Food sector 'resilient'
Latest statistics depict a "resilient" food, beverage and grocery industry - not one that’s in “steep, terminal decline” - according to Australian Food and Grocery Council (AFGC) chief executive Gary Dawson.
The AFGC released its fifth and most recent State of the Industry report this week, updating historical statistical information on various industry sectors.
The new figures show those combined industry sectors experienced $111.2 billion in total turnover for the 2011-12 financial year, up from $110.7 billion the year before.
Food and beverage processing contributed $88.7 billion, grocery $16.9 billion and fresh produce $5.5 billion to this year’s total turnover.
The inflation-adjusted value of industry turnover contracted by 0.3 per cent in 2011-12 - compared to 4.5pc last year - while industry employment also decreased marginally by 1071 (0.4pc) from the previous financial year.
The industry employed approximately 298,825 people in 2012-13, comprising 222,000 in food and beverage manufacturing; 30,744 in grocery manufacturing; and 46,081 in the fresh produce sector.
Last year’s AFGC report showed total industry employment had contracted 2.2pc, which prompted AFGC chairman John Doumani to say the figures should sound alarm bells for policy makers at federal, state and local levels, given around half the people were employed directly in rural and regional Australia.
But speaking to Fairfax Agricultural Media, Mr Dawson said this year’s industry figures contradicted some of the more sensational headlines around the nation about the state of food manufacturing and processing, amid recent high profile plant closures and job cuts.
He said holding a line on this year’s employment figures was a positive result, given the industry had faced some big challenges.
“The picture is one of a resilient industry, not one in terminal decline,” he said.
The report said turnover and employment continued to contract this year, albeit at a slower rate but the industry’s trade performance showed a strong improvement and expanded capital expenditure.
“Overall, the industry appears cautiously optimistic about its future,” the report said.
Mr Dawson said the figures on capital expenditure spending showed businesses were prepared to invest in the food and grocery industry to improve competitiveness.
The report showed that capital investment in food product manufacturing had increased by 26.5 per cent, “as organisations increased investment in productivity initiatives such as automation and other cost reduction programs”.
Mr Dawson said another encouraging sign was the performance of industry exports, which reversed a significant decline from about 2003 to 2010 to increase by 2.2pc to $24.3 billion in 2012-13.
According to the report, exports of food and beverages increased from $18.2 billion to $18.8 billion (3.4pc) and fresh produce increased from $651.6 million to $821.8 million (26.1pc).
But grocery exports decreased by from $4.9 billion to $4.6 billion (5.6pc).
At the same time, the value of industry imports decreased by 0.4pc to $26.5 billion in 2012-13.
“It’s not spectacular growth but a sign that trade has stabilised and is growing again,” Mr Dawson said.
“The export of value added, premium priced foods into growing markets, in the Asian region in particular, are opportunities worth going after.”
However, Mr Dawson said concerted efforts were needed to reduce regulatory, energy and labor costs, “otherwise we won’t achieve the industry competitiveness we need”.
The report said rising commodity prices, rising energy and labour costs, continued downward pressure on margins from a highly competitive retail sector, coupled with relatively subdued consumer confidence are combining to produce a challenging business environment.
“Against this backdrop, government policies that reduce the cost of doing business and provide targeted cost -effective incentives for innovation are required, particularly for the food, beverage and grocery manufacturing sector as a foundation for the expansion of the industry,” the report said.
AFGC chairman Terry O’Brien also upped the ante in applying pressure on the government to reduce cost burdens.
“Looking ahead, a confidence boost from a change in government along with reductions in energy costs (if the Carbon Tax is abolished) should help stimulate growth,” he wrote in the chair’s report.
“The new federal government has emphasised a return to certainty and stability, and a focus on getting the policy settings right to boost confidence and promote investment and jobs.
“The food and grocery sector is greatly encouraged by an emphasis on removing regulation and red tape and encouraging manufacturing industry to continue to drive economic growth.”
In his report, Mr Dawson wrote, “The Coalition has been elected on a mandate to put in place policies that will modernise the Australian economy and enhance the productivity and competitiveness of the manufacturing sector”.
“The Government’s Commission of Audit of public expenditure, 'root and branch' review of competition policy, the Energy White Paper, Review of Taxation and extensive institutional changes within the bureaucracy to re-energise regulatory reform will have a significant long term influence on economic conditions,” he said.
Source: North Queensland Register, 4 November 2013
