It’s time to innovate: SPC’s plan for the future [video]

Fruit processor SPC, will use the $100 million co-investment from the Victorian government and its owner, Coca-Cola Amatil, to make productivity and efficiency gains, and innovate in-line with consumer demands.

Food magazine recently sat down with Bronwyn Powell, marketing and innovation director at SPC, who spoke about a number of challenges the brand has faced in recent times, and the progress they’ve made in keeping it afloat.

She said SPC has been a leading force in the recent anti-dumping legislation, adding that cheap imported produce, specifically tomatoes, have made competing in the local market a significant challenge.

While SPC’s struggles have been well publicised (read more here, here and here), the $100 million co-investment is expected to go a long way for the company. Powell said the money will be put to good use, and will fund innovation including a move away from canned products, in response to consumer demands.

You can hear more about what SPC’s got planned in the video interview below.

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24 Hours with SPC Ardmona

Bronwyn Powell, Marketing and Innovation Director at Australian fruit and vegetable processor, SPC Ardmona runs us through a day in the life of a food manufacturing professional. 

  1. What are your primary roles and responsibilities in your job?  Give us a day in your working life.

No one day is the same!

Anything from discussing the strategy and execution of SPC Ardmona’s Marketing and Innovation plan, to developing new product concepts with the marketing team and R&D teams, to launching new advertising campaigns with one of our great external agencies.  

I am also a director on the company’s Executive Leadership team so everyday involves transforming the business across all facets to be a world class consumer led organisation.

  1. What training/education did you need for your job?

Bachelor of Commerce with a Marketing major from University of NSW

On job experience over 20+ years in Australia, USA, Europe, Internationally. I have lived in 4 countries and also worked across North America, Australia, Europe, Asia and South America.

  1. How did you get to where you are today?  Give us a bullet point career path.

 

  • Assistant Brand Manager
  • Brand Manager
  • Senior Brand Manager
  • Marketing Manager
  • Marketing Director
  • Global Marketing Director
  • Chief Marketing Officer
  • Marketing and Innovation Director

It is a classic blue chip global FMCG and QSR ladder I have to say. I have not deviated into agencies but instead stayed client side driving business growth through a number of organisations.

  1. What tools and/or software do you use on a daily basis?

My IPad and IPhone….inseparable! 

Twitter, Facebook – Pulse on Brands. 

 Reports on trends in market, shares and insights reports.

  1. What is the one thing that you are most proud of in your professional life?
  • Starting at SPC Ardmona with a small team of dedicated marketers and food technologists.  Our whole team is so dedicated to us succeeding, now having consumers who love our brands and products and openly telling us on social media at #SPCSunday and SPCAustralia. They are life time disciples.
  • Achieving Global Marketing Director position leading strategy for KFC across 100 countries- living in the USA in the Deep South in Dallas Texas was an enormous life experience I have to say! Taught me allot about cultural differences around the world and how to market with that not against it.
  1. Biggest daily challenge?

Getting to the heart of the consumer insight… digging deeper and deeper for the killer insight and not stopping.

Time is always against us to get to market fast and to keep up with the ever changing consumer- so we need to be ahead on how they think, feel and behave.

  1. Biggest career challenge?

Category Barriers – over coming category barriers to packaged fruit.  Consumers see SPC as fruit in syrup when most of our products are in juice.  Goulburn Valley fruit is only currently in fruit juice and we will be launching it in coconut water in June this year further breaking down the barriers of our category. 

I have had category barriers before working for in fast food for KFC, Pizza Hut and McDonald’s so it does not faze me, but rather drives me to find a way to break down this wall between our product and consumers perceptions.

  1. What is your biggest frustration in your job?

So much to do and not enough time to do it!

Agricultural based business lead times. Fruit has to grow and we rely on Mother Nature to do her work. We can’t speed it up.

  1. What is the biggest challenge facing your business?

Transformation through brands and innovation.

  1. Is there anything else about your job you want Australia to know about?

I ask every Australian “have you looked at the back of all packs…turn them around and look for the country of origin.  Fruit and Vegetables need to stay being grown in Australia.  We owe it to our children to keep our food supply clean, green, wholesome and Australian grown and made.

If you would like to take part in Food mag's Industry Map, click here.

To read another Industry Map Q&A, click here.

 

 

Let’s reap the economic benefits of local food over big farming

While Australia’s national food and agriculture debate centres on boosting production and increasing exports, our local food industry is being neglected. That’s a shame because countries such as the United States and Canada, which have explicitly prioritised local food, are now reaping the economic benefits.

A few weeks ago, the federal government decided to scrap the A$1.5 million Community Food Grants program.

This meant that 364 community gardens, farmers' markets, food rescue organisations, community kitchens and other groups – more than 200 of whom had already been approved for grants up to A$20,000 – were informed that the program would be wound up and no funds disbursed due to the “tight fiscal environment”.

The grants were originally part of the now-defunct National Food Plan, a key Labor initiative launched in May 2013.

The food bowl myth

It has been said that a “dining boom” awaits our farmers and food manufacturers, brought about by the swelling ranks of the Asian middle classes who are demanding our agricultural commodities.

This is the thinking that informs the federal government’s White Paper on Agriculture, which is calling for submissions until April 17.

But its primary motivation has nothing to do with “feeding the world”, although that provides an ideological fig-leaf. Rather, bipartisan food and agricultural policy in this country is above all about meeting corporate hunger for profit.

What is lost in this myopic drive for growth and profit are the many other dimensions and functions of our food and agricultural systems, including local food systems.

The United States: local food makes economic sense

Overseas, things are done a little differently.

For more than 20 years, the US Department of Agriculture (USDA) has made tens of millions of dollars available in grants and low-interest loans to the local food sector. Here are some of the results of the return on this public investment:

  • The numbers of farmers' markets in the US rose from 340 in 1970 to 8144 in 2013.

  • In 1997-8 there were two farm-to-school programs; now there are over 2000 ; and 46 states have either enacted or proposed legislation to support farm-to-school programs in their jurisdiction.

  • Over 200 Food Hubs now exist across the country from under ten a few years ago, providing distribution and marketing solutions at scale for many farmers and businesses.

  • Total local food sales reached US$4.8 billion in 2008/9, with US$1.2 billion being direct-to-consumer sales.

The USDA’s own economists explain the solid economic case:

“Fruit and vegetable farms selling into local and regional markets employ 13 full-time workers per US$1 million in revenue earned… In comparison, fruit and vegetable farms not engaged in local food sales employed three full-time workers per US$1 million in revenue."

This translates into local food economy job-creation rates being three times higher than national and/or global food economies.

In terms of the multiplier effect, studies suggest that the percentage of money spent in local businesses that is retained in the local economy is typically more than 50%, compared with only 15-30% of money spent in non-local businesses.

In Illinois, according to a 2009 local food report, a 20% increase in local food production will generate US$20 billion to US$30 billion of new economic activity, resulting in thousands of new jobs.

Applying the same logic across all Australian states (with a total combined annual spend on food of US$158 billion, compared with US$48 billion in Illinois) would mean that the same 20% shift to local food in Australia would lead to at least A$50 billion of new economic activity, with consequent major job-creation and local business impacts.

Compare that figure with food imports, which in 2010 reached A$10.6 billion, a near-tripling since 1991.

I haven’t even touched on the non-economic benefits of local food: the increased consumption of fruit and vegetables, the reduced environmental impact, and the enhanced social capital.

Canada: local food and the law

It’s for all these reasons that Canada is following the same path. The Local Food Act passed the Ontario Provincial legislature last year with unanimous, bipartisan support.

In Ontario, and throughout much of Canada, local food is non-contentious. Every political party supports it, as does Walmart Canada, Cisco and other multinational food service providers, hospitals, schools, chefs, farmers and local communities.

It’s no longer a political issue: it’s just good, common sense. As the preamble to the Act acknowledges:

“The variety of food produced, harvested and made in Ontario reflects the diversity of its people. This variety is something to be celebrated, cherished and supported. Strong local and regional food systems deliver economic benefits and build strong communities”.

The Local Food Act mandates the Minister of Agriculture and Food to set goals or targets with respect to:

  • Improving food literacy in respect of local food

  • Encouraging increased use of local food by public sector organisations

  • Increasing access to local food

The Local Food Act also creates a 25% tax credit for farmers who donate produce to local food banks, directly improving their bottom line while getting more good food to those who need it. With food relief agencies in Australia experiencing unprecedented levels of demand, this is also a major opportunity and need.

Another plank of the Canadian strategy is a dedicated Local Food Fund, worth up to C$30 million over three years to support innovative projects that enhance the purchase of local food and contribute to economic development.

Expanding local food

In Australia, local government has begun to analyse the benefits of a bigger local food industry. Victoria’s Mornington Peninsula Shire found in preliminary modelling that expanding its local food industry by 5% would bring in A$15 million and create nearly 200 jobs.

This is an invitation to any politician or political party with the courage to expand this thinking to state and national scale. It doesn’t have to be either exports or just local food: it can be both. If the US and Canada can do it, so can we.

There’s never been a better time.

The Conversation

Nicholas Rose works for the Food Alliance. He is also affiliated with the Australian Food Sovereignty Alliance and the Food Connect Foundation.

This article was originally published on The Conversation. Read the original article.

What’s the best production line for your food business?

There are a few key factors to consider when upgrading or investing in a new production line. Heat and Control has some pointers to help you get started.

Choosing the right kit is only half the story. It is not simply a question of buying the most suitable weighing equipment, or distribution system. Yes, speed, accuracy and reliability are vital, but you also need to choose a supplier with a service and support team that understands your wants and needs, and provides the right solution if ever a problem occurs.

Every food and beverage retailer is looking for something a little bit different in their product range, be it a different type of snack, flavour or pack presentation, so manufacturers need to be able to customise their products and deliver exact requirements to their customers.

These days, weighing and packaging systems have become compact with a smaller footprint compared to previous single multihead weighers and bagmakers. As an example, they are able to deliver around 130 bags per minute for chips and as much as 220 bags per minute for extruded snacks, on small target weights. This is compared to the 80 or 90 bags delivered by equipment of the past, with modern day technologies helping to achieve accuracy within one percent of the target weight.

Factors that you should consider when looking to upgrade, or looking at investing in a new distribution line, include:

  • Consideration for system layouts with a view to future requirements
  • Provision for accumulation and feed modulation
  • Methods to divert product, sanitation, operator safety, cross-contamination, sustainability and product quality control.

While price, delivery and other commercial considerations are important, technical performance should certainly be the primary factor when evaluating which production line is best for your business. 

Conveying
Conveying (product delivery) has become an integral part of controlling the feed to the weighing and packing stations of any food product, and has become more sophisticated than simply moving product from point A to point B.

When selecting a distribution system a processor needs to ask‘do I need a vibratory conveyor or a horizontal motion conveyor for my line? 

Vibratory conveyors come in two drive types, electromagnetic drives, which produce variable speed movements with short amplitude (lift) and high frequency (speed). Electromagnetic drives are best suited for lightweight, easy flowing products, and for conveying limited bed depths, spreading product, and fines removal. The other is a more aggressive, mechanical vibratory drive.

While vibratory conveying systems are very useful for breaking up product and keeping it separate, the constant bounce and impact of product on the pan is aggressive and can often reduce the quality of the finished product. Vibration can cause micro-cracks in some products, making them more susceptible to breakage later in the packaging or delivery process.

Additionally, there is often coating build-up on a vibratory conveyor pan but not on horizontal motion conveyor systems.

Rather than bouncing the product, horizontal motion conveyors slide the product along the pan. This has become the preferred means of conveying fragile and coated foods such as snacks, fresh produce and frozen prepared foods. The horizontal motion virtually eliminates product breakage and cracking and does not shake off coatings, breading or seasoning. At the same time as being gentle on the product, an added advantage is that seasoning, oil and other coatings do not build up in the pan, which in turn increases downtime for cleaning. 

