Minister for Technology and Member for South-Eastern Metropolitan Region, Gordon Rich-Phillips today opened the new manufacturing facility of Temptation Bakeries, in Chelsea Heights.
Rich-Phillips said Temptation Bakeries is a true Victorian manufacturing success story.
“Temptation Bakeries employs 100 local people and contributes substantially to the local economy, community and the reputation of Victoria’s food manufacturing sector,” Rich-Phillips said.
“What began as a small family-owned bakery 21 years ago has developed into a leading manufacturer of award-winning food products for blue-chip customers, including major airlines, supermarkets and food service suppliers.
“Last financial year, Temptation Bakeries produced 32 million individual products and with the expansion of its facilities in Chelsea Heights now complete, is aiming to double this output within five years.”
Owners Mike and Pauline Ratcliff began their operations with a small regional bakery on Victoria’s Mornington Peninsula. Mike Ratcliff said their company’s competitive advantage leverages off innovative and sustained new product development and a flexible manufacturing culture that expects and welcomes change.
“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,” Mike Ratcliff said.
Consumer watchdog Choice is calling for further simplification of the country of origin framework for food products.
While the watchdog backs the Standing Committee on Agriculture and Industry’s recommendation that food country of origin labelling needs to change, Choice believes that the committee needs to go further by creating a more simplified framework.
Choice director of campaigns and communications, Matt Levey says that the proposed solution to the current system runs the risk of being equally as confusing as the new framework which has a focus on percentages of the amount of local inputs versus imported ingredients.
“It’s not clear that this will be a significant improvement for already confused shoppers,” said Levey.
“Choice is calling for a simplification of country-of-origin labelling, giving consumers the information they want, getting rid of the information they don’t, and testing the revised framework to make sure it’s meaningful.
“Our research shows many consumers are passionate about where their food is grown, and where it is manufactured, but are confused about current labelling requirements. We strongly urge the Federal Government to undertake direct consumer research before making any changes to the current labelling framework,” Mr Levey says.
The Committee’s proposal for the three claims are as follows:
‘Grown in’ – 100 per cent content from the country specified;
‘Product of’ – 90 per cent content from the country specified;
‘Made in [country] from [country] ingredients’ – 90 per cent content from the country specified;
For products which can’t make these premium claims, the Committee recommends two qualified claims:
‘Made in [country] from mostly local ingredients’ – more than 50 per cent Australian content;
‘Made in [country] from mostly imported ingredients’ – less than 50 per cent Australian content.
Levey says that a Choice survey of 700 members found that only 12 percent were able to accurately identify the meaning of ‘Made in Australia’.
“Most consumers won’t know that ’made in Australia from mostly local ingredients‘ is any different from ’Made in Australia from Australian ingredients‘,” Levey says.
“One solution would have been to qualify the country of the characterising ingredient or ingredients. For example, a frozen vegetable mix made in Australia with some imported vegetables and Australian carrots and peas could state that it is ‘Made in Australian with Australian carrots and peas’,” Mr Levey says.
Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this Free Trade Scorecard series, we review Australian trade policy over the years and look at where we stand today on the brink of a number of significant new trade deals.
A combination of dumb luck, geographical isolation and a zealous stance on quarantine has kept Australia relatively free of the many pests and diseases that can be spread by international agricultural trade. As a result, it has been spared many of the health threats and extra farming costs – not to mention irreversible damage to native wildlife – that come with the arrival of these pests, or with changes to food safety.
Strict food safety standards are often seen as market protectionism or barriers to trade, rather than what they also are: important protection measures for the consumers who will eat the food. Yet within the current round of trade negotiations it is likely that the United States will continue to put pressure on Australia to water down its regulations.
While Australia’s current regulations are not perfect, it is important that any discussions about reforming them are conducted with an eye first and foremost on the health and safety of Australians, and are not unduly influenced by trade concerns.
Australia’s clean reputation
More than 70% of Australian agricultural income is from exports. Consequently, our exports must meet importing countries’ expectation of being “free” of pests and residues – meaning that no living pests (plant, animal, or disease-causing microbes) are found in the product, and that any chemical residues are within agreed international limits.
Australia has an excellent international reputation for clean and green production. Because we are free of many trade-hampering pests, and because we specialise in low-input, low-output production systems, this freedom has allowed Australia’s process for regulating chemical use in agriculture, veterinary products and humans, to differ from many other countries.
In many cases, this has raised the costs an individual farmer faces when using chemicals, and given them fewer choices for how to manage crops and livestock. But for some industries this combination of costs and choices has slowed the rate at which pests develop resistance to chemicals, and as a result total production costs are lower than their international competitors. It has also helped those same farmers meet international safety standards and maintained the pristine reputation of their products.
As shown below, Australia and the United States use antibiotics at about the same rate, yet the resistance level is more than 30% higher in the latter.
Australia’s relative pest- and disease-free status gives its exporters a significant market advantage, and allows them to demand a price premium amid increasing public awareness about food safety. For example, in 2004 and 2005 Australia dominated the lucrative Japanese market for beef and veal when Japan halted US imports in response to the BSE outbreak.
As food can be contaminated anywhere from paddock to plate, each stage of the process needs to be monitored. Although consumers' preference for safe food may not always translate to higher prices, their refusal to buy food identified as potentially unsafe can be immediate and catastrophic for any exporting country that is identified (even incorrectly) as a source.
Watering down regulations?
Australia has a clear interest in maintaining the integrity of its regulations for plant and animal health and food safety. But its more stringent regulations have long been in the sights of our trading partners, who would prefer that our high standards be “harmonised” with their less stringent ones, to “facilitate trade”.
With Australia now embarking on increased economic integration with the US thorough the Trans-Pacific Partnership negotiations, the question of Australia’s stringent food safety standards will no doubt be a key topic of discussion.
The United States has often argued that, in the absence of international standards of chemical use, American standards should be used. In 2007, this approach led Canada to lower its standards to match US settings.
Bringing chemical and food standards into line with the United States is clearly in America’s interest. But there is little evidence that harmonising Australia’s more stringent standards with America’s less stringent ones would benefit Australia, either economically or socially.
It is true that higher regulatory standards can often cost more. But the economic and social consequences of leaving Australians open to new and unknown food safety risks are likely to be much worse.
