AFGC called Nash’s office same day as star rating site was pulled

Australia’s peak body for food manufacturers, the Australian Food and Grocery Council has said that it contacted assistant health minister, Fiona Nash’s office on the day that the health star rating website was taken offline.

The AFGC’s CEO, Gary Dawson says that he contacted Nash’s office to express his concern that the health star rating website was ‘premature’, but stated that he did not ask for the website to be taken down.

"On the day, yes, we expressed a view that we thought it was premature," Dawson told ABC News.

Health department officials initially claimed that the website was a ‘draft’ and that it was ‘made live inadvertently’, however it was later revealed that Nash’s chief of staff, Alastair Furnival – who is a co-owner of his wife’s lobbying firm Australian Public Affairs – ordered health officials to pull the site down.

The move attracted widespread criticism from labor senators including Penny Wong, and health advocates, many of which sight Furnival’s involvement in lobbying firms as a significant conflict of interest.

Labor senators also accused Nash of misleading the senate as she initially claimed that Furnival had no links to the APA, only to say that he was a shareholder hours later.

Nash rejected the conflict of interest claims, stating that Furnival had given ‘a series of undertakings’ to ensure a strict separation between the department and his involvement with APA.

Prime Minister Tony Abbott stood by Nash stating that "all the decisions that Senator Nash has made are eminently justifiable and I support them".

 

Coles expands discounts with new Deeper Down Down range [video]

Supermarket giant Coles has taken its Down Down discounted range a step further, offering up to 34 percent off the original price on a number of popular brands as part of its Deeper Down Down offering.

Coles will also add 50 new products to the Down Down range.

John Durkan, Coles chief operating officer, said “Together with some of Australia’s favourite brands, we are offering our customers Deeper Down Down prices. This means pantry staples that are already on Down Down will have their price reduced even further – with discounts up to 34 percent on brands including Nescafe, Lipton and Sanitarium.”

While the Down Down campaign reduces prices for a minimum of six months, many products have been held at the lower price point for over two years.

Fiftty new items will be added to the existing 1,400 products currently in the Down Down range, including Golden Circle Fruit Juice 2L (was $3.59 now $2.70) and Huggies Bulk Nappies 30-54pk (was $19.98 now $17.00).

The Deeper Down Down campaign commences today (26 February).

While advertising campaigns from both Coles and its key rival, Woolworths, have focused on reduced prices in recent years, research conducted by Roy Morgan in mid-2013 questioned the effectiveness of such campaigns with that less than half (45 percent) of Coles customers believing it offers low prices.

From 2009 to the start of 2012, one in two Coles customers believed that the supermarket had low prices, while rival Woolworths, which offers its down Every Day Value prices, came in lower with just over 40 percent.
Last year’s research however states that the two supermarket giants are almost on par, with Woolworths only two percentage points behind Coles.

Norman Morris, Roy Morgan’s Industry Communications Director, said “Perhaps the effectiveness of the ‘Down Down’ campaign has come to an end, with consumers tuning out the message after years of exposure: the latest March 2013 results reveal there is once again only a small gap between Coles and Woolworths customers, primarily due to a decline shown by Coles rather than any ground made by Woolworths.”

The food industry has criticised Coles’ and Woolworths’ discounting, with the Australian Food and Grocery Council claiming Coles favours its own private label products in its Down Down range. Coles retaliated, arguing that branded products make up 75 percent of all products in-store.

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SPC investment must be followed by regulatory reform: AFGC

The Australian Food and Grocery Council (AFGC) has announced its support of a $100 million co-investment from Coca-Cola Amatil and the Victorian to fruit processor SPC Ardmona, but says the investment needs to be followed by regulatory reform.

On 13 February, Coca-Cola Amatil (CCA) confirmed it will invest $78 million into SPC Ardmona and welcomed the decision by the Victorian government to invest $22 million over three years.

This followed the federal government’s rejection of SPCA’s plea for a $25m co-investment as part of a restructure plan to keep the company afloat.

AFGC CEO Gary Dawson said the SPCA situation should be a wakeup call to governments considering new regulatory cost imposts.

“From a broader industry perspective the challenge remains to get the settings right to kick-start the massive investment and re-investment needed if we are to capitalise on the unprecedented food export opportunities into Asia. The imperative is growth and the investment needed to drive productivity and competitiveness gains,” he said.

Dawson said food manufacturing should be seen as an industry which can deliver comparative advantage for Australia moving forward, delivering jobs and growth, and shouldn’t be burdened by additional regulatory costs.
“Any additional regulation that adds costs for business or consumers runs the risk of impeding vital investment and job creation.

"We call on all governments in Australia to reject any new regulation that adds costs to the manufacturing industry and to move quickly to remove existing unnecessary regulatory costs,” he said.

 

Star Rating website allegedly pulled due to industry pressure

Only eight hours after its official launch last Wednesday, the government’s long-awaited Health Star Rating website was pulled down, allegedly due to the intervention of a senior minister.

