30 October 2013
The Australian Food and Grocery Council’s (AFGC) fifth annual economic snapshot State of the Industry 2013 commissioned from KPMG released today, shows signs of strong growth opportunities for the Australian food and beverage, grocery and fresh produce manufacturing sector despite experiencing difficult economic conditions.
The AFGC’s State of the Industry 2013 based on the most recent ABS data found that industry turnover of $111 billion remained largely flat in 2011-12, noting a marginal 0.3 per cent decline, while total industry employment declined by 0.4 per cent (1,071 people) to 298,825 in the 2012-13 financial year.
AFGC CEO Mr Gary Dawson said that the State of the Industry 2013 report showed the remarkable resilience of Australia’s $111 billion food and beverage, grocery and fresh produce manufacturing sector in difficult times, particularly when put in the context of significant contraction in turnover and employment in previous years.
AFGC CEO Mr Gary Dawson
“The findings of State of the Industry 2013 demonstrates that while the Australian food and grocery manufacturing sector – Australia’s largest manufacturing sector – is facing an environment where input costs are rising on everything from commodities to labour to energy, encroaching regulations are adding to compliance costs and retail price deflation continues to cut margins, there are signs of significant growth potential,” said Mr Dawson.
“In particular a 26 per cent increase in capital investment in food manufacturing as suppliers increase investment in productivity initiatives such as automation and other cost reduction programs.”
“Solid export growth in processed foods and beverages is also encouraging as suppliers respond to emerging market opportunities including the growing Asian middle class. This has significantly contributed to three consecutive years of improving trade surplus in processed food and beverage products.” said Mr Dawson.
The detailed State of the Industry 2013 report – examining food and beverage, grocery and fresh produce industries – showed the complex industry was made up of 25,662 businesses in 2012-13 (170 fewer than 2011-12, spent about $535.8 million on R&D and accounted for $50.8 billion of international trade (an increase of 0.8 per cent).
Valentina Tripp, KPMG Consulting National Leader for Consumer Products said, “The increase in exports for value added foods such as meat processing, grain mill products and fruits and vegetables is encouraging and we expect to see this trend continue.
“Exports to China increased by $770m (44 per cent on the previous year) with the meat processing and human pharmaceutical sectors accounting for 85 per cent of this increase.
“Despite a tough time for the dairy sector domestically, the sector presents strong potential to capitalise on growing global demand, particularly in the Asian markets. Investment in R&D and innovation to leverage Australia’s high quality, clean, green and safe food supply systems is key to long-term sector growth.”
“Food and grocery companies are looking for a return to certainty and stability from the government, and a focus on getting the policy settings right to boost confidence and promote investment and jobs,” said Mr Dawson.
“To that end we strongly support priorities including the finalisation of stalled Free Trade Agreement talks, a rollback of costly unnecessary regulation, action to reduce energy costs, targeted investment incentives and a review of competition laws to help level the playing field where there is an imbalance in market power.
“Right now the industry is facing massive challenges from high costs and retail price deflation squeezing profitability. Key food processing capabilities are at risk of being lost altogether, with the flow on loss of jobs and opportunities extending into the farm supply base.
“This report shows that getting effective policies in place will enable industry to take advantage of the massive growth potential for the future provided we can boost competitiveness and productivity, and open up market access in the growing economies of Asia,” concluded Mr Dawson”.
The 2013 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"