Carbon tax “another blow to food and grocery manufacturing”

Posted by AFN Staff Writers on 14th October 2011

Research released today by the Australian Food and Grocery Council (AFGC) predicts that, under the Federal Government’s carbon tax, Australian food manufacturers’ operating profits will fall by an average of 4.4 per cent in 2012-13.

The carbon price of A$23 per tonne will be a “real hit” to profits for Australia’s largest manufacturing sector, according to the AFGC. Global management consulting firm A.T. Kearney undertook the research. It claims that losses in profitability could reach 15.6 per cent for paper products and more than 11 per cent for dairy and meat products.

AFGC Chief Executive Kate Carnell said that although the A$108 billion industry supports a price on carbon and many companies are already reducing their carbon footprints, the timing of the Government’s carbon tax delivers “another blow to already stressed Australian manufacturers”.

Ms Carnell said that the carbon tax will increase the cost of Australian manufactured goods – but will not affect imports, which are already cheaper due to the high Australian dollar. She said that this will ultimately impact industry competitiveness affecting its capacity to employ, innovate and invest.

“To maintain its competitiveness, industry will need to upgrade plant equipment and invest in low emissions technology to use less energy and become more efficient,” Ms Carnell said. “To enable this to occur, industry urges the Government to improve the business case for investment and innovation to encourage companies to improve their Australian manufacturing operations rather than moving offshore, which will impact local jobs.”

A.T. Kearney Vice President and Partner Jeremy Barker said the research found most companies in the Australian food industry already have some form of energy reduction plan in place, but they are limited in their ability to manage cost increases in the inputs and services they buy, such as electricity, fuel, transportation and packaging.