Assistant Health Minister, Fiona Nash and her chief of staff, former spokesperson for Kraft/Cadbury, Alastair Furnival are reported to have personally intervened by taking the site down only hours after its launch, SMH reports.

The website was developed to support the launch of the new health star front-of-pack labelling system for food and beverages, a system which has attracted criticism from industry bodies, including the Australian Food and Grocery Council (AFGC) and major food manufacturers.

According to the SMH, the website had received all the appropriate governmental approvals to go live, however a Health Department spokesperson said that the site was a ‘draft’, and made live in “an inadvertent error”.

Public health groups have rejected claims that the site was a ‘draft’ and have fuelled speculation that the website was pulled down due to industry influence.

''I looked at it very carefully, and there was nothing that struck me about it as being a draft,'' Public Health Association head, Michael Moore told SMH. ''It just doesn't make sense.'

Further explanation was given on Friday afternoon with a spokesperson for the Health Department stating that the website was taken down due to possible ‘confusion’ that the public may experience, as the labelling is not as yet appearing on products. The spokesperson also stated that the system was still to undergo a comprehensive cost-benefit analysis to ensure that associated industry impacts were considered.

"A website at this stage would be premature given that the cost-benefit analysis has not been done. It is prudent to wait for the finalisation of the cost-benefit analysis to fully inform decision making on this process," the spokesperson told ABC News.

The AFGC have supported Senator Nash’s decision to implement a broader cost-benefit analysis, stating that the scheme has not yet been ‘fully assessed’.

"Once the cost-benefit analysis has been completed, companies can make a proper assessment of the proposed scheme," an AFGC spokesperson told ABC News.

The Health Star Rating system received support from public health and consumer advocacy groups including Choice, who last year claimed that the system was under threat due to pressure from the food industry.

“We spent two years negotiating this new system with the food industry, represented by the Australian Food and Grocery Council . The new system incorporates a number of concessions sought by the AFGC but now it has turned around and launched a fierce campaign against the very system it helped to develop,” said Choice CEO, Alan Kirkland in a statement.

Labor health spokesperson, Catherine King said that any evidence of outside pressure to pull down the website would be concerning.

''I would be concerned, given the extensive work that has been done on the health star rating system … if there were any other influences involved.” 

 

National Food and Health Dialogue a failure, The George Institute

A recent evaluation of the Federal Government initiative, the Food and Health Dialogue, has found the program to be failing in its efforts to improve the nutritional content of food and promote the importance of healthy eating.

The dialogue was launched in 2009 as a partnership between government organisations, public health groups and members of the food industry, and consisted of a number of objectives including the encouragement of higher fibre and wholegrain content in food, and limits to salt, sugar and fat content.

However the evaluation, published in the Medical Journal of Australia, states that only 11 out of a possible 124 targets had been set, with none fully achieved. The evaluation also states that there is no evidence that any educational programs had been enacted.

Lead researcher of the evaluation, Professor Bruce Neal of The George Institute and the University of Sydney, said that although the dialogue had fantastic aims, the implementation was ‘very weak’.

“The huge quantities of salt, sugar and fat added to the food supply by industry are now the main cause of ill health in the country,” he said.

“If we are to get on top of health problems like obesity, diabetes and heart disease we have to fully implement the dialogue's objectives."

Co-author of the study, Rob Moodie, said that action was being ‘stifled’ by powerful  peak industry groups such as the AFGC.

“We need the Government to make this a priority,” said Moodie. “And we have to find a way to strengthen a process that relies upon the voluntary engagement of industry. Powerful industry lobby groups like the Australian Food and Grocery Council are stifling action.”

Jane Martin from the Obesity Policy Coalition said that similar programs such as initiatives launched in the UK have proven to be highly effective, and that ‘meaningful targets’ and coupled with government support are urgently needed.

“The UK experience has shown that these types of initiatives can be effective but action in Australia is occurring at a glacial pace. If we don’t want to be the first generation to outlive our children, then we need to get serious about improving diets, particularly in children. We need meaningful targets, with sanctions for non-compliance and we need the government to take a strong stance and lead the way on this.”

 Main recommendations of the evaulation include:

  • Leadership from ministerial level of government
  • Substantial new investment in Dialogue activities
  • Broader engagement to include all relevant stakeholder groups from government, industry, public health, academia and other organisations
  • New process for target-setting that removes major conflicts, adopts applicable overseas targets in interim and sets maximum acceptable levels
  • Industry roundtables focus on implementation activities

 

Retail sales at its strongest since 2010, AFGC CHEP Retail Index

The 12th edition of the AFGC CHEP Retail Index was released today indicating that retail sales have enjoyed its strongest growth year-on-year since early 2010.

The Index was 4.2 percent higher in December 2013 compared to the same period in 2012, with the December quarter scoring an overall 4 percent increase in 2013 compared to 2012.

