In short:
Australia’s food manufacturing industry is concerned that as costs keep rising, more and more imported goods will appear on supermarket shelves.
Some say they worry about the sector going the way of car manufacturing in Australia, which shifted manufacturing overseas.
What’s next?
There are calls for more federal government help for the industry to protect local businesses and jobs.
Australia produces an abundance of fresh food.
But when it comes to processed foods — such as canned fruits, sauces or packets of chocolate, cereal and chips — you may find more and more of them being imported.
You may even be eating Australian-grown food that has been processed overseas and then imported back.
Outside a shopping centre in Hobart’s northern suburbs, Cody Summers said he would not have a clue where the food in his trolley came from.
“[Which item I buy] comes down to cost really because I only work part time,” he said.
Beth Joyce and Annette Bailey said they tried to buy Australian-made food where possible.
Ms Bailey said the price difference had to be “big” in order to stop her.
“If it’s only 10 cents, 20 cents, I think ‘Oh well, I’ll just pay it.'”
But some in the food manufacturing industry worry more and more imported products will end up on supermarket shelves.
They say the cost of doing business in Australia is rising.
A recent example of this was when Australian cannery SPC cut its order of pears and peaches by 40 per cent due to what it said was declining demand.
The company said customers were buying “alternative”, imported products from South Africa and China amid the cost-of-living crisis.
Ken Mahlab, who owns a biscuit-making factory in Melbourne with his wife, said their business was struggling with the growing cost of ingredients.
“Unless you want food manufacturing [in Australia] to go the way of car manufacturing and the dodo bird, you would want to be doing something pretty fast and pretty serious,” he said.
The business employs about 35 people and bakes biscotti, melting moments and other biscuits for Woolworths and Coles and export markets.
He said while his business was doing better than others, no-one was prospering and he would like to see greater help from the federal government.
“We are absolutely in a survival mode,” he said.
“Manufacturing feels very unloved right now.”
Invest in Australia or overseas?
It is not only small manufacturers that are worried.
Big brands like Cadbury are making decisions about future investment in Australia.
“There is a cost-of-manufacturing crisis,” Darren O’Brien, president of Cadbury owner Mondelez’s Australian arm, said.
“It’s been led by things such as increased process around energy, increased complexity in the regulatory environment, a lack of incentive to make new investments.”
He said he was concerned some food manufacturers could shut down or shift overseas.
“What we know from history is that when businesses choose to go offshore, they don’t come back,” Mr O’Brien said.
Mr O’Brien is poised to make a decision on whether to invest tens of millions of dollars in factory upgrades at Tasmania’s Cadbury factory or the company’s operations overseas.
“We’re going to need some changes and some incentives, whether it be in government policy or regulation,” he said.
“I think it’s pretty disappointing that in the most recent [federal] budget there wasn’t much to get excited about if you are a food and grocery manufacturer,” he said.
He said simplifying regulation could help, such as reconsidering the need for complex reporting of CO2 emissions.
“I think the important focus has to be on the actions you take to reduce them, not the reporting,” Mr O’Brien said.
Buying Australian ‘protects jobs’
Simon Wise runs a sauce and jam-manufacturing company in Tasmania.
He said it would be nice to think consumers would choose Australian-made food products.
“It protects a lot of things. It protects jobs, it protects the farmers,” Mr Wise said.
His company is growing its business through independent supermarkets across the country.
“A couple of years ago we were probably two-and-a-half full-time team members. The next financial year [we’re] probably looking at closer to six.”
Like other food manufacturers, the company is struggling with the rising costs of ingredients and packaging.
“Another email arrived this week, freight is going up again,” Mr Wise said.
He said the business was trying to find ways to absorb the costs without passing them on to the consumer.
“Our owners are investing in new equipment to help support efficiencies and actually allow us to try to save some money.”
Threat from cheaper imports
Shoppers’ preferences are clear, Professor Roger Stanley from the University of Tasmania’s Institute of Agriculture says.
“Consumers do vote with their wallet.”
“Which is why we are getting less Australian-manufactured product bought and more imported competition on our shelves,” he said.
According to a recent parliamentary inquiry, about 11 per cent of the food Australians consume is imported. It is mainly packaged and canned food.
The Australian Food and Grocery Council says the profitability of food and beverage manufacturing in Australia is on a downward trend.
It fell from $8 billion annually in 2009-10 to $5 billion a decade later, its report showed.
Professor Stanley said that reflected Australia’s decreasing international competitiveness, as “countries who have invested more in their food manufacturing than Australia bring in cheaper product”.
Food and Grocery Council chief executive Tanya Barden said Australia produced an “abundance of agricultural output”.
“But from a processing perspective, that’s where the risk is — that we end up not being able to manufacture in Australia and need to do more importation.”
Australia’s food and grocery manufacturing sector employs more than 275,000 people, the council says.
The council would like to see a doubling of food manufacturing by 2030.
But it fears if nothing is done, imports of food will continue to rise to the point where consumers will struggle to find high value-added products that are made in Australia.
There were other knock-on effects too, Ms Barden said.
“Imported product is susceptible to all of those global price shocks … the cost of shipping in those items can go up significantly,” she said.
“So losing the manufacturing base does expose the Australian economy to more import price shocks over time.”
Another issue if Australia becomes increasingly reliant on imported groceries is that disruptions to supply chains due to natural disasters or political tensions could result in empty supermarket shelves, as seen during the pandemic.
But Associate Professor Flavio Macau from Edith Cowan University said any supply chain issues would most likely be temporary.
“Given time (typically a few weeks), most shortages can be mitigated,” he said.
Agrifood strategy consultant Dr David McKinna felt the biggest risk of a declining food manufacturing sector was the loss of jobs in regional areas.
“You’ve got towns like Shepparton or Ballarat, or Albury-Wodonga … you take a food processor out of that area, it makes a big impact,” he said.
The federal government says food and beverage manufacturing is the cornerstone of the economy, driving growth and sustaining thousands of jobs.
“The Albanese government’s commitment through initiatives such as the $15 billion National Reconstruction Fund and $392 million grant program for early stage innovation assist Australian businesses to invest and grow,” Senator Tim Ayres said.
In a statement, a spokesperson for the senator, who is the Assistant Minister for Trade and Manufacturing, said $100 million is being spent on research to improve the productivity and sustainability of the food manufacturing sector.
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