Horizontal motion conveyors are available with direct and inertia drives. The horizontal motion allows gentle short term product accumulation, whilst uphill horizontal motion conveying reduces product damage in return loops.

While sliding product prevents breakage, coating loss and noise, it also has some limitations that become evident in horizontal motion conveyors:

  • Product spreading can only be achieved with specially shaped pans
  • Product travel rates are slower than aggressive mechanical drive vibratory conveyors, but may be faster than high frequency electromagnetic drive designs
  • Uphill conveying is usually limited to about 1.5 degrees, although in some special cases, it is possible to convey product up to eight degrees
  • Does not level piles of product without pan modifications
  • Difficulty conveying limp or sticky products

Direct drives use long strokes, producing travel rates up to (12.5 m/min). In addition to greater throughput/pan size, direct drives can also stop and start instantly, offer modular expandability, provide fast travel rates to reduce stale product complaints and improve the efficiency of seasoning applicators, weighers, bagmakers, and overall packaging room performance.

(Inertia drives generally deliver slower product travel rates, have delayed stop and start operation, and do not work well in modular and packaging feed applications).

Selecting the proper type of direct drive will greatly reduce maintenance and energy usage, as well as improving safety and packaging feed efficiency.

Weighing and packing
Tasks usually performed by manual labour, involving sorting, counting, weighing, bagging and case packing can be replaced with consistent, accurate and high-speed systems, drastically reducing operational costs while increasing output and productivity.

Modern weighing technology brings with it higher speed and more accurate weighments, increasing product yield, which in turn relates to less “giveaway” per bag. Computer combination weighers deliver the performance processors needed to meet high production requirements for their products.

Modern stainless steel weighers provide more sanitary weighing systems, while new surface profiles and coatings virtually eliminate product sticking. High-amplitude feeder drives provide powerful control of product flow, while Pulse Width Modulation systems automatically tune dispersion and radial feeder drives for maximum operating efficiency.


Technological advances have resulted in further increases for packer profit with higher production rates, reduced product giveaway, and lower cleaning and maintenance costs. We can summarise the developments in weighing technology as follows:

  • Speeds up to 15 percent faster than earlier models
  • Control unit with Windows XP operating system and e-mail capabilities
  • Capability for full integration and monitoring of other equipment on the line through single panel operator interface
  • USB camera for real-time monitoring of product conditions on the dispersion and radial feeders
  • Automatic timing settings that optimise productivity and reduce operator inputs
  • Reduced energy consumption
  • Quick and easy set-ups and product changeovers

Finally, when designing/engineering your plant layout, packaging platforms also need to be taken into consideration. Modular packaging room platforms reduce installation and cleaning costs in meat and poultry, plants and sanitary production environments. 

Packaging platforms need to provide a safe, stable support for product distribution and inspection conveyors, weighers, control panels and other equipment. Lightweight structural members could cause vibrations that are not easily detectable but can translate into errors on the load cells of computer weighers.

The end result will be weight fluctuations that can cause weighing errors, reducing productivity and efficiency. Structural members need to be located correctly to eliminate flat surfaces where debris can accumulate.

Conveyors can also be elevated above the non-slip decking to facilitate cleaning. Another feature to consider is open frameworks that take minimal floorspace, and allow complete access to bagmakers, cartoners and other ground-level equipment.

Platforms are normally custom-configured for each installation and can include wash racks for weigher hoppers, plumbing and pre-wiring for single point connection to utilities, lighting, hose storage, catwalks, stairways, safety railing, floor drains and other features.  

Before you buy, consider testing your products. Some suppliers have equipment set up and ready for customer testing to help prove capabilities such as gentle handling, conveying uphill, or moving large quantities of product, as well as weighing and packaging demo centres. If this service is available, making use of it can be of value in the decision making process. During a product test or demo, you can also get firsthand experience with other features such as operator interface, ease of use, and possibly sanitation.

When choosing a supplier, as with any equipment purchase, the buyer is not just purchasing a piece of equipment but also entering into a long term relationship with the vendor. Choose a reliable supplier that understands your industry and offers up-front assistance with such things as system layout, sanitation procedures and avoidance of cross-contamination. Be sure that you are comfortable with the vendor's ongoing assistance such as warranty, training, spare parts and technical support capabilities. Price should not be the only consideration; choosing the wrong partner can cost you much more than you’d save by investing in a sub-standard supplier.

Robert Marguccio is business manager – packaging and inspection systems at Heat and Control, which manufactures food processing and packaging equipment systems. Contact them at info@heatandcontrol.com or visit www.heatandcontrol.com
 

Putting safety first in food manufacturing

Even discussing the possibility of a product recall is enough to send shivers down the spine of a food or beverage manufacturer.

Whether we’re talking about a small scale operation, or a highly reputable multi-national company with world class food safety procedures in place, the reality is that neither is immune to contamination scares. Only last year global food processor Fonterra embarked on a mass recall due to a botulism scare, while products from Victorian dairy processor, Jindi Cheese, were responsible for the death of three people, marking nation’s largest listeria outbreak.

Even with exceptional food safety standards, there is always a slim chance that pathogens could slip through the cracks. So what are the best ways to ensure optimal protection for smaller players in the food manufacturing game and a price that is realistic?

Food Magazine recently spoke to some of the leading food safety solutions players in the business to provide us with insight into the most effective ways to ensure best practice and conduct a successful product recall.

Advanced Oxidation from Dow

Global food safety company, Dow Microbial Control launched its Advanced Oxidation System (AOS) commercially in July 2013 at the International Association of Food Protection’s (IAFP) Annual Meeting. AOS is a whole room system used by food and beverage manufacturing/processing plants to sanitize all surfaces and the air. The system uses ambient air to generate Ozone and combines it with water to create a vapor that evenly fills the entire room.

According to Dow, AOS is a fully customisable solution that is designed to complement conventional cleaning and sanitisation practices, enabling food manufacturers of varying capacities to effectively sanitize hard-to-reach problem areas including; hidden areas in equipment, drains, vents and fabrics – and is even effective in dry environments such as bakeries.

“AOS Certified is particularly effective at reducing and controlling levels of the resilient Listeria monocytogenes in high-care, ready-to-eat (RTE) and prepared-food environments, as well as in spiral freezers and chillers. The technology is also very effective against Escherichia coli, and Salmonella, and against other bacteria, viruses, yeasts and molds,” Dow told Food magazine.

“The technology also runs automatically without relying on workers to do the sanitization so extra manpower isn’t required. The sanitizing agent is produced on demand using just air and water, so manufacturers also don’t have the burden of shipping and storing chemicals.”

The system took Dow over 12 months of intense R&D engineering collaboration to create, and in addition to excellence in sanitation, AOS also offers impressive sustainability credentials.

“Dow Microbial Control is fearlessly committed to revolutionizing how the world approaches microbial control and AOS technology is a chief example of our commitment to sustainable solutions.

“AOS uses ambient air and water to generate a non-condensing humid ozone atmosphere, which produces one of the fastest and most effective penetrative whole room sanitizers. Additionally, AOS does not involve the handling, storage or transport of harsh chemicals, nor does it leave any chemical residues.”

Extending food safety to the ingredients

Earlee Products has taken a slightly different approach to food safety by developing food ingredients that enhance the food safety of processed meat products against pathogens, particularly listeria monocytogenes.

“We saw an opportunity to develop some food ingredients that enhanced the food safety of processed meat products particularly against listeria monocytogenes; the scourge of ready to eat sliced modified-atmosphere meats,” Bob Hamilton, managing director of Earlee Products told Food Magazine.

“Good manufacturing practice is still important, but bacteria is so ubiquitous in plants that once it is there it is hard to get rid of.”

Hamilton says Earlee’s products which consist of ready to use liquids, starches and edible oil lubricants, provide a natural alternative to pathogen control and can be integrated into existing processes or as a decontamination dip for the finished product prior to slicing.

“The ingredients are bactericidal to listeria, staphylococcus aureus and E. coli. So whilst they are food ingredients, they promote food safety by eliminating potently fatal pathogens. The dip can also be sprayed on processing equipment such as slicers and dicers.”

Take the guesswork out of the recall process

In addition to employing exceptional food safety standards within the food manufacturing process, effective recall systems are also essential to have in place.

GS1 and SICK both offer comprehensive traceability solutions for both small scale and industrial sized food and beverage manufacturers.

Richard Jones, general manager quality services at GS1 talked Food magazine through the GS1 Global Traceability Standard.

According to Jones, the standard is inclusive of a number of key pillars including:

  • Global Location Number (GLN) – a unique identifier of any player in the supply chain
  • Global Trade Item Number (GTIN) – a unique identifier of a traded unit
  • Serial Shipping Container Code (SSCC) – uniquely identifies shipments of good

The GS1 Traceability Standard also utilises GS1 Bar Codes – Point-of-Sale (POS), Global Data Synchronisation (GDSN), or its local incarnation GS1net, to share master data between trading partners prior to conducting a transaction in addition to Electronic Data Interchange (EDI) – for conducting electronic transactions.

Jones says that the implementation of an effective recall system such as the GS1 Traceability Standard offers significant benefits to food manufacturers of any size.

“The first benefit is that it is based on standards businesses are already using to meet trading partner requirements. Therefore, no action is required to assign product identification or bar coding as the foundational elements of the system are already in place with GS1 standards.

“Secondly, communication of this information between SMEs and their trading partners means that, in the event of a recall, products and raw material components can be easily identified and dealt with according to the risk. Studies have shown that a large part of the delay in product recalls is due to a lack of consistency in product identification between trading partners. So when a supplier identifies an issue with an item and communicates if to their customer, they may identify it by a different code that needs some form of translation before it can be dealt with appropriately. Multiply this each time an item changes hands and delays can drag on for considerable periods.

“Lastly, they meet all of their internal traceability needs using the same tools that interface with their customers.”

By not employing effective traceability systems, Jones says that suppliers risk far more than a haphazard attempt at recalling product should the unthinkable occur.

“First is the legislative requirement to have traceability in event of a recall and be able to meet regulatory demands to demonstrate capability. In Australia, there is a base level of regulatory oversight whereas in Europe and the US stringent legislation exists that is quite prescriptive in how a manufacturer must apply solutions to meet these requirements.

“In addition, there is a reputational risk. Most customers acknowledge that mistakes will happen from time-to-time. But when a product recall event occurs, customers are looking for quick and decisive action. This is how manufacturers will be judged by consumers moving forward.

“If you do not have the information you need to effect a speedy and efficient recall this can be seen as more devastating to your reputation than allowing the original mistake to occur in the first place. A solid traceability system will allow you to have that information at your fingertips so that you can alert your customers and fellow supply chain partners in a timely manner, meeting the approval of all concerned – including the regulator.”

German sensor system company SICK are also in the business of recall systems. Food magazine recently spoke to SICK about why recall radio-frequency identification (RFID) solutions are an essential component to many food safety programs around the globe.

SICK say that effective traceability and code checking at each and every stage of the production and logistics process is not just desirable, it's essential.

“In terms of final inventory, the numbers in FMCG and food are staggering. One of the Australia’s major grocery players accepts 10,000 pallets of goods a day at distribution centres across the nation – that’s over 3.6 million pallets a year; each stacked two metres high with multiple products, all needing to be individually identified. A 1% inaccuracy or no read rate using traditional bar code label technology would mean breaking down over 36,000 pallets per year for manual handling and double-checking,” Sean Carter, product manager identification and measurement told Food magazine.

“Considering these sorts of numbers, and that the onus is completely on the supplier, the need for error-free tracking and code checking is pretty clear.”

Carter points out that in addition to inventory issues, the potential for error also abounds in food processing.

