AFGC calls for targeted investment allowances for food manufacturers

Posted by Andrea Hogan on 16th October 2017

The Australian Food and Grocery Council has called for targeted investment allowances for Australian food manufacturers saying the industry is under increasing pressure due to rising business costs.

The Australian Food and Grocery Council (AFGC) has called for the allowances whilst releasing its 2017 State of the Industry report.

The AFGC said allowances were particularly needed in regional Australia as 40 per cent of the sector’s jobs are located in regional Australia.

The ninth annual edition of the Australian Food and Grocery Council’s (AFGC) State of the Industry report revealed that the AUD $127.4 billion Australian food and grocery sector added more than 7, 300 jobs in 2015-16.

AFGC Chief Executive Officer, Tanya Barden, said although the report highlights strong industry employment growth, and encouraging capital investment, falling exports and flat overall turnover are “clear warning signs for the future of Australia’s largest manufacturing sector.”

“The food and beverage, grocery and fresh produce sectors employ 320,300 people representing over 33 per cent of Australian manufacturing jobs despite a small decrease in industry turnover by a third of a percent to $127.4 billion,” Barden said.

“There is no doubt Australia’s largest manufacturing sector is facing an environment where input costs are rising on everything from commodities to labour to energy, and six years of retail price deflation continues to cut margins, placing the sector under increasing pressure.

“We are expecting these pressures to only increase as energy, especially gas, has seen a doubling and in some cases a tripling of price that is likely to have dire consequence for Australian jobs and investment, with some companies re-assessing their long term future in Australia.”

Input costs could stall turnaround

Baden said there has been a 4.7 per cent increase in capital investment within the industry but that the expected increases in input costs could stall this recent turnaround in investment and employment.

“Continuing to stimulate investment in site modernisation is critical particularly in light of mounting input cost pressures, Baden said.

“We are now in danger of drifting into a low investment trap, where uncertainty about return on investment flowing from retail price deflation and rising costs is seeing investment decisions deferred or dumped.”

Key statistics

Key statistics from the AFGC 2017 State of the Industry report include:

  • Industry turnover $127.4 billon, down 0.3 per cent in real terms, 2015-16 data
  • Direct employment 320,302, increase 7,317 people, 2015-16 data
  • Industry made up of 30,748 businesses, 2016-17 data
  • Capital investment of $2.7 billion, up 4.7 per cent, 2015-16 data
  • Total international trade $67.9 billion (down 8.1 per cent), 2016-17 data


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