economy in the world are uncertain to predict.

Our view is that any significant move towards protectionist policies would be negative for global growth and commodity prices long-term and would be harmful for Australia as a significant net exporter of agricultural produce.