Australia's food manufacturing industry worries rising costs will push supermarkets to use more imports

ABC NEWS (Australia)

There are calls for more federal government help for the industry to protect local businesses and jobs.

Transcript

00:00When you do the grocery shop, are you looking for bargains?

00:10Or checking labels to see where the food you're buying comes from?

00:14No, I try and choose Australian all the time, 100 per cent.

00:17No, I generally look.

00:19No idea today, because it's too cold and I really don't care.

00:23It comes down to cost really, because I only work part time.

00:30Ken Malib is on the other side of the grocery business.

00:36His factory in Melbourne bakes biscuits for supermarkets across Australia and for export.

00:42He and his wife have owned the operation for 20 years.

00:46When we bought it, we were in a small building with five staff.

00:49We now operate out of three or four buildings with approximately 35 to 40 staff.

00:56But the last few years have been tough.

00:58The pandemic pushed them to the brink, and now the rising price of ingredients is hurting.

01:04No one is prospering.

01:05We are absolutely in a survival mode.

01:08Manufacturing feels very unloved right now.

01:10Ken Malib says the industry needs government help to boost exports and improve productivity.

01:16And unless you want food manufacturing to go the way of the car manufacturing and the

01:20dodo bird, you'd want to be doing something pretty fast and pretty serious.

01:25Across the sector, wages, energy and compliance costs are all up.

01:31The ability to pass on price hasn't matched that because of a, the power of the supermarkets

01:37and b, the cost of living.

01:39Consumers just won't pay more for products.

01:41We're going to need to see some changes and some incentives, whether it be in government

01:45policy, in regulation.

01:47The profitability of food manufacturing has fallen by $3 billion over the last decade.

01:54The Food and Grocery Council fears without an intervention, Australia's food processing

01:58sector will decline, resulting in cuts to its 276,000 strong workforce, particularly

02:06in regional areas.

02:07We produce an abundance of agricultural output, but from a processing perspective, that's

02:12where the risk is that we end up not being able to manufacture in Australia and needing

02:17to do more importation.

02:19It's already happening.

02:20SPC has had to cut back on production.

02:24Canned fruit has been substituted by cheaper products from South Africa and China.

02:30And this trend has continued across a number of the food categories.

02:34If Australia becomes increasingly reliant on imported groceries, disruptions to supply

02:39chains could result in empty supermarket shelves, like during the pandemic.

02:45Typically it will be solved in a short time and even if it doesn't, because it's not

02:50an essential item, you will find a replacement.

02:54But there could be cost implications.

02:57Imported product is susceptible to all of those global shocks because then the Australian

03:01dollar changes and as that changes, the price of imported product can go up significantly.

03:09In Hobart, this jam and sauce manufacturer trades on being a locally made product.

03:16They'd love to hear the story about our fruit in our jams being Tasmanian.

03:21As the business grows its interstate markets, it too is struggling with rising costs.

03:26Another email arrived this week, freight's going up again.

03:31Unlike bigger manufacturers, the factory is small enough to make changes quickly.

03:36Our owners are actually investing in new equipment to help support efficiencies and actually

03:41allow us to try and save some money.

03:43But like larger manufacturers, Simon Wise is hoping for a lift in support for the food

03:48processing industry.

03:49It protects a lot of things, doesn't it?

03:51It protects jobs, it protects the farmers, there's a lot involved in this.

03:56In a statement, the Federal Government has indicated its support for food and beverage

04:00manufacturing.

04:01It says it's investing billions of dollars in innovation grants and research to help

04:07businesses grow.

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