This article draws on research prepared for the 2014 Workshop “Ten Years since the Australia-US Free Trade Agreement: Where to for Australia’s Trade Policy?”, sponsored by the Academy of the Social Sciences in Australia and Faculty of Arts and Social Sciences, UNSW Australia.
In the past David Adamson has received funding from the CRC's for Tropical Pest Management (1994-1999) and the Emerging Infectious Diseases CRC (2009). He is currently part of a COST-ACTION proposal looking at the evaluation metrics of one-health issues.
The Federal Government will not be keeping its election promise to toughen anti-dumping laws due to complications with World Trade Organisation rules.
Prior to winning the election in 2013, the Coalition promised to protect Australian suppliers by making it easier to enforce anti-dumping actions against unfairly cheap imports that are seen to damage Australian companies in the marketplace.
In an address to the National Press Club in Canberra yesterday, Industry minister Ian Macfarlane said that the government would not be able to fulfil its election promise,The Weekly Times reports.
“We are trying to resolve those issues but can I say the euphemistic term reversal of onus of proof is not valid anywhere,” Macfarlane said.
“The Americans don’t do it, there is not another example of it in the world and it is not WTO legal.
“I can assure people that in terms of anti-dumping, we are introducing a streamline system which will be far more effective.
“But we are working our way through that and we expect to get to a final position in the not-too-distant future.”
Victorian-based fruit and vegetable processor, SPC Ardmona lodged an application with the antidumping commission on 10 July 2013, alleging that Italian tomatoes were being exported to Australia from Italy at margins that constituted dumping, resulting in material injury to local producers and reduced profitability/ lower sales volume for the business.
The Australian Bureau of Statistics (ABS) has revealed that over the September quarter, the price of food and non-alcoholic beverages has risen by 1.2 percent.
The ABS released the Consumer Price Index (CPI), which measures quarterly changes in the price of a ‘basket’ of goods and services.
Out of the 11 groups measured, the food and non-alcoholic beverages group experienced the most growth.
The CPI said the main contributor to the rise in the group for the September quarter 2014 was fruit (+14.7 percent). The rise was partially offset by a fall in bread (-3.0 percent).
Over the twelve months to the September quarter 2014, the food and non-alcoholic beverages group rose 3.5 percent. The main contributors to the rise were fruit (+19.2 percent), vegetables (+10.0 percent), restaurant meals (+2.2 percent) and takeaway and fast foods (+1.9 percent). The rise was partially offset by a fall in breakfast cereals (-6.0 percent).
In seasonally adjusted terms, the food and non-alcoholic beverages group rose 0.9 percent in the September quarter 2014. The main contributor to the rise was fruit (+9.3 percent).
Researchers from the World Health Organisation Regional Office for Europe have warned that the increased consumption of energy drinks may pose danger to public health, especially among young people.
The researchers reviewed literature on the health risks, consequences and policies related to energy drink consumption, and concluded that that concerns in the scientific community and among the public of potential adverse health effects caused by the increased consumption of energy drinks are “broadly valid”.
Caffeinated energy drinks were first launched in Europe in 1987, and have since boomed into a highly lucrative industry worldwide. Sales in the US have increased by around 10 percent per year between 2008 and 2012. Estimates from the European Food Safety authority suggest that 30 percent of adults, 68 percent of adolescents and 18 percent of children below the age of 10 consume energy drinks.
Studies included in the review suggest that caffeine intoxication can lead to a host of health dangers including heart palpitations, hypertension, nausea and vomiting, convulsions, psychosis, and in rare cases, death. The researchers noted that several cases in the USA, Sweden, and Australia have been reported where people have died of heart failure or were hospitalized with seizures due to excessive consumption of energy drinks.
According to the National Poison Data System in the US, between 2010 and 2011, 4854 calls to poison information centres were made in relation to energy drinks, and of those calls, almost 40 percent involved alcohol mixed with energy drinks. A similar study in Australia demonstrated a growth in the number of calls about energy drinks.
"As energy drink sales are rarely regulated by age, unlike alcohol and tobacco, and there is a proven potential negative effect on children, there is the potential for a significant public health problem in the future," wrote the authors.
As possible solutions to address the rising health concerns surrounding the dangers of energy drink consumption, the researchers suggest:
Establishing an upper limit for the amount of caffeine allowed in a single serving of any drink in line with available scientific evidence;
Regulations to enforce restriction of labelling and sales of energy drinks to children and adolescents;
Enforcing standards for responsible marketing to young people by the energy drink industry;
Training health care practitioners to be aware of the risks and symptoms of energy drinks consumption;
Patients with a history of diet problems and substance abuse, both alone and combined with alcohol, should be screened for the heavy consumption of energy drinks;
Educating the public about the risks of mixing alcohol with energy drinks consumption;
Further research on the potential adverse effects of energy drinks, particularly on young people.
The halal food market is expected to be worth US$1.6 trillion globally by 2018. With an average growth rate of 6.9 percent a year, it’s a sector that cannot be ignored, especially by food manufacturers keen to make their mark internationally.
While many manufacturers may question the value of gaining certification in Australia, where the Muslim community represents a relatively small proportion of the nation’s population, those companies looking to broaden their horizon beyond Australia’s shores would be well versed in the importance of meeting halal’s criteria.
What is halal?
Derived from the Koran, Islam’s book of faith, the word ‘halal’ literally means ‘lawful’ or ‘acceptable’.
Dr Muhammad Khan, chief executive officer at Halal Australia, a certification and accredidation company, told Food mag the best way to understand what halal is, is to understand what halal is not.
“As a general rule of thumb, everything is halal except what has been described as not halal.
“’Haram’ means ‘prohibited’ or ‘unlawful’, so products like swine or pork and its bi-products, and animals which are not properly slaughtered or they die before slaughtering, are not accepted as halal. So the blood is prohibited. Obviously alcoholic drinks and intoxicants are also not halal; carnivorous animals such as lions, tigers and monkeys are not halal, and certain other animals like scorpions, snakes and things like that – they are not halal.
“However, when it comes to processed foods, if it is contaminated with any of the products that I’ve mentioned, or their derivatives, including emulsifiers like 471 or 472, and also gelatine, they are not halal,” Khan says.
