Australian food industry could shed 130,000 jobs by 2020, report
Real industry manufacturing turnover is forecast to decline by 0.2% per annum despite a growth in retail demand of 3.7% per annum over that same period, according to the research, 2020: Industry at a Crossroads, by the Australian Food and Grocery Council (AFGC) and market analysts A.T. Kearney.
The report said that imports, retailers' private label products and parallel importing would increasingly fill this gap in growth between locally manufactured supply and retail demand.
This would result in the industry shedding an estimated 100,000 to 130,000 jobs through a combination of productivity gains and direct job losses to “right size” the industry, the report said.
Amongst the key findings of the report was the response of food manufacturers, 55% of which were negative about the future of industry.
Coordination of policies needed
The report suggested that unless the government provides tax incentives for investment, improves skills development or creates a level playing field in the highly concentrated retail sector, the job losses would not be reversed.
AFGC chief executive Kate Carnell said that all political leaders – both federal and state – would thus need to seriously consider this report and reconsider the current business-as-usual approach towards the sector.
According to the report, the government would have to step in now with policies, which create a consistent, national, transparent regulatory framework with better infrastructure and consistent rules and regulations.
Most importantly, the report recommended that there be coordination and alignment of government policies relevant to food and grocery manufacturing across all portfolios.
R&D is a way out
Also needed, notes the study, would be policies that spur research and development leading to product innovation, reformulation and improved products, which will then lead to increased production and jobs across the entire food and grocery sector.
For now, the report said, that it is highly uncertain if the industry will be in sufficient financial health to make the level of investment in innovation required to ensure its future competitiveness.
“A large majority (88%) of companies polled currently invest less than AU$10m in R&D and over 80% cite cost as the major barrier to investment,” the report noted.
Policies are also needed, the report continued, to ensure an environmentally sustainable food chain – with a focus on better packaging, efficient use of water, minimizing food waste and carbon footprints.
The government would have to ensure “increased farm production to feed Australia‘s forecast population of 36 million people by 2050,” the publication added, and suggested that “to meet these targets, Australia must calculate and identify the amount of quality land and water needed for agricultural production and put in place policies to ensure its availability.”