“Inaccurate labelling can easily lead to supply of the unsuitable product and make tracing incredibly difficult. In the worst case, a failure in process can result in contaminated product reaching the consumer, conceivably creating wide-spread food borne illness and even death,” he said.

SICK’s RDIF technology systems fall into two distinct types based on the technology that under pins them.

  • High frequency 13.56 MHz inductive coupling systems (HF) that are used in near field applications usually <30 cm. They are not affected by the presence of water or metallic objects and there is a large range of transponders and tags for all sorts of applications.
  • The other system that is available is ultra-high frequency 860-960 MHz capacitive coupling systems (UHF). These are typically used in longer range applications >30cm and the unique item identifier (UII) of the tag is programmable.
     

A number of high profile food and beverage manufacturers currently employ SICK’s RFID solutions including Fonterra New Zealand, however SICK say that although the technology is highly sophisticated it is also within the reach of smaller to medium sized manufacturers.

“RFID is very affordable. The transponders (or tags) come in many different shapes and sizes to suit almost every conceivable application. Additionally the cost of the tags has reduced to the point where most are now considered to be disposable,” said Carter.

No matter what sized business you are running, SICK say that food safety is not something that a manufacturer can afford to compromise on.

“If the cost of a complete solution with multiple interrogators at first appears expensive, food and beverage manufacturers should probably ask themselves whether they can afford not to have an effective track and trace system that minimises the chance of process errors and maximises the chance of tracking them when they occur.”
 

Reformulation specialisation – how to successfully tweak a winning recipe

There is always a certain amount of risk involved when a company chooses to tweak a winning recipe.

Consumers are demanding folk that want food to be healthier, cheaper and more accessible – but at the same time if you alter the recipe, you could find yourself in the middle of a PR nightmare.

In the mid-1980s, the Coca-Cola Company was starting to lose market share to its main competitor Pepsi. In order to win back consumers, Coca-Cola reformulated the recipe for the first time in 99 years and renamed the beverage New Coke. The new recipe was met with a surge of consumer complaints and saw the return of the original recipe only a few months after the initial launch.

Identifying the fine line between product innovation and an outright marketing disaster is a complicated task that involves extensive market research, product testing and sometimes a bit of pure faith.

When the British subsidiary of Kellogg’s released a reformulated version of the veteran women’s cereal Special K in May 2013, it was met with a host of complaints from previously loyal customers who called for the return of the original recipe. Consumers complained that the new recipe was too sugary despite holding the same sugar content as the original recipe, while others complained that the flakes were too hard.

These were all lessons that the Australian division of Kellogg’s no doubt kept in mind when they decided to increase the nutritional content of Special K down under by adding a higher wholegrain content and decreasing the sodium levels of the recipe.

Keeping the special in Special K

The Australian recipe for Special K had not been touched in over 50 years and as such, Kellogg’s made a conscious effort to tread very lightly and develop a new recipe that ticked additional nutritional boxes without compromising on taste and texture.

Food magazine recently spoke Special K’s Senior Brand Manager, Kate Harris about the process involved in changing Special K’s recipe and what it was that motivated Kellogg’s to take an educated risk on one of its most popular products.

“Special K as a brand has always been on a journey with Australian women and being around for 50 years meant that we needed to evolve with our consumers,” said Harris.

Harris explains that as the Special K consumer has evolved, the demand for healthy food options and better nutritional content in breakfast cereals has also increased.

“We’ve listened to what they are looking for in a breakfast cereal and we’ve made positive changes to best meet those desires.”

According to Harris, the process of tweaking the recipe to meet the needs of the brand’s customers meant upping the nutritional content without changing the taste or consistency of the signature Special K flake.

“Making changes to our food and getting it right in the eyes of our consumers takes time. Replicating the taste and consistency was incredibly important. We used not only internal quality checks but also took the product to consumers to get their feedback through research.

“We know that consumers love the taste of Special K which is why we worked so hard to ensure that this did not change.”

Considering how the changes were executed in the UK back in 2013, it was imperative that the Australian subsidiary adapted the recipe to local market accordingly. Harris explains that as Special K is a global brand found in many countries, decisions for the brand’s direction are made with each individual market in mind.

“The changes made in the UK are not the same as those made in Australia and New Zealand. “As a global brand we always strive to take learnings from each market and adapt and reapply those where appropriate in another one.”

The new recipe was released on the 3rd of February, and according to Harris, consumers have responded positively to the changes.

“When we were in the process of reformulating Special K, we wanted to be sure that our customers would be happy with the changes. The Special K consumer was kept front of mind throughout the process, which is why keeping the signature taste while also introducing the increased benefits of nutrition was equally important.

“The new Special K is now a better source of fibre than the previous recipe, a source of wholegrain, features about 15 per cent less sodium and is still one of the highest protein cereals available.”

Slow and steady wins the race

Early last year, fellow cereal manufacturer Uncle Toby’s reformulated its entire breakfast cereal range to comply with new nutritional guidelines set out by the Federal Government – becoming one of the first manufacturers to do so. Uncle Toby’s regional nutrition manager, Nilani Sritharan said that the transition to a more nutritious portfolio was no easy feat.

Sritharan told Food magazine back in 2013 that the key to making any change was ensuring that customers stayed on-side. She said that making small healthy improvements over time is far preferable to introducing an immediate change, and that a slow transition period often results in consumers not even detecting a change in the recipe.

In addition to keeping consumers happy, Sritharan said that keeping the cost structure down is another factor that needs to be considered due to the time invested in R&D in addition to more expensive ingredients. She also mentioned that healthy improvements don’t necessarily require new manufacturing processes, and that often changes can be achieved simply through a tweaking of current procedures.

“I don't think it fundamentally changes the manufacturing process but you may find there are changes in texture or stickiness that we would have to work through and adjust for,” she said.

Sritharan sighted the popular children’s cereal Cheerios as a prime example. Since 2008 Cheerios had reduced its sodium content by 40 percent and boosted its fibre content by 25 percent, with wholegrain content rising by a similar margin.

“For example with Cheerios, increasing the wholegrain content can sometimes make the Cheerio a bit softer or affect the loop shape itself.

“So looking at some of the mixed grains we have in there, we have to try and balance that out.”

As was the case with Coca-Cola, Kellogg's and Uncle Toby's, any reformulation process is indeed a matter of trail and error but two key learnings will undoubtablely have you on the path to success: 

Firstly, listen. Listening to your consumers is something that manufacturers need to keep top of mind during the reformulation process, no matter how fantastic the new health credentials may be. And secondly, whether a food manufacturer is tweaking a recipe to abide with new regulations or simply aiming to improve the current nutritional content, slow, steady and subtle adjustments are the key to successfully introducing the improved product.

 

10 things you didn’t know about plastics

Did you know that the word Nylon is derived from New York and London?

Few of us stop to think twice about the pack we are about to open. All that our minds are focussed on at the time is to get to the contents, so when we experience difficulty in opening the pack we have lots to say about packaging in general.

Packaging plays such an important role these days in everybody’s life that consumers don’t for one minute stop to think about how they manage to apply deodorant in the morning, eat a bowl of cereal or buy a litre of milk. With this in mind, here are some tips to keep in mind when you’re considering what your next product’s packaging will look and feel like:

  1. When designing packaging, always design with the end in mind. Think of the full supply chain, from cradle to grave, and what the package will endure along the way. Thought should be given to shape and size at unit level so that containerisation can be maximised and overall costs reduced.
     
  2. Conditioning is essential before making tests on many materials and containers. Properties of certain materials are a function of the environmental conditions in which they find themselves. For example, the thickness, or caliper, of a piece of chipboard varies with the humidity of its environment.
     
  3. The word ‘Nylon’ is derived from ‘New York’ and ‘London’, where DuPont's research facilities were located in 1935.
     
  4. Karl Ziegler, a German chemist, developed polyethylene in 1953, and the following year Giulio Natta, an Italian chemist, developed polypropylene. These are two of today’s most commonly used plastics.
     
  5. ‘Plastic’ is used interchangeably with ‘polymer’. Usually ‘plastic’ refers to the finished formulated product, whereas the more correct word ‘polymer’ is used to describe the pure basic material.
     
  6. The word ‘polymer’ is derived from the Greek word poly meaning ‘many’, and the Greek word mer meaning ‘unit’, i.e. a polymer is a ‘many-unit’ material.
     
  7. Bakelite or polyoxybenzylmethylenglycolanhydride, is an early plastic. It is a thermosetting phenol formaldehyde resin, formed from an elimination reaction of phenol with formaldehyde. It was developed by Belgian-born chemist Leo Baekeland in New York in 1907. It is one of the first plastics made from synthetic components. It was great for electrical components like plugs.
     
  8. Cellophane looks and feels like a plastic but is not a plastic. It is a thin, transparent sheet made of regenerated cellulose. It was invented by a Swiss chemist, Jacques Brandenberger, who in 1900 was inspired by seeing a wine spill on a restaurant's tablecloth, and decided to create a cloth that could repel liquids rather than absorb them.
     
  9. We incorporate additives into plastics in order to enhance or improve their performance both during processing and in use of the resulting mouldings or films. Examples are:
    Plasticisers – these are often necessary to reduce the rigidity of some plastics so that processing is easier at a lower temperature and so that permanent flexibility can be achieved.
    Stabilisers – these protect the polymers against physical or chemical deterioration when subjected to atmosphere effects or to high temperatures during processing.
    Slip additives – these are added to films in order to reduce the corffecient of friction between two film surfaces.
     
  10. If each Australian family used one less plastic bag each week that would be we’d use 253 million fewer bags in a year.

If more of us, both inside and outside the industry, thought about packaging a little more, and thoroughly appreciated and understood its advantages and real purpose in the supply chain, as a population we’d greatly reduce wastage and packaging pollution, and go a long way towards achieving the 3 Rs: reuse, recycle and reduce.

Pierre Pienaar Msc, FAIP
Education Coordinator
Australian Institute of Packaging (AIP)
educate@aipack.com.au

 

Why don’t we believe Australia’s fisheries are sustainable?

Australians love seafood. We each consumed an average of 25 kilograms of seafood in 2010 – an amount that has increased significantly over the last 30 years. Worldwide, fish consumption now exceeds beef. Despite our love of fish, more than two-thirds of Australians think that our fisheries are unsustainable, a view that is strongly at odds with the scientific evidence.

Two current reports on Australia’s wild catch fisheries reveal stark differences in the way scientists and Australians view the sustainability of fish stocks. While scientists assess most stocks as sustainable, the community sees it differently. Less than one in three Australians perceive the wild catch commercial fishing industry as sustainable.

What we know

Last year, the Fisheries Research and Development Corporation published an extensive assessment of the status of Australia’s commercial fish stocks. The report assessed 150 stocks of 49 species, which make up the bulk of the commercially significant fisheries (approximately 70% of the commercial wild catch by volume and 80% by value).

The report tells a positive picture: 98 stocks were classified as “sustainable”, 11 as “transitional”, 39 were “undefined” due to insufficient data, and just two – Southern Bluefin Tuna and School Shark – were assessed as overfished.

This isn’t a comprehensive survey. Some stocks could not be assessed because information was not adequate. The report doesn’t assess all commercial species, or consider sustainability of the broader marine environment. But it shows clearly that more than more than 90% of the total catch of the species considered is being fished sustainably. This is good news for consumers of wild caught Australian seafood.

What we think we know

But last week, the Fisheries Research and Development Corporation (FRDC) released the results of a recent survey of community perceptions of the Australian fishing industry. The online survey of 1021 respondents shows that only 30% believe that the commercial wild catch fishing sector is sustainable.

Because of this gap between science and community perceptions, there is a real risk of limited community approval or acceptance of fisheries management.

In other words, Australia’s commercial fisheries lack a “social licence” to operate. This means that when controversy arises — as it did in conflict over the “super trawler” Margiris — Australians are unlikely to support these fisheries.