Certification is about ensuring these ingredients aren’t included in the manufacture of food products, and haven’t contaminated the manufacturing process in some way, for example, by being used on the same production line as non-halal products or ingredients.
With halal certification being more about what isn’t included in the product than what is, a product could be deemed halal without the manufacturer even realising or intending it to be. However, if that product is – or one day could be – destined for an export market, certification is worth considering, if not essential.
Why gain certification?
Similar to organic and kosher certification, halal certification guarantees Muslim consumers that the product has been grown/reared, processed and manufactured in a certain way.
Dalene Wray, general manager at OBE Organic, a certified organic and halal producer and exporter of beef, says certification allows companies to access new markets around the world.
“From a manufacturing point of view, it gives the manufacturer or the producer of the product more opportunities for sales of their product globally, if it’s halal certified.
“There are markets around the world that you can’t export to unless you have halal certification. So those would include the Middle East, Indonesia, Malaysia and to some extent Singapore. However, what we’ve found is that our halal certification is advantageous to all markets we export to around the world, even though to clear customs you don’t need it.
“For example the US. We don’t need halal certification to clear the US government customs, however we’ve found that the end users of our product in retail in America are Muslim consumers and they want our product to be halal certified,” Wray says.
She adds that certification allows OBE Organic to capitalise on the Australian government’s efforts to build relationships with certain export markets.
“We can take advantage of a lot of the activities that the federal and state government is doing to build relationships in those markets … and also we’ve got the Queensland government doing trade visits to the Middle East, so [we’re] really capitalising on a huge growth trend in opportunities in the Middle East markets.”
According to a report commissioned by the Dubai Chamber of Commerce, the global halal market is expected to be worth US$1.6 trillion by 2018, up from US$1.1 trillion in 2013. Halal food made up 16.6 percent of the total world food market in 2013, and by 2018 this is expected to rise to 17.4 percent.
The Muslim population represents roughly 23 percent of the global community – or 1.8 billion people – and is growing at a rate of about three percent per annum, says Halal Australia’s Mohammed Khan.
But certification isn’t all about servicing Muslim consumers or benefiting export markets; Australians – regardless of their faith or background – can benefit from the growing halal market too, he says.
“A lot of companies are happy to seek certification because they see it as adding value to the company, something that bring a lot of money and that also can increase the employability of Australians. Companies can sell a lot more products than they would normally sell [if they’re halal] and that obviously increases the demand for employment.
“It’s a win/win situation for everybody. Even if one person is employed by a company, and that person is a bread winner and either he or she can support their family in the halal way – halal means in a lawful way – it’s good.”
Spreading the word
Gaining certification is only one half of the equation, says Lisa Mabe, founder of Hewar Social Communications, a PR consultancy specialising in the global specialty food market.
“If you make the effort and spend time and money to earn certification, why would you not target the very people who are looking for that certification?” she says.
Mabe told Food mag that manufacturers exporting to regions with Muslim populations tend to focus on their relationships with retailers rather than the end users. They’re relying on distributors in foreign markets to market the product’s certification on the manufacturer’s behalf, but the message often doesn’t get through, she says.
“In terms of reaching consumers, I don’t see many products doing much at all … I really think there’s a lack of understanding of the potential of those markets,” she says.
“A lot of business that we do is private label, which means that the retailer puts their own label on the product, and they may or may not choose to identify the product as halal certified. Our job then is a little more difficult, and we have to articulate that message through our marketing, which is mostly done through social media,” Wray says.
“So we have a dedicated Facebook page just for marketing to Muslim consumers. We don’t know of any other food or beef company in Australia that has two Facebook pages: one for marketing to the world and one specifically for communicating with and sharing content that’s relevant to Muslim consumers.”
Content includes recipes, conversations about the Islamic holy month, Ramadan, and discussions regarding festivals celebrated in Middle Eastern communities.
Wray agrees with Mabe that Australian manufactures which have gained certification aren’t promoting it as effectively as they could, or should.
“OBE is one of the few companies in Australia that is leveraging and marketing the fact that our product is halal. We make a big deal of it; it’s all over our homepage,” she says. “There are not many other companies around the world that can produce certified organic beef that’s also halal certified.
“I don’t know if I could even count the number [of brands] on one hand that actively promote the fact that their product is halal,” she says.
Mabe came to Australia from the US about 18 months ago, and was surprised by the number of brands that had certification, however very few of them were communicating it to consumers.
“It’s a missed opportunity,” she says, especially considering Australia already has a reputation overseas for being a clean, safe food manufacturer.
Put the trust that this ‘clean and green’ reputation creates together with the reassurance that certification provides to a growing, potentially lucrative demographic, and Australian manufacturers are in an enviable position.
“[Muslim consumers] trust that if it’s from Australia, it’s safe. With its reputation of producing clean and safe food, Australia is in a unique position to not only participate in, but also lead in the halal food market,” Mabe says.
In the space of just six months, the Australian Competition and Consumer Commission has launched two major cases against supermarket giant Coles for alleged unconscionable conduct against its suppliers.
The cases involve allegations of various forms of unfair treatment of suppliers, including harsh and oppressive tactics directed at extracting supplier rebates for claimed supply chain savings, pursuit of payments to cover “profit gaps”, payments to cover “waste” beyond the supplier’s control and penalties for short or late deliveries.
The basis for the actions is essentially that such behaviour oversteps the mark in what would be regarded as legitimate or fair trading relations.
These actions are to be applauded. That is not intended as a comment on their likely success. Coles has said that it will vigorously defend the allegations and it goes without saying that the ultimate outcomes are highly uncertain. It should also be acknowledged that since the conduct alleged in these cases took place, Coles has been party to drafting of a code of conduct relating to retailer-supplier relations, and has developed its own supplier charter.
The ACCC’s cases do not involve allegations that Coles acted anti-competitively or, more specifically, that the conduct involved a misuse of market power. This is significant. Much of the debate surrounding the retail grocery sector in recent years has been focused on its competitiveness.
Competition at any cost?
Yet the “experts” keep telling us that the market is workably competitive and that consumers are benefiting – pointing to staples such as milk and bread prices. The ACCC reached this conclusion in its 2008 inquiry into the sector and the recently released Harper Review appears to share this view.
