The Australian Food and Grocery Council (AFGC) has listed a series of key actions it believes should be adopted to achieve an increasingly stronger sector moving forward. In a statement from the council, a spokesperson said the candidates in the upcoming Federal Election should prioritise policies that address immediate needs of Australia’s food and grocery sector while paving the way for long-term collaborative solutions.
“The food and grocery sector has faced growing pressures in recent years,” an AFGC statement read.
“Supply chains remain strained after COVID-19, costs are rising, and the industry is faced with increasing compliance demands, from improving nutrition content to advancing sustainability through packaging and energy use.
“Without collaborative and sustained action, the ability to deliver the products Australians know and love are at risk. A thriving food and grocery industry is the key ingredient for a resilient Australia.
“The sector touches every household, and securing its future is critical for our nation’s economic and social stability.”
Some key actions to achieve this future include:
- Strengthen supply chains by investing in critical infrastructure like the East-West Rail to ensure efficient and reliable delivery of essential goods to consumers nationwide
- Incentivise investment with targeted tax breaks for advanced technologies, automation, and energy efficiency upgrades to boost productivity and sustainability
- Champion clear and consistent packaging regulation that is harmonised across Australia and industries to boost circularity.
In its call to action, the AFGC divided recommendations into three categories, ‘today’, ‘tomorrow’, and ‘together’.
Among the actions that can be adopted today was a call to strengthen vital connections like the aforementioned East-West Rail. It is Australia’s only direct train link between the East and West coasts, to safeguard supply chain efficiency and national resilience.
The AFGC is urging increased government investment to reinforce this important freight rail line and East Coast freight rail network, vital for the nationwide delivery of essential food and groceries.
The AFGC spokesperson said fortifying these critical arteries, including roads, against rain, fire or other conditions protects the delivery of essential food and groceries to consumers nationwide.
As well as the infrastructure strengthening, the AFGC also called for tax incentives to help boost investment, coupled with an increase in funding for Food Standards Australia New Zealand (FSANZ).
For points of action further down the line, the AFGC hopes to see more incentives for companies to adopt renewable energy solutions and more efficient technology across the industry, along with clear and consistent packaging regulations and a wider adoption of digital labelling.
And for the ‘together’ recommendations, the organisation has called for more collaborative efforts such as reinforcing the Healthy Food Partnership (HFP) between government and industry, and incentivising food donation to limit food waste. The AFGC also released results from its biennial survey, in partnership with Argon & Co, which supports the points of action, detailing five trends shaping food and grocery supply chains.
These trends were: cutting costs in supply chain; regular disruptions; the Artificial Intelligence (AI) and automation revolution; sustainability; and consumer preferences.
Cutting costs in supply chain
The survey revealed that 43 per cent of respondents are focusing on cost reduction over the next one to two years. This marks the first time in the survey’s history that cost reduction has surpassed customer satisfaction as the top priority for supply chain leaders.
Energy, materials, labour, and transport were identified as the main cost concerns.
With production costs continuing to rise, profitability is under pressure. If this trend persists, businesses may face difficult decisions, including price hikes, smaller pack sizes, or reduced quality, all of which could affect consumers.
Nearly 80 per cent of respondents reported moderate to significant disruptions, with 68 per cent citing delays in international shipping.
In response, businesses have diversified suppliers, strengthened resilience, and improved agility
AI and Automation
A survey has found that 74 per cent of respondents plan to invest in AI and automation over the next three years, aiming to improve route optimisation, efficiency, and quality control.
However, the adoption of these technologies is being hindered by a shortage of skilled workers. Companies are now focusing on upskilling their teams to implement robotics, machine learning, and warehouse automation.
Sustainability
Sustainability continues to be a key focus for manufacturers.
Australian companies will need to meet new climate-related disclosure requirements and packaging reforms, which begin this year.
While upfront costs are high, sustainability investments enhance brand reputation and help future-proof operations. The challenge lies in finding cost-effective solutions to meet rising expectations.
Consumer preferences
Market research shows consumers are increasingly choosing organic, sustainable, and minimally processed products. This shift is prompting consumer goods manufacturers to reassess product portfolios, supply chains, and sourcing strategies. Companies that quickly adapt to these changes in consumer behaviour can secure brand loyalty and maintain market share in a competitive market.
However, product innovation to meet these demands is capital intensive and challenging in a high-cost production environment. Consumer preference was also in the top three considerations for supply chain planning.
“Strengthening the resilience of supply chains by investing in rail and road, embracing AI and adapting to shifting consumer demands will be critical to the industry’s success,” the AFGC call to action stated.
“With the right government and industry action, Australia’s food and grocery sector can build stronger supply chains for the future.”