SPC asks for government help

Canned food company, SPC, has asked the government to step in and help save its Goulburn Valley growers by imposing an emergency tax on imported tin fruit.

The company told growers at meetings earlier this month that their produce would not be accepted from 1 May, with the high exchange rate and a decline in export markets causing SPC to dramatically reduce its fruit intake.

According to weeklytimesnow, the federal government has received an urgent request from SPC, asking for special protection measures, which could include an emergency tax on imports, allowed under World Trade Organisation rules.

The rules allow a government to intervene when a rise in imports threatens a domestic industry.

Goulburn Valley fruit growers yesterday attended the first of two mass meetings to discuss their future prospects, with funds from SPC ceasing this Wednesday.

Many growers are expected to apply for a farm finance assistance package, announced by federal Agriculture minister, Joe Ludwig on the weekend.

 

Australian food processors falling like “dominoes”: AUSVEG

The influx of cheap, imported produce to Australia is continuing to rise, placing significant pressure on local producers.

 A new report from the Department of Agriculture, Fisheries and Forestry (DAFF) indicates that processed fruit and vegetables contributed up to 15 percent of food imports between 2010 and 2012, with New Zealand produce making up the bulk of the imports.

According to Ausveg, the value of imported processed fruit and vegetables has increased by $264 million over a five year period.

AUSVEG spokesperson, Hugh Gurney, believes the government needs to take action in order to secure a future for Australian growers.

“Our sector is facing a crisis. Like dominoes, Australian food processors are toppling over in their tracks. Government action is critical if we want to continue to feed our own country into the very near future,” said Gurney.

He believes the increase in imports may result in significant health risks, as New Zealand imports Chinese produce which is then exported to Australian shores using confusing labelling techniques.

“New Zealand imports Chinese produce, processes it in New Zealand and exports it to countries like Australia under the guise of ‘Made in New Zealand with local and imported ingredients,’” he said

“The safety and quality of vegetables produced in China cannot be guaranteed because they are not grown to the strict standards required here in Australia. It has been reported that Chinese farmers have sprayed produce with formaldehyde – a toxic chemical used to preserve human flesh – to preserve it during periods of unrefrigerated transport.”

Gurney believes a complete overhaul of the Country of Origin Labelling legislation should be made in order to help consumers make educated decisions at the checkout.

Suggestions made earlier this year by consumer group Choice focused on simplifying the labelling system into three categories after a survey indicated that 90 percent of respondents were unsure of where their food comes from.

A Greens Bill from February this year which addressed the issue was criticized by the Australian Food and Grocery Council for failing to protect Aussie jobs and focusing purely on food ingredients. The council believed the bill ignored the value-adding process which takes place with processed foods.

The AFGC claimed that the Bill could potentially mislead consumers and remove any export advantage Australian food manufacturing companies have in promoting premium Australian brands in Asian markets in particular.

The new DAFF report comes at a sensitive time for Australian producers with many farming operations across the continent either in receivership or extreme distress due to the rising Aussie dollar and the continuation of adverse weather conditions.

Parasites and imports – a sticky situation for Australian honey producers

The last few years have been a tumultuous affair for Australian beekeepers. The threat of varroa mite, transhipping and older generations leaving the industry is making it more important than ever to support our local producers. 

Australia produces some of the world’s finest honey with a yield of up to 140kg per hive per year. This is due to a number of factors including a high volume of eucalyptus which is a fantastic nectar producer and the fact that we are so geographically distant from the rest of the world, preventing us from the introduction of harmful parasites and diseases.

But can Australian honey producers continue to rely on our geographical advantage to warn off parasites such as the industry destroying varroa mite?

“It’s going to happen eventually,” explains Lamorna Osborne, president of the Illawarra Beekeeping Association.

“The whole rest of the world has got it.

“We have already had two instances on ships that verroa mite was found on, one at Kurnell and the other at Darwin,” she said

Collapsing colonies the world over 

According to Osborne, Australia is the only country in the world that does not have the varroa mite problem.

A typical beehive consists of anything from two to four stackers with the baby bees on the bottom stack. The varroa mite, which is about the size of a match head, sucks on the blood of the baby bees which weakens the whole hive and its resistance to parasites.

There have been instances in America where entire bee colonies have suffered from what is widely being referred to as ‘colony collapse disorder’, where complete bee colonies have abruptly disappeared. 

Osborne mentioned that she had spoken to a number of South American bee keepers who were “happy if they can even get 7 kilos per hive”. 

Another challenge that the bee industry is facing is the Asian honey bee which has already come through Cairns according to Osborne. 

“It got in via a mast in a ship and is actually frequently swarming. It actually gets in and robs all the honey from the beehives so the bees starve to death. So that’s already here.”

An ageing industry is taking its toll

The hurdles for Australian beekeepers do not end there. Transhipping, low productivity and the older generation hanging up their coats is also proving to take its toll on this fragile industry.

“The older generation are leaving the industry and no younger people coming on,” explains Casey Cooper, Councillor of the NSW Apiarist Association.

There have been initiatives in place to encourage the younger generation to participate, however to make a viable future in the market is becoming more and more challenging.