The Index suggests that growth is likely to sustain throughout early 2014 with a forecast of a 4.2 percent year-on-year increase for the month of February 2014. The March quarter 2014 is also forecast to increase by 4.2 year-on-year.

CEO of the Australian Food and Grocery Council, Gary Dawson said that strengthening growth during the 2013 Christmas trading period appears to have been better than analyst had expected.

“The combined effect of low interest rates and improved consumer confidence after the Federal election has seen retailers experience a stronger-than-expected rise in retail sales over the past few months,” said Dawson.

“Retailers will be hoping that the labour market also strengthens to support a return to a genuinely strong retail environment.”  

The Index’s findings are consistent with retail trend data from the Australian Bureau of Statistics which demonstrated that year-on-year growth in nominal retail trade had increased by 4.1 percent over the year to November 2013.

“The strong growth since August 2013 is a welcome change,” said CHEP Australia and New Zealand President, Phillip Austin.

“We’re delighted that the retail industry experienced a stronger than forecasted Christmas peak and that the uplift can be expected to continue into the March quarter of 2014. With our network size and scale, CHEP fully supported our retail customers through this upswing, and is well positioned to meet the additional demand for pallets, produce crates and retail display solutions resulting from the increase in retail trade.”

 

Multinational food companies are undermining healthy eating push: Choice

Consumer watchdog Choice says that new food labels designed to encourage healthy eating are under threat due to pressure from the food industry.

The front of pack labelling system which was agreed to earlier this year, provides a rating of up to five stars on the front of food products, along with details on salt, sugar and saturated fat content.

The system is designed to enable consumers to easily make comparisons between products and according to research conducted by the Department of Health and Ageing, is a more useful and user-friendly system compared to the industry-run Daily Intake Guide system.

“We spent two years negotiating this new system with the food industry, represented by the Australian Food and Grocery Council (AFGC). The new system incorporates a number of concessions sought by the AFGC but now it has turned around and launched a fierce campaign against the very system it helped to develop,” says Choice CEO, Alan Kirkland.

“This research shows exactly why we need a new scheme to replace the flawed, industry-run Daily Intake Guide that currently appears on many food products. Australians who have actually heard of the Daily Intake Guide – less than half of those surveyed – are likely to find it complex and misleading because it suggests that there is a daily intake of sugar, salt and saturated fat that people should be aiming for, when the best advice is to limit consumption. 

“Despite it always being clear as part of the negotiations that the Daily Intake Guide had to go, the AFGC is now fighting to make it part of the new labelling system,” says Kirkland.

Executive manager of the Obesity Policy Coalition, Jane Martin says that front of pack labelling systems, such as the star system, enables the consumer to cut through claims and promotions on packaging and encourages them to choose healthier foods.

"We have recently seen several countries, including the UK, introduce easy to understand, interpretive, front of pack labelling schemes which simplify the nutrition information panel because evidence shows this supports consumers to choose healthier foods," says Martin.

The Health Star Rating System was developed by key consumer, health and industry groups including the AFGC, with support from the Department of Health over the past two years and Choice says that food manufacturers are worried that the scheme will expose ‘the truth about some of their best selling products.’
 
“The Board of the AFGC includes some of the world’s biggest food companies — like Kellogg, Simplot and Campbell Arnotts. We should not allow companies such as these to dictate our domestic food policy.”
 
“Consumers should be free to buy and eat whatever they want – but if they are looking for a healthy option, this should be easy to find through clear, accurate and honest information in an easy-to-understand format, on the front of packs.”

The AFGC have been contacted for comment.
 

WTO trade agreement crucial to facilitate growth: AFGC

The Australian Food and Grocery Council (AFGC) has stated that a multilateral agreement must be reached at the 9th WTO Ministerial Conference in order to build momentum for trade liberalisation.

The conference which is currently taking place in Bali, has trade ministers from more than 150 nations in attendance, and the AFGC says that a WTO agreement covering trade facilitation and food will be beneficial to Australian food exporters.

Gary Dawson, AFGC’s CEO said that Australian exporters within the sector are looking to capitalise on opportunities within key markets such as Asia and that global trade rules set by the WTO will be crucial to achieve growth.

"We know the Australian government, through Trade and Investment Minister Andrew Robb and his officials, are working hard to secure a deal and we strongly support those efforts,” said Dawson.

"An agreement on trade facilitation – to reduce red tape and move towards more harmonised and transparent customs rules – is a particular focus of the proposed agreement.  This would have benefits for Australian food and grocery exporters, particularly SMEs and companies involved in global supply chains for food and grocery products.

Dawson said that Australia is well positioned to capitalise on export opportunities within the global marketplace due to the nation’s reputation for high quality foods.

