AFGC concerned about emissions target

Posted by Editorial on 15th December 2008

The Australian Food and Grocery Council (AFGC), the nation’s peak body representing food and grocery manufacturers, believes the Federal Government’s plans to cut greenhouse emissions by between 5 and 15 per cent by 2020 still has the potential to compromise the domestic and international competitiveness of Australia’s largest manufacturing industry.

The government’s White Paper was released today, with Prime Minister Kevin Rudd indicating the plan to cut emissions by at least 5 and up to 15% was “responsible”. ”We are not going to make promises that cannot be delivered,” he told the National Press Club upon launching the plan. ‘We are starting the scheme with appropriate and responsible targets, targets that are broadly consistent with other developed countries.”

Malcolm Turnbull has yet to indicate the coalition’s position as they look to analyse the paper carefully before opposing or supporting the plan, while it has been attacked by the Greens – who are seeking an ambitious 40% reduction.”Prime Minister Rudd’s 5% target is a global embarrassment and a recipe for global catastrophe,” Australian Greens Leader Bob Brown claimed. “The Rudd target of 5 per cent will anger voters. It is exactly where John Howard would have placed Australia in 2009 – a spoiler as the Copenhagen conference on climate change reaches for a much higher goal.”

AFGC CEO Kate Carnell said that the $70 billion sector- which itself currently employs more than 200,000 people, half of whom live and work in rural and regional Australia – was now facing an uncertain future.  The nature of international trade, the lack of available capital and ongoing confusion surrounding specific industry assistance, combined with a 2012 start-up date has the potential to undermine the future viability of Australia’s food manufacturing sector, according to the industry body.

“Obligations imposed up and downstream of the farm gate mean that carbon costs will be passed through the food supply chain to consumers. This will undoubtedly result in significantly higher food, beverage and grocery prices for Australian produced products,” Ms Carnell stated. “The food and grocery industry is therefore concerned that in the absence of a global agreement on greenhouse emissions, more expensive carbon levied Australian goods will be placed at a competitive disadvantage when forced to compete against imported goods from non-carbon levied nations.”

Ms Carnell also suggested that the current financial crisis made 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 to borrow for the major capital investment required to transform existing plants into lower carbon operations,” she claimed. “The Australian food and grocery manufacturing industry therefore calls on the government to clarify what assistance will be available to companies that do not meet the current criteria for both emissions intensive and trade exposed assistance to help them make the transition to a low carbon future.”

Ms Carnell said that whilst industry appreciated the government’s efforts to find a balance between the environment and the economy, it considers that a 2010 start up date would hinder, not help business adapt to a low carbon future. “The food and grocery manufacturing sector is calling on the government to wait until 2012 before implementing its Carbon Pollution Reduction Scheme. The extra two years would give industry time to adjust its operations in an environment where inputs are not subject to a carbon levy,” she added. “Similarly, the affordability of a structured change to the food and grocery manufacturing industry largely depends upon the pace, and the cost at which domestic and international change takes place.”

“However, for the Australian industry to continue providing high quality, value-added products derived from Australian agricultural ingredients, requires the sector to have faith in an emissions trading framework which gives companies incentives to reduce their carbon emissions whilst maintaining their international competitiveness – it is important that the government’s efforts reflect this,” Ms Carnell concluded.