“It is a niche market and as more things come along, more diseases more problems, it’s a harder and harder industry to break into and then make it successful,” he said. 

“If you’re established, it’s not quite as hard on you, but to come in today into the industry, and start and make a go of it, it would be a lot harder than it was 20-30 years ago.

“We have had a low productivity in the last 3 to 5 years. Imported honey coming in has not made our price rise because there is enough honey to supply the markets in the country. Imported honey is one big problem we’ve got to the bee keeping industry.”

Liane Colwell from the NSW Beekeeping Association also explained that transhipping is creating an inferior product.

“Chinese honey is exported to India, Malaysia and other countries and then imported into America and Australia. Their standards are quite different. They use antibiotics that we don’t use, there is often residues like chloramphenicol, and the other thing is that they often adulterate with sugar syrups, so it’s not honey,” she said.

“There is a big difference in feeding sugar and syrup to bees, and adding it to honey that is already finished.”

Colwell explained that honey sold in the supermarkets demand a cheap price and as a result, honey is imported and local producers lose out. 

“If you’re a small operator there is no possibility that you can sell in a supermarket,” she said.

Both Colwell and Cooper emphasised the importance of trade and consumer shows such as the Royal Easter Show and local farmers markets as key channels to connect to the public and pass on knowledge. 

It’s now more important than ever to buy local and support our Australian producers.

Another manufacturing company hits the wall: Starmaid Group

Plastics manufacturer, Starmaid Group, has been placed in receivership – the latest of several recent business collapses in the industry.

According to SmartCompany, Starmaid manufactures storage products and uses premium food-grade materials to manufacture plastic houseware and professional products across 50 brands, including Fresh Seal, Clea and Hobbibox.

PPB Advisory has been appointed as receivers and managers over the Starmaid Group, and is calling for expressions of interest in the business.

It's been a difficult 12 months for the manufacturing industry, especially food manufacturing, with a number of companies entering voluntary administration, including confectionery brands Chocolate Fare, and the iconic Darrell Lea, not to mention Gourmet Food Holdings – owner of Rosella.

Windsor Food Factory also announced its collapse earlier this month, closing its Cowra cannery and leaving many employees and local growers shortchanged.

The popular Byron Bay Cookie Company also entered voluntary administration recently, with one disgruntled supplier telling Food mag he's owed $30,000.

The high Australian dollar, cheap imports from overseas and the rising influence of the supermarket duopoly have all been listed as contributing factors to manufacturing's woes.

 

Inghams sold to TPG for $850m

Poultry processor, Inghams Enterprises, has been sold to a US private equity group, TPG, for approximately $850m.

Before sealing the deal with TPG, Inghams was in negotiations with other prospective buyers including Chinese agribusiness company New Hope, and US private equiteer Blackstone.

According to The Australian, major shareholder Bob Ingham planned to sell the family's land holdings and horse-racing interests in the deal, which was originally expected to fetch more than $1 billion, but will now retain them after TPG requested they be excised from the sale.

The existing management structure at Inghams will be retained and Ingham said it will be business as usual for the company, founded in 1918, and now under the direction of chief executive officer Kevin McBain and his team.

"An important part of the decision for me was finding a buyer who would ensure that our customers will continue to receive the highest level of service and our employees would be well looked after," Ingham said. "I believe I have found that in TPG."

The Inghams sale is the biggest private equity deal in the Australian market since the sale of Primo Smallgoods in 2011, which garnered more than $900m, and could indicate renewed confidence in the food manufacturing industry, which has struggled in recent times with competition from imports and pressure from the supermarket duopoly to lower prices.

 

Masterol Foods rising to the challenge despite tough times

The high Australian dollar and competition from foreign imports hasn't stopped Masterol Foods expanding its range of products in the hope that its customers will soon see the value of home grown, healthier alternatives.

Masterol Foods manufactures and distributes vegetable oils, processing aids and ingredients to food manufacturers, from local operations through to national and international brand names.

While Nathan Cater, managing director at Masterol Foods, says the family-owned business is smaller than some of the giant manufacturers in the industry, Masterol has developed a number of products previously unavailable in the Australian market including a range of fluid shortenings for the baking industry. The new range of shortenings are healthier, and perhaps most importantly, Australian.

“They are essentially a different spin on normal bakery margarines and shortenings which are traditionally palm-based products. Instead of being palm-based, which often equates to 50 to 60 percent saturated fat, our pastry and biscuit shortening is Canola-based so saturates are down to 25 or 26 percent, and it is predominantly Australian grown and made content,” said Cater.

“Another advantage is that a liquid formulation means manufacturers are able to use significantly less when compared to traditional shortenings or margarines. It enables manufacturers to design healthier bakery products because you can use up to 20 percent less and the shortening itself has around half the level of saturated fat.”

The pastry and biscuit shortening is suitable for a range of applications and Masterol is hoping to get some of the big brands onboard, hopefully giving imported palm-based products a run for their money.

"Many bakery margarines and shortenings come from Asia, and as a result of the exchange rate, they're cheap too. We have been able to develop Australian grown and manufactured alternatives while remaining competitive with the price of imported product,” said Cater.

