Artisan producers a drag on productivity

The Productivity Commission has pointed to the rise of artisan food and beverage companies, such as bakers, craft brewers and small wine makers, as a drag on economic efficiency.

It says the effect is small but noteworthy, as it takes twice as many bakers, for instance, to bake premium loaves as it does to bake a white sliced bread which can now be bought for $1 a loaf.

“There was an increase in the output of some types of food and beverage manufacturing that have lower levels of measured productivity, which lowered the average productivity of the subsector,” the productivity commission wrote in a recent report.

There has been change in the share of bakery products produced by different types of manufacturers, with stronger growth in shop-based bakeries than in centralised factories, but shop-based bakeries, which are usually small scale and less automated, do not achieve the economies of scale of large factories, according to the productivity commission.

 “Lifestyle considerations, tax arrangements, and alternative sources of income may have reduced the incentive for smaller winemakers to leave the industry,” it also wrote.