Australian Food and Grocery Council CEO Tanya Barden says research by the Council shows the value food and grocery manufacturing brings to the economy and local communities. While there is “hope and opportunity” for the sector, it also faces significant challenges and needs “attention and focus” to ensure its ongoing viability, Barden told Food & Drink Business.
A quarter of all manufacturing in south-east Melbourne is in the food and beverage sector. Food processing is now the fifth largest economic contributor to five federal electorates: Aston, Chisholm, Deakin, Hotham and Isaacs.
In northern Victoria, food and grocery processing is now the second largest contributor in terms of output and the eighth largest employer across the four federal electorates of Mallee, Bendigo, Indi and Nicholls. It generates $9.23 billion a year and employs 14,221 people.
“Each year we present a national State of the Industry Report which shows national figures for turnover, employment, capital investment, export and all those things. AFGC CEO Tanya Barden told Food & Drink Business the sector employs more than 320,000 people and 40 per cent of them are based in regional centres.
But what we’ve looked at is where the sector largely based and where it has real impact on communities in terms of jobs and local economic contribution. We want to raise the profile of how important this sector is,” Barden said.
Food and grocery manufacturing businesses in south-east melbourne:
- employ 16,190 workers;
- pump $1.29 billion of wages and salaries into the region; and
- contributes $11.1 billion in annual output.
Barden said: “Food and grocery manufacturing employers in south-east Melbourne range from major global companies like Chobani in Dandenong or Simplot in Pakenham, through to strong Australian brands like Carman’s Fine Food in Cheltenham.”
The state of food manufacturing
Barden said overarching figures show a “fairly resilient” industry but there was a drop in turnover in 2017-18 and a “continuous drop-off in capital investment for a number of years”. “We see pockets of growth, innovation and export growth, but the overarching story is one of some really significant challenges. This is a sector that needs attention and focus if we want to keep this manufacturing presence here in Australia and keep those jobs and economic contribution local,” Barden told F&DB.
From government, Barden said there is good recognition and appreciation of how important this sector is. In the electorate of Isaac in south-east Melbourne, 7244 jobs are in food and grocery manufacturing. “There is that awareness about how important the sector is, but we want to elevate the conversation to a ministerial level as well,” she said.
Barden said one of the greatest pressures on the industry at the moment are “the massive increases in energy prices, commodity increases coming through from the drought, and cost increases in a whole range of areas at a time you have downward pressure on retail pricing. Manufacturing is getting squeezed in the middle, which impacts its long term viability.
“The worst case scenario is you lose some of this manufacturing offshore because Australia loses its competitiveness.
“We are keen to have conversations around what do you do about cost pressures, particularly energy and needing bipartisan support for a policy that will deliver sustainable but also affordable and reliable energy supply, that is key.”
Capital investment and encouraging companies to invest in Australia at a time when there are these pressures is also challenge. Looking at tax incentives for capital investment in food and grocery manufacturing is important and needs to be raised, she said.
Barden also pointed out there was “hope and opportunity”. “When you look at export, that is really the growth channel for the industry. We see that $32 billion out of $131 billion is exported in the sector. And with the low Australian dollar that creates opportunity for companies, and can help you get some scale, which can then help offset cost pressures domestically. From a strategic perspective, that high growth offshore opportunity is a good one. There’s a heavy presence of meat and dairy but we’re seeing more companies explore than opportunity.”
Skills and training is one of the challenges the sector is addressing. For Barden, when a workforce is based in regional communities, it is critical they have access to the right skills that are needed in the workplace.
“There are emerging opportunities in food manufacturing – in the past people thought about most of the jobs were packers and line workers, but as we move towards automation, we’re seeing an upskilling of the workforce. So we’re seeing people moving from factory floor roles, to managerial roles or more technically advanced roles – the industry is very supportive of skills and training. Change the perception people have about opportunities in the industry is something we’re focused on,” she said.
Yoghurt manufacturer Chobani employs 200 people at its Dandenong factory. Managing director Peter Meek said in 2018, the factory produced more than 85 million pots of yoghurt.
“We believe every food maker has a responsibility to provide people with better options, which is why we’re so proud of the way our food is made. Behind the scenes, it is the people and the passion that inspires the team at Chobani to continue to think big, push the boundaries and innovate.”
For hiring, Chobani works with local agencies: Monash Health; Southern Migrant and Refugee Centre (SMRC); Asylum Seeker & Refugee Centre (ASRC); Local Skills & Jobs Centres for Chisholm and Holmesglen Tafes; and local “job actives” networks.
Smallgoods producer DON KR Castlemaine employs 1500, with 1100 frontline factory roles producing more than 70,000,000 kilograms of product a year. Managing director, Will Ursell said the company wants to change the perception around factory jobs and encourage people to consider long term careers in the industry.
The 250 people they employee each year undergo extensive training. DON sees this as an investment in their employees’ careers and to their business. Every year, 300 staff are trained to the nationally recognised accreditation of Certificate III or Certificate IV.
DON contributes more than $300 million into the Victorian economy each year.
“Food and grocery manufacturing in northern Victoria continues to invest, innovate and employ locals. The sector relies heavily on local supply chains, purchasing $3.36 billion in goods and services from within the region.”
Barden said there is a lot of change in the food manufacturing sector. “We’re fast moving consumer goods industry, so companies want to keep up with and cater to consumer trends in a viable and profitable way.”