"[Palm-based products] are the incumbent in these sorts of applications, so we're more selling our products based on them being an innovative approach – number one, the pricing is competitive. Number two – they’re suited to medium- and large-scale operations because there is no need for cutting and weighing blocks of margarine or shortening, and three – it's going to offer your customers a healthier product because bakery products tend to have a lot of saturated fat in them.”

Other than that, Cater says manufacturers can continue doing what they're doing, making top quality bakery products, but with the knowledge that what they're producing is healthier and is supporting the local food manufacturing industry.

"The main thing that I think will impress people is that the products they're making and the quality they're currently getting from their formulations won't change," he said. "It will taste as good or even better than what they're making now."

While Masterol prepares to release its new range of shortenings to the market, it also has a range of locally designed and manufactured products for the confectionery industry which, again, offer alternatives to imported products.

"We are heavily involved in the confectionery industry with regard to glazing agents for confectionery and chocolate products – products such as jellies and scorched almonds.

“For example, the jellies are coated with an oil to stop them from sticking together and drying out," Cater told Food magazine. “We are the only people in Australia that make most of these products. All panned chocolate and confectionery, for example scorched almonds, liquorice bullets and chocolate-coated sultanas, need to be glazed. We are the only people in Australia that make the shiny stuff."

While proud of these industry-leading products, Cater says Masterol’s biggest accomplishment is simply the fact that it manufactures top quality, home-grown products for use both here and abroad.

“We’re designing and manufacturing these products here as opposed to importing them. Without innovation, I don’t think it’s possible for local manufacturers to make significant inroads in the current market – the only way to succeed is if there is a commitment to research and development and a degree of innovation in what you’re doing.”

 

Japan’s new import controls could take a bite out of Aussie beef

The Japanese government is easing restrictions on its beef imports from America and France, which could mean more competition and a tougher sell for Australian producers.

Japan was once the largest importer of US beef, but after a case of mad cow disease was detected in 2003, supply was halted.

Since then, Japan has only accepted beef over 20 months of age, but according to thewest.com.au, earlier this week Tokyo announced the age cut-off would be relaxed to 30 months on 1 February, if the health minister's council gives approval.

The new restrictions will apply to beef from the US and France, which was previously completely banned. Beef from the Netherlands has also been banned up until now, with Japan in talks with the Dutch government to set an age restriction of 12 months on its beef.

According to Meat and Livestock Australia (MLA) Japan is Australia's largest beef export market in volume and value terms, so the easing of import restrictions is likely to cause a stir amongst Australian producers.

And its not like our beef producers don't already have enough to worry about, with continuing arguments about live exports and the difficulties surrounding the location of abattoirs causing them grief in recent times. Read more here.

 

Only Australian Groceries blames unpatriotic shopping for Rosella’s woes

The on-line shopping website Australian Groceries, or OnlyOz, has blamed a lack of support for Australian brands for the collapse of Gourmet Food Holdings, owner of Rosella.

Katie Hooker, co-founder of Only Oz, has commented on the lack of willingness by consumers to buy domestic products.

“I challenge everyone to only buy Australian made from Australian owned companies this Christmas,” she said in a statement. “You will not only be giving great products, but you will also be keeping Australians employed.

“We can not make the government buy Australian made cars or Australian made paper products… We can all chose to buy Australian this Christmas. You never know, you might be preventing another Australian manufacturer from going into receivership!”

Others, including the Australian Manufacturing Workers Union, have blamed the appeal of cheap imports for difficulties facing Australian food and beverage manufacturers.

Gourmet Food Holdings was placed in receivership earlier this month, with Ferrier Hodgson acting as receivers and managers. Gourmet employs 275 people in Australia and New Zealand.

Russia lifts ban on kangaroo meat imports

Russia has eased its import restrictions on kangaroo meat, a move welcomed by the Australian kangaroo meat industry.

Australia’s largest kangaroo meat supplier Macro Meats has secured permission from the Russian quarantine authority to begin exportation of their product after their site and operations were inspected over a three week period, the ABC reported.

Restrictions were put in place four years prior following Russian claims that the trade presented food safety concerns, citing high levels of E. coli and salmonella.

Government and industry groups have extensively lobbied the restrictions for the past four years after the suspensions brought the industry to its knees, wiping out more than half of the $120 million export sector.

Russia once accounted for 70 percent of exports for the commercial kangaroo industry and insiders said the decision to lift the ban is estimated to bring a $200 million boost to the kangaroo meat industry, marking the move a significant turning point.

"I think what they want to do is just start it and see how it goes and then gradually let more in depending on how we perform," Macro Meats manager Ray Borda said.

"There's a lot of weight on our shoulders to do the right thing."

However, this result to remove the ban isn’t just assisting the meat production industry.

Land owners and farmers are now also looking at the industry win as a way to control kangaroo population numbers.

New South Wales Bombala Shire mayor Bob Stewart is currently lobbying the state government to allow kangaroo culling after favourable seasonal conditions has seen populations swell, the ABC reported.

“With the better seasons here in the last two or three years, the kangaroo population has grown dramatically,” Stewart said.

Stewart stated that an increase in demand for kangaroo meat may now attract professional hunters.