"Australia's food, beverage and grocery manufacturing sector currently exports around $24 billion of products each year. The combination of high quality agricultural produce and very high food safety standards in Australia's food processing sector mean we are well placed to capitalise on growing export opportunities for processed and semi-processed foods.

"Moving Australian food exports up the supply chain means more value-add in Australia – generating jobs and growth.  Efforts by government and industry to facilitate this trade, through the WTO and through bilateral and other trade negotiations, are crucial to the future of Australia's largest manufacturing sector,” he said.

 

Fast food companies “force feeding” advertising to children: Choice

Despite creating voluntary codes to restrict the television advertisements of unhealthy foods to children, consumer group Choice has found that fast food companies aren’t applying the same restrictions to their social media marketing and mobile phone apps.

Choice said the growing popularity of mobile phones has caused fast food brands to develop a range of sophisticated strategies aimed at promoting their “unhealthy offerings” to children.

“With children increasingly exposed to junk food advertising via apps, social media, viral marketing and celebrity endorsements, competitions and advergames with embedded brand messages and licensed characters, educating kids about junk food has never been more challenging,” Choice head of media, Tom Godfrey said.

While the food and beverage manufacturing industry has created codes to restrict the advertising of unhealthy foods to children, there’s been widespread criticism of this self-regulation, and a number of studies have questioned its effectiveness, including independent surveys in Europe, Asia, North America and here in Australia.

The Australian Food and Grocery Council (AFGC), however, is standing strong arguing that self-regulation has been a success.

“With a lifetime customer worth an estimated $100,000 to a retailer, fast food companies have taken to force-feeding junk food advertising to kids through mobile phone applications and social platforms such as YouTube,” said Godfrey.

“Hungry Jack’s Shake and Win app, generates vouchers for free or discounted food when user shake their phone at any Hungry Jack’s store. With one in four Australian children overweight or obese, you have to question whether this is a responsible practice.”

The problem is not limited to mobile phone applications and social media, Choice said, with food companies also using community-based sponsorships to promote junk foods to children.

”Large food companies are mainly concerned with creating brand loyalty. Companies such as McDonald’s say they don’t advertise to children aged under 14, yet they do sponsor children’s sports such as Little Athletics, Hoop Time basketball and Swimming Queensland. KFC and Milo are sponsors of Cricket Australia, and Coca-Cola sponsors Bicycle Network Victoria, which has a program for teens.”

Choice said the sponsorship of children’s sporting events by fast food companies undermines the healthy eating messages that governments and parents try to promote to children, while normalising the relationship between junk food and sport.

“The line between entertainment and advertising is increasingly blurred, with product tie-ins and placement within TV shows and films common practice for food companies seeking to reach children with their messages.”

 

Supermarket duopoly gives voluntary code the nod

Coles and Woolworths, together with the Australian Food and Grocery Council (AFGC), have agreed to a voluntary code regulating their dealings with suppliers.

According to the ABC, minister for Small Business, Bruce Billson, said the agreement will help protect suppliers when negotiating with the major supermarkets, which control approximately 80 percent of the grocery market.

"It's a clear statement between the parties about the way they will conduct themselves, the respectful nature of those commercial arrangements, the no-surprises basis of commerce rather than seeing a small supplier being told to unilaterally change the pricing or the way in which they engage with the big business," she said.

Key aspects of the Code include:

  • Tough restrictions on retrospective and unilateral variations to grocery supply agreements; 
  • Greater transparency on the basis of shelf allocation for branded and private label products;
  • Recognition of the importance of intellectual property rights and confidentiality in driving innovation and investment in new products; and
  • A low cost and fast track dispute resolution mechanism.

Earlier this year, the ACCC announced it would be investigating the supermarket duopoly amid claims Coles and Woolworths bully their suppliers to force prices down.

The investigation is considering claims that the supermarkets impose penalties on suppliers that aren't part of the terms of trade, favour homebrand products, threaten to remove products from the shelves if extra payments or penalties aren't paid and fail to pay prices agreed with suppliers.

However Billson said the voluntary code should help to protect suppliers.

"I think this code is recognition that there is an opportunity to improve that relationship, that the supermarkets are very large players, and if you are a supplier to them you're very reliant on that relationship continuing even if that relationship isn't a particularly positive one."

AFGC CEO, Gary Dawson, believes the voluntary code will be just as effective as a mandatory one, and while a voluntary code won't be legislated, it will still be enforceable by the ACCC.

However, in March this year the National Farmers' Federation called for the code to be compulsory, arguing a voluntary system wouldn't go far enough in protecting farmers' interests.

 

AFGC report finds growth opportunities for food and beverage sector

The Australian Food and Grocery Council (AFGC) has released its fifth annual economic snapshot of the food and beverage, grocery and fresh produce industries, titled State of the Industry 2013.

The report which was commissioned by KPMG, shows signs of strong growth opportunities for the Australian food and beverage, grocery and fresh produce manufacturing sector despite challenging economic conditions.

