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Government going green gives groceries grief

The Australian Food and Grocery Council has warned that the federal government’s plans to cut greenhouse emissions by between 5% and 15% by 2020 has the potential to compromise the domestic and international competiveness of Australia’s food industry.

AFGC CEO, Kate Carnell, said that the $70 billion sector was now facing an uncertain future, stating that the nature of international trade, the lack of available capital and ongoing confusion surrounding specific industry assistance, combined with a 2012 startup date has the potential to undermine the its future viability.

“Obligations imposed up and downstream of the farm gate mean that carbon costs will be passed through the food supply chain to consumers,” said Carnell.

“This will undoubtedly result in significantly higher food, beverage and grocery prices for Australian produced products.

“The food and grocery industry is therefore concerned that in the absence of a global agreement on greenhouse emissions, more expensive carbon levied Australian goods will be placed at a competitive disadvantage when forced to compete against imported goods from non-carbon levied nations.”

Carnell also pointed out that the current financial crisis makes it very difficult for companies to attract the necessary capital required to invest in low carbon technology.

“There are major liquidity problems in the market; the money just isn’t there to borrow for the major capital investment required to transform existing plants into lower carbon operations,” she said.

“The Australian food and grocery manufacturing industry therefore calls on the government to clarify what assistance will be available to companies that do not meet the current criteria for both emissions intensive and trade exposed assistance to help them make the transition to a low carbon future.”

Carnell said that whilst industry appreciated the government’s efforts to find a balance between the environment and the economy, it considers that a 2010 start up date would hinder, not help business adapt to a low carbon future.

“The food and grocery manufacturing sector is calling on the government to wait until 2012 before implementing its Carbon Pollution Reduction Scheme. The extra two years would give industry time to adjust its operations in an environment where inputs are not subject to a carbon levy.

“Similarly, the affordability of a structured change to the food and grocery manufacturing industry largely depends upon the pace, and the cost at which domestic and international change takes place.

“However, for the Australian industry to continue providing high quality, value-added products derived from Australian agricultural ingredients, requires the sector to have faith in an emissions trading framework which gives companies incentives to reduce their carbon emissions whilst maintaining their international competiveness — it is important that the government’s efforts reflect this.”

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