The 142-metre 10,000-tonne MV Margiris, the world’s second largest super trawler, arriving at Port Lincoln, South Australia, in August 2012. AAP Image/Nat Kilpatrick

 

Licensed to fish?

Why the gap? Other natural resource industries provide some valuable lessons.

First, the Australian fishing industry may be being defined by its past. Despite improvements in management and practises, poor past performance can contribute to today’s perceptions of an industry.

The survey released last week shows that 80% of the Australian public are unaware or unsure of changes put in place to improve fishing industry sustainability in recent decades.

Second, the community might be generalising perceptions about international fisheries to Australian fisheries. Imported seafood, mainly from Thailand, China, Vietnam and New Zealand, made up 72% of the seafood consumed in Australia in 2008/09.

Third, the public judge wild catch fisheries based on their knowledge of it. This knowledge rarely comes from people directly involved in the industry, and much more commonly comes from newspapers, radio and television. Media headlines grab public attention, yet the depth of information portrayed is often shallow and the opportunity to meaningfully learn from scientific reports is limited.

But it’s a two-way street. We need more accessible information on fisheries management, and science needs to address the issues that concern the community, if Australians are to make informed judgements.

What we think of bigger businesses

Compounding those problems is the lack of visibility of commercial fishers in many communities. Social licence is often built through personal interaction and trust, and an industry that lacks visibility has few opportunities to build this trust.

Thanks to efforts to improve economic efficiency and sustainability, Australia’s commercial wild catch fisheries now employ fewer people, and have shifted to larger, more corporate fishing businesses. Commercial fishing activity has also been reduced in near-shore areas used by recreational fishers. This has the unintended side effect of reducing the visibility of commercial fishing and the sense of familiarity for the general public. With less connection and less visibility, commercial wild catch fishers operate almost out of sight.

The shift to larger businesses and in some cases larger boats may itself reduce trust in wild catch fisheries. Multiple studies (based on energy, forestry and farming) have found that the public perceive activities more negatively if they are conducted by large businesses or on a large scale.

Fisheries policies —intended to improve productivity and encouraging economies of scale — may have the unintended consequence of reducing the acceptability of the industry.

The lack of a social licence to operate for Australia’s commercial fishing sector means fisheries can struggle to find community support when controversy arises.

But the latest FRDC survey suggests there is room for change. While only 30% of Australians believe our fisheries are sustainable, a further 37% sat on the fence. Better access to trusted information and increased familiarity with the fishing industry can help address this gap.

Peter O'Brien is a Director of the Fisheries Research and Development Corporation.

Jacki Schirmer and Lain Dare do not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article. They also have no relevant affiliations.

The Conversation

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Food labels are about informing choice, not some nanny state

Coalition MP Ewen Jones has spoken out against reinstating the health star rating website controversially closed down by the assistant health minister. Jones says the government shouldn’t interfere with people’s lives, but food labelling requirements aren’t a manifestation of the nanny state, they’re there to provide accurate, easy-to-understand information.

Indeed, food labelling has been a central plank of the food regulatory system since it first emerged in the mid-1800s. Back then, it was not uncommon for products to be adulterated, or marketed with fraudulent claims.

There were reported cases of people being deceived about the weight of the food or its composition. One practice involved adding white colouring to water to create the appearance of milk. Labels provided an effective tool to help food regulators solve such problems.

Things stay the same?

The main issues confronting food regulators have now changed considerably, partly due to the availability of many more products. You might think this increased choice has provided increased opportunity to choose a healthy and varied diet, but that’s not necessarily the case.

Rather, what we have is a proliferation of high-energy, nutrient-poor “discretionary” or junk food constructed from the same basic highly-refined ingredients, such as corn, soy, sugar, fats and salt, typically coloured, flavoured, packaged and marketed in different ways. And the increased amount of information that has accompanied this proliferation often translates into increased confusion.

What’s more, many food products are still marketed with dubious claims. Highly-processed breakfast cereals containing a third of their weight in added sugar, for instance, are marketed as being healthy because they contain a number of added synthetic vitamins and minerals.

Food labels can now be the shopper’s ally by promoting informed choices for a healthy balanced diet, or adversary by promulgating misleading claims that create confusion and uncertainty.

Food regulators are supposed to use labels to help achieve two primary statutory objectives – to protect public health and safety and to provide adequate information relating to food to enable consumers to make informed choices. But there are many reasons why the current approach is inadequate.

A screenshot from the health star rating food labelling website shut down by the government. Christina Pollard

Health claims

Marketing products with health claims, such as “This product helps reduce the risk of heart disease” provides a strong angle for generating increased sales. And the food industry has fought hard for permission to use such claims on food labels.

Despite evidence showing these claims have little, if any, benefit for the health of the population, in early 2013, Australian ministers permitted the use of health claims on food labels.

Public health and consumer groups expressed concern that such claims make a nonsense of the fundamental nutrition principle that the balance of the total diet shapes health outcomes, not individual foods.

They also pointed out that junk food manufacturers would take advantage of the marketing potential of such claims. And the first notification the food regulator received was from the manufacturer of a highly-processed food claiming to have a “calorie burning effect”.

If health claims are to genuinely be about protecting public health and not marketing, food labelling regulations might mandate them and link products' added sugar with dental cavities, for instance, or their salt content with hypertension.

Spreading confusion

People are frequently confused about the information appearing on food labels. And this confusion isn’t helped by the use of words such as “natural” or “real”, which are undefined in labelling law but imply some kind of benefit.

Some products imply they’re made with fruit when, in fact, they contain little fruit and are very high in sugar. Following a complaint from the Obesity Policy Coalition about the potential misrepresentation of a “65% real fruit” claim on Uncle Tobys Roll-Ups, for instance, the Australian Competition and Consumer Commission took the view that the claim was potentially misleading and deceptive.

Confusion can also be created by what’s implied but not explicitly said. A claim such as “97% fat free”, for instance, might be displayed on products that wouldn’t usually contain fat anyway but have added sugar, such as confectionery.

A screenshot from the health star rating food labelling website showing what the system would look like. Christina Pollard

Endorsement schemes displayed on food labels are another source of consumer confusion because the criteria used to endorse food products can vary among schemes and with nutrition policy recommendations. Concern has been expressed about the National Heart Foundation’s “Tick” scheme, for instance, because it’s not always consistent with Dietary Guideline recommendations.

The emphasis on most food labels is placed on persuading people to buy the product rather than informing them about it. That’s why the way information is framed on labels imply benefit.

Labels range from “information only” to information with an element of persuasion – “5% fat” is information only whereas “95% fat-free” is information plus persuasion. And people already interested in low-fat products will be persuaded to choose the 95% fat-free product.

Protecting public health and promoting informed choice

Clearly, there are problems with the current food labelling regime. But why does something that promotes informed choice have to be so difficult?

Why would Jones and the assistant health minister Fiona Nash want to maintain an information asymmetry in favour of the food industry and at the expense of the people they’re elected to represent?

At least seven years in the making, with the involvement of food ministers, government food regulation advisors, food industry representatives, consumer advocates, public health organisations, and an independent public health nutrition advisor, the Star Rating labelling system was a good start to positive change.

The approach is informative, easy to understand and targeted at helping correct dietary imbalances that are one of the major public health problems confronting food regulators.

But as the debacle with the website showing the system has illustrated, the challenge with developing and implementing informative food labelling is often less about evidence and more about the political will to stand up to the interests of the food industry to whom clear labels may not always be palatable.

Mark Lawrence is the Principal Investigator for an ARC-linkage funded project modelling policy interventions for food security and sustainability and a Chief Investigator with the NHMRC Centre for Research Excellence in Obesity Policy and Food Systems based at Deakin University. He does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article.

Christina Pollard is the Principal Investigator on Curtin University’s Healthway funded Food Law, Policy and Communications to Protect Public Health. Curtin University has received 5 years of funding to assist the translation of research into practice through the FLPC project. She works part-time for the Department of Health in Western Australia as a Nutrition Policy Advisor for the Chronic Disease Prevention Directorate. She has co-written this article as an academic and not as a public servant and not representing the views of the Department.

The Conversation

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Will community support seal the deal on SPC’s future?

It was only a few weeks ago that the future of Australia’s last remaining fruit and vegetable processor, SPC Ardmona, was in doubt.

A steady influx of cheap imported tomatoes, a consistently strong Australian dollar and confusing regulation surrounding country of origin claims have all impacted on the processor, which warned it may have to cease trading in Australia.

SPCA reached out for government assistance to meet rising costs, a request that was initially met with a $25m pledge from Labor, but was later rejected by the Abbott government.

The processor also appealed to the Anti-Dumping Commission to have tariffs imposed on tomatoes imported from Italy on the basis that the cheap imports were causing material injury to local producers. The Anti-Dumping Commissioner ruled in favour of SPCA, and imposed a tariff of around nine precent on 14 Italian processed tomato brands.

The imposition of tariffs and increased consumer awareness of SPCA’s plight led to a steady increase in sales, but not enough to secure its future.

It wasn’t until late one Thursday night in early February that SPCA’s future would really take a turn for the better.

Newcastle resident and loyal SPCA customer, Linda Drummond pioneered a movement on Twitter that encouraged Australians to purchase SPC products over the weekend. She created the hashtag #SPCSunday which soon spread to various forms of social media including Instagram and Facebook.  

Within less than 24 hours, the hashtag had been used in over 1,000 tweets and reached the likes of Australian celebrities including Magda Szubanski, Father Bob and Adam Spencer who were all eager to support the cause.

By the time Sunday rolled around, the hashtag was tweeted over 7,000 times and sales of SPCA products soared..

Food magazine recently spoke with Bronwyn Powell, the marketing and innovation director for SPC Ardmona about the #SPCSunday campaign and the impact that it has had on the business.

Powell said that sales in the lead up to #SPCSunday were already increasing, but since the campaign, more consumers have been reached than they could have possibly hoped for.

“In our key line and our key retailers we have increased sales by over 50 percent, which was actually happening even before #SPCSunday. We have had such great support from consumers, retailers and everyday Aussies, and now even more so,” she said.

“We are just overwhelmed with the everyday Australian supporter for our company really. So it’s amazing, it’s really been fantastic.”

When asked whether SPCA would consider integrating #SPCSunday into the company’s marketing activities, Powell said it is something that the company would ‘definitely’ consider.

“We are definitely looking at how we can continue to support and grow this idea whether it is instore or online with consumers. It’s only early days but trust me, my team are crazily thinking, about how we can help grow and support #SPCSundays and really connect with our consumers and the community.”

Since #SPCSunday, both Coca-Cola Amatil (SPCA’s owner) and the Victorian state government announced a new $100 million investment plan to assist the processor over a three year period. The cash injection will no doubt provide much needed assistance to the brand, however for the company to continue to prosper now and into the future, ongoing consumer support is vital.

Food magazine asked Powell what she believed Australia would lose if SPC was to close.

“There are a lot of things that we are going lose if we lose SPC. The first one that I have to say as the marketing director is great brands that have been around for nearly 100 years – Many of them people have grown up with. Household names like Ardmona, IXL jam, Goulburn Valley and Taylors more recently which is a newer brand, those brands will be lost and lost from a lot of our Australian childhood memories.

“And because we are an agricultural based company with Australian grown fruit and vegetables – we are going to actually lose a lot of Australian growers. And the sad thing for me, the thing that probably brought me the most emotion in this job was that we would be losing 100 year old pear trees that have gone through three generations of families.

“The other thing is that consumers are going to lose the reassurance that they are buying Australian, and when they are buying Aussie grown, and our products, I can assure you that they are clean, green and wholesome. We give consumers comfort that their food is premium quality and safe – that is critically important and something that we know and we can demonstrate.”

