Cost pressures affecting Australian food and grocery manufacturers

AFGC CEO Tanya Barden says Australian food and grocery manufacturers are facing cost pressures that are starting to flow through to supermarket shelves. 

“All manufacturers of food and groceries are facing pressure and that is starting to flow through to supermarket shelves,” Ms Barden said. 

“Over the past decade manufacturers have already been dealing with a situation where wholesale prices – the prices they receive for their goods – have risen by less than the cost of their inputs. There has been a lot of absorbing of costs by manufacturers before the impact of the pandemic. 

“Over the past couple of years the price of inputs for making and distributing goods has risen. The cost of shipping ingredients and finished goods to Australia has risen by 500 to 700 per cent. There have also been significant costs to business as a result of COVID safety measures, domestic freight cost increases caused by weather disruptions, shortages of pallets and rises in the cost of packaging. 

“Adding to this unprecedented COVID disruption, manufacturers are facing increases in global commodity prices as a result of the situation in Ukraine and they are now seeing increases in labour costs. 

“There is no longer the ability for manufacturers to continue to absorb those increased costs”.