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Smith’s Chips factory in WA to close

Smith’s Snackfood Company will shut its Smith’s Chips factory in Canning Vale next year and, as a result, 300 workers will lose their jobs.

The West Australian reports that the company told workers the news at a meeting yesterday at 8am.

The job losses, which will be staggered until the factory closes for good late next year, will come from a range of roles including factory and administrative roles.

“Following a strategic review of its manufacturing operations across Australia, The Smith’s Snackfood Company has announced its intention to close its manufacturing facility at Canning Vale in Western Australia,” a Smith’s spokeswoman said in a statement.

 “This difficult decision was made with careful consideration, and The Smiths Snackfood Company will provide outplacement services and redundancy support to affected employees.”

The closure will not affect the company’s operations in the Eastern states.

The closure will also affect the Western Australian potato growers who currently supply the Canning Vale factory with about 12,000 tonnes of potatoes per year.

One such grower, Gary Bendotti of Bendotti Exporters told the ABC he had been supplying Smith’s for decades and the closure will hit his company hard.

Another grower, Manjimup Shire president Wade DeCampo told the ABC, "Smith's has been going through an Australia-wide review and Smith's is owned by Pepsico, which as we all know is a multinational in America and they take no prisoners unfortunately, and today we are being cut loose."

McCain Foods to invest $10 mill in Smithton plant

McCain Foods Australia/New Zealand will spend up to $10 million dollars over the next two years upgrading onsite storage facilities and building a new packing line at the Smithton plant in Circular Head, Northern Tasmania.

McCain Foods will spend an estimated $7.9 million on the on-site storage over two years and $1.6 million on the new packing line.

The improved storage facility will hold up to 55,000 tonnes of potato for processing.

McCain Foods Australia/New Zealand Agriculture Director John Jackson said the investment in upgrading storage and a new packing line will increase efficiencies and make the plant more sustainable.

“While this added investment will increase the plant’s capability and efficiencies, we still have a number of challenges before us in maintaining the competitiveness of the plant to ensure its long term survival,” he said.

“One of the challenges, in such a competitive market, is maintaining and increasing efficiencies to drive cost-reduction. Even in Northern Tasmania, we have to realize that we are competing in a global commodities market.

“In addition, rising local water and energy costs impact on the plant’s cost base reducing its overall profitability against global competitors.”

The Smithton plant processes potatoes for French Fries and potato products for the local and interstate markets.


Huon Aquaculture opens $12 mill processing plant

Huon Aquaculture has opened a new $12 million Smokehouse and Product Innovation Centre in Parramatta Creek.

The facility is comprised of a 2,500m2 value-added salmon processing facility and a 750m2 administration facility. It is expected to deliver more than one million dollars in cost savings for the company in its first year of operation under one site.

The new facility involves a revamp and extension of Huon’s existing Parramatta Creek operation, now twice as large as its original footprint.

Huon Aquaculture Managing Director Peter Bender said: “Our new facility will enable us to increase our production capacity and efficiency, while reducing our environmental footprint.

“We produce around 17,000 tonnes of fresh salmon each year, with our new facility part of our four-year $160 million controlled growth strategy.

“This world-class site will incorporate whole fish, fresh fish, and value-added cold and hot smoked production, successfully bringing together our full range of seafood processing at a single location.”

The project includes:

  • A suspended walkway across existing and new processing facilities provides access to staff entry areas, as well as viewing facilities for customers and visitors.
  • The new 750m² administration facility includes meeting rooms, a boardroom, laboratory and product development, and extended car-parking facilities. The dining room and commercial kitchen are complimented by staff breakout and barbeque areas for 100 employees.
  • The existing fresh salmon processing facility, completed in stage one, received a reconfiguration of process areas and upgrade works to drainage and floors with a new epoxy finish.
  • LED lighting has been incorporated throughout the new facility providing an improved environment for the staff and saving on energy consumption and maintenance.


Export opportunities and facility design

While the media describes Australia as the 'food bowl of Asia', the real story paints a different picture.

The reality is that we import more food than we export. Looking at our competitive position in the food trade worldwide isn't encouraging. In the decade 2002-2012, the Australian share in Asian food markets dropped significantly. Similarly, Australia's ranking as food supplier to these countries has slipped; in some cases dramatically so. This indicates Australia's market share in Asia is being usurped by other nations as we fail to capitalise on the demands and opportunities that the food industry offers up.

Further investigation has shown that while global profitability in the food industry has remained relatively constant since 2010. The same cannot be said for food industry profitability in Australia; with rates nearly halving since 2011.

The greatest areas to be addressed by food manufacturers concern Australian labour and energy costs which have skyrocketed in comparison to the rest of the world. While the Emissions Reduction Fund (ERF) will make government funds available to companies to reduce and improve their energy consumption and efficiency, labour cost is a significant issue that requires careful consideration. Thinking differently and designing differently to maximise labour productivity and best utilise technological innovations is one of the many ways food processors can deliver progress in their facilities. 