Powell says that differing standards in food safety is another concern that the Australian public will face should SPC close and shelf space be replaced with imported products. The call for stronger country of origin labelling and more rigorous testing of imported fruit was heightened last year after high levels of lead were detected in Chinese canned peaches. Tests on the fruit showed alarming high levels of lead – up to twice the amount that is legally permissible under the Australian and New Zealand food standard.

“One of the things I always say is actually look at where products come from… Have a look in the fine print and actually see where that product was really made and then ask yourself, do you really know what goes on in terms of the conditions that the product was made in? Do we really know if they have the same strict laws that we have in Australia around food safety?”

Powell explains that innovation within the Australian fruit sector is also something that the nation stands to lose.

“We would lose all of the future innovation that myself and my team have been working on. Just one of those is Goulburn Valley Perfect Fruit [soft serve fruit] which is currently in test market. We have loads of other ideas too that won’t be there if we go, as there is nobody else that really operates in fruit to offer that innovation in Australia. Fruit is at the core of what we do.”

Although SPCA has been enjoying a spate of increased support from consumers and retailers in recent months, ongoing sales is what’s required to  to keep the company alive.

In mid February, parent company Coca-Cola Amatil posted a $400m slump in net profit, related to write-downs from SPCA. In order for the company to truly come back into prosperity, constant consumer support is paramount, and also achievable.

Spring Gully, a South Australian sauce and pickle manufacturer was in a similar predicament, albeit on a smaller scale, in mid-2013. The company entered voluntary administration with debts of $4.9 million in July, but showed stronger signs of life months later as a result of community and retail support. 

Fellow South Australian food brand, Robern Menz launched the “Shop and Swap” campaign which encouraged consumers to swap one supermarket food item with its South Australian produced counterpart.

Not long after Shop and Swap was launched, three weeks' worth of Spring Gully sales took place over a three day period with Foodland, IGA and Coles placing extra orders to make up for the increase in sales. In November, the company announced that it had cleared $1 million in debt.

The question is can SPCA follow a similar path and pave a road to recovery through increased consumer support? Powell thinks that they are most certainly on the right track.

“The support is certainly helping us, it is certainly saying to everyone that this is a company with brands and products that Australians want to keep alive.

“SPC is overwhelmed with the support, and we want to thank each and every Australian who has supported us – retailers and the consumers.”

 

Can Australia win from FTAs in the Asian Century?

Australia and South Korea are entering a Free Trade Agreement (FTA), but before you think “advanced Western country gains access to a large Asian market”, think again.

Economic powers have shifted seismically to the East Asian region (China, Hong Kong, Japan, Korea, Singapore, Taiwan), raising the question of who actually benefits from an FTA in the new world order, the so-called Asian Century.

China appears to be prioritising its Asian neighbours, including South Korea, over Australia, despite Prime Minister Tony Abbott’s ambition to have an FTA signed with China by the end of the year.

South Korea is more competitive

Korea has surpassed Western economies on most key economic dimensions. In the 60 years following the Korean War, the southern part of the Korean peninsula has become one of the most dynamic and sophisticated economies in the world, whereas in contrast, Australia’s competitiveness has dropped, and falls short on key macroeconomic dimensions.

According to the World Economic Forum (WEF), Australia ranks 21st in terms of global competitiveness, Korea ranks 25th. But in terms of innovation and sophistication, Korea is 20th and Australia 26th, in terms of infrastructure Korea ranks 11th and Australia 18th; for the macroeconomic environment it’s 9th versus 25th, and for health and primary education, Korea ranks 18th, Australia 22nd.

Nevertheless, some Australian industry sectors are strong and globally competitive. For example, agriculture will benefit from the FTA with growing beef, dairy, sugar, wheat and wine exports to Korea once tariffs fall. But at the same time, Korea’s own food industry has fast reached global centre stage with innovative noodle, confectionery and healthy herbal products, whereas Australian processed food may find only little demand in Korea. Australia can position itself to deliver raw materials for the Korean food industry, but Korea is also looking to China for produce more in line with local tastes such as rice and herbs.

Manufacturing in a spiky world

Korea is a world leader in the manufacturing of high-tech products such as mobile and smart phones, tablets and smart TVs (Samsung, LG), whereas Australia is not involved in making such things. At the same time, Korea hosts two of the most dynamic and profitable, fastest growing car manufacturers: Hyundai and Kia.

Korean manufacturers are smart in utilising comparative advantages on a regional, if not global scale. Design (R&D) and marketing of such products is largely done in Korea, but the labour-intensive manufacturing has partially been outsourced to low-cost countries such as Indonesia and Malaysia (electronics), Vietnam (tyres) and India (cars).

The Australian car industry has, in contrast, not only lost foreign brands such as Ford, Mitsubishi and Toyota, but even its own home-grown brand Holden has defected from Australia for more cost effective manufacturing in – you guessed it – Korea.

Toyota’s management made a point of mentioning tariff issues when they made the decision to pull out of Australia, but in fact such large scale decisions are more of a competition issue rather than a tariff one, which is really about market access. Ultimately, Australia may simply not have a comparative advantage when it comes to (car) manufacturing, and in the global car industry, manufacturing moves to locations with the greatest competitiveness.

Australia may gain a synchronous advantage, however, once tariffs on steel are reduced and more Australian gear boxes are shipped to Korea. The Korean car industry benefits from that revised trade too, and subsequently is able to sell more cars, which in turn means Australia can make more gear boxes for more Korean cars. This will result in a symbiotic advantage because both countries win in international trade.

Korea wins on services and education too

Australia has much to learn from South Korea. DFAT/AAP

In addition to manufacturing, Korea has emerged as a strong service provider with competitive airlines and a growing tourism sector.

The FTA will guarantee market access for education providers, but here too, Korea is fiercely competitive. Korea’s education system with a focus on academic performance, discipline and passing on Confucian values has resulted in strong PISA results.

Korean students outperform Australian 15 year olds by 10% in maths and 6% each for reading and science. The Australian government aims to lift education to East Asian standards as part of the Asian Century theme, but the Confucian approach to education took centuries to form, and is not a matter of simply “copy/paste”.

Korean parents are still sending their offspring to study down under, but Korea is increasingly attracting international students itself.

The big challenge for Western countries such as Australia is that education ultimately leads to competitiveness, and if the gap between East Asian and Western education standards and performance widens more, then by the very logic, global competitiveness of East Asian nations like Korea will further increase, and Western countries will have a less globally competitive workforce.

Where Australia can benefit

Korea will continue to be hyper competitive with fast to market products and services, it will continue to pass on Confucian dynamism in its education system, and it will focus on FTAs more important than the one with Australia.

Korea, together with China and Japan, make up 20% of the global GDP, and if territorial disputes can be overcome, then these three countries will likely enter FTAs and compete on equal footing with the USA and European Union; Australia may be a niche player in contrast.

It would be naïve to assume that Australia can in fact compete with Korean brands such as Hyundai, Kia, or Samsung and LG. The benefit of the new FTA for Australia is not merely the opening of an already key export market, but a chance to learn from Korea about an education system that contributes to a competitive workforce, an opportunity to better understand the utilisation of comparative advantages, and in the longer term, a chance to regain global competitiveness.

Chris Baumann does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

The Conversation

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Should the food industry resign from the health department too?

Furore over links between Assistant Minister for Health Fiona Nash’s office and industry continues with revelations that her former chief of staff is connected to the alcohol, as well as the food industry.

Alastair Furnival resigned last Friday over his role in shutting down a website about the health star rating food labelling system and it’s now been revealed that he played a key role in cancelling the funding of the Alcohol and other Drugs Council of Australia.

Furnival is co-owner of a lobbying firm that has represented major food companies opposed to the new front-of-pack labelling system. According to Fairfax, he and his wife also co-own a company, which, in turn, owns another that lobbied for the alcohol industry in 2012.

Such conflicts of interest place question marks over an individual’s capacity to judge a situation, perform a duty or make a decision in a fair and impartial manner. But what if a public institution, such as the Department of Health and Ageing (DoHA) itself, has conflicted interests?

Furnival’s conflict of interest is worrying and should be thoroughly scrutinised. But the influence of the food and alcohol industries at the institutional-level precedes Furnival and will continue despite his resignation.

A growing closeness

The Australian Food and Grocery Council (AFGC) and the health department have developed close ties in recent years. Senior executives of the Council sat on the Dietary Guidelines Working Committee and the National Preventive Health Taskforce.

It co-funded a major nutritional health research survey with the health department in 2007, and is a prominent member of the Food and Health Dialogue.

At the 2009 AFGC annual dinner, Nicola Roxon, then-minister for health said these relationships weren’t cause for concern. Roxon welcomed the industry’s partnership with health prevention strategies and research projects, adding that she “saw no reason for people to fear industry engagement – quite the opposite”.

Perhaps. But when the aim of the food and grocery council is to “influence federal and state policies to ensure our members’ views are represented at the highest level”, legitimate questions arise about whether these partnerships conflict with the work of the health department.

Lawrence Lessig, professor of law and director of the Edmond J. Safra Center for Ethics at Harvard University, warns that such partnerships can corrupt an institution by creating:

an economy of influence that illegitimately weakens the effectiveness of an institution especially by weakening the public trust of the institution.

So does the health department’s relationship with the food and grocery council weaken its effectiveness and public trust of the institution? For many, the answer is yes.

Keeping everyone happy?

In 2011, DoHA responded to the Blewett Review of food labelling law and policy by rejecting the major recommendation of a traffic-light front-of-pack labelling system. Journalists, public health researchers and consumer groups all believed the decision was due to the food and grocery council’s influence.

Catherine King, then-parliamentary secretary for health, defended the decision in an interview with the ABC. King explained the traffic-light scheme would “be a fairly big change for industry” and decided that “we need to get public health and industry together to try and…look at another system”.

This led to the Forum on Food Regulation, a collaborative process involving the AFGC, public health researchers and health department officials. The Forum’s objective was to develop a front-of-pack food labelling system that “must strike a balance between seeking to ensure good public health outcomes and ensuring a strong and profitable food industry”.

But are these objectives compatible? If a profitable industry undermines public health, is a balance feasible? And does the attempt to reach a balance weaken the effectiveness of the health department, the institution that arbitrates this relationship?

A profitable food industry is certainly in the nation’s economic interest. But the idea that it should be a primary concern for DoHA rubs against its more obvious objective of ensuring public health.

Individual conflicts of interest can cause significant damage – Furnival and those responsible for his appointment need to be fully investigated. But whether the increasing acceptance of public-private partnerships is the best way to ensure public goods needs critical attention. These partnerships have the potential to undermine public trust and weaken the effectiveness of vital public institutions.

The public needs to be confident that public officials and public institutions are acting in their interest. Recent events at the individual and institutional level imply that such confidence is misplaced.

The author would like to thank Associate Professor Jonathan H. Marks and Emeritus Professor Donald B. Thompson. This analysis partly draws on research undertaken as Postdoctoral Fellow on their collaborative project (https://rockethics.psu.edu/bioethics/food-ethics/research) jointly funded by the Rock Ethics Institute at the Pennsylvania State University and the Edmond J. Safra Center for Ethics at Harvard University.

The Conversation

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WA’s canola case shows GM crops are still being demonised

Once again, genetically modified crops are in the news for all the wrong reasons. In Western Australia’s Supreme Court, organic farmer Steve Marsh is suing his neighbour and fellow farmer Michael Baxter for allegedly ruining his crop by contaminating it with GM canola.

Marsh lost his organic certification as a result, and members of the green movement have rallied to his cause. But the case is just the latest episode in a saga that has left scientists like myself bemused at the strength with which the public has been swept up by the anti-GM movement.

We thought we were generating a useful and benign technology, but instead find ourselves portrayed as purveyors of doom and disaster. Where did it all go wrong?

Tackling disease

When I entered the field of plant pathology 30 years ago, techniques for genetic manipulation of plants had just been established, and it was clear that plants have genes that protect against disease. It seemed a simple matter to find those genes and express them in crop plants.

