Retail regulation a must, say Australian industry execs

By Ankush Chibber

- Last updated on GMT

Related tags: Investment, Australian food and grocery council

More regulations please, say Australian execs
More regulations please, say Australian execs
Australia’s food and grocery sector desperately needs greater regulation in the retail sector and more transparency around foreign direct investment, Australian industry executives said in a new survey.

The research was conducted by law firm Baker and McKenzie, where the firm surveyed 162 senior executives from 11 sectors across Australian industry, including the food and grocery sector.

The firm, in a release, said that survey was to ascertain the hurdles their businesses face, and what actions governments and regulators need to take to ensure food security for Australian society.

Retailer regulation a must

Top of the list for 62% of the respondents was the demand that the government intervenes and regulates the activities of supermarkets in food retailing, which could include the creation of a Supermarket Ombudsman and Code of Practice.

FoodNavigator-Asia has surveyed previously the demand by the Australian Food and Grocery Council (AFGC) over a Supermarket Ombudsman to keep the growing powers of retailers like Woolworths and Coles in check.

The survey revealed that such an intervention would be greatly supported by food industry executives, 59% of whom said that their number one challenge is the prevalence of private label products.

Head of the firm's Competition practice, Andrew Christopher, said that the industry clearly supports more government intervention in the retail space where two grocery majors are having a significant impact on the supply chain.
“A competitive grocery sector is a key factor in ensuring long-term food affordability as well as consumer choice and product innovation. The introduction of a supermarket ombudsman is a possible solution,”​ he added.

Industry threatened on foreign investment

The survey also showed that views on foreign investment in the food sector and agribusiness are polarised, with 26% of respondents “sitting on the fence”​ when asked if foreign investment poses a significant risk to food security.

At the same time, whilst 49% of all the respondents agreed that foreign investment is a serious threat, 26% of them also disagreed that such investment could be harmful to food security, the survey revealed.

Also revealed was that there was also a similar protectionist sentiment exists on the issue of international trade barriers, with 45% of respondents agreeing that trade barriers should be heightened in response to issues like parallel importing.

"Significantly, half of our survey respondents highlighted foreign investment as a serious threat,”​ said David Watson, Co-Head of Baker & McKenzie's Food and Agribusiness group.

“Almost that number again said the Government should impose higher trade barriers to favour Australian commodities. This data indicates a protectionist streak within the industry,”​ said Watson.

Regulatory framework around food needs work

The survey also revealed that there is lack of confidence that the current regulatory framework, especially in the areas of parallel importing, marketing claims and food labelling, are adequate.

For example, 68% of respondents thought more or better regulation was needed for parallel importing, while only 8% disagreed. Also, 71% of the respondents said country of origin labelling is critical and should appear on the pack.

Likewise, 75% of the respondents said better marketing claims regulation is required, the survey said.

Water scarcity the biggest natural threat

On environmental concerns, availability of water was identified as the greatest challenge by 53% of the respondents felt that the availability of water was the largest challenge.

A significant minority, about 36% of the respondents, felt that drought was the greatest concern, while disasters, slow growth of agricultural production and climate change were the third, fourth and fifth.

Furthermore, only half of respondents felt their organisation was not vulnerable to the adverse effects of climate change and only about 27% of respondents saw regulation around the environment and climate change as a concern.

Contrary to consumer concerns, the survey revealed that there was a remarkably strong demand by 58% of the industry respondents for GM food to form an essential part of delivering food security.

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