Based on the most recent data from the Australian Bureau of Statistics (ABS) the report found that the industry turnover of $111b remained largely flat in 2011-12, noting a marginal 0.3 percent decline, while total industry employment declined by 0.4 percent in the 2012-13 financial year.

AFGC CEO Gary Dawson, said that the report was a testament to the ‘remarkable resilience’ of the Australian food and beverage manufacturing sector in such difficult times.

“The findings of State of the Industry 2013 demonstrates that while the Australian food and grocery manufacturing sector – Australia’s largest manufacturing sector – is facing an environment where input costs are rising on everything from commodities to labour to energy, encroaching regulations are adding to compliance costs and retail price deflation continues to cut margins, there are signs of significant growth potential,” said Dawson.

 “In particular a 26 percent increase in capital investment in food manufacturing as suppliers increase investment in productivity initiatives such as automation and other cost reduction programs.

“Solid export growth in processed foods and beverages is also encouraging as suppliers respond to emerging market opportunities including the growing Asian middle class. This has significantly contributed to three consecutive years of improving trade surplus in processed food and beverage products.” said Dawson.

The report found that the industry comprised of 25,662 businesses in 2012-13 (170 fewer than 2011-12), spent about $535.8m on R&D and accounted for $50.8b of international trade – an increase of 0.8 percent.

KPMG’s consulting national leader for consumer products, Valentina Tripp said that the increase in exports for value-added foods is highly encouraging and she expects the trend to continue. 

“Exports to China increased by $770m (44 percent on the previous year) with the meat processing and human pharmaceutical sectors accounting for 85 percent of this increase,” she said.

“Despite a tough time for the dairy sector domestically, the sector presents strong potential to capitalise on growing global demand, particularly in the Asian markets. Investment in R&D and innovation to leverage Australia’s high quality, clean, green and safe food supply systems is key to long-term sector growth.”

Gary Dawson says that food and grocery companies are looking to the government to return certainty and stability to the industry by focusing on getting policy settings right, which will then boost confidence and promote investment.

"…We strongly support priorities including the finalisation of stalled Free Trade Agreement talks, a rollback of costly unnecessary regulation, action to reduce energy costs, targeted investment incentives and a review of competition laws to help level the playing field where there is an imbalance in market power," said Dawson

“Right now the industry is facing massive challenges from high costs and retail price deflation squeezing profitability. Key food processing capabilities are at risk of being lost altogether, with the flow on loss of jobs and opportunities extending into the farm supply base."

Dawson says that through effective policies, the industry will be able to take advantage of growth potential and further open up market access in Asia. 

 

Food manufacturing asks for government intervention

The food manufacturing industry is pleading with the Abbott government to remove burdens and free up investment in new production, following some disheartening figures released by the Australian Food and Grocery Council.

The AFGC will soon released a detailed report showing that despite making up lost ground against imports, growth in the industry has struggled compared to last year.

The Australian obtained the findings, which including that the industry lost around 170 employers in 2012-13 and 1,000 workers. Export growth outpaced imports, narrowing trade deficit to $2.2 billion.

AFGC chief executive, Gary Dawson, said the industry was "running fast to stand still" but if the government removed some of the burdens on business, it could prosper and take advantage of growing export opportunities in Asia.

Dawson said the industry needs better access to trade markets, regulatory reform and targeted investment incentives to help drive capital upgrades.

After receiving a government grant of $500,000 last week for capital upgrades, vegetable processor Simplot announced its Tasmanian Devonport plant, the viability of which has been in question recently, will remain in operation for at least another three years, to fulfil contracts with Coles and Woolworths.

The company did however state that the plant will need to make significant savings or it will potentially face closure by 2019, and that the processor’s casual workforce will experience significant job cuts.

SPC Ardmona, the nation’s last remaining fruit processor has voiced similar concerns, announcing it may be forced to close if the Abbott government refuses to come through with a $25 million grant promised by the former Labor government.

"The situation is urgent. We had a productive meeting with minister Macfarlane (the new industry minister) but we need an answer fast. We understand this is a new government and we need to show some patience, but the board has been holding off on a decision for some time," Kelly told The Guardian.

The funding was meant to be sourced from a clean technology program, which the Liberal government has since pledged to scrap as it was funded by the carbon tax.

Dawson will also address the National Press Club on Wednesday, and has cautioned against limits on foreign investment in agricultural businesses. "A lack of foreign investment could see more domestic production capability move offshore, reducing Australia's long term food security," he said.

The AFGC's report also found that the industry experienced a 0.3 percent fall in turnover to $111.2 billion in 2011-12 compared to a 4.5 percent decline the previous year.

While the sector posted a trade deficit across all its products – including some non-food grocery items – the results countered fears about the nation's food security. In the food and beverage categories, Australia exported $18.8 billion in produce and imported only $11.4 billion before including the vast bulk exports of wheat and other commodities, the Australian reports.