It wasn’t quite that simple, but by about 2000 the genetic basis of disease resistance was well understood and techniques to express genes in most crop plants had been established. So why aren’t we now enjoying the benefit of GM disease-resistant plants?

The biggest problem is that public anxiety about genetic modification has stymied progress.

A long history of regulation

Genetic modification is, I believe, unique in the history of science in that its original developers were the first to exercise caution and suggest a moratorium, at the famous Asilomar Conference in 1975. This led to a set of regulations under which we all work still today.

After a few years, the scientists realised that working with genetically modified versions of organisms such as cancer viruses was no more dangerous – and often much less dangerous – than working with the unaltered version. Nonetheless, the regulations have never been relaxed, with the result that today, the regulatory hurdles of GM crop production add tens of millions of dollars to the costs of the research.

Researching the risks

The risks of GM crops have been talked about for 25 years and not a single shred of reliable evidence of significant harm to environment or human health has been found.

I took part in a large European Union project in the 1990s to assess the risks of genes from GM crops spreading through the environment. Dozens of researchers worked for five years to identify issues of concern. They found almost nothing – the conferences were easily the most boring I have ever attended.

A couple of well-publicised cases – the first in the late 1990s, when Arpad Pusztai fed GM potatoes to rats, and more recently when Gilles-Eric Seralini made his now retracted claim that GM maize was carcinogenic – have purported to show a health risk associated with GM food. Both studies have since been discredited.

Organic crops do not receive anything like to same attention. A US Centres for Disease Control project found that people who eat organic food are eight times more likely to get infected by E. coli. In Germany, 53 people died and many more permanently disabled from eating organic bean sprouts in 2011. Imagine if GM crops were blamed for even one case of the ‘flu.

Controlling our food?

Another accusation levelled at GM crops is that big companies are “controlling our food”, forcing farmers to buy seeds each year from a monopoly supplier. People too easily forget that farmers have a choice of many types of seed. The huge expansion of the area sown to GM suggests that farmers are increasingly happy to use them. Crops from which seeds can’t be resown (for biological and legal reasons), such as maize and canola hybrids, have been around for nearly 100 years.

Organic farmers argue that coexistence is impossible because they receive a premium for their product and that GM contamination destroys their organic status. But this situation arises from the total rejection by the organic movement of all things GM over the past two decades.

Organic certification depends on a set of arbitrary rules; if the rules permitted a small mixture, there would be no case to answer. The organic movement’s total rejection of GM is irrational, especially as GM has reduced pesticide use. Why are they more worried about mixture from a GM crop treated with glyphosate than a conventional crop treated with a less benign herbicide such as triazine?

Call for coexistence

All three cropping systems (conventional, GM and organic) could coexist. This is best illustrated by the case of papaya ring spot virus in Hawaii, where a sustained epidemic of the virus had severely reduced papaya yields.

Since 1995, a GM virus-resistant cultivar has been grown very successfully. Before then, an organic crop would have been unthinkable because the virus was rife. But now, because the virus levels are so low, it is possible to grow organic papaya in among the GM crop.

The anti-GM movement should be more open to considering examples of positive co-existence such as this.

I don’t see this as a question of ignorance or ideology. Instead, I would suggest that it may be a clash with their commercial and employment interests. The anti-GM movement is spearheaded by a handful of national and multinational organisations, some with very large staffs and budgets. As a result the movement is sustained with the help of subscriptions from anxious members of the public.

Unlike scientists, who are trained to listen to arguments and accept the best evidence, the anti-GM multinationals would evidently prefer to spread anxiety rather than listen and work collaboratively with us.

The way forward

How can we resolve this impasse and move on? If handled correctly, GM crops hold great promise to help maximise the production of safe crops with minimal use of scarce resources. There is a case for their use on grounds of better water efficiency, lower greenhouse emissions, and reduced pesticide use.

Here are some more questions for anti-GM campaigners to consider.

Do they oppose the use of pharmaceuticals developed using GM technology, such as insulin and growth hormones? How would they feel about the resurgence of diabetes and dwarfism that would await if we stopped using them?

Would they want to see people die or go blind through vitamin A deficiency, rather than eat Golden Rice? These are troubling questions for many people. But they need to be answered if we are to consider properly how we want science to be harnessed for progress.

I previously consulted for Zeneca (now Syngenta). I research fungicide resistance and receive funding and support for this from GRDC and fungicide companies

The Conversation

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SPC Ardmona’s bailout is crucial given China’s food safety record

Christopher G. Baker, University of Sydney

Yet the firm’s recent tribulations are a reminder of why I regularly choose to buy products at the supermarket that are more expensive than the alternative.

One reason is that Australian food standards are generally world-class when it comes to the amount of contamination allowed from metals such as lead and cadmium. Although it is not always possible to police this perfectly, these standards allow a high degree of confidence that Australian food is free from contamination.

Contamination issues

The story is different elsewhere. In China, for example, the past decade has seen a host of food-contamination issues. Besides the notorious melamine baby formula scandal, there were also rice products with toxic levels of cadmium, and vegetables tainted with other industrial heavy metals such as lead, chromium, zinc and nickel.

In March last year, up to 16,000 diseased pig carcasses were found rotting in Shanghai’s Huangpu River, after a crackdown on black-market sales of substandard meat prompted the animals' owners to dump them.

There have also been fears over soy sauce made using human hair, and slaughtered sheep injected with filthy pondwater to boost the weight of the meat.

Rapid growth, but at what cost?

Last year, my colleagues and I released a report on the state of food security in Asia. It highlighted serious environmental issues related to China’s food supply, stemming in part from the chronic pollution of China’s water and farmland.

Among other things, it showed that China’s rampant economic growth has come at a severe cost to its environment, effectively turning its rivers and lakes into industrial dumping grounds. As a result, 90% of groundwater in China is polluted, 65% severely so, with contaminants such as pesticides, fertilisers, and petrochemicals.

According to China’s Vice-Minister for Land and Resources, 3.3 million hectares of agricultural land are moderately or severely polluted, an area roughly the size of The Netherlands. This results in the contamination with heavy metals of 12 million tonnes of grain per year; an amount greater than the entire cereal production of Japan.

Along China’s vast coastline, 68,000 square kilometres of coastal waters are now classified as severely polluted. Figures from China’s National Marine Environmental Monitoring Centre show that in 2012, some 17 million tonnes of pollutants flowed through 72 of China’s rivers, including 93,000 tonnes of oil and a staggering 46,000 tonnes of heavy metals such as lead and cadmium.

                                       

A woman collecting water from the Yangtze River, China. Lu Guang/Greenpeace

The deadly combination of food, water and air pollution in China has led to a dramatic increase in the number of “cancer villages”, where high rates of cancer have risen in line with water and soil contamination.

Poor track record

This is not to say that all Chinese canned food is necessarily contaminated. Nor does it suggest that it is only China facing these issues. India, Bangladesh and Vietnam, to name a few, are also facing serious challenges to clean up pollution and contamination.

But for importers of Chinese food, China’s track record on food safety, and its systemic problem with severe and chronic pollution, should raise serious concerns.

Several reports have shown how deadly chemicals have infiltrated the Chinese food system, such as through the use of waste water to irrigate crops, and the presence of pesticides in market food. A 2012 review of the extent of lead contamination in China concluded that “the problem of lead pollution in China is a global problem".

Of greatest concern to Australian consumers of canned fruit should be a recent study in Zhejiang province, showing that oranges, grapes, pears and plums were contaminated with levels of chromium, copper, cadmium, mercury and lead well in excess of Chinese safety standards. It is worth noting that Chinese safety standards allow twice the level of lead permitted in Australian fruit.

Although a recent article in The Conversation suggested that the label of “cheap, dumped and frequently contaminated” attached to Chinese food is a shortsighted view, I would argue exactly the opposite.

China is attempting to make changes to the amount of pollution in its food chain, and clean up its environment. Yet the reality is that as the pressure for food and water continues to ramp up, food contamination is also likely to increase.

China’s environmental problems border on insurmountable, and when combined with systemic corruption in environmental monitoring and the greater profits to be gained from industrial output over agriculture, it makes for a bleak long-term outlook.

What does this mean for Australia?

China is already Australia’s largest supplier of prepared fruit. According to data from the UN Food and Agriculture Organisation, Australia imported just 3,000 tonnes of packaged Chinese fruit in 2001, rising to 27,000 tonnes a decade later. As a comparison, statistics prepared for the Australian Productivity Commission show that SPC Ardmona sold just over 36,000 tonnes of packaged fruit in 2012.

                                           

Employees at SPC Ardmona’s factory in Shepparton, Victoria. AAP Image/Daryl Pinder

Australia’s last fresh fruit cannery is safe for now. But its demise would have caused a shortfall in packaged fruit that would need to be sourced from overseas. Given that China is Australia and the world’s largest supplier of prepared fruit, it’s likely that much of the shortfall would be sourced from China.

The challenges facing SPC Ardmona highlight the risks confronting both Australian food producers and consumers. The steady increase in cheap food imports means that Australian producers of food face an increasingly uneven playing field: one in which it is harder every day to stay profitable.

For Australian consumers, the increase of food imports from countries facing severe contamination issues – such as China – creates a difficult choice between the superior and more expensive Australian product and the often much cheaper import. Unfortunately, there are far too many consumers who are unaware of the potentially serious risks to their health of buying the import.

In denying federal assistance to SPC Ardmona, Prime Minister Tony Abbott has said he wants to signal the end of the corporate “free ride”. But he should bear in mind that the consequences of leaving Australian food manufacturing by the roadside are far greater than any short-term economic agenda.

Christopher G. Baker does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

The Conversation

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Industry winning the fight against better food labelling

Most people doing their grocery shopping are probably blissfully unaware of the industry lobbying and backroom politics that determines what information appears on food labels.

So let’s start with some background. For almost two years, a Commonwealth government-led initiative involving public health and consumer groups, industry organisations as well as state government health authorities has been working to develop an interpretive front-of-pack food labelling scheme.

The proposed system echoes the “star ratings” already in use for choosing energy- or water-efficient refrigerators and washing machines, as well as hotels and restaurants. Put simply, the more stars, the healthier the food.

But since Australia’s food and health ministers confirmed their commitment to the health star rating system on December 13, 2013, there’s been a steady trickle of food industry media aimed at undermining the scheme. And it appears to be working.

What consumers want

The government-led process has been highly consultative and consumer research has and continues to inform the final design.

The health star rating was based on specially-commissioned consumer research that showed people understood the concept of a star rating for food, but still wanted information about the level of saturated fat, sugars, kilojoules, and sodium in different products.

The research also highlighted mistrust of food industry-led initiatives. Specifically, participants recognised that the company-determined serve sizes, which are the basis of the industry’s existing daily intake guide labelling initiative, are often a fraction of the portions people actually consume and make it difficult to compare different products.

They want front-of-pack nutrition information presented per 100 grams or 100 millilitres to allow for easy, more reliable comparison.

What the industry wants

Despite these findings, the Australian Food and Grocery Council has continued to champion its preferred daily intake guide.

The scheme doesn’t meet the criteria agreed on by federal and state health ministers in 2011 when they endorsed the Blewett review recommendation that a front-of-pack labelling system should provide an easy interpretation of a product’s healthiness and nutrition content.

The system is based on the amount (in percentage terms) that one serving of a product contributes to an “average” adult’s daily intake of 8,700 kilojoules and other nutrients.

But each food manufacturer is allowed to determine what serving size they will base their calculation on. And the same product from two different companies may provide the percentage of daily intake figure based on two different portions.

This variability, coupled with the fact that the serving sizes being used bear little resemblance to the portions that most people eat, has become the main point of contention for health and consumer groups.