Thinking differently

Working in the modern food processing industry is about delivering value; value to the supplier, value to the consumer and value to the market. Being the centre of that value equation, food processors must learn to adhere to the old adage and work smarter, not harder; think differently and design differently.

Although the picture seems overly gloomy, the food market provides a huge opportunity for producers and processors if we can increase our ability to compete within the world market. This opportunity lies in the rapid growth of the Asian market and the growing middle class. The Asian middle class will reach 3,228 million people by 2030; roughly 140 times the current Australian population. With this surge in affluence comes greater purchasing power.

The task is clear. The factory of the future must be competitive on a world standard; our labour will always be expensive, so we must seek ways to minimise these costs using technology and improving the productivity of remaining labour positions.

Human-centred design

Human-centred design is a term that speaks to efficient design practices between people and technology; giving attention to the psychological needs of humans. Human-centred design seeks to prioritise people over machine efficiency. When processing is your core business, it is critical to your success that these practices are optimised for the operator, robotics and automation, and the end user.

One principle of human-centred design suggests that greater autonomy over tasks and production methods should be allowed to encourage the implementation of human ingenuity, experience and intelligence (traits of which we are yet to automate). While engineers like to design straight lines, this is not necessarily the best configuration to improve human interaction; in fact it is isolating, and discourages operator cooperation and internal communications. 

A further critical element to the successful implementation of sociotechnical system design is feedback. This provides staff with a rationale for their work, a why; thereby satisfying a number of their psychological needs. 

Working smart

Advancements in robotics, automation and machinery have led to designers increasingly working to satisfy sociotechnical design aspects in order to develop 'smart' devices and systems.  We can begin to see the effects of these innovations in the development of technologies like Baxter and Kuka  products; robots capable of performing repetitive tasks with the same efficiency as current manufacturing robots with the added ability of working safely and intelligently next to people. These collaborative robots offer a level of human-plant interaction that is unprecedented in manufacturing facilities.

The technological level of Automated Guided Vehicles (AGVs) has grown significantly, particularly with the advent of Google electric driverless cars. The application within manufacturing facilities has become more achievable as systems adapt to the infinite variables of working with humans. The safety standards of smart devices utilising such sensor technology has opened the door for the integration of human and robotic logistics systems. 

Big data

Lately, there has been much hype about the mining and analysis of big data within businesses. The benefits of such data collection offers an opportunity for food processors to truly bring their facilities into the technological age of the fourth Industrial Revolution. 

The biggest limitation for accessing data and utilising it to improve production processes and procedures is the wide array of operating systems that are currently utilised. In most facilities there is limited capability for these systems to interact, let alone work together. This complicates the process wherein food manufacturers can access, analyse and interpret data supplied by their production facility. By collating data and implementing a methodology of reporting, food manufacturers have the opportunity to gain significant insight into their entire process on both the macro and micro scales, representing an opportunity for improving efficiency, operations, and subsequently profitability. 

Australian manufacturers must invest in new plant and equipment to stay in the game. We must use the best equipment and embrace the new design paradigm to achieve plants that are better than our competitors. We must get better value from the money we are investing in capital by using modern collaborative project delivery systems. This is how we will build the food facility of the future.

Steve Christie is the director of Process Engineering at Wiley


Move it or lose it: the ins and outs of catering for a niche market

At Temptation Bakeries, continuous improvement isn’t just an industry catch phrase – it’s absolutely vital.

Temptation Bakeries started as a small regional bakery on Victoria’s Mornington Peninsula, but 21 years on the bakery has completed construction of its $2.5 million manufacturing plant in Melbourne.

Niche Markets

“As demand has grown, so has the need to increase productivity, along with having to regularly come up with new products,” CEO, Temptation Bakeries, Michael Ratcliff says.

“Things really started to ramp up and we had to keep pace. We knew we had to innovate if we were to be taken seriously for large contracts, but we had the willingness and creativity to think outside the square and come up with our own niche markets.”

Ratcliff says the up-front challenge was to be able to deliver a marked point of difference and maintain that, while the ongoing challenge has been to stay competitive in a country with high costs and low margins.

“We have actually capitalised on the advantages of being small and having the flexibility to bring together timely innovation, technology and business operations aimed at keeping costs down, while at the same time being able to deliver on rapidly shifting market demands,” he says.

“Finding and keeping business for Temptation means constant quality improvement, introducing new products to keep up with the changing demands of supply chain consumers. But that, says Ratcilff, is the advantage in being able to make short production runs profitable.

“Our company’s competitive advantage leverages off the combination of innovative and sustained new product development and a flexible manufacturing culture that expects and welcomes change.

