Australian food and grocery manufacturing still at risk: AFGC

Posted by James Ferre on 31st October 2008

Australia’s peak food and grocery manufacturing industry association, the Australian Food and Grocery Council (AFGC), says that the introduction of the federal government’s Carbon Pollution Reduction Scheme (CPRS) must ensure that the domestic and international competitiveness of Australia’s food and grocery manufacturing sector is maintained.AFGC Chief Executive Kate Carnell believes that Australia’s world leading, $70 billion food and grocery manufacturing sector is at risk of being adversely affected by the introduction of a rushed emissions trading scheme, particularly in the absence of any international agreement.

“The preferred option for the food, beverage and grocery industry is to begin emissions trading with modest trajectories. The industry advocates a fixed price on emissions at around $5-10 a tonne until a binding international deal is brokered. Not to do so will almost certainly result in higher food and grocery prices,” she advised. “This scenario currently being presented by the government will see Australian made products become less competitive against imported goods, particularly those from the Asia-Pacific region, which, unlike the Australian goods would not be affected by a carbon levy.”

“The consequences of the government’s actions will have significant flow on effects. The Australian food and grocery manufacturing sector directly employs more than 200,000 people, half of whom live and work in rural and regional Australia. A less competitive sector means many of these jobs could be put at risk,” Ms Carnell said.

Ms Carnell added that it was hard to understand why the government hasn’t provided specific details on what impact the CPRS would have on everyday food and grocery items, which make up around 20% of all household spending – instead choosing to focus on domestic fuel and power expenditure, which only account for 3% of household expenses.

“It is disappointing to both industry and the public that the government’s modelling failed to provide any detail about the effect that the CPRS will have household food and grocery expenses,” Ms Carnell said.

The AFGC also point out that the current financial crisis makes it very difficult for companies to attract the necessary capital required to invest in low carbon technology.

“There are major liquidity problems in the market; the money just isn’t there for major capital investments of this kind. Accordingly, the Australian food and grocery manufacturing industry is calling on the government to assist the sector in making the transition to a low carbon future,” Ms Carnell concluded.