Food manufacturers welcome new government’s reforms: AFGC

Finalising free trade discussions, cutting red tape and reducing energy costs are at the top of the list of priorities food manufacturers hope the new Abbott Ministry will commit to.

With the new Ministry to be sworn in today, the Australian Food and Grocery Council (AFGC) has welcomed the new government's focus on growth, trade and regulatory reform.

AFGC CEO Gary Dawson congratulated all new minister, especially those working more closely with food and beverage manufacturers, including Industry minister Ian McFarlane, Trade and Investment minister Andrew Robb, Small Business minister Bruce Billson, Agriculture minister Barnaby Joyce and Assistant Treasurer Arthur Sinodinos.

Dawson said manufacturers are hoping the government will offer certainty and stability and will focus on boosting confidence, investment and jobs by "getting the policy settings right."

"To that end we strongly support priorities including the finalisation of stalled Free Trade Agreement talks, a rollback of costly unnecessary regulation, action to reduce energy costs, a tax reform white paper and a review of competition laws to help level the playing field where there is an imbalance in market power," he said.

"Food and grocery manufacturing is Australia’s largest manufacturing sector, directly employing around 300,000 people and with annual turnover of $110 billion.  It is the lifeblood of many regional economies, with numerous major food processing plants located outside the metropolitan areas, and makes up half the total industry employment in regional Australia."

Dawson said the manufacturing and agricultural sectors has struggled of late, with the high Australian dollar, retail price deflation and high costs all being significant burdens.

"It is also an industry with massive growth potential for the future provided we can boost competitiveness and productivity, and open up market access in the growing economies of Asia," he added.

"AFGC looks forward to working with these experienced ministers in establishing a coordinated and disciplined approach to policy making, to ensure a competitive Australian food and grocery manufacturing sector."

 

Australian Made calls for stronger government support

The Australian Made campaign is calling on the government to throw its weight behind the manufacturing industry by supporting stronger country of origin labelling requirements.

"The Australian brand is one of the most powerful assets available to our businesses in global markets, but unfortunately the value of this seems to have been consistently underestimated in government and bureaucratic circles for many years," Australian Made Campaign chief ececutive, Ian Harrison, said.

The iconic green and gold kangaroo logo has been used by thousands of businesses for nearly three decades  to identify genuine Australian products and produce in Australia and overseas.

"In an environment where increased costs and a high $AUD have seriously undermined the competitiveness of many Australian products, country of origin is an asset we should be driving much, much harder," Harrison said.

Harrison is calling for a strategic partnership between the government and the Australian Made campaign, including a plan to reduce consumer confusion surrounding country of origin labelling.

"It’s important that we rebuild confidence in the system and add marketing value to the manufacturing, growing and processing of products in this country.

"We are lobbying the government to work together with us on this," he said.

Earlier this year, the Greens proposed a new country of origin labelling system which focuses purely on food ingredients, but this was slammed by both Australian Made and the Australian Food and Grocery Council, which argued that the proposal fails to provide clear information on where the value-adding process takes place on processed foods.

Consumer group, Choice also suggested a shake-up to country of origin labelling, proposing a simplified system comprising three key claims: Product of Australia, Manufactured in Australia; and Packaged in Australia.
 

Retail growth slow but due to rise: Index

The latest edition of the AFGC CHEP Retail Index shows that retail growth remains sluggish, but predicts the rate of year-on-year growth will increase by the September quarter.

The Index is a collaborative project between the Australian Food and Grocery Council (AFGC) and CHEP Australia, using CHEP's transactional data based on pallet movements to predict performance in the retail market.

The latest Index findings indicate an increase of 2.8 percent for the three months ending 30 September 2013, up from 2.6 percent year-on-year growth in the three months ending 30 June, which was the third consecutive quarter of decline in the rate of growth.

For the month of June, the Index indicates that the Australian Bureau of Statistics (ABS) will report year-on-year retail trade growth of 2.5 percent and turnover of $21.9 billion. The Index forecasts August year-on-year growth will be 2.7 percent, with turnover increasing to $22 billion.

AFGC CEO, Gary Dawson, said the situation is expected to improve towards to end of 2013.

"The retail environment remains challenging, reflecting subdued consumer confidence. Indications of growth improving later in the year once the federal election is out of the way are encouraging and would see improved consumer spending supporting retail sales growth," he said.

Overall, food is faring better than other retail sectors. Recent ABS statistics have shown improving year-on-year growth in food and grocery retail compared with overall retail sales growth. Results published by the ABS for May show food and grocery retail sales grew by 4.2 percent over the past year. In contrast, sales at clothing retailers were flat, sales at department stores contracted, and household goods retailers posted growth of about one percent.

The next AFGC CHEP Retail Index will be released in late October 2013.

