Economic challenges in Australian food and grocery industry, AFGC reports

Posted by AFN Staff Writers on 15th October 2012

The Australian Food and Grocery Council (AFGC) has released its fourth annual economic snapshot State of the Industry 2012, which underlines the economic challenges facing the Australian food and grocery manufacturing sector.

The AFGC’s State of the Industry 2012 based on the most recent ABS data found that the total industry output contracted by 4.5 per cent in 2010-11 while total industry employment declined by 2.2 per cent or almost 7,000 people in the 2011-12 financial year.

The report showed the food industry was made up of 22,668 businesses in the 2011-12 (335 fewer than 2010-11), accounted for $49.2 billion of international trade (an increase of 4.3 per cent).  The food, beverage and grocery sectors employed approximately 296,300 people, with a reported decrease of 2.2 per cent.

AFGC CEO Mr Gary Dawson said that that the food and grocery manufacturing sector’s contraction reflected the cumulative impact of both economy-wide and sector-specific factors.

“The findings of State of the Industry 2012 serve as a warning to policy makers at all levels of government that the Australian food and grocery manufacturing sector – Australia’s largest manufacturing sector – is facing an environment where input costs are rising on everything from commodities to labour to energy, and retail price deflation continues to cut margins, placing the sector under increasing pressure,” Mr Dawson said.

“It is imperative that regulatory reform in this sector be re-energised and deliver real results that improve the competitiveness and sustainability of the food and grocery manufacturing industry.”

According to the AFGC report, priorities for regulatory reform in the food processing and manufacturing sector should include:

–       A recommitment to harmonisation of food standards across all Australian states and territories and New Zealand;

–       An urgent review of the mandatory reporting system introduced in 2010, which has added significant costs to industry with little or no improvement in food safety;

–       Clarification that standards and labeling relating to food composition and safety are administered by Food Standards Australia New Zealand and all other consumer related labeling requirements should be in consumer law;

–       A requirement that any food regulation aimed at achieving preventive health outcomes be subject to a rigorous cost benefit analysis and be evidence based;

–       Streamlining and removal of duplication in energy efficiency and water usage reporting requirements; and

–       Clarification that food regulation is an inefficient and inappropriate mechanism for addressing lifestyle associated risk-factors for non-communicable diseases.