“If we can get commercial value out of many in the kangaroo population it is only going to benefit all the landholders with the problem we have,” he said.

“I'm sure once there is a market and demand, then we will have people come in and take advantage of the situation which I think will be advantage to everybody,” he said.

Earlier this year Food Magazine reported that Australia’s commercial kangaroo industry is the world’s largest consumptive mammalian wildlife industry. Calculated on a ten-year period, an average of three million adult kangaroos are killed each year in the rangelands for pet meat, meat for human consumption and hides.

At the time a representative from the Kangaroo Industry Association of Australia said “I think we are starting to have to seriously consider the end of the kangaroo industry nationally.”

 

Bleak outlook for WA beef producers

After confirmation that Indonesia will be reducing its beef import quota next year, leaders in the WA cattle industry have returned from a trade mission with serious concerns.

According to thewest.com.au, Federal agriculture minister, Joe Ludwig, confirmed Indonesia will reduce its beef import quota to 80,000 tonnes next year, with Australia's live exports falling from 283,000 this year to 238,000 in 2013.

West Australian producers are expected to be the hardest hit by Indonesia's push towards a self sufficient beef industry.

Dale Park, president of WAFarmers, who attended the mission, said Indonesia wont be able to sustain a beef industry as it's already eating into its breeding stock. He added that the trade mission visited empty feedlots and a Jakarta abattoir which has cut processing by 75 percent because it's running out of cattle.

"Virtually all the feed lots are empty and even when they do get this latest quota in, they will still be operating at about 25 per cent of capacity," he said.

Park also raised concerns for local producers who have invested in cattle for the Indonesian market, many of whom are still struggling in the wake of the federal government's temporary ban of live exports last year.

According to thewest.com.au the export ban created doubts about the reliability of exports from Australia and caused Indonesia to look elsewhere.

 

Pork producers face tough competition this festive season

Imported pork products and confusing labelling standards are making it difficult for Australian producers to stand out from the crowd, says leading Australian butcher, Adam Stratton.

Stratton, runs the Tender Value Meats chain in Sydney and is urging consumers to buy local products when doing their Christmas ham shopping.

"Around 22 million kilograms of ham is sold in Australia at Christmas time, but unfortunately, not all of that is sourced from Australia.

"It is important that customers know that the ham they serve for Christmas lunch might have spent three months on a boat being shipped in from overseas," he said.

Stratton said the vast majority of Australians prefer to buy Australian made and produced goods, but are often confused by misleading labelling.

"Ninety percent [of Australians] would rather buy Australian products, and the labelling on the packaging should be more clear about what's imported and what isn’t," he told Food magazine.

"[For example], on the back of a packet it might say ‘Made from local and imported ingredients’ and the local ingredients are the salt and the water, when they cure it here, but the imported product is the actual ham. So it gets a bit confusing."

Stratton is urging producers and consumers to embrace the pink Australian PorkMark logo, which guarantees the product is exclusively Australian.

"If we're going to be fair dinkum and we want people to buy Australian we need to label them correctly and not leave silly little loopholes … What you’ve got to look for is the pink Australian pork label. That is a 100 percent guarantee that it's an Australian product. If you want to buy Australian, look for that pink sticker," he said.

 

Price wars and imports threaten to burst Veuve’s bubble

Australia's second favourite champagne house, Veuve Clicquot, is concerned its reputation will suffer thanks to big retailers' price wars and parallel imports.

The infamous price wars in Australia are a concern to Veuve Clicquot's president, Jean-Marc Lacave, but, according to SMH, he said the situation is worse in other markets.

"We see much more dramatic situations around the world than what we see in Australia, in other markets such as Europe, UK and France it is much more aggressive," he said.

With Christmas around the corner, Coles and Woolworths, which control most of Australia's liquor market through brands including Dan Murphy's and Liquorland, are expected to battle it out for the cheap champagne crown, with serious discounts already on offer.

Veuve Clicquot Brut Yellow Label is currently on offer at Dan Murphy's for $55.70 per bottle or $66.66 from Liquorland Direct.

"We have seen [in] many examples around the world that it is not a few dollars that is going to dramatically improve sales so it's better for the value chain to keep the margin for the retailers," Lacave said. "And, for our brands, considering the quality, command a premium and the consumer will understand this as long as we maintain the quality."

Another issue for champagne producers is the availability of cheap drops on the grey market, where the product can be imported by individuals or businesses at a cheaper rate than that asked of official distributors.

Owned by Moet Hennessy, Veuve ranks second in Australian sales of French champagne, behind Moet, but is still enjoying double-digit sales growth rates.


 

Food for thought: key challenges for our industry

Australia is well into deficit when it comes to its food processing trade.

The Australian Food and Grocery Council's annual State of The Industry report (using ABS figures and KPMG's research) released in September showed we imported a net $2.8 billion worth of food and beverage, grocery and fresh produce.

More worryingly, total industry output dipped 4.5 percent for 2010-11 and its number of employees went down by 2.2 percent.

"The sector's growth, competitiveness and ability to create jobs are under threat," Gary Dawson, the AFGC CEO, said when the report was released.

