Australia's food manufacturing industry worries rising costs will push supermarkets to use more imports
There are calls for more federal government help for the industry to protect local businesses and jobs.
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00:00When you do the grocery shop, are you looking for bargains?
00:10Or checking labels to see where the food you're buying comes from?
00:14No, I try and choose Australian all the time, 100 per cent.
00:17No, I generally look.
00:19No idea today, because it's too cold and I really don't care.
00:23It comes down to cost really, because I only work part time.
00:30Ken Malib is on the other side of the grocery business.
00:36His factory in Melbourne bakes biscuits for supermarkets across Australia and for export.
00:42He and his wife have owned the operation for 20 years.
00:46When we bought it, we were in a small building with five staff.
00:49We now operate out of three or four buildings with approximately 35 to 40 staff.
00:56But the last few years have been tough.
00:58The pandemic pushed them to the brink, and now the rising price of ingredients is hurting.
01:04No one is prospering.
01:05We are absolutely in a survival mode.
01:08Manufacturing feels very unloved right now.
01:10Ken Malib says the industry needs government help to boost exports and improve productivity.
01:16And unless you want food manufacturing to go the way of the car manufacturing and the
01:20dodo bird, you'd want to be doing something pretty fast and pretty serious.
01:25Across the sector, wages, energy and compliance costs are all up.
01:31The ability to pass on price hasn't matched that because of a, the power of the supermarkets
01:37and b, the cost of living.
01:39Consumers just won't pay more for products.
01:41We're going to need to see some changes and some incentives, whether it be in government
01:45policy, in regulation.
01:47The profitability of food manufacturing has fallen by $3 billion over the last decade.
01:54The Food and Grocery Council fears without an intervention, Australia's food processing
01:58sector will decline, resulting in cuts to its 276,000 strong workforce, particularly
02:06in regional areas.
02:07We produce an abundance of agricultural output, but from a processing perspective, that's
02:12where the risk is that we end up not being able to manufacture in Australia and needing
02:17to do more importation.
02:19It's already happening.
02:20SPC has had to cut back on production.
02:24Canned fruit has been substituted by cheaper products from South Africa and China.
02:30And this trend has continued across a number of the food categories.
02:34If Australia becomes increasingly reliant on imported groceries, disruptions to supply
02:39chains could result in empty supermarket shelves, like during the pandemic.
02:45Typically it will be solved in a short time and even if it doesn't, because it's not
02:50an essential item, you will find a replacement.
02:54But there could be cost implications.
02:57Imported product is susceptible to all of those global shocks because then the Australian
03:01dollar changes and as that changes, the price of imported product can go up significantly.
03:09In Hobart, this jam and sauce manufacturer trades on being a locally made product.
03:16They'd love to hear the story about our fruit in our jams being Tasmanian.
03:21As the business grows its interstate markets, it too is struggling with rising costs.
03:26Another email arrived this week, freight's going up again.
03:31Unlike bigger manufacturers, the factory is small enough to make changes quickly.
03:36Our owners are actually investing in new equipment to help support efficiencies and actually
03:41allow us to try and save some money.
03:43But like larger manufacturers, Simon Wise is hoping for a lift in support for the food
03:48processing industry.
03:49It protects a lot of things, doesn't it?
03:51It protects jobs, it protects the farmers, there's a lot involved in this.
03:56In a statement, the Federal Government has indicated its support for food and beverage
04:00manufacturing.
04:01It says it's investing billions of dollars in innovation grants and research to help
04:07businesses grow.