Anthony Di Pietro of LaManna Premier Group says costs are eating into profit margins

Profits are under threat due to soaring input costs, supply chain issues and labour shortages, horti king Anthony Di Pietro tells The Australian Ag Podcast. LISTEN NOW

Anthony Di Pietro expects horticulture profit margins to be squeezed in the short term.

Soaring fertiliser and chemical prices, supply chain issues and an industry-wide scramble for labour are expected to significantly chew in to the profits margins of horticulture growers as peak summer production ramps up.

Anthony Di Pietro, the managing director of LaManna Premier Group – one of Australia’s biggest national fresh fruit and vegetable supply businesses with a turnover of $500 million – said costs were “going through the roof” which was likely to have an inflationary impact on prices for consumers.

“We are absolutely worried about margins this year,” Mr Di Pietro told The Australian Ag Podcast today. “Our fertilisers, chemicals packaging – it’s going through the roof, and we also have supply chain issues with getting things here on time. Stockholdings at suppliers are very low and shipping is running behind, so farmers are really stressed.

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“We are certainly paying unbudgeted pricing. That will have an inflationary effect on cost – and whether we are able to get a return on those costs as an industry is going to be the challenge.”

LaManna grows fruit and vegetables on its own farms across Australia and works with another 1100 horticultural grower suppliers. It has a team of 500 employees and a further 500 contractors.

Mr Di Pietro, the chairman of Australian Fresh Produce Alliance, said the impact of a shortage of skilled and unskilled labour on Australia’s billion-dollar horticulture industry was “enormous” describing it as “unprecedented times”.

“We are seeing across the whole country, in every industry, skilled labour in high demand because there is a shortage,” he said. “Skilled labour is being raided and that is going to have an inflationary impact. Until we can have a free-flow of people coming into the country to alleviate that then cost pressure is going to be enormous.”

Mr Di Pietro said he couldn’t see any reprieve for some time given the need to get “people back in, quarantined and into the system” but rejected the suggestion that the situation could worsen before it got better.

“It is going to take time,” he said. “We lost over 100,000 working holiday making visas in a 12-month period out of the country, out of the workforce, that weren’t replaced.

“I think it will continue to improve now. The Pacific Australia Labour Mobility Scheme is a really good one … and the Ag Visa sees a pathway to residency (which is good news).”