Essentially, the issue raised by the ACCC’s allegations is whether we want competition at any cost. Do we prize lower prices at the expense of other interests or values?
Social research indicates while we welcome productivity measures that increase competition and lower prices, we also feel uncertain about the extent to which free markets guarantee us an overall improvement in our quality of life.
We are concerned about the threat from competition to other interests that we value, like income equality, environmental sustainability and opportunities for domestic employment. Less tangibly, but as importantly, there is a sense that unbridled competition threatens our traditional attachment to the land, the iconic image of the ‘Aussie battler" and our cultural ethos of a “fair go”.
This general tension is played out vividly in the context of supermarkets. Consumer patronage of chains at the expense of smaller retail outlets has risen over the last decade, due to lower prices on a wider range of products, shopping convenience and flexible hours. But consumers have a “love/hate” relationship with Coles and Woolworths. They feel resentful and distrustful of the very shops that they patronise, often because they see the chains as undermining the character and amenity of their communities.
These sentiments are consistent with the evidence of general public mistrust of “big business”, a concern that large companies have excessive power and scepticism of the relationship between government and business.
In spite of demands by business to “cut red tape”, the public expects that economic activity will operate within a framework of rules, and strongly supports government intervention to protect consumers, communities, the environment and workers.
Competition is seen as being by its nature a brutal process, but we are not prepared to accept brutality and destruction in other spheres of social interaction. Nor should we in the context of market dynamics. In my opinion, there is a legitimate role for fairness in the way in which businesses deal with each other – as competitors, customers and suppliers.
It is worth remembering that despite its name, the Competition and Consumer Act is not just directed at providing for consumer protection and promoting competition. Section 2 makes it clear that it is intended to enhance the welfare of Australians, including through provision for fair trading. “Welfare” is not defined in the statute and while the contemporary pre-occupation of theorists in this field is with “consumer welfare”, there is not a compelling justification for defining it so narrowly.
Instead, “welfare” in this context could be associated instead with the more encompassing concept of “wellbeing”. After all, there is no shortage of evidence from the economic happiness literature that self interest and wealth maximisation (the premises of competition policy, narrowly conceived) are not necessarily a guarantee of greater happiness, or wellbeing in a holistic sense.
Fairness and competition
Outside of the purview of fairness for consumers, “fair trading” has been the sleeper in the last 40 years of development in our trade practices law. It has been largely missing from the policy debate and appears to have been a low enforcement priority. I am pleased to say that there are signs that this is changing.
The government has not just a productivity policy, where competition is the central tenet, but also a small business policy, which speaks of “the vital contribution that the [small business] sector makes to our economy and our communities".
Small Business Minister Bruce Billson MP proposes to extend unfair contract protections to small business (explicitly acknowledging the need to recognise an “ethical norm of fairness” in business dealings). This sits along with the proposed code of conduct governing contractual relations between supermarkets and suppliers and includes a proposed requirement of “good faith”.
The ACCC’s recent enforcement actions reflect its annual statement of enforcement priorities and demonstrates commitment to exploring the bounds of the prohibition on “unconscionability” as it applies to business-to-businesss transactions in the legislation. In its media release accompanying the latest Coles action, ACCC Chairman, Rod Sims, said:
“The ACCC has commenced these proceedings because it considers the alleged conduct was contrary to the prevailing business and social values which underpin business standards that apply to dealings with suppliers.”
But clearly there is still much work to be done, including tackling the big questions – such as what is “fairness”? In interpreting the unconscionability laws, the courts speak of “conduct against conscience”; conduct assessed against “moral and normative standards, broadly cast”. But how are those standards defined? They need to be given more content, no matter how daunting that task may seem.
The ACCC cases against Coles will not address all of the concerns that surround supermarkets in this country. But in bringing this litigation the ACCC is making a substantial contribution to an informed debate about what value should imbue business dealings.
Is it possible to reconcile the potential conflict between the inherently unfair process of competition and fairness in business dealings? Can we realistically have both? And, if so, when is one to be prized above the other? For example, would consumers accept higher grocery prices if it meant that farmers and suppliers could be treated more “fairly”? When and how do policymakers and the ACCC strike the right balance between these two concerns?
Should, for instance, government be responsible for fostering and protecting fairness in business dealings, or should we expect our business leaders to also take some responsibility? This expectation would recognise businesses not just as economic but as social and political actors in our society and place expectations on them accordingly.
It appears that some in the business sector recognise and embrace this. Despite the scathing criticism that it sometimes attracts and regardless of the outcome of the current cases, Coles deserves recognition for its commitment to regional communities through not-for-profit projects such as SecondBite (which it has donated $5 million in meals to disadvantaged families over the last four years).
These are questions actively being explored by our political leaders and those who are in the position to influence directly the nature of the policies, law and enforcement action that impact on our lives. We should support them in this endeavour – by continuing to engage in the discourse and ensure our voices are heard in a debate, the outcomes of which will have fundamental and long term implications for how we feel about being Australian.
Caron Beaton-Wells does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.
“The ACCC has commenced these proceedings because it considers the alleged conduct was contrary to the prevailing business and social values which underpin business standards that apply to dealings with suppliers,” ACCC chairman Rod Sims said in a statement.
“These proceedings will provide the Court with an opportunity to consider whether conduct of this nature, if proven, is unlawful in the context of large businesses dealing with their suppliers.”
Coles says that the allegations specifically concern a limited number of dealings with five Coles suppliers in the lead up to the Christmas 2011 trading period in addition to issues related to waste and damaged products. Coles says that communications with the suppliers referred to in the ACCC’s Statement of Claim were part of ongoing commercial negotiations involving a much broader, longer-term trading relationship with each supplier.
“These are normal topics for business discussions between grocery suppliers and retailers in Australia and around the world. Furthermore, commercial negotiations can be robust, regardless of the industry or sector,” the supermarket said in a statement.
“The allegations include a day previously called Profit Day. This was an administrative day where discussions were held with suppliers in relation to outstanding claims and additional business opportunities.
“These discussions, including those concerning profit gaps, were aimed at improving the profitability of products. Profit gaps can occur when a product’s financial performance fails to meet business plans or expectations discussed between Coles and its suppliers. Products with poor sales performance limit Coles’ ability to deliver value to customers.”
