The Australian Food and Grocery Council (FGC) has called for the Federal Government to include the food and grocery manufacturing in its Future Made in Australia policy following the release of its annual industry snapshot for 2022/23.
The State of the Industry report highlights the vital role the food and grocery manufacturing industry plays in Australia’s economy, employment, and every household.
FGC CEO Tanya Barden emphasised the sector’s importance and the challenges ahead.
“Our industry is a cornerstone of the Australian economy, providing essential goods and employment for over 280,000 Australians. Recent and ongoing global supply chain disruptions have made our industry even more critical from a national resilience perspective,” said Barden.
The snapshot showed the sector’s increase in value by 11.6 per cent to $163 billion, reflecting strong demand from a year of record immigration and increased wholesale prices. Many wholesale prices rose for the first time in a decade.
Despite higher top line growth, the report showed operating profit fell by 7 per cent to $7.2 billion due to persistent cost pressures from commodities, energy, and shipping rising faster than wholesale prices.
Employment in the industry rose by 4.1 per cent to 281,269 workers, with 37 per cent of jobs based in regional areas, emphasising the sector’s growing importance as a major employer across Australia.
The snapshot detailed the Government’s temporary full expensing tax measure helped stimulate capital investment which rose by 24.5 per cent to $4.2 billion.
This largely directed towards plant and equipment upgrades, particularly in automation to counter labour shortages and enhance efficiency.
Significant investments were made in meat processing, grain processing, dairy, and fruit and vegetable sectors.
The food and grocery manufacturing industry needs to significantly lift investment in coming years.
This investment is vital to enabling the clean energy and circular economy transition and adopt digital technologies to maintain global competitiveness.
However, suppliers are hampered by a decline in profitability and cost of living pressures.
It’s becoming more difficult for the industry to recover costs such as large increases in energy, labour, transport and warehousing, and insurance.
The report said the Future Made in Australia policy is a critical lever at government’s disposal to keep jobs and production in Australia’s largest manufacturing sector at home.
The FGC urged the government to back this key industry by implementing tax incentives for food and grocery manufacturing to be globally competitive, contributing to Australia’s economic prosperity, as well as net zero transition.