Exports buoy Australian food and grocery manufacturing industry amid tough domestic conditions, new report shows

The Australian Food and Grocery Council’s (AFGC) latest annual industry snapshot shows the nation’s food and grocery manufacturing sector remains a key economic contributor and employer, injecting $122.1 billion into the economy.

The AFGC’s State of the Industry Report 2019 shows the sector experienced 4.5 per cent real growth in 2017-18 despite challenging domestic and international conditions, with growth largely due to increased exports totalling $34.4 billion.

The industry also remains one of Australia’s largest employers, providing jobs for 273,301 people representing 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.

AFGC Deputy CEO Dr Geoffrey Annison said the report illustrated the key role the sector played in the Australian economy and highlighted why steps must be taken by all levels of government to ensure it remains strong into the future.

“This report shows the resilience of the sector in the face of global economic uncertainty, drought, rising production costs and seven consecutive years of retailer price deflation,” Dr Annison said.

“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.”

Despite tough domestic conditions, Australian food and grocery exports increased by 7.6 per cent over 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.

“The sector’s global footprint continues to expand, with Free Trade Agreement developments opening up more and more export opportunities for Australian food and grocery manufacturing businesses,” Dr Annison said.

“However, policy settings must be right for continued growth to continue. And for the Australian economy to grow there needs to be strong regional employment, a resilient manufacturing sector and export-led growth.

“To this end, the AFGC will continue to work with key stakeholders and all levels of government to ensure the sector remains a cornerstone of the Australian economy.”

State of the Industry 2019 – key points:

• 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).

 

Contact:

For more information contact Anne-Louise Brown, AFGC Manager, Communications:
anne-louise.brown@afgc.org.au  0406 987 050