AFGC releases its latest State of the Industry report

The Australian Food and Grocery Council (AFGC) has called for the federal government to include the largest manufacturing sector in its Future Made in Australia policy following the release of its annual industry snapshot for 2022/23.

The AFCG’s State of the Industry report highlights the vital role the food and grocery manufacturing industry plays in Australia’s economy, employment and every household.

Key highlights in the report include:

• Increase in value: Turnover, or the value of the sector, increased by 11.6% to $163bn, reflecting strong demand from a year of record immigration and increased wholesale prices. Many wholesale prices rose for the first time in a decade.
• Profitability challenges: Despite higher top-line growth, operating profit fell by 7% to $7.2bn due to persistent cost pressures from commodities, energy and shipping rising faster than wholesale prices.
• Employment impact: Employment rose by 4.1% to 281,269 workers, with 37% of jobs based in regional areas, emphasising the sector’s growing importance as a major employer across Australia.
• Incentives boost investment: The government’s temporary full expensing tax measure helped stimulate capital investment which rose by 24.5% to $4.2bn, largely directed towards plant and equipment upgrades, particularly in automation to counter labour shortages and enhance efficiency. Significant investments were made in meat processing, grain processing, dairy, and fruit and vegetable sectors.

AFGC CEO Tanya Barden said: “Our industry is a cornerstone of the Australian economy, providing essential goods and employment for over 280,000 Australians. Recent and ongoing global supply chain disruptions have made our industry even more critical from a national resilience perspective.”

The AFGC highlights that the food and grocery manufacturing industry needs to significantly lift investment in coming years to enable the clean energy and circular economy transition and adopt digital technologies to maintain global competitiveness. However, suppliers are hampered by a decline in profitability and, given cost of living pressures, it is becoming more difficult for the industry to recover costs such as large increases in energy, labour, transport and warehousing, and insurance.

“Australia’s largest manufacturing sector should be a significant part of the Future Made in Australia policy, which has been described as the biggest pro-manufacturing package in Australian history,” Barden said.

The State of the Industry results highlight that without strategic intervention, there is a risk of Australian-made products being produced elsewhere in markets that are increasingly offering significant investment attraction incentives. The AFGC calls for continued collaboration with government to unlock the potential of the food and grocery manufacturing industry, which is poised to be a winner if we implement the right settings.

Image caption: State of the Industry infographic. Image credit: The Australian Food and Grocery Council.

Top image credit: iStock.com/Adene Sanchez