Coles also added that the failure of suppliers to deliver agreed quantities of stock at agreed times, high levels of waste due to delivering products too close to their use by date, mishandling/ packaging damage and the poor performance of products in general are all issues that are “actively managed” by the supermarket.
The proceedings have risen out of the same investigation that was instituted by the ACCC against Coles on 5 May in respect to Coles’ Active Retail Collaboration (ARC) program.
In June, Coles categorically denied claims it engaged in unconscionable conduct by forcing suppliers to pay an additional rebate.
As part of the Statement of Claim, the ACCC is seeking pecuniary penalties, declarations, injunctions and costs. The matter is listed for a directions hearing in Melbourne at 10am on Friday 24 October 2014 before Justice Gordon.
Food Innovation Australia Limited (FIAL) has released an interactive eCatalogue of Australian food and beverage suppliers and overseas buyers.
The tool is aimed at giving Australian food and beverage producers greater access to overseas buyers and more opportunity to expand their supply chains beyond Australian shores.
It was developed in response to frustration from both Australian producers and international buyers with the industry’s past methods of fostering valuable international relationships.
With more than 350 Australian suppliers already on board, including major brands such as Arnott’s, Bundaberg Brewed Drinks and Weis, FIAL is calling on Australian food and beverage producers interested in export opportunities to register.
The eCatalogue will give suppliers access to valuable information on why their business may or may not appeal to overseas buyers through its unique rating system, which allows buyers to rate suppliers on their unique selling proposition, product range and company website.
FIAL general manager market development, Najib Lawand says the benefits of buyer feedback to Australian businesses are invaluable and could help remove the barriers many Australian suppliers face when initiating their export business.
“Buyer feedback helps our producers improve their ability to sell products in international markets, and understand exactly what buyers, particularly in key Australian export markets throughout Asia and the Middle East, are looking for,” Lawand said.
“Often our suppliers don’t understand why overseas buyers aren’t interested in working with them, and it could often be something as simple as improving their website that helps change that.
“Through the eCatalogue, FIAL wants to provide the mechanism that will help Australia’s suppliers grow their markets internationally, and also help Australia appear more attractive to overseas buyers.
“Increasing interest in our food and beverage industry from high-end Asian and Middle Eastern supermarket buyers means now is the time to make the connecting process between them and our suppliers as seamless as possible.”
The eCatalogue currently covers 24 industry categories ranging from dairy, meat and livestock, to fruit and vegetables, chocolate and confectionary, nuts and seeds, even cat and dog food.
With support from Austrade and various state government agencies, Lawand says FIAL plans to expand the eCatalogue’s features to include online training resources and tutorials that will help suppliers identify and sell their unique offer, prepare winning presentations for export buyers, demystify free trade agreements and create websites that will generate buyer interest. The eCatalogue will also be optimised for mobile devices for easy access while travelling, include translation services for Chinese, Japanese and Korean buyers, and offer detailed reporting on buyer behaviour.
“We hope to give our suppliers as much information as possible to assist them in growing their business while making Australia as attractive as possible for overseas buyers in the food and beverage industry. The eCatalogue is an important step forward for the industry,” he said.
For more information or to register with FIAL’s eCatalogue, click here.
Food and agribusiness and advanced manufacturing have been identified as priority areas in the government’s Industry Innovation and Competitiveness Agenda.
The government announced in the report that it intends to create Industry Growth Centres in five promising industries (including food and agribusiness and advanced manufacturing), at a cost of $188.5 million over four years.
The centres will aim to enable businesses to self-select and grow, by removing impediments and unlocking potential at the industry level. They will encourage organisations to work closely together to unlock commercial opportunities and reduce risk.
They will also encourage businesses to form commercial research and development partnerships with each other, and with the research sector.
The report said that a food and agribusiness Industry Growth Centre could help small and medium food processing businesses in the following ways:
Allow them to research Asian consumer preferences about taste, texture and packaging.
Food scientists would help them to develop the desired product characteristics.
Provide them with specialist advice on intellectual property protection, marketing and exporting in differing Asian markets.
Work to improve the efficiency of the regulatory framework, while ensuring it maintains and supports Australia’s reputation for safe food production.
Subject to quality of the expressions of interest, the remaining three industries with centres will be: mining equipment, technology and services; oil, gas and energy resources and medical technologies and pharmaceuticals.
The food and agribusiness industry will also be one of the priority areas for the Industry Skills Fund.
According to the Industry Innovation and Competitiveness Agenda, the fund will “support the training needs of small to medium enterprises not readily met by the national training system.”
Larger companies may apply to access the fund, but will be expected to make contributions towards the cost of training.
The government has also established a $50 million Manufacturing Transition Programme in order to assist Australian manufacturers shift to higher value activities and improve competitiveness. The programme offers grants for manufacturers that invest in projects to expand or transition into higher value or knowledge based manufacturing activities.
International research is mounting on the case for a group of management tools – known as high performance work practices – for improving business performance. And the evidence is particularly compelling in manufacturing.
So why isn’t the Australian manufacturing industry abuzz with these practices?
We are not talking about millions of dollars of investment in R&D or capital. We are talking about a set of human resource practices that are focused on:
improving employees’ knowledge, skills and abilities
motivating employees to perform, and
providing employees with the opportunity to contribute to how their work is done.
It presents quite a paradox: manufacturing businesses, on the whole, are not implementing a set of practices that will boost performance.
The Australian evidence
Small and medium sized manufacturers (companies with less than 200 employees) stand to gain significantly from high performance work practices – they have the labour and capital foundations yet are small enough to be responsive to changes in demand and new innovation developments.
A study of more than 1,000 manufacturing SMEs, commissioned by the Australian Government Department of Industry, has shown while most workplaces have at least some of the practices in place, there is still a long way to go before they are reaping the full benefits.
Research shows performance effects are amplified when bundles of high performance work practices under each of the three areas listed above are deployed as a system. However, only 37% of manufacturing SMEs were identified as having a “moderate” system in place, that is, at least four practices of each of the three types. More concerning was that we did not find a manufacturing SME in Australia that had a “strong” system in place.