“Running in tandem with all this, is the need to up the ante on our research and development to enable us to convert great ideas into manufacturing reality. This can require considerable investment of time and money.”

“It is a challenge,” says Ratcliff, “with the constant need to introduce new lines, but it helps ensure we stay at the top of our game.

“So continuous improvement isn’t just an industry catch phrase – it’s absolutely vital for us and for that matter, any business deadly serious about what they’re doing”.

Quality assurance has also been integral to their planning and development which has helped grow opportunities for their branded and house branded products and has been at the forefront of the company’s latest expansion.

Manufacturing Plant Upgrade

Last financial year, Temptation produced around 32 million individual products. With the completion of its new $2.5 million plant and expansion of its technological capabilities, the company is aiming to double its output within 3-5 years.

“We now have the capabilities of a complete, high efficiency, test kitchen-to- consumer -ready production line,” Ratcliff explains.

The blueprint included segregated zones aimed at meeting the most stringent quality control standards for manufacture and hygiene.

Separate areas for preparation and post baking are designed for the premium care of products prior to wrapping and packing to ensure sustained quality and freshness. The facilities also accommodate increased storage of finished goods. Overall, it means significant efficiencies in the production, packaging, storage and dispatch all on the one site.

The company employs around 100 people and Ratcliff hopes to be able to recruit more as they progress.

Temptation Bakeries


P: (03) 9773 4800


World’s largest integrated dairy production base to be built in NZ

Chinese leaders together with New Zealand’s Prime Minister John Key, have unveiled plans for the Yili Oceania Production Base.

The production base will cover packaging, production, processing and R&D to become the world’s largest integrated dairy production base.

Yili Group, a privately owned company engaged in the processing and manufacturing of milk products, has invested more than RMB 3b into the project, inclusive of a 1.2b initial investment and a newly added investment of RMB 2b.

The new investment will be used in four parts including a raw milk deep-processing project, a UHT liquid milk project, a milk powder production facility and a packaging facility.

In addition to the funding, the Yili Group and Lincoln University signed an agreement known as: The Agreement on Scientific Cooperation across the Whole Dairy Industry Chain. Under the agreement, the two sides will carry out in-depth cooperation based on their unique resources and technological advantages, focusing on the strategy of the whole dairy industry chain.

The first step of the agreement is to focus on innovative technologies for improving nutrition and quality assurance in dairy products in the coming years.


Gina Rinehart to invest $500m in infant formula venture

Mining magnate, Gina Rinehart will be broadening her investment in the agricultural sector by investing $500m in infant formula for the Chinese market.

Rinehart’s Hancock Prospecting confirmed that it has entered into a venture with a Chinese state-owned company to purchase hectares of farmland in Queensland, together with a processing facility, The West reports.

"Mrs Rinehart has been involved in the planning of this exciting venture, which will be a huge boost for Australia, Australian exports and for the Queensland dairy industry, which has been in much need of support," a Hancock Prospecting spokesman told The West.

"Hancock Prospecting and Gina Rinehart are huge believers in Australia and back strong export opportunities for the country.

"It's in line with the company's principles to invest and we're very happy to be supporting the Australian dairy industry."

In addition to the new investment, it is reported that Hancock Prospecting holds a 70 percent stake in the recently formed Hope Dairies in partnership with Sinomach, an enterprise run by the Chinese central government.  It is believed that the new operation will be capable of producing up to 30,000 tonnes of formula per year, with production commencing in 2016.

Rineharts investment in the dairy industry follows her decision in July this year to purchase up to a 50 percent stake in the Liveringa and Nerrima cattle station in WA’s West Kimberly region.

The purchase was a joint venture between Hancock Prospecting, and Dowford Investments which is owned by Graham Laitt and his family- the owners of the Milne AgriGroup.


Five week shut down for Cadbury factory

The Hobart Cadbury factory will close its doors for five weeks due to lagging sales and a bigger-than-expected stockpile.

Cadbury's parent company Monodelez International said the shut down over the Christmas period is part of the process of matching supply to demand forecasts, which could fluctuate through the year, ABC Rural reports.

Dairy farmers who supply Cadbury said they were confident their milk would go to other processors and their contracts would be honoured.

John Short of the Australian Manufacturing Workers Union said the factory usually closed for a fortnight over Christmas but workers would have to take more annual leave this year.

“It appears that the company did really well at the start of the year and got a lot of chocolate made, and they got a bit of a stockpile, but unfortunately they haven't had the sales in the second half of the year they would have liked,” he said.

“What this is trying to do is to hang on to their workforce by having a bit longer shut down than they normally would.

“We're working with the company to try to reduce the effect it has on workers.”

Cadbury said it would maintain its tourism operations while the factory was shut down.


SA beverage systems manufacturer wins Carlton United Breweries contract

South Australian drink dispensing machinery manufacturer, Hoshizaki Lancer has won a major contract with Carlton and United Breweries (CUB), to provide maintenance and repair services to 20,000 venues including bars, clubs, hotels and liquor stores across the nation.