The daily intake guide doesn’t allow shoppers to make meaningful product comparisons. Clearly, comparisons both within and across food categories are easier when based on standard portions, such as 100 grams.

Until consistent and meaningful serve sizes are developed in consultation with government, health and consumer groups, and industry, the system cannot be the focus of any government-endorsed front-of-pack labelling system.

An even better option

While many health and consumer groups involved in the development of the scheme are committed to the introduction of the health star rating scheme, it represents a substantial compromise on their preferred traffic light labelling system.

Originally developed by the UK Food Standards Agency in 2006, consumer research conducted there and in Australia had demonstrated that traffic-light systems are highly effective in assisting shoppers identify healthier foods.

Despite the development of the health star rating scheme, Australia continues to lag behind the UK where traffic light labelling is growing in acceptance among food companies, retailers and, of course, consumers (the scheme remains voluntary as mandatory labelling laws are enacted across the European Union).

When the UK government announced the introduction of a consistent front-of-pack food labelling system last year, most major UK supermarkets were either already using traffic light-based schemes or had announced that they would be doing so in the near future.

Increasing support for a traffic light-style scheme by UK food suppliers will generate further evidence about the value and influence of that food labelling system.

Meanwhile, any system introduced into the Australian marketplace must also be widely adopted by the food industry, supported by a public awareness campaign and subjected to extensive evaluation to ensure that it actually guides healthier food choices.

Better labelling on food packaging can help people make healthier food choices and easy comparisons at the supermarket. Despite the food industry’s efforts to undermine it, public health and consumer groups are committed to ensuring the health star rating scheme is widely adopted in Australia.


The author would like to acknowledge the contribution to this article by Wendy Watson, Nutrition Project Officer, and Clare Hughes, Nutrition Program Manager who are both at Cancer Council NSW.

Kathy Chapman is a co-investigator on research studies funded by the Australian Research Council and Australian National Preventive Health Agency. She is affiliated with Cancer Council NSW.

The Conversation

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Australian trade beats aid in boosting global food security

Should Australia aim to become Asia’s “food bowl”? How can we help farmers earn more for what they produce? And how can Australia best contribute to global food security?

Those are some of the crucial questions now being considered in the federal government’s long-term agriculture policy, which is expected to be released towards the end of this year.

I believe our future lies in playing to our strengths. The Australian agricultural business model should not be to produce cheap food for the world’s poor, but rather expensive food for rich, largely Asian, consumers.

That doesn’t mean neglecting our responsibilities to help poorer nations or to support global food security. However, this is best done through trade – such as providing technical advice and assistance – to help improve food self-sufficiency in developing countries.

The new dining boom

Food-price shocks in 2007–08 greatly increased global consumer interest in agriculture and the challenges of food security. It has also reiginited interest in boosting agricultural development in northern Australia.

As growth in Australia’s mining sector slows, agriculture is increasingly being seen as an economic replacement, reflected in the slogan ‘dining boom not mining boom’. However, even with global food demand increasing, Australia’s response needs careful consideration and focus.

Continuing growth in world population is overshadowed by the impact of growing affluence, resulting in greater per person consumption of food and demand for more expensive foods.

For a relatively high-cost food producer such as Australia – with high labour costs and a high value currency, but a global reputation for producing clean, safe food – those are trends we can harness to our strategic advantage.

Finding our niche

Global markets are large enough to take all of our relatively small agricultural production as high-value product. So at home, our farmers need to concentrate on production of niche, high-value agricultural products.

For example, wheat is the largest crop in Australia, grown mainly in Western Australia, New South Wales, South Australia, Victoria and Queensland. Most of that wheat is sold overseas, including to Indonesia, Japan, South Korea, Malaysia, Vietnam and Sudan.

Yet even with those significant exports, Australia produces only about 3% of world wheat.

Significantly, we have a good track record of extracting a higher value for our wheat through niche marketing.

Examples include the supply of wheat from Western Australia to produce Udon noodles in Japan. Australia has produced almost all of the wheat used for this product by having a wheat variety with special characteristics delivering a high-quality noodle.

 

Brewing better coffee – for us and the world

Agricultural research and development – such as the work done at the Queensland Alliance for Agriculture and Food Innovation – needs to go beyond just trying to increase on-farm productivity, and instead find new ways to add value to agricultural products right along the production chain to the final consumer.

Product differentiation is essential. We need to produce niche products with recognised high value, rather than bulk, undifferentiated commodities that will only attract the prevailing price in world markets.

Coffee is a perfect example. By analysing the genetic and chemical basis of coffee quality, researchers can help develop new high-quality, distinctly Australian coffee products for international markets.

Coffee is an important cash crop for many small landholders in developing countries. Those developing nations are likely to remain the most efficient in producing large quantities of coffee for mass markets. However, with the help of Australian experts, they may still be able to find ways to increase their productivity – in doing so, helping to boost self-sufficiency in developing countries.

In contrast, Australia’s coffee production needs to concentrate not on high volume, but on novel high-value products for high-value markets. If targeted with the right products, those overseas markets could take all of Australia’s coffee production.

* This article is based on an address Professor Henry will deliver to the Australian Agricultural and Resource Economists Society’s annual conference on February 7.

Robert Henry receives funding from the Australian Research Council and Green Cauldron Coffee.

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SPC Ardmona and the cheap Chinese food challenge

The political lobbying accompanying yesterday’s (2 February) government decision to withhold financial support from SPC Ardmona has overshadowed the big structural issues facing Australia’s preserved food industry.

The two major issues are the shift of market demand towards fresh food and the role of Chinese imports.

The decline of SPC Ardmona’s cannery business is not an isolated event. Heinz closed its cannery business in Goulburn Valley in 2012, Windsor Farm closed in Cowra, and only a few small players remain, mainly in NSW and WA.

Imports, mainly from China, have been singled out and demonised as “cheap, dumped and frequently contaminated”. This is a short-sighted perspective.

China is a big global player in international agribusiness. Chinese importing of fresh food provides opportunities for Australian exporters, but at the same time Chinese exports of canned food compete with Australian products in the local domestic market and in traditional export markets.

The “cheap, dumped and frequently contaminated” label will not stick for long.

China is stepping up consumer protection

While China’s canned food will remain cheap because of economies of scale and because canning technology is not much different in Australia and China, contamination is being addressed more seriously in China with new laws and regulations expected. The flow-on effect will mitigate Chinese consumer dissatisfaction with local food standards, but also improve the quality and safety of Chinese export products.

In January, China’s Supreme People’s Court announced an 18-clause guideline on how to handle civil disputes regarding food, drugs, cosmetics and dietary supplements.

The new guideline, together with an updated version of the consumer protection law, will come into effect on March 15, World Consumer Rights Day, and signal a new wave of regulatory action from the government to tackle China’s food safety problems. It gives consumers backing from the courts to sue manufacturers and retailers of unsafe food. Advertisers and publishers can be sued even before any actual harm is inflicted. Celebrities who endorse substandard products can also be sued if consumers feel they have been misled.

Since the milk powder scandal of 2008, much as been done to alleviate public anxiety and improve practices in the food industry. The Food Safety Law, replacing the outdated Food Hygiene Act, came into effect in 2009 and includes provisions on risk assessment methods, unification of food safety standards, improving supervision, and imposing tougher penalties on violators.

In March 2013, China’s State Food and Drug Administration (SFDA) was renamed to China Food and Drug Administration (CFDA) and elevated to a ministerial-level agency directly under the State Council, in an attempt to consolidate power and streamline regulation of food and drug safety.

The new guidelines change the balance of power between consumers and producers and rely less on local government enforcement. One challenge facing China in food safety regulation is that law enforcement and implementation at the local level do not match the original intent of the law and central policies. With clearer procedures on how to protect their rights, consumers are given more say on food safety. This will increase food producers’ opportunity cost as consumers are now more willing and able to participate in the monitoring process.

Previously, producers and manufacturers had an incentive to sacrifice quality in order to maximise profits, because the chance of being caught and penalised was low. But consumers and social media now play a much more active role in monitoring food safety and have successfully put pressure on the government to enforce food safety standards

Australia has a head start

While enforcement will work for the corporatised food export sector, China’s highly fragmented food industry will continue to face problems because of the scale of monitoring required. Almost 80% of the half a million food companies in China are classified as “cottage industry” with ten or less employees.

Like in Australia, there are social reasons to keep small producers afloat. Along this complex supply chain there is a need to balance the interests of producers, markets and consumers. China’s first policy document of 2014, the No.1 Central Document, underscored the importance of rural reform and the development of modern agriculture.

For Australian agribusiness, this entails opportunities and challenges. Chinese producers will for the foreseeable future not be able to satisfy the demand of urban middle class consumers for top quality food. Australia, in competition with New Zealand, has a head start in this market with an enviable and hard to replicate reputation for clean and fresh food.

On the other hand, Chinese exports will become more competitive in the preserved food market, in particular in such traditional segments as canned food, putting more pressure on Australian producers in those market segments. For SPC Ardmona and its supply chain, the farming communities in the Goulburn Valley, this will require a radical rethink of traditional products and a switch to new product lines.

The authors do not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article. They also have no relevant affiliations.

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Pass the shiraz: variety the spice of life for Australian wine growers

The world’s wine markets have become far more competitive over the past decade, but despite the competition, Australia’s mix of winegrape varieties is not very different from the rest of the world’s. Since 2000, it has become even less differentiated.

Wine producers are always on the lookout for new ways to differentiate their product to attract and retain consumer (and supermarket) attention, but Australia to date has made little headway in diversifying its vineyards.

Even though there are very large differences in growing conditions across Australia, cross-regional varietal differences within Australia are much less than is the case within other countries. This suggests there is plenty of scope to explore alternative varieties in the various regions of Australia – something grapegrowers are doing in any case as they consider ways to adapt to climate changes.

These are some of the insights gleaned from a new resource that reveals what winegrape varieties are grown where in the world, and offers winemakers data that could be used to make critical decisions.

Climate adaptation by Australia vignerons, for example, could involve switching to more resilient southern European grape varieties, and/or sourcing grapes from higher latitude or altitude regions if wineries’ wish to retain their current mix of grape varieties. And growing novel varieties could generate a point of difference in a winery’s offering. Responding in these ways requires information on trends in varietal plantings here and abroad.

The 2010 database compiled by researchers at the University of Adelaide includes 520 regions in 44 countries, thereby covering 99% of global wine production; and it includes over 1,270 winegrape varieties.

Measuring uniqueness

The researchers developed a Varietal Similarity Index, or VSI, to measure how close one region’s varietal mix is to another’s. This indicator has a complex formula, but it simply ranges between zero and one. A VSI value of zero means a region’s varietal mix has no overlap at all with that of another region (or the rest of the world, or its own region in a different year), while a VSI value of one means the two regions have exactly the same shares of bearing area under particular grape varieties.

In 2000 the VSI between Australia and the world was 0.45, which was 9th highest in the world. But it rose to 0.62 by 2010, making it 3rd highest in the world after France and (marginally) the United States. Meanwhile, the average of the VSIs for all other countries in the sample hardly changed, at 0.35. In other words, Australia was much less distinct than the average country in its varietal mix in 2000, and its distinctiveness became even less so by 2010.

 

Winemakers are looking to alternative grape varieties in response to changing climates. RobW_/Flickr

How different are wine regions within Australia?

Notwithstanding the very large differences in growing conditions across the country, varietal differences between regions within Australia are more muted than is the case within other countries. The average of its regional VSIs of 0.53 is not much below Australia’s national VSI of 0.62 in 2010, and is almost double the average regional VSI of other countries in the sample. In France for example, where each region is required by law to grow only a small number of varieties that have been designated as most suitable for that region, the average of its regional VSIs is 0.29.