This is despite the fact that the survey found for every additional high performance work practice that was used there was an increase in profits, quality of products and services, labour productivity, innovation, and customer satisfaction, as well as an improvement in relationships at the workplace.
What’s causing the low adoption
So what is behind this “performance paradox”? Why aren’t more manufacturing SMEs implementing some relatively simple practices to train, motivate, and involve their employees?
Adopters of high performance work practices are more likely to operate in growing or stable markets, compared to “non-adopters” that tend to be located in declining or turbulent markets.
These two groups also seem to face different business challenges. SMEs that have adopted a system of high performance work practices tend to face intense competition both nationally and internationally and have got into the practice of benchmarking themselves against their competitors. These businesses are also more concerned with the retention of their skilled workers and innovation.
On the other hand, non-adopters face lower levels of competition on a more localised basis. The managers in these businesses also seem to be more concerned with survival, the financial climate, and weak demand.
So it seems that SMEs that have adopted the practices have been forced to look outward and think inventively about their management practices. However, this does not exempt the non-adopters – if they were to adopt more of the practices they too could compete and perform at a higher level.
Secrets to success
Manufacturing SMEs could do with more information and support to assist with the adoption of high performance work practices. Businesses that had successfully adopted the practices were more likely to seek advice from professional bodies such as consultants and employer or industry associations.
But it’s important to note that the workplace managers we spoke to who had successfully operationalised the practices did not recognise their management practices as a “high performance work practices system”. Although some did recognise that their practices were mutually reinforcing and had multiple benefits for business performance.
An important success factor was that the take-up of the practices had been the result of a workplace champion, either a senior manager or business owner who had driven their adoption and continued to look for ways to improve.
But most importantly, we found that no one high performance work practices system looked the same. The way they are operationalised can differ significantly across workplace contexts. The practices can be tailored to the needs of individual workplaces.
But let me leave the last word to a team leader at Dowell Windows in Brisbane where there has been cost reductions and increases in productivity as a result of these practices:
“The employees, especially the new ones, are coming up with ideas that we haven’t thought of. We’ve done things a certain way for so long but now the employees are coming up with suggestions that we’re taking on board every day. It’s great”.
Brigid van Wanrooy does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.
Late last month, managing director Terry O’Brien said the industrial action would have a significant impact on operations.
“The potential threat of industrial action has come at a time when harvesting is at its peak,” he told ABC News.
“We believe Simplot has proposed a very fair and reasonable offer for our employees considering the economic climate and industry challenges."
Simplot last year warned its employees that the Bathurst and Devonport facilities were under threat of closure, with the competitive industry and high Australian dollar rendering them uncompetitive.
"If insufficient opportunities are identified, we will be forced to close our Bathurst plant after the next corn season. Our Devonport plant will be required to produce a five year improvement plan with satisfactory outcomes or face the prospect of a longer term (three to five year) closure," O’Brien said at the time.
Just a few months after this announcement, it was confirmed the Devonport plant would remain open for the next three years, allowing it to fulfil new contracts made with both 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.
AUSVEG has backed comments from the Victorian Farmers Federation which criticise authorities over their failure to enforce Country of Origin Labelling breaches.
In an interview with The Weekly Times earlier this month, president of the Victorian Farmers Federation (VFF), Peter Tuohey said that not a single Victorian business has received a fine for breaching Country of Origin Labelling laws.
AUSVEG spokesperson, Michael Bodnarcuk said that the industry body is concerned by the “flagrant disregard” by some fresh food retailers in Victoria with relation to the implementation of Country of Origin Labelling laws.
“These laws were introduced to protect consumers and their ability to decide on the origin of the product that they will consume,” he said.
“Studies have shown that the majority of Australians would prefer to buy locally grown fruit and vegetables and we believe that consumers are being robbed of this ability through improper labelling practices.”
Bodnarcuk said that a strong regulatory framework and proper policing of relevant laws was vital to ensuring that customers know where their food is coming from, and for overall health of the Australian fresh food industry.
“The enforcement of Country of Origin Labelling laws needs to be strong enough to prevent produce of dubious origin being brought in to Australia with ambiguous labelling,” he said.
With major employers heading offshore and employment numbers decimated, what will emerge from the ashes of Australia’s manufacturing industry? And what role should manufacturing play in the federal government’s competitiveness agenda? In this Reinventing Manufacturing series, we look at the case for retaining the industry, and how it can transform itself into a high performance, advanced and productive sector.
Over the last half century, manufacturing employment as a proportion of total employment has been in long-term decline.
Although many have predicted the eventual death of manufacturing, and some have even suggested it is inevitable, there are a number of reasons why policy makers should invest in the future of manufacturing.
Manufacturing and economic prosperity
Writing in The Conversation earlier this year, Professor Tim Mazzarol highlighted a clear link between economic growth and the presence of a viable manufacturing sector. This reflects a number of factors, including a direct relationship between the expansion of manufacturing and flows of new direct foreign investment, a critical connection between manufacturing and the development of new technologies and other innovations; and manufacturing as a driver of national productivity growth.
This does not appear to be true for most service-based industries. While these sectors are generating an increasing proportion of jobs, they do not appear to be associated with the same aggregate effect on productivity growth or innovation. Based on this evidence, Mazzarol concluded that:
“…the Australian economy cannot maintain long term growth and high living standards on the back of agriculture, mining and services alone. Manufacturing still matters.”
The quality of manufacturing jobs
This virtuous link between economic performance and manufacturing appears to extend to the quality of jobs. Speaking on the importance of manufacturing for the resilience of the the US economy, Princeton economist, Danni Rodrik has suggested why this is the case:
“We may live in a post-industrial age, in which information technologies, biotech, and high-value services have become drivers of economic growth, but countries ignore the health of their manufacturing industries at their peril. High-tech services demand specialised skills and create few jobs, so their contribution to aggregate employment is bound to remain limited. Manufacturing, on the other hand, can absorb large numbers of workers with moderate skills, providing them with stable jobs and good benefits. For most countries, therefore, it remains a potent source of high-wage employment.”
But is this true for Australia? Has manufacturing continued to deliver high-quality jobs, even in a period where it has been forced to undergo significant restructuring and reform?