The contract has now made Hoshizaki Lancer Australia’s largest beer system maintenance and repair service provider.

Managing director of Hoshizaki Lancer, Joe Thorp said that the CUB contract is the largest single repair and maintenance agreement Lancer has signed and will add several million dollars to company’s turnover.

“Lancer already provides repair and maintenance services to other brewers and individual customers, but, this contract has turbo-charged our business,” said Thorp.

Thorp said that the company has taken on 30 additional staff across Australia to meet demand from metropolitan and country customers.

“It’s also accelerated plans to vertically integrate our business and provide a “onestop- shop” for turnkey supply, installation and maintenance of beverage dispense equipment," said Thorp.

“All of the beverage systems we supply our customers are produced at our Adelaide factory, so we are able to provide rapid, specialist response when issues arise.”


Schneider Electric teams up with Process Partners to deliver CIP solutions

Energy management specialists, Schneider Electric, has announced an agreement with Process Partners to offer Clean-In-Place (CIP) optimisation solutions to food and beverage manufacturers.

Craig Roseman, food & beverage segment nanager, Schneider Electric Australia, said “Discussions with many food and beverage manufacturers have helped us to identify CIP system performance as a major challenge within the industry. Left unresolved, these CIP system issues have the ability to adversely impact food safety as well as quality, manufacturing cost and plant capacity. Addressing Clean-In-Place solutions will help optimise the performance of industrial plants and alleviate pressure on a highly competitive industry. This presents an opportunity for our clients to convert a constraint into an area of growth for their business.”

The Schneider Electric CIP Optimisation solution encompasses a holistic review of the CIP system to identify opportunities where areas for improvement exist, which are then captured and highlighted in a report comprising detailed recommendations. An assessment on the CIP’s energy usage, process automation and the CIP equipment is undertaken to guarantee cleaning performance, ensure key parameters are managed and satisfy food safety requirements.

Ultimately, Schneider Electric’s CIP activities aim to help its clients reduce their energy consumption and environmental impact while also improving their productivity.

In 2011, Schneider Electric and Process Partners engaged in a successful project for the organic yoghurt manufacturer, five:am, which saw Process Partners build a plant from the ground up from initial concept through to design, installation, commissioning and complete project management, whilst Schneider Electric provided automation and control technologies to help fully automate the production process.


Don’t let pest management eat away at you

Pest management is a dirty word for some food manufacturers. They don't like to talk about it, and they don't like to admit that it's an integral part of their business. But let's face it – if you're a food brand in Australia worth your name in salt, then you must have a pretty serious pest management plan in place.

Having a strategy for keeping creepy crawlies out of your facility, as well as one for removing them if they find their way in, is indicative of a proactive, responsible business, not a negligent one.

But, like a lot of regulation in the food manufacturing industry, knowing exactly what an effective pest management strategy looks like can be difficult.

There are a wide array of pest management standards that a brand can adhere to, depending on what products it manufactures and where those products will be sold.

Eighteen months ago, the Australian Environmental Pest Managers Association (AEPMA) penned a Code of Practice for pest management in the food industry in Australia and New Zealand.

David Gray, national president of the AEPMA, says "With the industry Code of Practice, we didn't create anything new, really. We just took the benchmarks that were there and, in a nutshell, if someone is setting up a pest management program in a food manufacturing facility and they set it up to the Australia and New Zealand Code of Practice, then they will meet the requirements of all the existing standards or codes that are out there."

The Code, which aims to define best practice in managing pests in food manufacturing, is a go-to guide not only for food brands, but also for auditors and pest management companies.

"We've added some additional value in the sense that auditors usually come from the food industry. Their expertise is in food, some of them have some experience in pest management but most don't. So we've developed this Code equally for their benefit, so they can look at it and then audit the pest management program against the Code. It gives them some KPIs that they can measure against, rather than just going in and approaching it blindly," Gray told Food magazine.

"It also includes the downstream suppliers to the food industry, so the suppliers of raw materials, and things like packaging. Often the packaging plants and packaging materials come under the same stringent requirements because they're supplying into the food industry."

Abiding by the AEPMA's Code of Practice means food manufacturers will not necessarily have less regulatory I's to dot or T's to cross, but will at least know what systems and processes it needs to have in place to ensure everything's kosher, so to speak.

Stephen Ware, national executive director at the AEPMA, says "In the pest management industry, everyone knows they need pest managers, but the food manufacturers haveproblems because auditors turn up and different auditors have different ideas of what should happen as far as, for instance, where to put down rodent baits and traps. The Code of Practice has helped to clarify that.

"That's why [the Code] has been pretty well accepted by both the pest controllers – who don't really want to argue with everybody about where he should put the bait – and the food manufacturer – who doesn't want to have to sit down and have an argument with every auditor that comes in."