 

AFGC rejects Choice’s claims that dodgy diet foods may be making Australian’s fat

The Australian Food and Grocery Council (AFGC) have refuted findings by consumer watchdog Choice into ‘dodgy diet’ claims made on food products.

Choice recently completed a review of popular diet foods and found that many may actually be higher in kilojoules than regular products.

Choice compared a wide range of products with diet claims, including oven baked chips, ice creams, cottage cheese, breakfast cereals and rice cakes, and found that many of these foods held a premium price yet contained more kilojoules than conventional products.

“With Australian consumers spending $827 million on weight-loss products last year, diet foods can be hard on your hips and your hip pocket,” said Tom Godfrey, head of media at Choice.

“Food companies attract would-be dieters with terms such as ‘guilt-free’, ‘lean’, ‘balanced’, ‘healthy’, ‘less’ and ‘stay in shape,’ but unfortunately this marketing jargon is meaningless if you are trying to count kilojoules.”

Deputy CEO of the AFGC, Dr Geoffrey Annison has dismissed Choice’s claims by stating that all nutritional attributes are listed on the back of these foods, allowing consumers to make informed decisions.

“I think that Choice is essentially missing the point. It’s important that food companies are able to attract consumers to foods that are specially formulated to help them construct healthy diets,” Annison told Food magazine.

“The full information about the nutritional attributes of those products is on the packs, displayed on the nutritional information panels.”

Supermarket shelves have been bombarded with brands aimed at the health conscious consumer such as the new Coles Simply Less brand along with more established players such as McCain Healthy Choice and Weight Watchers.

Choice emphasised that these products are far from ‘guilt-free’ as they have a tendency to be highly processed with minimal nutritional value.

“The first thing you notice when you look at diet products is that many tend to be highly processed, salty, sugary treat foods with little nutritional value. From jams and biscuits to salad dressings, they’re foods you’d assume a dieter should avoid, even with reduced kilojoules,” said Godfrey.

“With 80 percent of weight-loss products purchased by women, they should be aware that ‘simply less’ could well mean more kilojoules, so it’s vital that if you want to watch your weight you need to read the nutritional panel on pack.”

Examples of products compared

  • Birds Eye Hot Chips Straight cost $3.99 at 514kj/ 100g while McCain Healthy Choice Straightcut Fries costs $4.29 at 519kj/ 100g
  • Dairy Farmer Low Fat Cottage Cheese costs $2.89 with 389kj/100g while Weight Watchers Cottage Cheese costs $3.50 at 381kj/100g

The AFGC believes that it is up to consumers to make an educated decision by reading the nutrition informational panel on products prior to purchase.

“Ultimately, the whole issue of labelling is for consumers to look at the whole pack, to look at the nutritional information panel, particularly if they are not familiar with the product, and make an assessment about whether it meets their dietary needs or not,” said Annison.

“Products are marketed on the totality of their attributes, not just on single attributes.”

 

Voluntary supermarket code still under negotiation

Coles and Woolworths are reported to still be in negotiations with peak body, the Australian Food and Grocery Council (AFGC) over a voluntary code of conduct.

The completion of the code, which is designed to manage relationships between Australia’s supermarket giants and suppliers, is reported to still be months away, The Australian reports.

The slowdown in negotiations is said to be due to pressure from agribusiness leader Donald McGauchi, who urged the Australian Competition and Consumer Commission (ACCC) to accelerate its investigation into alleged misuse of power in regards the duopoly’s suppliers.

In addition to ACCC investigations, both Coles and Woolworths are said to be unable to reach an agreement over the infamous private labelling issue.

The AFGC has been pushing for the retailers to employ separate buying teams for private label products to avoid the occurrence of ‘knock off’ versions of established branded products. However, the supermarkets deem that maintaining separate buying teams would be too costly.

Chairman of cattle giant, The Australian Agricultural Company (AACo) Donald McGauchie, has also encouraged the ACCC to speed up its investigation into alleged bullying tactics that the supermarkets are using to pressure suppliers.

“There are some accusations made against the supermarkets that I have heard some a number of sources that need investigation and the ACCC needs to do that,” said McGauchie.

“They need to have sensitive was of doing that because people tell m they are concerned about the way supermarkets treat them and are concerned that is they are seen to be making comments about that publicly, it would endanger their business.”

A new round of negotiations for the voluntary code will take place next month.

Profitability of food suppliers down 28 percent: AFGC report

Results from the most detailed financial analysis of Australia's food and grocery manufacturing industry have been released.

The Australian Food and Grocery Council has released its first Competitiveness and Sustainable Growth Report, which was undertaken by KPMG and considered detailed survey data from Australian food and grocery suppliers between 2009 and 2012.

AFGC CEO, Gary Dawson, said "Previously we have had plenty of anecdotal evidence of how tough the market conditions have become for food and grocery suppliers. This report provides the hard data to assess market trends and chart a way forward for this critical industry."