Over the last 20 years, manufacturing employment has halved, slipping from 14.2% of the workforce to just 8.2% – a fall of almost 50% – which has been most concentrated in the states of Victoria and South Australia. In terms of the size of the total labour force, however, the decline in employment has in fact been far less dramatic. In net terms, since 1994 employment in the sector has fallen from 1.1 million to approximately 950,000 workers – or a decline of around 15%. In fact, manufacturing remains the fourth largest sector in the Australian economy in terms of total jobs, behind healthcare and social assistance, retail, and construction.
Perhaps most surprising has been the resilience in the quality of jobs generated by the manufacturing sector. The key indicators of job quality provided by the Australian Bureau of Statistics data are employment status and whether employees receive paid leave entitlements. In manufacturing, well over 80% of jobs are full-time, and the majority of these come with the full suite of employee benefits, including paid leave.
In other words, there has been a relatively low propensity to turn manufacturing jobs into less secure jobs through casualisation or the use of independent contractors. While these proportions have declined since 1993 – the sector has generally maintained a high proportion of standard jobs. Moreover, Jeff Borland’s analysis of ABS data shows manufacturing is now of roughly equal importance across all states, not just the traditional manufacturing heartlands of Victoria and South Australia.
We can compare this situation to the quality of jobs created in those industries that have been responsible for generating enough jobs to absorb Australia’s expanding labour force. The retail sector accounts for around 11% of the labour force – or 1.25 million employees. Of these just over half are employed part-time (50.8%) or receive paid leave entitlements (53.4%). In construction, while the overwhelming majority of workers are employed full-time, fewer than half receive paid leave.
The future of manufacturing
All in all, the evidence overwhelmingly suggests the Australian manufacturing sector has, even in a period of decline, continued to represent a core source of economic prosperity for Australia – and should continue to do so. In short, it has outperformed many other sectors in terms of its contribution to Australia’s sustained economic performance and its capacity to generate quality jobs. It still produces around 6.5% of Australia’s GDP.
Does this mean there is a strong case in favour of ongoing government support in the form of protections and subsidies for the sector (notably the automotive sector)? In my view it does not. Protection will accompany the continued decline of manufacturing as it fails to respond to real economic forces that are signalling the need for change.
Nor does it mean government – or industry leaders – should leave the sector to limp along with no support or assistance in re-inventing itself.
The Australian manufacturing sector needs both market-based competition and concerted action from governments, industry leaders, unions and those cities and regions dependent on the health of sector for their future. This remains an issue that we have yet to fully grapple with. The sooner we do so the better we will be able to manage the transition without significant costs or unnecessary disruption.
The Centre for Workplace Leadership has received funding from the Commonwealth Department of Industry to investigate the diffusion of high performance work practices among manufacturing SMEs in Australia.
B&E Poultry Holdings – a repeat offender when it comes to underpaying staff – has again been reprimanded by Fair Work, having to backpay a group of three Taiwanese backpackers.
The backpackers were in Australia on 417 working holiday visas and employed to work at a facility in Ormeau in Queensland.
They started work at 2.30am and regularly clocked up to 60 hours a week for a flat rate of $17 an hour. The Fair Work Ombudsman found they should have been paid between $21 and $33 an hour, depending on their shift.
The workers, employed as casuals, were short-changed $12,347, $7,702 and $5,513 respectively, as well as being underpaid casual loadings, shift penalties, overtime rates and weekend penalty rates.
The employer – B&E Poultry Holdings– has previously been required to back-pay tens of thousands of dollars to other staff members, and since 2012, the Fair Work Ombudsman has required the company to hand over more than $140,000 to 15 other employees.
As a result of the latest contraventions, the company has entered into an Enforceable Undertaking with the Fair Work Ombudsman as an alternative to litigation. It has reimbursed all outstanding entitlements, issued a written apology for the breaches, and posted a workplace notice advising other employees of its contraventions, giving a commitment that such conduct will not occur again.
The company is also required to undertake workplace relations training on employee entitlements under the Fair Work Act and to engage independent, external consultants to review and report on its compliance at six monthly intervals for the next two years.
Recent public comments of senior Australian government ministers suggest they are increasingly confident a free trade agreement with China will be concluded by the end of the year.
For its part, Beijing has also offered hints an agreement will be reached within the same time frame. The speculation is a grand signing will take place in mid-November when Chinese President Xi Jinping will be in Brisbane for the G20 meeting.
Given that governments from both countries have staked their credibility on such a schedule, it is more likely than not pen will be put to paper next month.
But the significance of an Australia-China FTA is at least as much about diplomacy as it is about economics. The reality is that the Australia-China economic relationship does not really need an FTA to flourish. Agreements on all access in various sectors are concluded constantly without need for it to be part of a grander sounding FTA. Meaning the excitement behind the likely conclusion of an agreement will exceed the actual significance of such an agreement.
Bored into agreement
Let’s begin with what an FTA actually is. Rather than comprehensive economic agreements covering broad aspects of one’s economy, they tend to end up as rather piecemeal agreements covering specific sub-sectors that negotiators chose to target. Additionally, rather than expressing a broad meeting of minds, philosophies and policies between two economies, they contain extremely detailed provisions.
For example, there might be something about “processed dried stone-fruit” attracting a lower tariff than “semi-processed dried stone-fruit” with appendixes indicating what “processed” and “semi-processed” means, what constitutes a “stone-fruit”, what proportion of the product has to have dried fruit in its ingredients for it to be classified as “dried fruit”, and which stone-fruit are excluded from the provisions etc. It is no wonder that trade negotiators tend to admit the side that becomes bored first tends to lose.
Moreover, when one signs an FTA, especially with China, they tend to be treated as much as political and diplomatic agreements as well as economic ones. In this context, the Tony Abbott government has understood the “me too” mentality in Northeast Asia and played intra-Northeast Asian jealousies well. With Australia having signed FTAs with Japan and Korea, China pushed its own negotiators to fast-track an agreement with Australia.
Foreign investment thresholds
However, since Beijing needs the FTA for political and diplomatic purposes, it will want the appearance of a breakthrough in China-Australia relations. This will come in the form of China insisting that no Foreign Investment Review Board (FIRB) process is required for Chinese investment into Australia under one billion dollars, whether this be investment by Chinese state-owned-enterprises (SOEs) or private firms.
