AFGC warns of tough times ahead for food makers

The latest Australian Food and Grocery Council’s (AFGC) annual industry snapshot State of the Industry 2016 shows a 14 per cent increase in Australia’s food and grocery exports in 2015-16 to some extent moderated by the challenging economic conditions confronting Australia’s $125.9 billion food and grocery processing sector.

AFGC CEO Gary Dawson said while the State of the Industry 2016 highlighted export growth and a lift in overall industry turnover, falling capital investment and stalling job growth are clear warning signs for the future of Australia’s largest manufacturing sector.

“This year’s State of the Industry highlights the importance of the food and grocery sector to Australia’s economy, as well as its resilience in the face of the significant challenges it faces to stay competitive,” said Dawson.

“The good news is that industry turnover continues to increase with food and grocery processing now making up 33 per cent of total Australian manufacturing. This growth is largely on the back of strong growth in exports. In 2015-16 food and beverage exports grew by 11 per cent to $26bn, fresh produce exports up 49 per cent to $1.5bn and grocery (non-food) exports up 32 per cent to $4bn.

“Yet low domestic growth, rising costs for energy and other inputs, and six years of retail price deflation in the ongoing supermarket price war has created relentless pressure back through the supply chain to become more efficient in order to stay competitive.”

“In 2015-16 job growth stalled across the food and grocery sector reflecting the ongoing financial pressure the sector is under which is forcing food and grocery producers and processors to cut costs across every part of their business.”

“A key concern is the continuing decline in capital Investment at a time when a step change upwards in investment is required to fully capitalise on improved market access and growing demand from middle class consumers in the emerging economies of Asia and the Middle East,” said Dawson.

 

 

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