"The findings of State of the Industry 2012 serve as a warning to policy makers at all levels of government that the Australian food and grocery manufacturing sector – Australia's largest manufacturing sector – is facing an environment where input costs are rising on everything from commodities to labour to energy, and retail price deflation continues to cut margins, placing the sector under increasing pressure".

Why are things in such an apparently bad way?

The high dollar – as has been the case with almost every segment of manufacturing – has presented problems. Terry Davis, the CEO of Coca-Cola Amatil – the parent company of SPC Ardmona, Australia's biggest fruit and vegetable processor – has said that supermarket private labels, the high dollar and taxes were driving many in the industry out of business.

"We all know high labour costs are an issue," he told a Rabobank agribusiness event, while pointing out the payroll taxes were a massive pain. "Tell me how a tax on employment fosters sustainability?"

Dan Tehan MP, a federal Liberal backbencher, is another outspoken critic of taxes on food manufacturers.

Tehan, the member for Wannon and a former adviser to federal Nationals leader Mark Vaile, believes that the carbon tax risks sending industries such as diary overseas.

"In recent government policy, obviously the carbon tax harms our international competitiveness and the government has hung the food manufacturing sector out to dry," Tehan told Food magazine. He compares it unfavourably to the EU's treatment of its food processors.

"The European Union not only gives its agricultural slash food processing sector subsidies, it also allocates them with free permits under their carbon tax."

Tehan also believes that the National Food Plan, which is in the green paper stage and ended its consultation period on September 30, will do nothing to address the problems food manufacturing faces.

"We've seen job losses in this area and yet government hasn't done anything to help what is key part of the whole food chain, where you value add, add additional income and employ people.

"At this stage it just seems to be a lot of motherhood statements. And one would hope that it would address the tough issues that need to be addressed if we are to ensure the long-term future of food manufacturing in Australia."

The food manufacturing industry's malaise isn't exactly news. The AFGC and consultants AT Kearney released 2020: Industry at a Crossroads report a year ago, predicting 130,000 jobs in the sector would disappear by 2020 if nothing was done, and that 55 per cent of manufacturers were pessimistic about the future.

The SPC Mooroopna plant's closure last year made big news. The beginning of the year saw Heinz stop tomato sauce production, closing its Girgarre factory, which also had people talking about the decline of local food processing. As did the announcement that Kerry Ingredients would close its Altona factory.

What's behind the industry's woes? Of course, exchange rates hurt. Others have pointed to the rise of private label brands in supermarkets.

In-house supermarket products have been around for three decades or more, but has only recently become so popular. IBIS World research published this year suggested a quarter of groceries were private labels.

Critics, such as the AFGC, say that private labels are getting in the way of Australian products getting to consumers, robbing Australian makers of shelf space, being increasingly produced offshore, and forcing them to whittle their margins away to compete on price.

"The Australian food processing sector is being destroyed," said David McKinna, a food industry consultant and principal of McKinna et al.

"Australia is going the same way as the UK and US where private labels are up to 70 per cent of the supermarket range."

For all the pessimism, are there many opportunities for Australian food and beverage manufacturers?

Certainly, with the Asian Century singled out as a big potential boost for future sales. Wine exporters are seeing excellent improvements in sales to China, the fastest growing market for Australian wine. The growing Asian middle class was singled out as a huge opportunity for Australian processed food in the recent Prime Minister's manufacturing task force report, describing it as "one of the few areas of manufacturing where high distance costs are outweighed by other factors, in this case Australia's natural resource advantage."

The task force report recommended initiatives like a Food Industry Innovation Hub to best identify what the market's marketing and taste needs might be.

"Food is singled out, it's something that's a comparative advantage in Australia," Professor Roy Green, a member of the task force, told Food magazine. "And food manufacturing is an important value adding element of food production."

Our biggest manufacturing segment has a huge potential to do well, despite the current difficulties around cheap imports, input costs and taxes, and the purchasing habits of supermarkets.

"If we can't do that, well, what can we do? That's a kind of basic product that we really have to be successful in," said Green.


 

Australian labels to drive wine growth: Nielsen

Australian drops are expected to drive growth in wine sales in the coming years, with generic labels and imports tapering off after years of dominance.

Generic labels and foreign imports – including New Zealand's ubiquitous sav blanc – have been front runners in Australia's wine industry for years, but market researcher Nielsen told the Newcastle Herald Australian wines are expected to take the lion's share of sales growth over the next three years.

Nielsen is predicting that Australian branded wines will account for 70 percent of the $400 million sales growth to 2015 and this will represent the best opportunity in a decade to thrive.

Sales growth for Australian wines will be driven by consumers' increasing preference for premium bottled wine over cask wines, which five years ago represented 60 percent of wine sold off the shelf. This figure is now down to 50 percent, according to Nielsen.

Foreign imports and generic labels are both expected to run out of puff with people expected to move towards family-owned brands, thanks to their thirst for premium wines.

Nielsen's findings come after Rabobank released its quarterly wine report for the three months to October this year. The report found that the global over-supply of wine from 2004 to 2010, which caused prices to plummet, is set to end this year.

It also found that low wine grape harvests in Europe will send prices upwards and Australian producers – who in some areas are expected to generate good yields in 2013 – will have the opportunity to make up for this shortfall. Read more here.