Such a threshold has been applied to Japan and South Korea under Australia’s FTAs with those countries. As China wants the FTA to demonstrate that it too has a special economic partnership with Australia, even if there are strategic and political differences, Beijing will insist on being treated the same as other Northeast Asian neighbours in this context.
For Australia’s part, this was always only really a political sticking point that Canberra will likely relent on. As surveys such as the annual Lowy Institute Poll demonstrate, there is widespread public suspicion of Chinese foreign direct investment (FDI), most of it being undertaken by state-owned enterprises, even if the reasons for such suspicions are not well formed or articulated. In opposition, Abbott appeared to share some of these fears. But in government, his tone seems to have changed. After all, FDI entering into Australia still has to play by Australian rules and follow Australian laws and regulations.
The reality is that the vast majority of Chinese FDI applications into Australia have been approved over the past decade, despite some high profile knock-backs. All indications are the Abbott government will accommodate Beijing’s insistence to raise the threshold to one billion dollars knowing that almost all Chinese FDI applications would have passed the FIRB test in any event. Besides, Canberra will be happy to reduce this hurdle for Chinese firms since FIRB is only an advisory body, albeit an influential one, and the relevant minister can still knock back FDI applications on national security or other grounds.
In return, Australia will receive better access to the Chinese domestic market for our diary and agricultural goods, but this would have occurred in any event without an FTA since provincial governments in various Chinese markets have been agitating for high quality imports in these sector and would have formally and informally made it possible for Australian firms to more easily access those provincial markets.
When it comes to Australian access to the services markets such as legal and financial, we are likely to receive some concessions. But the real barriers to entry in these Chinese markets are local ones at the regulatory and social levels, and an FTA will not reduce these barriers.
The bottom line is that both countries want an FTA for diplomatic reasons. The major, headline concessions that both sides will offer carry few costs to the conceding country, would have occurred in any event, or were already happening in practice. If the acceptable standard is that an FTA should “do no harm” at the very minimum, then that low threshold will be met in November.
John Lee does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.
Prime Minister Tony Abbott said that he will announce more cuts to red tape within the food manufacturing sector over the coming month.
In an address to industry leaders on Wednesday, Abbott said that he recognises the importance of Australia’s food and manufacturing sectors, and that he will work with industry to remove any ‘burdens’ that are preventing manufacturers from prospering, ABC News reports.
"My commitment to you is to keep working with you to remove any of the burdens that are holding you back because I want Australia's food and grocery industry to prosper and succeed,” he said.
"We all need your industry to prosper and succeed.
"And I pledge myself to do whatever I humanly can to make that possible."
Abbott’s announcement comes days after the Australian Food and Grocery Council (AFGC) released its annual State of the Industry report which highlights the food and beverage manufacturing industry’s turnover, employment, international trade, capital expenditure and research and development. In the report, the AFGC has re-emphasised its call to reduce regulatory burdens.
"Barnaby Joyce has put the case that the market opportunities of Asia are so vast that even if we doubled, tripled or quadrupled our production in fruit, vegetables, meat and groceries, we would still only provide a fraction of the needs for food in our region and Barnaby is absolutely right," he said.
"The market's there are so vast and the opportunities are so great that there really is unlimited potential for this industry.
Abbott said that Australia’s food and agriculture industry is vital to the nation’s economic future.
"You can't have strong communities without strong economies to sustain them and you can't have a strong economy without profitable private businesses."
AMWU said that while it would be a last resort, it is still prepared to take industrial action which could include strikes and overtime bans.
Managing director of Simplot, Terry O’Brien told ABC News that he was hopeful that the talks will help resolve the issue, and in turn avoid any industrial action as it would impact heavily on the operations of the processor as harvesting is currently at its peak.
The ACCC has called for issues around enforceability and coverage to be addressed in the proposed grocery code of conduct, before a conclusion is reached.
Addressing the Australian Food and Grocery Council’s Industry Leaders Forum in Canberra, ACCC Chairman Rod Sims said a code of conduct that provides clear rights and legally enforceable norms of conduct would be of considerable assistance to food and grocery industry participants.
“However, many of the protections of the proposed Code are qualified and retailers and suppliers are able to agree to ‘contract out’ of Code provisions,” Sims said.
“This raises an issue of whether the Code will address the problems which industry has identified if norms of conduct in the Code are able to be traded away, rather than always enforceable.”
Sims also backed recent comments made by the Chairman of the Productivity Commission that Australia should stick with its successful strategy of favouring the many over the few by focusing on removing barriers to competition generally, rather than pursuing policies that favour particular sectors.
“I agree with him completely. So, it seems, does the Harper Panel review.
“We strongly agree with the review panel that there is a need to reinvigorate Australia’s competition policy, and ensure that it evolves.”
Sims welcomed the Harper Competition Review Draft Report and discussed proposed areas of microeconomic reform where the food and grocery sector stands to benefit.
“On road infrastructure provision and pricing, we support the panel’s recommendation on introducing cost-reflective road pricing linked to road construction, maintenance and safety,” Mr Sims said.
“Importantly, more effective road user charges can be offset by lower fuel taxes which currently account for one quarter of fuel prices.
“The ACCC also welcomes the draft recommendations to deepen competition in liner and coastal shipping services. This will also reduce your production costs."
In discussing proposed microeconomic reform, Sims rejected the notion all the low hanging fruit has been picked, and that all the really important reforms have been made.
“The reforms to shipping are low hanging fruit, and can be implemented quickly. And the road reforms are fundamental to our economy.”
Sims also welcomed the review panel’s consideration of Australia’s competition laws.
“In doing so, they have clearly had regard to established international approaches to setting the appropriate boundaries of such laws. Australia’s competition laws are behind international best practice in important respects.”
Sims broadly welcomed the Panel’s recommendation on “concerted practices”, the misuse of market power, and in relation to merger assessment.
In reporting on the ACCC’s recent compliance and enforcement activities, Mr Sims listed outcomes in area of credence claims including beer, pork, honey and free-range eggs.
“When making promotional claims about food or grocery products, the ‘who’, ‘what’, ‘where’ and ‘how’ must be accurate.”