The report provides data from real companies operating in Australia, and provides comparisons with international benchmarks.

Key findings from the survey include:

  • Profitability of Australian food and grocery suppliers has declined by 28 percent from 2010 to 2012;
  • Profitability of companies operating in Australia is now significantly below international comparators;
  • Supermarket retail turnover has recorded steady growth but Australian food and grocery suppliers are reporting falling turnover, with an upsurge in food and grocery imports;
  • Suppliers are significantly increasing the funding of price discounting by retailers, via their ‘trade spend’, which has increased sharply (6.4 percent growth per annum) over the past four years, impacting on profitability (6 percent decline per annum);
  • Rising trade spend has also been part funded by reductions in marketing and R&D;
  • A strong focus on cost containment has held labour costs and operating costs steady over the survey period;
  • Suppliers continue to invest strongly in their businesses, with a more than 30 percent increase in capital expenditure over the four year survey period.

Dawson said manufacturers are continuing to invest in boosting efficiency and productivity in their production lines.

"The overall picture is one of suppliers having to adjust rapidly to the shift in market conditions by investing in improvements to manufacturing systems to boost productivity and reduce labour and energy costs, and the funding of retail price promotions to try and maintain volume.

"Looking forward the ability of the Australian food and grocery manufacturing industry to increase its competitiveness and win export opportunities will require a continued focus on cost containment and capacity rationalisation, greater collaboration with retailers to drive growth and share the benefits of supply chain efficiencies, and a rebalancing of trade spend to boost brand building and innovation," he said
 

Code of conduct nearing completion

The code of conduct being developed to manage relationships between retailers and suppliers is nearing completion, says the Australian Food and Grocery Council (AFGC).

According to the ABC, the AFGC has spent months developing a dispute resolution mechanism with the supermarket duopoly – Coles and Woolworths.

The next step is to host a roundtable with a number of industry stakeholders such as the National Farmers Federation, which earlier this year pulled out of negotiations, arguing the code should be mandatory, not voluntary.

The AFGC hopes to hold the roundtable in the next few weeks.

The code is centred on the principles of codifying contractual arrangements between suppliers and retailers, ensuring that efficiency in the supply chain is achieved, and that the supply chain is not overregulated.

CEO of the AFGC, Gary Dawson, believes that a voluntary code would be just as effective as a mandatory one in ensuring the participation of the supermarket giants, especially considering failure to sign up could result in poor supplier relationships.

“It would be very difficult for suppliers given how competitive the market is. An important element of the code is about ensuring efficient retailer/supplier relationships,” Dawson told Food Magazine.

“To Woolworths’ and Coles’ credit, they have taken that on board and we are working through those issues.”

Dawson said that the AFGC is working with the retailers to develop an effective code that provides more contractual certainty, encourages investment in innovation, provides for appropriate sharing of risk and an effective dispute resolution mechanism – all without adding unnecessary compliance costs on suppliers.

Earlier this year, the ACCC announced it would be investigating the supermarket duopoly amid claims Coles and Woolworths bully their suppliers to force prices down.

The investigation is considering claims that the supermarkets impose penalties on suppliers that aren't part of the terms of trade, favour homebrand products, threaten to remove products from the shelves if extra payments or penalties aren't paid and fail to pay prices agreed with suppliers.

A key element of the code of conduct will be an examination of the shelf space supermarkets allocate to private label products.


 

New star labelling system “an additional regulatory burden”: AFGC

The new star labelling system which got the nod of approval from food and health ministers today has serious flaws and will be an added expense for Australian food manufacturers, says the AFGC.

In an AFGC statement, CEO Gary Dawson, said it was unfortunate that the announcement had been "rushed out by the federal government without any cost benefit analysis or evidence that it will achieve the outcomes it is seeking."

Despite its disappointment with today's developments, the AFGC said it's willing to help develop an effective front of pack nutrition labelling system (FoPL), but a number of outstanding issues will need to be resolved.

"Industry believes that there are still significant problems with the proposal but we are committed to working through them to see if a workable solution can be found," Dawson said.

"The food industry is expected to carry the $200m cost of implementing this scheme while also dealing with an additional regulatory burden. If industry is going to make this investment in a new FoPL system, it must be based on sound and credible science, effective in communicating with consumers and practical and attractive for industry to implement."

Dawson said an effective labelling system would need to resolve issues such as how the star system is calculated, to avoid anomalous ratings, while also outlining whether substantial funds will be allocated to educating consumers on how to use the labelling system. Whether or not the government is prepared to undertake a robust cost-benefit analysis also needs to be determined.

The AFGC has long been an advocate for the Daily Intake Guide labelling system, which was introduced in 2006 as a voluntary initiative and now appears on over 7,200 food products on Australian supermarket shelves.

While the AFGC says the DIG labels provide an easy to read summary of a product's nutritional content, others, including consumer group Choice, have said it's confusing and potentially misleading.

 

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