 

Peach growers to lose thousands from SPC Ardmona cuts

Australian peach growers say they were only informed of SPC Ardmona’s decision to cut its peach quota by almost 20 per cent after they had begun preparing for season.

The growers say the short notice will leave them out of pocket, with some individual businesses set to lose tens of thousands of dollars.

SPC Ardmona, Australia’s last remaining major Australian-owned fruit processor, says it genuinely believed it had informed all growers in advance, and will work to ensure communication methods improve in future.

The company cut its peach quota by 17 per cent due to “significant fall” in consumer demand.

It said the cut was necessary due as sales have decreased by 14 per cent, despite increased activity and promotion.

SPC Ardmona also pointed to the high Australian dollar as part of the reason for the cut to the quota, as well as the cheap imports flooding the market as a result of the supermarket price wars.

Furthermore, the high Australian dollar has impacted on export opportunities for the products, while increasing competing pressures from cheaper imports.

SPC Ardmona is a subsidiary of Coca Cola Amatil which has announced expansion plans in its drinks business as previously reported in Australian Food News.

Earlier this year the company announced it would be embracing new packaging technology to reduce costs.

Maggie Beer slams supermarket dominance

Celebrity chef and food producer is the latest industry insider to accuse the major supermarkets of failing to support Australian food growers and manufacturers.

“So many Australians seek the cheapest alternative in food, and perhaps this is exacerbated by the big two [Coles and Woolworths], our duopoly, that pits one against the other in price wars, that see the farmer suffer. We have to do something about that,” she told the International Year of Co-operatives conference in Port Macquarie last week.

Beer’s pate, quince paste and ice creams sell through major supermarkets and independent retailers at a higher price than other comparable item, due to their high quality standard and use of Australian ingredients.

She said that while most Australians say they support Australian made and owned products, their purchasing behaviour proves otherwise.

''It's interesting Australians say they will support Australian-made and Australian-grown, but will we?”

“We support what's marketed most, and we so often support what's cheapest, especially with food.''

Beer was awarded an Order of Australia this year, after finding recognition for her cookbooks and television series focussed on cooking.

Beer has echoed the statements of Independent Queensland MP Bob Katter, who earlier this year told Parliament that the major supermarkets are killing our farmers.

''If we don't support our farmers, we will not continue to enjoy the freshness and the diversity of the produce we have now,'' she said.

''I have to say flavour, seasonality, ripeness, can not travel a long way.

Beer is in a good position to comment on the realities of farming, since she owns a farm in South Australia’s Barossa Valley with vineyards, olive groves, quince orchards and a soft fruit orchard.

“I know we live in a global market, but our local farmers can not compete against the imports of a global market when it comes to the cost of our labour.

''It's important that we pay a proper wage to a farm worker that not only sustains a family but sustains farming communities – whole communities.''

Terry Toohey Australian Dairy Farmers Director, told the Food Magazine Industry Leaders Summit earlier this year that the impact of Coles and Woolworths’ price wars will continue to drive farmers away.

"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, because it's not profitable for my children,” he said.

"If I was old and had children ready to take over the farm, I will tell them blue in the face not to come into agriculture.

“And that's pretty sad after 107 years on the one farm."

“It’s an unfortunate reality that milk price is a dollar.

“[It’s] simply unsustainable for all involved in the fresh food market.

“You can see the dairy farmers’ dairy families already suffering for Coles’ tactics.

“Given the sheer size of the supermarket duopoly, over 75 per cent of the market is between the two powers, and they are wielding that Australian marketplace and the majority of Australian suppliers, particularly to the fresh food industry,” he said.

“In NSW, my state, I see farmers being asked to sign contracts for 3 cents a litre than their previous contracts," he said.

“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 products 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.”

Beer also joined the myriad of critics of Australia’s current labelling laws, saying they make it very difficult for consumers to understand which products are locally-grown.

''We were bottling some of our olives,” she explained.

“The salt came from South Australia and we had some of our own red wine vinegar in the jar and we were labelling it and then we found out we could not say 'Produce of Australia' because the jar came from overseas.''

Australian entrepreneur Dick Smith, who launched his own food company over a decade ago, has also voiced his concerns about the ability for local companies to compete against cheap imports.

“The freedom we’ve usually had in Australia is that you could go to a supermarket and decide if you wanted to buy Australian, imported, high-quality, low-quality, it was up to you," he said earlier this year.

“ALDI has taken that decision away.

“The problem is that because so many of us go to ALDI because the prices are cheaper, Coles and Woolworths will copy.

“The reason ALDI’s so successful is you can’t compare a price.

“What Coles and Woolworths will do to compete with that, which they must do because they have Aussie mums and dads as shareholders and the board will get the sack if they don’t keep making profits each year, so they will go to more and more products where you can’t compare a price.

"I call that ‘extreme capitalism,’ and it’s a disadvantage to consumers."

Do you agree with Maggie Beer's comments? How can we fix this problem?

Image: Australian Traveller

End to cheap wine prices is near: global decline in grapes

A massive global over-supply of wine from 2004 to 2010 that caused prices to plummet looks set to end this year.