A multi-faceted approach
Paul Moreira, service manager for Victoria at Adams Pest Control, says the two fundamental pillars of pest management are hygiene and maintenance.

But this isn't as straight forward as it may sound, he insists.

"In the food industry there's a requirement to integrate a pest management approach which is multi-faceted. So rather than just focusing on applying a pesticide, it's about identifying proofing issues, harbourage issues, alternative food sources. All of those things link into the site's pest management program," he said.

Safety of the end product, obviously, is a high priority in pest control in the food industry. Manufacturers need to be very careful about where and how they fight off pests, and there are a number of options available to them, Moreira says.

While toxic bates are available, which are consumed by rodents and kill them five to 10 days later, Moreira believes that in the coming years the industry will move award from these chemicals.

"Another approach is to have a monitoring block, which allows you to assess activity. So the pest controller goes around and has a look at if the block has been consumed or not,and if it has you obviously have a problem and you have to go down the path of getting rid of the infestation," he says.

This approach means there's no risk of contaminating the product being manufactured, but on the other hand it's purely an information gathering exercise – it doesn't treat the problem at all.

It's for this reason that the American Institute of Baking (AIB), which has an internationally recognised standard, is moving away from the use of non-toxic chemical blocks internally, instead recommending the use of mechanical traps.

"It's all about minimising pests within the site by hitting them outside, and then inside your treatment becomes a non-toxic approach. According to the AIB's standard you have to use a mechanical trap. You can't use a monitoring block … because all that does is feed the rodent. You haven't addressed the issue of having the rodent there."

While Adams Pest Control's latest product, Baitsafe, can be used with toxic baits, it's like nothing else on the market as it allows food manufacturers to use pesticides in cavities in a safe, controllable way, Moreira says.

"What Baitsafe allows us to do is put a device in that cavity and then apply the pesticide in a very secure way. It looks like a fire alarm. It's flush against the ceiling, but it doesn't have to be in the ceiling. It can be in the splashback of the kitchen, it can be in the kickplate of a bench or in a wall, but it sits flush against it.

"We have a key, we place it in the device, open it and the pesticide is on the other side, or we can even apply a monitoring block or a sticky board to allow us to gauge the activity levels of, say, fruit flies or cockroaches, then we close the device.

"So as far as anyone on this side of the wall, where people work, are concerned, all they see is a tiny little circular flat planel and they can't access the pesticide that's on the other side," Moreira says.

Money well spent
Food manufacturers need to be proactive with their pest management strategy. It goes without saying that it's much easier – and more cost effective – to prevent an infestation from occurring than it is to have one treated.

So while regular inspections and a detailed pest management strategy might seem like an unneccesary expense, it's money well spent, says Simon Lean, Australian technical manager at Rentokil.

"Pest control isn't free but they [food manufacturers] do get good value for money. It's always something you have to have on your books and something manufacturers often want to get done for as cheap as possible, but generally, if people are chasing cheap pest control they get a cheap job, and if they get a cheap job they end up with pest problems.

"That's the last thing they need because all these food manufacturing companies are very particular about brand protection. The last thing they want is for someone to see a rat in a loaf of bread or something like that," Lean told Food magazine.

"A PR disaster can really hit these companies. But it's not just PR. If they've got a contaminated line in their manufacturing, just imagine if they have to close that line down because it's either riddled with pests or simply broken. The cost of that line being down could be thousands of dollars, sometimes hundreds of thousands a week, in lost production. Whether that be because of pests or an engineering concern, it gets very serious and it really does hit their bottom line."

Regular inspections are critical for any food brand, especially those in older facilities that may not be able to keep pests out as effectively as new buildings can.

Having said that, regular – and thorough – hygiene and maintenance schedules go a long way in pest-proofing your business, and therefore minimise the likelihood and cost of treating infestations, replacing equipment or – heaven forbid – dealing with product recalls.

"If you keep things clean and in good working order, it's going to be easier to inspect for any pest problems, and you're not going to have as many pest problems because it's clean and you don't have any food for the pests or harbourage where they can hide and breed," Lean says.

"That's why inspections are so critical in food manufacturing."


Lion to pay dairy farmers more

Milk processor Lion have said it will increase the price it pays to dairy farmers for some milk, but critics say it may be too little to late for some famers.

Lion agriculture procurement director Murray Jeffrey said yesterday that Lion would "significantly increase tier-two milk prices".

Lion will pay the equivalent of tier-one [contract] prices for all milk supplied from February to June 2013," The Newcastle Herald reports,

However, Bowthorne Dairy's Dallas Clarke said that with production of milk dropping, the outlook for most farmers was still grim.

Clarke said the extra money for farmers would "only be a few crumbs".

