Australian bushfires hit businesses, damage still being assessed

Australian bushfires hit businesses, damage still being assessed

A fire blazes across bush in Newnes Plateau
A fire blazes across bush in Newnes Plateau, New South Wales, Dec 7, 2019. (Image: Reuters/Gena Dray)

SYDNEY: As Australia's deadly bushfires rage, many companies are reporting hits to business with resorts shutting their doors, cheesemakers struggling to secure milk supplies and insurance claims on the rise.

As many as 5,850 fire-related insurance claims have been lodged since early November with insured losses estimated at A$375 million (US$260.3 million), according to the Insurance Council of Australia (ICA). However, with conditions still too dangerous in many areas, the full cost of the disaster is not expected to be known for several weeks.

The fires have ripped through more than 6 million hectares of land in the two most populous states of New South Wales (NSW) and Victoria, killing 24 people so far, razing thousands of buildings and leaving some towns without electricity and mobile coverage.

READ: SAF working with Australia to identify support options over bushfires: Australian PM

Aspen Group, which owns tourist parks in idyllic beach towns like Tomakin on the NSW south coast, said on Monday (Jan 6) it has turned away holidaymakers from its rentals as a result of the fires and expects a hit of at least A$500,000 to its revenue.

"Fire activity along the NSW south coast has been catastrophic with significant loss of life, housing and infrastructure," Aspen said in a statement.

"Tourists and residents have been asked to leave the region. It is not known when trading conditions will return to normal," it said, although none of its properties have been affected by the fires.

Bushfires in New South Wales
Cobargo resident John Aish walks to pump water up to his cows in the top paddock at his destroyed home in Cobargo, as bushfires continue in New South Wales, Australia January 5, 2020. REUTERS/Tracey Nearmy

Vitalharvest Freehold Trust, which leases farms to Australia's largest listed fruit and vegetables grower Costa Group, said the fires had damaged a packing shed, including equipment and vehicles at one of its berry farms.

The farm comprises about 6 per cent of Vitalharvest's berry plantings, it said, adding a full assessment was yet to be carried out.

Kangaroo Island Plantation Timbers requested a trading halt on the stock exchange until Tuesday, pending an announcement on the "current fire situation."

Kangaroo Island is a popular holiday spot in South Australia where two people died as dangerous fires burned over the weekend.

Last week, Insurance Australia Group said it expected to pay roughly A$400 million in natural peril claims for the six months to Dec 31. That is more than half of its A$641 million natural peril allowance for the fiscal year.

Rival Suncorp said it had received more than 1,500 claims since the fires began in November. "However, the full impact will not be known for several weeks until areas are safe to access."

FIRE HIT KEY DIARY REGIONS, ADD WOES FROM DROUGHT

Bushfires across Australia's east coast are set to pile on more pain for the country's dairy industry, already hurt by a prolonged drought, as processors in one of the world's largest exporters face tightening milk supplies.

Dairy cows eat grass in a paddock on the New South Wales south coast near the town of Nowra
FILE PHOTO: Dairy cows eat grass in a paddock on the New South Wales south coast near the town of Nowra, Australia, Sep 5, 2014. (Photo: REUTERS/David Gray/File photo)

The fires have swept through major dairy areas along the New South Wales south coast, where many producers have faced a three-year drought, and East Gippsland in Victoria. Bushfire-affected regions account for about a third of the country's milk output, data from industry group Dairy Australia shows.

"It isn't yet possible to get a full picture," said Phin Ziebell, agribusiness analyst, National Australia Bank.

"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, supplying mainly Asian markets with products such as fresh milk, butter and cheese, as well as milk powder. Dairy is the country's fourth-biggest rural industry, worth A$3.3 billion (US$2.3 billion), according to government figures.

Even before the fires, Australia's milk production was set to fall to a 22-year low due to drought, according to country's chief commodity forecaster, leaving processors scrambling for sufficient supplies to meet demand.

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

A kangaroo jumps in a field amidst smoke from a bushfire in Snowy Valley on the outskirts of Cooma
A kangaroo jumps in a field amidst smoke from a bushfire in Snowy Valley on the outskirts of Cooma on Jan 4, 2020. (Photo: AFP/Saeed Khan)

Many farmers are now struggling to secure feed for their cattle, which could affect both milk production and breeding.

"Many roads are closed so we can't get fodder to farmers who need feed," said Paul Mumford, a dairy farmer in Won Wron, 210 km east of Melbourne.

"The fires have primarily killed the youngest in the herd. It will take years to rebuild," he added.

Australian Prime Minister Scott Morrison said on Monday nearly 4,000 livestock had been killed by the fires.

Bega Cheese, the biggest Australian-owned processor, said on Monday the fires had not directly affected its production facilities, but had hurt some suppliers.

"We are working closely with our employees, dairy farm suppliers and freight providers to ensure milk can be delivered and processed," said chief executive Paul van Heerwaarden.

Bega shares fell as much as 10 per cent on Monday.

Other big processors include Murray Goulburn, owned by Canada's Saputo, and New Zealand's Fonterra.

Source: Reuters/nr

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