True, some regions in Australia have managed to pull away from the pack and so are more differentiated from the national mix now than in 2000. However, a little over one-fifth of Australia’s 74 regions in the database, comprising 40% of the national winegrape area in 2010, changed their varietal mix hardly at all (the VSI of their mix in 2010 vis-à-vis 2000 was 0.97 or higher). For another one-fifth of Australia’s regions, accounting for 22% of the national area, their VSI was 0.95 or 0.96. It was only the small remainder of regions, comprising only about one-third of Australia’s winegrape area, that had a VSI between their varietal mix in 2000 and 2010 that was less than 0.95.

How important are emerging varieties becoming in Australia?

 

Emerging winegrape varieties in Australia – 2001 to 2012. Blank spaces mean data are unavailable, rather than zero. Anderson and Aryal (2013a), ABS (2012) and Phylloxera Board of SA (2013). 

There are only 10 varieties whose areas in Australia have grown significantly from less than 200 bearing hectares since 2000 (left-had side of table above), if one ignores varieties in the world’s top 20 list. Furthermore, in aggregate those ten raised their share of Australia’s total area by only 1.7%.

Increase in bearing area by variety, Australia, 2001 to 2012. Derived from Anderson and Aryal (2013a) and ABS (2012).

 

The eight varieties whose area in Australia expanded most over the first decade of this century (see chart above) are, apart from Viognier, all in the top 20 globally. The share for Shiraz alone rose 6 percentage points over that decade, while Chardonnay’s rose 5 points and the shares of Sauvignon Blanc and Pinot Gris each rose 2 points. And two-thirds of what has been removed in Australia since 2000 is Sultana, whose area globally fell by three-quarters over the 2000-10 period – adding to the country’s drift towards the global norm. The right-hand side of the table above refers to those very minor varieties whose plantings have taken off in the past few years. But these make up only a small fraction of 1% of the national area.

What role for Shiraz?

World’s top 35 wine varieties in 2010, compared with 1990 and 2000. Anderson (2013, Chart 12).

 

Australia popularised Shiraz/Syrah in the 1990s, which led to many other countries expanding their plantings of this variety. In 1990 it was 35th in the area ranking of all winegrape varieties globally. But by 2000 its area had trebled, and by 2010 that had nearly doubled again, bringing Shiraz to the 6th position on that global ladder and just below the areas of the two now-most-widespread varieties, namely Cabernet Sauvignon and Merlot (see chart above).

Australia contributed to that expanding area of Shiraz, but expansion was even greater in France and Spain. There were also large plantings in other key New World wine countries, and in Italy and Portugal. As a result, Australia is no longer as globally dominant in this variety: its share of the global Shiraz area has dropped from 29% in 2000 to 23% in 2010 – even though Shiraz has increased its share of Australia’s own vineyards over that decade, from 22% to 28%. Partly because of these changes for Shiraz, the mix of varieties in Australian vineyards is becoming more like the global average.

What next?

Evidently, Australia’s mix of winegrape varieties is not very different from the rest of the world’s, leaving plenty of scope to explore alternatives.

Australia may have made little headway in diversifying its vineyards to date, but there is much discussion of alternative or emerging varieties in the media and at conferences. Consumers will hope this leads to greater diversity in future as wine growers continue to strive to understand their terroir and raise the quality of their offering.

Kym Anderson receives funding from Grape and Wine Research and Development Corporation.

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How investing in logistics can lift your standards

Whether you're running a small food manufacturing business or a large scale distribution operation, logistics matters. By Aoife Boothroyd.

There are a myriad of logistics models that businesses can subscribe to, with the size, scope and nature of the business being the key determining factors influencing which model is most appropriate.

Food magazine recently spoke to two food manufacturers that employ automation as a key part of their overall logistical operations: South Australian tomato producer D'VineRipe and cereal giant Kellogg's.

D'VineRipe was established in 2006 as a joint venture between food marketing company, Perfection Fresh Australia and investment company, The Victor Smorgon Group. 

The company produces a wide range of tomatoes from cocktail-sized, right up to the larger truss varieties.

D'VineRipe has the capacity to produce up to 15,000 tonnes of vine-ripened fruit year round in its state-of-the-art, 27 hectare glasshouse facility, complete with climate control and irrigation.

D'VineRipe supplies some of the nation's largest retailers including Coles, Woolworths, Aldi and Costco, and delivers to all the eastern states, with a smaller concentration in Western Australia and South Australia. Most impressively, they do this within a 24 to 72 hour turn-around from when the fruit is picked from the vine. 

D'VineRipe operates to the Delivered In Full, On Time (DIFOT) logistics model which is designed to measure delivery performance throughout the supply chain, and is geared to tailor deliveries to the customer by measuring how often the customer gets exactly what they want, at the time that they want it.

Image: www.vanderhoeven.nl

As D'VineRipe is in the business of perishable goods, it is imperative that its operations run as timely and as smoothly as possible. To achieve this, the facility is fitted out with a network of automatic guided vehicles which run down the rows of each glasshouse to collect fruit, and then deliver the full boxes straight back to the pack house where they are automatically weighed, entered into a buffer system, graded, and packed based on variety.

"All the picking operations are manually done, however the automatic guided vehicles improve efficiencies by eliminating that extra operation of someone transporting the fruit back to the pack house, picking up the box, weighing it, recording the weight on a piece of paper and then entering it into a computer," says Jon Jones, general manager of D'VineRipe.

"The vehicles enable all those steps to happen automatically."

The automatic guided vehicle system was built for D'VineRipe by Belgian company, Bogaerts Greenhouse Logistics. The vehicles deliver accurate recording data capabilities in terms of weighing the product, and also feature a built-in sensor, or a photo eye, that picks up if a person or object is within its range, enabling it to slow down or stop to avoid a collision.

When asked about the reliability of such a sophisticated system, Jones says that it's almost "bulletproof."

"It's like any computer system, it is » extremely reliable. Sometimes you can experience a glitch here or there, but the majority of the time it's bulletproof," he says.

Jones says that since the system was put in place over four years ago, operational efficiencies have improved even further thanks to various updates in technology.

"We are always looking for new efficiencies. We as a company have changed and gotten bigger; the technology in the automatic guided vehicles has also been upgraded and improved."

Logistics automation is key to the operations of many businesses, however the processes required by long shelf life FMCG's are obviously different compared to that of perishable produce like tomatoes.

Global food manufacturer Kellogg's decided to make the switch from an almost entirely manually operated 27,000 square metre distribution centre in Botany, New South Wales, to a system that could automatically process high demand volumes whilst also achieving high storage densities.

The system back in 2003 was capable of accommodating 28,000 pallet positions across the warehouse's 27,000 square metres, but the introduction of a new system saw the company achieve impressive storage and operational efficiencies that it did not expect.

Kellogg's worked with Dexion, a distribution management specialist, and supply chain solution company, Linfox, to create a more efficient and sustainable distribution model.  The model incorporated an automated storage and retrieval system (ASRS) which was implemented as part of a broader Real-Time Distribution System (RDS). 

ASRS is designed to tackle some of the most difficult challenges that FMCG distribution centres face including completing orders that cover high volume, fast moving and fluctuating quantities of goods that can be subject to strict use-by dates, while RDS controls the physical and operational aspects of a company's distribution centre from the receipt of goods to processing, storage, order fulfilment and despatch in real time.

Kellogg's new ASRS includes pallet conveyors, robotics, storage and retrieval systems and IT hardware that enabled the new distribution centre to hold 32,000 pallets – 4,000 more than what was previously possible – within the automated storage component and the conventional section of the warehouse. 

The new system enabled pallets to be stored in five aisles, six pallets deep on either side, with each aisle serviced by its own automatic crane. The ASRS enabled Kellogg's to have the capacity to put away up to 90 pallets per hour, and retrieve 120 pallets per hour.

Another impressive aspect of the new system was the command and control centre that provides a pictorial overview of the ASRS system, enabling the operator to see what the system's doing in real time and quickly resolve any issues that arise.

Since the introduction of the system, Kellogg's has reported a 10 percent reduction in pick error; production damage has been reduced by a staggering 85 percent and labour costs have also dropped as only half the amount of forklifts are now required, even with the increased capacities.

The most important part of any logistical operation is to have appropriate processes in place, enabling the operation to run as smoothly as possible by eliminating inefficiencies. 

While investing in sophisticated automation systems might mean a reduction in staff levels and a considerable investment initially, the productivity and long-term financial gains can most definitely outweigh the disadvantages. 

 

Big supermarkets, big on junk food: how to make healthier food environments

Supermarkets are an essential part of modern living – open almost all the time, selling almost everything, and selling it cheap.

Nowhere is this more true than in Australia. Coles and Woolworths, our two most dominant supermarket chains, are now ranked among the top 20 biggest retailers in the world.

Almost two-thirds of the groceries purchased in Australia are bought from these two stores. The supermarket environment is now a key influence on Australian diets. Unfortunately, the evidence suggests Big Supermarket has an unhealthy habit of promoting Big Junk – soft drinks, chocolate, confectionery and chips.

In a recent Melbourne study, four out of every 10 end-of-aisle displays and every single checkout measured were found to promote these products.

Other research has shown that the promotion of junk food in Australian supermarkets is greatest in disadvantaged suburbs – precisely the areas where obesity is more common.

And compared with supermarkets from seven other countries – the US, Canada, Denmark, Sweden, Netherlands, UK and New Zealand – Australian supermarkets have been shown to be world leaders in the promotion of junk food at checkouts and end-of-aisle displays.

Consumer choice? Or super profits?

While the supermarkets will defend these statistics by telling us that their customers demand and deserve choice, the wholesale promotion of products that we should be eating “sometimes and in small amounts” has nothing to do with choice.

The motive driving supermarkets' promotion of Big Junk? Big profits.

Sales figures guide most decisions in retail. The bottom line of a supermarket chain benefits from the promotion of junk food through both increased sales, and from the fees paid by manufacturers in exchange for a prime positioning on shelves.

But in this case, what is good for the supermarket is bad for the consumer.

Margaret Chan, the director general of the World Health Organization, highlighted the impact of junk food profiteering in a recent speech:

Efforts to prevent non-communicable [lifestyle] diseases go against the business interests of powerful economic operators … In my view, this is one of the biggest challenges facing health promotion … It is not just Big Tobacco anymore. Public health must also contend with Big Food, Big Soda, and Big Alcohol.

 

Would the threat of regulation make supermarkets think twice about their promotion of junk food? Flickr/macattck

With 63% of Australians now overweight or obese, and diabetes rates rising as a consequence, the question then becomes: how do public health interests compete with those of such powerful businesses?

There are two major levers that large corporations seem to respond to: the threat of regulation, and negative public perception that may impact sales. Both are potential targets that could be used to “nudge” Big Supermarket toward healthier environments.

The threat of regulation has only recently seen Coles and Woolworths act to protect suppliers. It isn’t a stretch to imagine they might act similarly in response to the prospect of regulation aimed at reducing Australia’s rate of obesity.

And in the Australian context of a highly competitive duopoly, public perception is particularly important to both Coles and Woolworths. Public perception can be influenced by effective advocates – individuals, the media or organisations such as the Parent’s Jury, the Obesity Policy Coalition and Sustain, in the UK.

The supermarkets also attempt to drive public perception themselves, with Woolworths launching its excellent healthy lunchbox range in recognition of the consumer demand for healthier options and in an attempt to position themselves as “the supermarket that inspires a healthier Australia”.

The fact that supermarkets are now using their health credentials as a marketing tool is surely a sign of change in the right direction.

As consumers become more aware of the importance of a healthy diet, will supermarkets realise restricting the promotion of Big Junk may even be good for business?

By concentrating on what motivates Big Supermarket, we may help nudge them into action – and begin to reverse our seemingly intractable obesity epidemic.

Adrian Cameron receives funding from the Australian National Health and Medical Research Council.

The Conversation

This article was originally published at The Conversation. Read the original article.