Ronobank has released its wine quarterly report for the three months to October this year, which reveals the global wine grape production throughout the world has dramatically reduced between 2004 and 2006.

It also found that demand has begun to increase again following the slump during the global financial crisis.

The massive global oversupply of wine for four years up to 2010 that caused prices to plummet let to many growers to ripping up vines.

Now, the Robobank report says due to the extremely low wine grape harvests in Europe, prices will once again trend upwards.

While Californian grape growers in particular are expecting bigger and better than average harvest in 2012, the bank’s analysts say this will not be enough to make up the gap from the European market.

France, Italy and Spain are all expected to report wine grape harvests drastically lower than 2011 levels.

The reduced harvest in those countries amounts to the total annual production of Chile’s wine.

The wine production from the whole of the Southern Hemisphere, besides Chile and South Africa, was quite low in 2012, Robobank found.

It could mean Australian producers, particularly in the south-east of the country, where good yields are expected for the 2013 harvest, will have a chance to make up the wine shortfall.

In further good news for Aussie growers, grape prices have posted their first significant rise in four years, and there was a rise in wine export volumes of 3.6 per cent in the first half of 2012.

But the value of wine exports did fall almost three per cent per cent wine bottled locally struggled to compete with bulk shipments.

Bulk exports is cheaper than bottled wine exports, with average import rates as little as 43 cents a litre in France up to $184 per litre in Sweden in 2011.

Rabobank noted that Australia's wine export data has been skewed Treasury Wine Estates decision earlier this year to ship its wine in bulk to the UK for bottling there.

In July, the world’s largest glass packaging supplier, Owens-Illinois (OI), revealed some Australian employees could lose their jobs, as the US-based company reassesses the business in light of slower beer and wine markets.

The company’s second quarter report revealed the slowdown of beer and wine sales in Australia could force the company to reconsider closing local plants and offering redundancies.

''Given the continued sluggishness of the Australian wine and beer markets, as well as the fact that we are still negotiating major customer and union contracts, further capacity actions may be necessary,” O-I Glass chief executive Al Stroucken said.

 

Aussies buying less private label products

In a small win for Aussie food companies, big-brand grocery item purchases have increased, while private label products have decreased.

A new Neilson poll shows that private label grocery items have fallen for the first time in five years.

The big food companies who have been struggling against the rapid increase in home brand products will surely be hopeful the 0.7 per cent drop in private label grocery sales from this time last year is possibly an indication that Australian consumers are committed to keeping these companies alive.

The Nielsen report found ‘household penetration’ of the supermarket’s own ‘home brands’ have dropped from 95.5 per cent in 2011 to 94.8 per cent this year.

The findings back reports in recent months that found nearly half of all shoppers go out of their way to buy Australian-made produce, while more than a third buy Australian wherever possible.

The news comes after previous studies earlier this year found the number of private label products being purchased in Australian supermarkets is increasing.

The report also found that while consumers are becoming more dedication to food brands, they are not demonstrating the same loyalty to the supermarkets, with the rate of cross-shopping increasing to over 88 per cent in 2012.

Supermarkets ‘providing an enjoyable experience’ and ‘staff service’ were factors impacting store loyalty, Nielsen Retail Industry Group Executive-Director Kosta Conomos explained.

“As retailers continue to focus on the same initiatives such as private label, loyalty reward cards or low shelf prices, shoppers are increasingly seeing them as ‘hygiene factors’.

“Unless further differentiation occurs among Australian retailers, we’ll continue to see very high penetration levels and cross-shopping, with low levels of loyalty.

UN not doing enough for food security: Rudd

Kevin Rudd has slammed the UN food agency for failing to do enough for food security and warned that fears around a repeat of the 2007-08 food crisis are justified.

The former Prime Minister, who was infamously ousted by the Labor party in 2010 in favour of Julia Gillard, and then became Foreign Minister, has always had a particular focus on international affairs.

He told a conference in Hong Kong yesterday that the United Nation's Food and Agriculture Organisation (FAO), needs to provide effective advice, rather than just release "another set of reports".

"The fact that we're having this kind of conference is an indictment of the failure of the FAO," he told the meeting – titled Feeding the world: Asia's Prospect of Plenty – which was organised by The Economist magazine,” he said.

"The execution of its mandate, which is food security, must now be done.

"A practical program against the billions of people who are hungry in the world today needs to be done – not another set of reports, not another set of committees.

“Action, action, action," he told reporters later.

In September last year, when he was Foreign Minister, Rudd was warning of similar food crises, saying wars and political uproar could become a reality if Western counties don’t address global food security.

Rudd said then that food security to be on the agenda of the Commonwealth Heads of Government Meeting in Perth the following month, as well as the G20 summit in Cairns last November.

He also called then for a push for trade liberalisation to provide access to give poor African countries access to European and US markets.

Earlier this month the FAO called for "swift, coordinated international action" to deal with the increased cost of maize, wheat and soybean, which has sparked fears of another food crisis.

While there was plenty of joking about the “tragedy” of a shortage of bacon as a result of the US droughts, the unseasonable weather has actually already created immense problems with the availability of foods that could have flow-on effects for some time.

And it’s not just in the US, as low monsoon rainfall in India led the FAO to cut its global 2012 rice output forecast.

