The Australian Food & Grocery Council (AFGC) has called for government support to strengthen the country's ability to make food and grocery products locally, as a report by HVAC technology company, Conry Tech finds food product manufacturing has the lowest survival rate of any manufacturing subsector in Australia, over both one year and the longer term.
AFGC CEO, Colm Maguire, said global disruptions over recent years had shown the importance of maintaining a strong domestic manufacturing sector.
“Australians are feeling the pressure when they pay the mortgage, fill up the car or do the weekly shop.
“There is a good lesson to learn here. Every time there is a global disruption, whether it's Covid, the conflict in the Middle East, or rising energy prices, Australia is reminded why it matters that we can make things here at home,” Maguire said
Food and grocery manufacturers also continue to face high costs for energy, transport, packaging and ingredients, even if inflation begins to moderate.
“Food and drink inflation has eased from previous highs, but many of the costs faced by manufacturers remain elevated,” he added.
“When oil prices rise, it's not just petrol that is affected. It increases the cost of transport, packaging and production right across the economy and this takes time to flow through to prices at checkout for consumers.
“Nobody wants higher prices, but there is no switch we can flick to bring costs down overnight.”
Maguire said higher interest rates were adding further pressure by making it more expensive for manufacturers to invest in new equipment, technology and production capacity.
The food and grocery sector is calling on government to back its manufacturing sector by improving productivity and lowering the cost of doing business through offering tax incentives and cutting red tape.
“The more food and grocery products we can make here in Australia, the stronger and more resilient we will be when the next disruption comes,” Maguire said.
Food and grocery manufacturing employs more than 301,000 Australians, supports one in three manufacturing jobs and contributes $183 billion to the Australian economy.
“Australia has the people, the capability and the businesses to do more manufacturing locally. The long-term answer is making it easier and more affordable to make food and groceries in Australia.”
Food makers fare worst in survival data
AFGC's call landed as a report by HVAC technology company, Conry Tech found food product manufacturing has the lowest survival rate of any manufacturing subsector in Australia, over both one year and the longer term.
Food product manufacturers are the least likely of any Australian manufacturing subsector to stay in business, new analysis of ABS data shows, as the Australian Food and Grocery Council calls for tax incentives and less red tape to keep production onshore.
The report, No future made in Australia, analyses Australian Bureau of Statistics counts of business entries, exits and survival since 2016. It found Australia lost 11,134 manufacturers in 2025-26, more than in any year since the 2008-09 global financial crisis, or roughly one every 47 minutes.
Food sits at the bottom of both survival measures. Around 87 per cent of food product manufacturers survive their first year, against an all-manufacturing average of 89 per cent. Over the longer period, around 62 per cent of food manufacturers were still operating, compared with about 67 per cent across manufacturing as a whole.
Beverages tell a different story. Beverage and tobacco product manufacturing ranks among the strongest subsectors on both measures, at around 91 per cent one-year survival and 70 per cent over the longer period, behind only polymer and rubber products and primary metal products. (ABS groups beverages with tobacco.)
The report also mapped manufacturer counts by state and local government area between 2015 and 2025. Victoria grew its number of manufacturers by just 1.3 per cent over the decade, against 11.3 per cent in NSW and 11.7 per cent in Queensland. Eight of the 10 LGAs with the largest net loss of manufacturers were in Victoria, led by Kingston, down 233 businesses or 18.5 per cent.
Over the two years to 2025, the largest net losses were in Marrickville North and Dandenong South, each down 25 manufacturers, followed by Bankstown South, Braeside and Thomastown, each down 23. Inner-city areas recorded the largest gains, led by Millers Point in Sydney (49) and the western Melbourne CBD (46).
Entries barely cover exits
Across all manufacturing, 35 per cent of companies operating in 2022-23 had exited by the end of 2025-26, whether by closing, ceasing to trade or moving operations offshore. For companies that entered the market for the first time, survival fell to 52 per cent.
The report argues the bigger problem is that new manufacturers are not replacing those that close. In 2025-26 the manufacturing entry rate was 12.5 per cent and the exit rate 12.3 per cent, for net growth of 0.2 per cent. In 2021-22, entries ran at 14.9 per cent against exits of 10.8 per cent.
Manufacturing’s entry rate is the third lowest of the 19 industry divisions tracked by the ABS, ahead of only agriculture and mining.
The report notes the net rate has not improved since the National Reconstruction Fund was established in September 2023 or since A Future Made in Australia was announced in April 2024. The federal government earlier this year brought forward $6.15 billion in NRF capital to support manufacturers hit by supply chain disruption.
Conry Tech CEO and co-founder, Sam Ringwaldt, said the loss of manufacturers was eroding the supporting industries manufacturers rely on.
“Skills are not being transferred to younger generations. Supporting industries like toolmakers, pattern makers, tool shops, foundries, casting etc are closing the doors and retiring with no one to take their place,” Ringwaldt said.
“The Government’s role should be to fill up the funnel of manufacturing prospects, rather than propping up big companies that forgot to keep innovating.”
