Tough domestic conditions with growing exports bolstering the sector were the key findings of the Australian Food and Grocery Council’s (AFGC) latest annual industry snapshot.
The AFGC’s State of the Industry Report 2019 shows food and grocery manufacturing experienced 4.5 per cent real growth in 2017-18, with growth largely due to increased exports totalling $34.4 billion.
Exports increased by 7.6 per cent in 2017-18, led by a 45.3 per cent increase in Chinese exports. This comes off the back of the China-Australia Free Trade Agreement and the opportunities it has unlocked, AFGC deputy CEO Dr Geoffrey Annison said.
Annison said the report showed the resilience of the section in the face of “global economic uncertainty, drought, rising production costs and seven consecutive years of retailer price deflation”.
Domestically, the sector is a key economic contributor and employer, injecting $122.1 billion into the economy, the report said.
For Annison, the report illustrated the key role the sector played and highlighted why steps must be taken by all levels of government to ensure it remains strong into the future.
“Though there has been growth it has been slow and the industry remains under significant pressure. Companies have continued to make efficiency improvements to stay competitive but this is not sustainable in the long term.
“Capital investment growth is low at 0.31 per cent, with businesses hesitant to invest because of difficult trading condition. This is problematic, as investment in site modernisation and innovation is essential if businesses are to keep their operations in Australia.
“The future of Australia’s food and grocery manufacturing sector is reliant on business confidence. The AFGC believes governments must work with industry, with a focus on cutting red tape and the introduction of targeted investment allowances.
“Policies addressing cost competitiveness and fair retail trading conditions are also essential and would help ensure the sector remains viable, retaining business and jobs into the future.”
The industry is one of Australia’s largest employers, providing 273,301 jobs, or 32 per cent of manufacturing jobs. The sector’s contribution to regional and rural communities is of particular note, where sector employment is 107,000 (See Food & Drink Business 20/11/2019, 21/08/2019).
State of the Industry 2019 snapshot
- The Australian food and grocery manufacturing sector’s turnover was $122.1 billion, representing 4.5 per cent real growth.
- The sector provided 273,301 jobs, (+1.8 per cent), with 39.3 per cent in regional Australia.
- The sector saw record export revenues of $34.4 billion (+7.6 per cent).
- The total amount of imports was $33.4 billion (+3.3 per cent growth).
- The sector experienced minimal growth in capital investment, at $2.9 billion (+.31 per cent).
