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Report
Australia's food manufacturing industry worries rising costs will push supermarkets to use more imports
ABC NEWS (Australia)
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8/3/2024
There are calls for more federal government help for the industry to protect local businesses and jobs.
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Transcript
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00:00
When you do the grocery shop, are you looking for bargains?
00:10
Or checking labels to see where the food you're buying comes from?
00:14
No, I try and choose Australian all the time, 100 per cent.
00:17
No, I generally look.
00:19
No idea today, because it's too cold and I really don't care.
00:23
It comes down to cost really, because I only work part time.
00:30
Ken Malib is on the other side of the grocery business.
00:36
His factory in Melbourne bakes biscuits for supermarkets across Australia and for export.
00:42
He and his wife have owned the operation for 20 years.
00:46
When we bought it, we were in a small building with five staff.
00:49
We now operate out of three or four buildings with approximately 35 to 40 staff.
00:56
But the last few years have been tough.
00:58
The pandemic pushed them to the brink, and now the rising price of ingredients is hurting.
01:04
No one is prospering.
01:05
We are absolutely in a survival mode.
01:08
Manufacturing feels very unloved right now.
01:10
Ken Malib says the industry needs government help to boost exports and improve productivity.
01:16
And unless you want food manufacturing to go the way of the car manufacturing and the
01:20
dodo bird, you'd want to be doing something pretty fast and pretty serious.
01:25
Across the sector, wages, energy and compliance costs are all up.
01:31
The ability to pass on price hasn't matched that because of a, the power of the supermarkets
01:37
and b, the cost of living.
01:39
Consumers just won't pay more for products.
01:41
We're going to need to see some changes and some incentives, whether it be in government
01:45
policy, in regulation.
01:47
The profitability of food manufacturing has fallen by $3 billion over the last decade.
01:54
The Food and Grocery Council fears without an intervention, Australia's food processing
01:58
sector will decline, resulting in cuts to its 276,000 strong workforce, particularly
02:06
in regional areas.
02:07
We produce an abundance of agricultural output, but from a processing perspective, that's
02:12
where the risk is that we end up not being able to manufacture in Australia and needing
02:17
to do more importation.
02:19
It's already happening.
02:20
SPC has had to cut back on production.
02:24
Canned fruit has been substituted by cheaper products from South Africa and China.
02:30
And this trend has continued across a number of the food categories.
02:34
If Australia becomes increasingly reliant on imported groceries, disruptions to supply
02:39
chains could result in empty supermarket shelves, like during the pandemic.
02:45
Typically it will be solved in a short time and even if it doesn't, because it's not
02:50
an essential item, you will find a replacement.
02:54
But there could be cost implications.
02:57
Imported product is susceptible to all of those global shocks because then the Australian
03:01
dollar changes and as that changes, the price of imported product can go up significantly.
03:09
In Hobart, this jam and sauce manufacturer trades on being a locally made product.
03:16
They'd love to hear the story about our fruit in our jams being Tasmanian.
03:21
As the business grows its interstate markets, it too is struggling with rising costs.
03:26
Another email arrived this week, freight's going up again.
03:31
Unlike bigger manufacturers, the factory is small enough to make changes quickly.
03:36
Our owners are actually investing in new equipment to help support efficiencies and actually
03:41
allow us to try and save some money.
03:43
But like larger manufacturers, Simon Wise is hoping for a lift in support for the food
03:48
processing industry.
03:49
It protects a lot of things, doesn't it?
03:51
It protects jobs, it protects the farmers, there's a lot involved in this.
03:56
In a statement, the Federal Government has indicated its support for food and beverage
04:00
manufacturing.
04:01
It says it's investing billions of dollars in innovation grants and research to help
04:07
businesses grow.
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