AFGC campaign to get Australian consumers to buy Australian food
The Australian Food and Grocery Council (AFGC) today launched a campaign urging Australian consumers to buy Australian-made products to support the food industry during the holiday season.
According to the AFGC, the cost of manufacturing food is, on average, 25 per cent higher in Australia than in regional competitor nations. The AFGC says this is seriously affecting the Australian industry’s competitiveness and profitability.
The high Australian dollar is also to blame, making imports cheaper and making it harder for Australian-made products to compete on Australian supermarket shelves.
AFGC Chief Executive Kate Carnell said the major reasons why Australian manufacturing costs were so much higher than for regional competitors included Australia’s rising cost of labour, energy, water and transport.
She said that one of these examples includes the cost of chocolate manufacturing being 28 per cent less in India due to much lower raw materials and labour costs.
“But it’s not just developing countries that have lower manufacturing costs than Australia,” Ms Carnell said. “The cost of growing potatoes is 50 per cent lower in the United States, which is a significant cost difference for a wide range of products using potatoes as a core ingredient.”
The major drivers of this differential are the costs of labour, equipment utilisation, water, irrigation and transporting the potato from the farm to the factory gate, according to the AFGC’s report.
Ms Carnell also said with major retailers Coles and Woolworths increasing the number of private label (home brand) products, more shelf-space is being devoted to these products which are increasingly being sourced offshore due to lower production costs. Supermarket discounting is also impacting manufacturers’ profitability.
“To encourage investment in Australia, government needs to provide tax incentives to enable business to take advantage of the high Australian dollar to invest in large-scale plant equipment upgrades (accelerated depreciation of assets) to improve efficiency.”
The AFGC has also previously called for the Australian government to appoint a Supermarket Ombudsman, who would be in a position to enforce a Fair Trading Code of Conduct, and improve the trading environment for supermarket suppliers.