"It will be interesting what happens if it's still dry until Christmas and how the season breaks when it starts raining.

"If we get excessive floods again, there's no hope for having fresh milk in Sydney all the time, unless they have a train coming every few minutes from Victoria."

Jeffrey said Lion was "not worried about a milk shortage" and "this is a good news story".

"Forecasts suggest that once the spring peak has passed, our volumes will be closely aligned with demand," he said.

"This will allow us to pay for all the milk we receive at the tier-one base price in each region."

Australian Dairy Farmers Association President Chris Griffin told Food Magazine earlier in the year that the industry would continue to suffer as a result of the milk prices.

“We know there’s been at least 30 leave the industry in Queensland alone, and the majority are sighting the uncertainty of milk prices as the reason.”

After Coles cut its retail milk price to $1 a litre in January 2010, and Woolworths decided to follow suite, the flow-on effects of the decision have continued to damage the sector.

“In NSW, my state, I see farmers being asked to sign contracts for three cents a litre than their previous contracts,” Terry Toohey, Australian Dairy Farmers Director said at the Food Magazine Leaders Summit.

“This will have astronomical effects on fund and profit margins.”

"In my case I'll have 40 per cent of my tier 2 of milk [purchased] at 18 cents [per litre].

"The cost of producing it is 40 cents [per litre].

"So, you start to look and say, I'm only one person, there are 800 dairy farmers in NSW alone."

The current practice is for milk companies to announce what is known as an Anticipated Full Demand (AFD) to Dairy Farmers Milk Cooperative (DFMC), which is bought at a somewhat reasonable price and referred to as Tier 1 milk.

Any milk deemed ‘surplus’ is then paid at a much lower price and referred to as Tier 2 milk.

However, the buyers of the milk produced on Australian farms are deliberately underestimating the amount of milk that each can deliver, meaning they are not obligated to buy a considerable portion of the milk they know a farm will produce at the reasonable price.

There is no transparency at farmer level as to what Tier 2 milk is being sold to other processors for.

"The retail actions are certainly impacting the dairy farmers in a negative way, this combined with the uncertainties and other factors [impacting] dairy or other farming, it's making it unattractive for the next generation,” Toohey said.

Earlier this year, Lion lowered the value of its dairy and drinks business by $1 billion, which it said was a direct result of predatory pricing by the major supermarkets.

“Persistent poor global economic conditions have seen a sustained period of low consumer confidence and increased saving activity in Australia," a Lion spokesperson said at the time.

"This challenging environment has been further exacerbated by short-term factors such as poor weather and natural disasters in Lion's key markets."

Lion’s dairy and drinks business, has suffered continuously increasing input costs and has labelled the fresh milk business "challenging".

"Continued discounting activity has caused a transfer of sales volumes from higher-margin branded products into private label and from the non-grocery channel to grocery," the spokeswoman said.

The Australian Food and Grocery Council’s chief executive Kate Carnell said the produce cuts have not been driven by supply chain competition or lower costs of production.

“If these current ‘price wars’ continue, the profitability of Australia’s food manufacturing sector, as well as farmers, will be eroded and the result could be a significant loss of both processors and producers,” she said.

Darrell Lea to be back on shelves in time for Christmas

Infamous Aussie confectionary brand, Darrell Lea, has overcome its financial issues from earlier this year, and the new owners have pledged to have the treats back on shelves in time for Christmas shopping.

In July Darrell Lea went into voluntary administration amid concerns surrounding the Lea family's ability to meet financial obligations.

In September, Darrell Lea was sold to Australia’s largest manufacturer of fresh chilled pet-food, the Queensland-based Quinn family for an undisclosed sum; though 400 part-time workers still lose their jobs.

Now Klark Quinn, one of the new owners, has told The Sydney Morning Herald that Darrell Lea products should be on sale in every major supermarket chain to buy for Christmas.

''Everyone wants Darrell Lea,'' he told the Herald.

Darrell Lea products will be in IGA stores by the end of October, thanks to a distribution deal struck by Quinn Foods.

Quinn confirmed the company is in negotiations with Coles, Woolworths and other supermarkets.

Quinn said the task of getting the confectionary maker back to being a profitable company will take work, speaking to the Herald at the Kogorah plant while wearing a fluro maintenance shirt.

''I wear a maintenance shirt because things are broken,'' he said of Darrell Lea. ''Every facet [of operations] was disconnected, marketing from sales, sales from finance, etc.''

Part of the plan will include a heavier focus on the 200 best performing and known products in the range, including the Rocklea Road and Soft Eating Liquorice, while 600 less popular products will most likely be dropped.

''It was the lesser known products that were dragging the business down,'' he said.

''It was very hard choosing what products to keep.

“But when we looked at it closer, it was obvious.''

Darrell Lea the No. 1 producer of liquorice in Australia.

