|
Australia’s $102 billion food and grocery industry remains the nation’s largest manufacturing sector but is under intense pressure from rising imports and falling exports, according to a new report by the Australian Food and Grocery Council (AFGC) and KPMG.
Launched today (27 October) by Federal Industry Minister Kim Carr in Canberra, the second annual economic snapshot of the food and grocery manufacturing sector State of the Industry 2010 found for the first time in decades, the industry’s international net trade position fell dramatically from a $4.5 billion surplus in 2004-05 to a $1.8 billion deficit in 2009-10.
“This alarming result shows food and grocery manufacturing – which employs 288,000 people – is now a net-importer of food and grocery products which impacts industry’s growth and competitiveness,” said AFGC Chief Executive Kate Carnell. She highlighted the report showed industry remained large but growth, employment and turn-over are flat at best.
The detailed report –examining fresh and processed food, beverage and grocery industries – shows the complex industry was made up of 31,000 businesses in 2009-10 (236 fewer than the previous year), spends about $3.5 billion a year on capital investment and accounts for $44.8 billion of the nation’s international trade ($50.9 billion in 2008-09).
“Industry is still a major exporter but imports are rising fast, eroding the trade surplus historically enjoyed by the industry. To protect Australia’s food supply and overcome this challenge, there must be a ‘whole-of-government’ national strategy to ensure food and grocery manufacturing’s long-term growth, increase export earnings and boost competitiveness.”
Ms Carnell said the wide-ranging report showed the industry represented 26 per cent of the total Australian manufacturing industry by turnover (compared with 28 per cent in the last report), and remained comparable ($102 billion in 2007-08) to the mining industry.
Ms Carnell said the report also recognised the importance of protecting the future needs of industry in terms of job growth and investment as well as meeting the significant food supply needs into the future.
“The industry employs more than 3 per cent of all employed people in Australia but lost 3400 jobs since 2006-07. The sector pays wages of more than $13 billion a year,” Ms Carnell said.
“There are also real challenges facing the industry including the increasing cost of energy, availability of water, the surging Australian dollar and the availability and cost of good employees.”
“Proposed water allocation cuts for food production in the Murray-Darling Basin will also threaten the future viability of numerous food manufacturers in the Basin, negatively impacting exports, and making it harder for locally-produced goods to compete with imports.
“Having a robust and prosperous food industry provides many opportunities for Australia – especially for our region centres where manufacturers are their lifeblood.”
KPMG’s lead partner for the food and drink segment Mark Epper said in the challenging food and grocery manufacturing sector, companies were operating in an increasingly difficult and changing global landscape.
“Our major supermarkets have experienced lower growth in recent quarters due to the impact of food price deflation. This has put extreme pressure on food manufacturers' margins. Companies are responding with new and refreshed products, as well as supply chain enhancements and further cost containment where possible in their businesses,” Mr Epper said.
“Interestingly, the report found that investment in Research and Development is 0.43 per cent of annual turnover, at what appears to be critically low levels. This highlights the need for increased awareness and utilisation of existing R&D concessions and grants.”
The 2010 report was based on the following definition of the Australian food and grocery manufacturing industry:
“Those industries that value-add to agriculture, food and other products for the purpose of producing everyday fresh and processed food, beverages and grocery products consumed and used by Australians.”
The full report State of the Industry 2010: Essential Facts and Figures will be available to download (from 4.30pm) as a PDF at www.afgc.org.au
-ENDS-
More information: Brad Watts AFGC Media Manager (02) 6270 9021 or 0437 379 818
KPMG Caroline Baldwin Communications Manager (03) 8626 0958 or 0400 508 748.
Follow AFGC on Twitter at http://twitter.com/AusFoodGrocery Download a PDF of this Media Release here:
|
