The Australian Food and Grocery Council has warned that the industry needs a more coordinated policy and funding approach to realise its potential as a provider of essential daily products, a high-skills growth sector, and a major export earner.
AFGC CEO Tanya Barden told a Senate inquiry into the state of Australian manufacturing that local food and grocery manufacturing can swing onto a viable growth path and secure the nation’s sovereign manufacturing capabilities with targeted policy and investment settings.
Barden said there has been disappointment within the $132.7 billion food and grocery manufacturing industry, Australia’s largest manufacturing sector, over the level of grant funding made available so far through the federal government’s Modern Manufacturing Initiative after food and beverage was named as one of six national manufacturing priority areas.
“I would say that the sector has been disappointed,” Barden told the hearing.
“The pace at getting the dollars rolled out has been slower than anticipated and the level of funding coming forward has been lower than anticipated. Currently we have capital investment of around $3 billion per annum. We need to grow that to about $7.5 billion per annum and yet recently we’ve seen $33m granted through one element of the Modern Manufacturing Strategy.”
The AFGC recently outlined a vision to double the value of Australian food and grocery manufacturing to $250 billion by 2030 in a landmark report, Sustaining Australia: Food and Grocery Manufacturing 2030.
The industry is facing challenges including a 50 per cent rise in input costs over the past decade while wholesale prices for manufacturers have only gone up 25 per cent, slashing profitability and stifling new investment in much-needed new capital infrastructure.
Barden said the growth of the sector requires investment in new product development, sustainable packaging, advanced manufacturing and digital technologies and this could be realised with a coordinated approach to regulation, skills development and industry support to encourage investment across all levels of government.
Food and grocery manufacturing differs from other parts of the manufacturing sector in that it is consumer facing, fast-moving and faces significant consumer, government and community expectations around health and wellness and sustainability.
“There are significant changes that need to be made in those areas as well as providing greater transparency of information to consumers about where products are made, how they’re made, how they’re sourced and that requires a lot more digital technology through supply chains,” said Barden.
“Covid has also highlighted just how crucial it is to have that sovereign capability in manufacturing.
“There’s been significant disruptions to global supply chains, to local production and to distribution and as a result of that it’s been essential that we’ve been able to ramp up production locally.”
This week the National Skills Commission State of Australia’s Skills 2021 report showed that food and grocery manufacturing recorded the strongest employment growth of all Australian manufacturing sectors over the past 20 years, while jobs in 11 of the 15 sectors actually declined.
The AFGC’s Sustaining Australia report recommends steps to secure the future of the sector, including a new grants program to support the uptake of advanced manufacturing technologies, the development of new, sustainable packaging formats and equipment, and the creation of a high-tech training centre to give workers the skills to use advanced manufacturing equipment and emerging digital technologies.
The report found that with a strategic focus, the right policies and incentives, the size of Australia’s food and grocery manufacturing sector can double to $250 billion by 2030, with a 54 per cent increase in employment to 427,000 people.