While the Quinn family wants to modernise the Kogarah plant, to Darrell Lea products keep  their distinctive handmade flavour, much of the old confectionary processes and equipment will remain.

This includes burnished copper pans in which cooks make peanut brittle without a recipe and thermometer, Qiunn explained.

''You hear people talk about word 'iconic,' but Darrell Lea is iconic,” he said.

“There's so much history we can draw back on going forward, it's really exciting.''

What do you think of the Quinn family's decision to drop 600 products? Is it good business sense?

Staff at Melbourne food plant claim extreme bullying was ignored

Staff at a Melbourne gourmet food manufacturing facility, which provides food for Ikea, Qantas and Costo have allegedly suffered extreme bullying at the plant.

More than half the workers employed at the Glendal Foods factory in the inner-city suburb of Brunswick say they have been bullied for years, and despite informing management and a trade union, the allegations were never followed up, The Age reports.

Of the 38 staff employed at the plant, 18 say they have been bullied by their employer, and one allegedly harmed herself two weeks ago as a result of the treatment.

She was admitted to the Western Hospital as a result and doctors there contacted WorkSafe to become involved.

An investigation is currently being conducted into the incident by the work safety authority.

Another staff member has alleged that a heavy trolley was pushed into her stomach while she was pregnant.

Most of the staff speak little English, and since their concerns have allegedly been ignored, they have decided to go public with their story.

They say the inappropriate treatment has been going on for at least six years.

The workers allege that management at the factory had allowed a senior staff member to regularly yell at them and make sexual and personal comments, tell workers they needed to give 48 hours' notice if they wanted to take sick days and demand staff work overtime on any day, without any notice.

They were also told, when they went from casual to full-time workers, they must ''celebrate'' by buying lunch for the entire workplace, or buying a supervisor a gift.

Employee Hiep Nguyen said when she was given a full-time job with the company, she was instructed to shout the entire factory lunch, because ''it was the rules,” and would face termination if she did not.

''I am a new arrival,” she said through an interpreter.

“I came to Australia legally.

“I work, and pay tax and try to be a good citizen.

“But because I have really limited English, I don't know a lot of rules.

“And for someone who has been here a bit longer than me to make my life really difficult is not fair for me.”

It is also alleged they were banned from making any contact with the company's owner and wages of some employees were withheld for up to eight weeks.

Most of the bullying complaints are against one supervisor, Van Phan, who the staff allege, pressured most of them to pay her 10 per cent of a backpay payment made to them in July after they signed a new workplace agreement.

They apparently had to make the payment in cash, and while Phan wouldn’t discuss the other allegations on Friday, she did say employees who gave her a cut of their backpay had given it as a gift.

''They were happy to do that,'' she said.

When the union became involved in the case, the company asked Van to voluntarily pay back this money, but it is unclear whether this has occurred.

Very few of the Glendal Foods employees were members of the National Union of Workers until August, when Nguyen filed a complaint with the union.

She also contacted the federal government's Fair Work Ombudsman, which referred her to WorkSafe.

Qantas and Ikea have confirmed that Glendal Foods is one of their suppliers,  among their suppliers but would not comment further.

Glendal Foods, which makes samosas, filo pastries, soups, curries and casseroles for its clients, is owned by Melbourne chef Chandra Kanodia, and the staff all allege he was aware of the incidents in the plant, but he ignored it.

He declined to discuss the allegations, but did comment on the fact that WorkSafe is investigating.

''WorkSafe will take care of this; the allegations are going to be sorted out by them,'' he said.

When asked why so many of his staff had complained of bullying, he said: ''They are all union members, are they? That says something, don't you think?''

He later issued a brief statement saying his company was concerned about the matter and taking it very seriously.

National Union of Workers organiser Monique Segan, who has regularly met staff at Glendal Foods since August, said the bullying was some of the most extreme the union has seen.

She also said that raising the issue Glendal Foods had increased problems, pushing the workers to go public with their story.

Troubled food group saved

PFD Food Services has bought troubled company Australian Convenience Foods Group (ACF) after the ready-to-eat food manufacturer went in to voluntary administration.

PFD’s chief executive Kerry Smith said the intention is to expand ACF’s business of supplying sandwiches and microwavable products for service stations and convenience stores across Australia, ninemsn reported.

“We see there are some synergies between ACF and PFD”, Smith told AAP on Tuesday.

"Our strategy when we acquire a business is to grow it.

"We have a customer base that can use products produced by ACF."

The purchase comes as good news to the 370 employees of ACF with little to no job losses suspected to come from the move.

As Food Magazine reported in early September, the ACF had been running at a loss for the last few years prior. However, Smith was optimistic about the merger.

"It's not going to happen overnight (but) we believe we can get it to an improved profitability reasonably quickly," Ms Smith said.