The UN estimates that the world population will increase by two billion by 2050.

Asia will account for half the increase, and with a rising middle class that will demand better food, Prime Minister Julia Gillard urged farmers and suppliers to embrace the population increase and become the “Asian foodbowl.”

Farmers and agricultural experts slammed the suggestions, saying current regulations are hindering the industry, not helping it, and significant changes would have to be made make the Asia an export possibility the government wants.

"Hunger is the world's most challenging problem," UN World Food Programme China director Brett Rierson said.

"There is a common perception that hunger is an African problem, but two-thirds of them are from Asia so hunger is here in Asia," he said.

From $4.5bn profit to $2.7bn deficit: Aus food sector in crisis

New figures released this week have proven what most in the food processing sector already know: the industry is close to collapse.

Financial specialists KPMG and the Australian Food and Grocery Council (AFGC) joined together to compile the report that offers a snapshot of Australia’s food sector.

And the figures are frightening.

Seven years ago, the sector was one of the most successful and profitable in Australia, producing an excess of $4.5 billion.

In the 2010-11 period it recorded a deficit of $2.7 billion.

In groceries alone, the deficit was almost $10 billion as Australia exported $4.6 billion of product and imported $14 billion in the 2010-11 year.

Australia a net importer of food

A recent Food Alliance report showed that Australia has become a net importer of processed fruit and vegetables, as the price is lower, but unfortunately, the quality often is also.

The Food Alliance report labelled local producers "vulnerable,” as they struggle to compete with the cheap imports, but if the Australian dollar fell to US55 cents, those cheap imports would suddenly become far more expensive.

A $1 tin of Italian tomatoes could become a $5 tin of tomatoes, Elders chief executive Malcolm Jackman warned.

Australia’s peak produce representative body AusVeg has been warning of this for some time, as has the Australian Manufacturing Workers Union.

In February, AusVeg’s Simon Coburn told Food Magazine that a decision by Coles to slash the price of produce “had the makings” of becoming the next milk price wars.

National Manufacturing Workers Union’s Jennifer Dowell also warned that produce and dairy farmers cannot afford to wait around, losing money, as supermarkets import products, in the hope that they reverse the behaviour and start using local products instead.

“My concern is that if we lose food sovereignty, if we lose control of our food chain we become hostage to other countries supplying our food,” she said.

“How ridiculous is that? In Australia we have the ability to produce the best food in the world, so how are we getting into this situation?

“Once these companies go, they won’t some back, they’re not going to come back and rebuild factories and businesses because Australia is upset after it basically kicked them out in the first place.

“If we rely on imports, and a country decides it is going to give its own market priority, as it very well should, what do we do? Where do we go?

“At a time when the world is saying Africa needs to have food sovereignty, we’re actually participating in a process where we won’t be able to feed our own people.

“We will be reliant on importing food.

“When we finally hit the wall and find that everything is coming from overseas and we no longer have any Australian food industries, it will be too late.”

How much is actually imported?

The supermarkets like to trumpet their success stories and gloss over their failings when it comes to local produce and their treatment of suppliers.

Coles made a song and dance about its decision to use Australian-grown produce in its own brand frozen vegetables, but omitted the fact that none of its 13 private label tinned fruits and vegetables are imported.

For its part, Woolworths imports 13 of 14 home-brand frozen vegetable lines, and 19 of its 21 private label tinned fruit and vegetable lines, according to the most recent report.

Woolworths released a statement labelling the Choice findings “inaccurate,” while a spokesperson told Food Magazine this morning that “we’re working very closely with the Australian agricultural sector, and we buy lot of produce from Australian farmers.”

“96 per cent of our fresh fruit and veg is from Australia.

“71 per cent of our own label products com from Australia, and that’s increasing.

“We’re now importing home brand rice from NSW and our focus is on increasing Australian grown products.”

The spokesperson did not answer questions, however, on whether the price the supermarket is paying local producers for those products is fair, or whether it shoulders some of the responsibility for the dire state of the food sector.

Coles accused Choice of pursuing a "public policy agenda on labelling” when the report was released, but did not respond to requests for comment by Food Magazine this morning.

"We know farmers are struggling": Coles GM

Last week Coles’ corporate affairs general manager Robert Hadler did acknowledge that local processing was in trouble, telling an agribuiness summit in that the high Australian dollar and increased labour costs were "catching many food manufacturers in a cost-price squeeze".

"We're quite concerned … we want security and sustainability of supply, particularly in processed product, so we've upped our game in working with local food manufacturers," he said.

Jackman has warned that it may not be just the supermarkets that are to blame for the state of the industry, but rather popular television shows, including Farmer Wants a Wife and Masterchef, are causing the damage.

"If we're not careful, MasterChef and My Kitchen Rules will all be made with produce produced overseas," he said.

“Long-term investment in agriculture, skills and people working in the field were needed to "drive the future.

"We can't afford to see production and food processing disappear out of Australia because the high Aussie dollar is making imports so much cheaper," he said.

He said food producers and processors needed to educate the public about why they should be willing to pay more for local produce.

How can we fix this important Australian industry? How would you make it profitable again?

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