Australian food and grocery industries feel the heat from rising gas prices

By Lester Wan contact

- Last updated on GMT

The Australian Food and Grocery Council says food, beverage and grocery — Australia’s largest manufacturing sectors — are set to be hard hit by rising gas prices and other pressures.
The Australian Food and Grocery Council says food, beverage and grocery — Australia’s largest manufacturing sectors — are set to be hard hit by rising gas prices and other pressures.
Food, beverage and grocery — Australia’s largest manufacturing sectors — are set to be hard hit by rising gas prices and other pressures.

The Australian Food and Grocery Council’s (AFGC) State of the Industry Report 2017 states that the rising cost of gas could put at risk the sector’s 33% of Australian manufacturing jobs.

“We are expecting these pressures to only increase as energy, especially gas, has seen a doubling and in some cases a tripling of price that is likely to have dire consequence for Australian jobs and investment, with some companies re-assessing their long term future in Australia,” ​said Tanya Barden, CEO, AFGC.

Barden said that input costs are rising on everything from commodities to labour to energy, and the six years of retail price deflation and rising labour costs the industries had undergone “continues to cut margins, placing the sector under increasing pressure”​.

Barden said the report compiled by EY highlights strong employment growth and encouraging capital investment (4.7% increase) in the last financial year. However, expected increases in input costs as well as falling exports and flat overall turnover could impact the recent turnaround.

Said Barden: “Continuing to stimulate investment in site modernisation is critical particularly in light of mounting input cost pressures.” 

Glenn Carmody, consumer and industrial products market segment leader, EY, commented: “Growing markets in Asia and the improvement of market access through free trade agreements should further support the industry’s growing export market and provide additional opportunities.”

However, he also noted that the report pointed out that the sector faces a number of challenges it needs to address including a decline in productivity.

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