Energy prices, high production costs, and excessive regulation were recurring themes at this year’s Global Food Forum, held in Brisbane yesterday (17 July). More than 400 industry leaders across the food and agribusiness sector were in the room for conversations ranging from consumers’ adjusted behaviours to cost-of-living pressures to export opportunities, sustainability challenges and the future of the beef industry. Here are some of the highlights.
Visy chair, Anthony Pratt’s keynote: “Tech gets all the love but food provides all the jobs”. At a time when most of the industry is feeling the challenges of 13 interest rate rises and soaring energy costs, Pratt provided a bolstering locker room speech on the power of the food sector.
In the last 10 years, 1200 food factories have been built in Australia and food exports have more than doubled to $59 billion. Beef exports to China alone have grown 200 per cent. Since the first GFF 12 years ago, the agriculture sector has produced 91 per cent more output.
“That has gone to food and beverage manufacturing, which has grown by 56 per cent. That’s more than twice the growth rate of all other manufacturing over the same period.
“In fact, more than one in four Australian manufacturing jobs are in food and beverage manufacturing – and food is by far the largest manufacturing sector in our economy,” Pratt said.
Federal agriculture minister, Murray Watt, followed, and pointed out that since China lifted wine tariffs at the end of March, Australia has already sold $220 million of wine into the market, which is four times the value of exports of Australian wine exports to China in 2021, 2022 and 2023 combined.
Jeff Kennett, chair of CT Management Group and Original Juice Company, and IGA Ritchies CEO, Fred Harrison, provided real insight into the challenges faced by supermarkets (a new angle to be sure) when consumers are feeling the financial squeeze.
Surprisingly, Kennett didn’t mince words, saying, “Governments are screwing the private sector”.
You could feel his frustration at the lack of a national approach to water management, agriculture, and energy. His concerns about the high cost of manufacturing and production in Australia were echoed throughout the day.
“I’m seeing, as part of the food industry, huge costs, and it worries me tremendously. There’s a lot of those who are in the smaller end of manufacturing and are not going to get through this period, the costs are too great.
“And when we hear (government) ministers and others talk about what supermarkets shouldn’t be doing, they could make a big change. Some of the supermarkets are paying more in taxes and charges when they’re making profit. So, if governments are serious, address some things that they can add rather than set themselves as private enterprise arbiters. It doesn’t work and never has,” he said.
Harrison painted the stark picture of how high costs impact not just profits but the ability to then reinvest in the business and its people.
“On the first of July last year the (Victorian) state government introduced a mental health levy tax on any company who had a Victorian payroll of more than $100m, and we fell into that. So we had to add a 1 per cent mental health cost to our business, or around $1.5m, plus payroll tax went up a further 1 per cent, that was another $1.5m.
“The Victorian WorkCover bill went up $1m.
“So we were up on the first day of July, the new financial year, $4m in additional costs and that was just from the Victorian state government – and don’t even worry about the power or the wages cost – that was already $4m in additional costs on day one,” Harrison said.
Food manufacturers including Bega Group chair, Barry Irvin, SPC CEO Neil Brimacombe, Bubs Australia CEO, Reg Weine, Noumi CEO, Michael Perich, and Bundaberg Brewed Drinks, John McLean, reiterated these concerns.
Weine said, “I’m not sure I can make a business case today for an energy-intensive facility located in Australia.”
Brimacombe said, “I’m not sure I can make a business case today for an energy-intensive facility located in Australia. We need to be 15 per cent cheaper with our finished goods to be competitive with China.”
It certainly was not a day of doom and gloom, but there was a sense of foreboding that if significant changes weren’t implemented, the future looked even more challenging than the present.
