Agribusinesses perform better than ASX All Ordinaries Index

Amid the corporate carnage of COVID-19, food processors are thriving. Meanwhile a quarter of Australia’s biggest listed agribusinesses have outperformed global stockmarkets and another two thirds have bettered the All Ordinaries Index.

AUSTRALIAN agribusiness has proven a shining light in the coronavirus crisis.

Listed agribusinesses, particularly those involved directly in food processing, have outperformed the Australian Securities Exchange since the onset of COVID-19.

An analysis by The Weekly Times and AgJournal reveal that 90 per cent of the 30 largest ASX-listed agribusinesses have share prices that are either higher than what they were before the coronavirus-induced market crash or have not slumped as much as the All Ordinaries Index.

SHARE PRICE MOVEMENT FOR AUSTRALIA’S TOP 30 AGRIBUSINESSES (PDF)

In fact, half of them have recovered better than even the best of global stock exchanges, including the high-performing Nasdaq index in the US.

The analysis shows the ASX All Ordinaries fell 36.9 per cent and the ASX 200 by 36.3 per cent on March 23.

And they have recovered slower than other global stockmarkets since then.

The Nasdaq Stock Exchange in New York has recovered best, being only 5.8 per cent lower than the February 21 level, the last business day before sharemarkets around the world crashed.

Most of the other stockmarket indices have now recovered to be 12-20 per cent below their February 21 levels.

However, the All Ordinaries Index is still languishing at 23.1 per cent lower.

Despite that, nine ASX-listed agribusinesses — including GrainCorp, Elders, Ecofibre, Duxton Broadacre Farms, Ricegrowers Limited and horticultural producer Vitalharvest Freehold Trust — have share prices higher than on February 21.

The other three outstanding performers were all dairy processors — The a2 Milk Company, Bega Cheese and goats milk infant formula company Bubs Australia — offering proof people still need essential foods.

The a2 Milk Company even posted a record share price last month, at $19.23.

Bubs Australia has risen substantially in the past week after announcing a major deal with Coles supermarkets.

Of the other 21 agribusinesses, all but fertiliser and explosives manufacturer Incitec Pivot, stockfeed company Ridley Corporation and omega-3 supplier Clover Corporation were still below the All Ordinaries Index performance.

The performance of Australian food companies has not surprised Agribusiness Australia chairman Mark Allison.

“Early on, the Federal Government recognised agriculture and its allied industries as essential industries,” he said.

“So most companies put protocols in place, which allowed a minimisation of disruption in their operating activities.”

Mr Allison said there had not been significant disruption to food companies operating in the domestic market such as those providing meat and fresh fruit and vegetables.

But for food companies servicing the export market, it comes down to whether they provide discretionary or non-discretionary products.

He said companies providing discretionary food items, such as top-end red meat, to China, South Korea and Japan were at the mercy of restaurant shutdowns. Food companies providing non-discretionary products, such as milk powders, were doing well.

Peter Hemphill’s family hold shares in Bubs Australia and Select Harvests.