The nature of business relationships between small and big businesses, together with the likely impact of climate change and growing political instability overseas, means a challenging future for northwest coast businesses, small businesses in particular.

A key characteristic of the economy of north west Tasmania is its reliance on the growth, harvesting and processing of products derived from the region’s abundant natural resources. Furthermore, our regional economy is reliant (although less reliant today than previously) on the activities of a relatively small number of large national and global firms producing high quality products for, largely, global commodity markets (beef, dairy, vegetables, seafood, minerals, timber, woodchips).

A notable feature of business in our region is that many smaller businesses have a heavy reliance on one or two of these major national and international businesses supplying them with a wide range of services, machinery, inputs for production, seasonal labour and components. Whilst the provision of products and services does provide the small business sector with the opportunity to develop some level of skill, predictability and economies of scale, it also increases the level of vulnerability of small businesses as a result of, in many cases, a small business providing one product or service to one customer.

A characteristic of this commercial relationship also relates to the relative imbalance between the small businesses and the large national or multinational businesses – in favour of large business.  Furthermore, the impacts of the quite often unpredictable changes in global commodity markets means that the commercial sustainability of small businesses in this region is uncertain, creating dire circumstances for many small businesses in northwest Tasmania.  Big business has a greater level of resources to combat significant changes in demand from global commodity markets – small businesses have little or no resource capability to respond to such changes.

Historically, whilst small businesses in northwest Tasmania have been aware of this high-level risk, the chances of the risk materialising has been to the extent that many businesses have chosen to take the risk and wear the consequences – should this occur.

Having said this, over past decades in the northwest economy, some small businesses have been forced to downsize (or even close) because their major customer has withdrawn demand altogether or, insisted the small business produces a product that is supplied at a price that makes the business no longer viable.

Of major concern is the increasing level of commercial risk and challenge arising from climate change and geopolitical instability (USA, Russia, Ukraine, Middle East, North Korea, Africa, China) increasing the level of uncertainty in the global marketplaces with direct implications for northwest Tasmanian businesses.

Increasing incidences of both La Nina and El Nino weather patterns creates a heightened risk level for our agriculture supply chain at both demand and supply ends.  This circumstance has been abundantly clear on King Island in 2024 where extended drought conditions meant that the islands’ world renowned beef was unable to be raised leading to the sale of stock, agistment of stock on mainland Tasmania and, the purchase of additional stock feed at a very high price. This has led to many beef farmers having no option but to significantly downsize their farming operations, put employees off and reduce local expenditure.  Each of these has had a dire impact on both the economy of King Island (then and now) as well as on the island’s individual small farming businesses.

One of the characteristics of northwest Tasmania, King Island in particular, is the predictably reliable rainfall enabling farmers (beef, dairy, crops) to operate as relatively low cost producers due to not having the need to buy expensive feed and other inputs from elsewhere.  The uncertainty of weather patterns due to climate change is likely to totally disrupt the traditional types and methods of farming in northwest Tasmania leading potentially,  to lower business incomes, lower employment and lower investment and other expenditure.

Growing political instability overseas has dramatic impacts on both the supply and demand sides of the markets in which businesses in northwest Tasmania are heavily reliant.  The availability and cost of diesel fuel, gas, fertiliser and machinery components as a result of the war in Ukraine has forced many businesses in northwest Tasmania (even large businesses) to dramatically alter their production plans.  For example, uncertainty regarding the unknown impact of potential tariffs on Chinese goods by the USA has created sufficient uncertainty in the global price of iron ore that Grange Resources operating an iron ore mine at Savage River (western Tasmania), to temporarily shelve plans for a significant expansion of its underground mining activities at its Savage River site.

The lack of availability of machinery parts from Ukraine has forced a major vegetable processor in northwest Tasmania to put on hold a major upgrade of its commercial operations in this region.  Ukraine, Russia and China are major suppliers of agricultural fertiliser for global customers including those in Tasmania.  Instability and uncertainty in each of these three countries have significant implications for businesses in north Tasmania both directly and indirectly.

Many observers see the increased impacts of climate change and political instability overseas as risks that are likely to remain for the foreseeable future – not just ‘blips’ inconveniencing business as usual.

In our own ‘back yard’, the health and social support industry sector has experienced significant and rapid growth over the past 10 years, particularly since the introduction of the National Disability Insurance Scheme (NDIS).  Many small businesses, and also some large businesses in northwest Tasmania, are almost totally reliant on income from the NDIS (in excess of 80% of total business income).  Whilst the benefits of the NDIS are significant and undeniable, changes to the NDIS (including reigning in current and forecast expenditure nationally), are likely to significantly impact many businesses in northwest Tasmania and in a negative way.