PFD will assume control of ACF's seven fresh and frozen food operation sites in Victoria, NSW, Western Australia, South Australia and Queensland

Kraft to buy remaining stake in Moroccan biscuit company

Global food giant Kraft has signed an agreement to acquire the remaining 50 per cent stake in Moroccan biscuit manufacturer Biscuiterie Industrielle du Moghreb (BIMO).

Kraft announced yesterday it will purchase the remaining share from local investment holding National Investment Co (SNI) for MAD1.31bn (US$150m).

Last year Kraft split the company into two parts, to further growth in different sectors of the food market.

The US food giant said the latest acquisition is part of its overall strategy to grow in developing markets, and that operations in the Middle East and North Africa are "an important part" of that plan.

It plans to continue to grow BIMO and its brands in conjunction with Kraft Foods' broader Moroccan operations.

The move will "ultimately benefit BIMO and the Moroccan economy as a whole,” according to of Kraft Foods Middle East & Africa, Lawrence MacDougall.

"For several years, Kraft Foods and SNI enjoyed a strong and successful partnership in the jointly-owned BIMO, and this transaction is clearly aligned to fit our respective strategies,” MacDougall said.

"I am excited about our business prospects in Middle East and Africa in general, and in Morocco in particular, where this agreement will serve to reinforce our position as ‘a global snacks powerhouse' not only internationally but also in this region.”

The finalisation of the acquisition will depend on customary regulatory approvals.

Ready-to-eat food manufacturer may get buyer soon

Up to 400 jobs are at risk after Australian Convenience Food Group announced that it is in administration. The Knox Leader reports that 90 jobs in Melbourne alone are in doubt.

ACFG, a maker of heat-and-eat meals sold in supermarkets and service stations, was put in voluntary administration on August 28. It operates seven factories in five cities.

Vaughan Strawbridge from administrator Deloitte stated that it could be sold within a week, but would not say anything about the number of jobs that may be shed.

“We've got good interest. It will depend what is in the expression of interests,” he told AAP.

“We won't know if there will be job losses until we conclude the sale-of-business process.”

The Sydney Morning Herald has reported that ACF has been loss-making for the last few years.

Gov releases manufacturing taskforce report

The Government has released its Manufacturing Taskforce report, which has a five point policy designed to get the manufacturing industry moving again.

The report, released today, states that it "looks to shape a more dynamic contribution from manufacturing over the medium term to longer terms", adding that there is an "urgent priority that needs to be given to addressing the immediate challenges faced by businesses and employees".

The first point the report lays out is addressing these challenges and "the real and imminent danger of large losses of jobs and capabilties".

It also looks "to help reboot economy wide growth, encourage investment, and reduce the costs of doing business" via a targeted stimulus and initiatives such as new regulation and taxations have also been proposed.

The report also seeks to address competitiveness issues in the market, putting forth "the development of globally oriented innovation precincts".

This report also outlines the need to "address the multiple barriers facing SMEs, and to help more SMEs grow into mid sized firms".

"The agenda proposed here is a complex one. It will require sensible sequencing and the engagement of multiple stakeholders. Notwithstanding the urgent pressures on parts of manufacturing, the non-government members of the Taskforce stress the need to get it done right rather than get it done fast," report states.

It goes in to say that the industry must focus on invention and innovation, with government assistance, if it is to succeed.

To read the report in full, click here.


Kerry closing Melbourne ingredient factory

Ingredient maker Kerry is closing its manufacturing plant in Melbourne, leaving up to 100 employees out of work.

The National Union of Workers says the Ireland-based company will move at least 75 per cent of its production to Asian factories.

The Altona factory, in the Melbourne’s west, will close for the last time on March 31 2013, and the production of products including bases for milkshakes, donuts and biscuits to Malaysia.

“These are high-wage jobs, high skilled jobs and they were good quality middle class jobs in the western suburbs,” National Union of Workers secretary Tim Kennedy said.

“The problem for these people is that the work for them in the future will be casual work here and there.

“There is just no confidence in the manufacturing industry in Victoria.”

Kerry’s factory closure is further indication that the manufacturing sector in Australia is struggling more than ever, he said.


“This is not just a job emptying bins at the footy,” he said.

“Some of the equipment is going to New South Wales but the bulk of it, about three quarters is going back to Malaysia.”

Kerry Group says some employees impacted by the closure would be offered jobs at the company's New South Wales and Queensland operations.

"Whilst manufacturing remains a very competitive environment in Australia and international markets, these decisions enable Kerry to provide sustainable business growth by leveraging the offering at our existing sites within the region," Kerry Ingredients and Flavours Asia-Pacific president Mark McCormack said in a statement.

"Whilst Kerry will continue to invest in and expand our presence in Australia, this is a consolidation of a number of acquisitions made over recent years."

"We'll now be focusing on redundancies and making sure that happens promptly and it happens well, and we'll also be looking at reskilling and retraining the workers."