Smart moves on food and grocery manufacturing will make the future of regional Australia

Every day across Australia, out of sight from the metropolitan centres, an industry works at creating the much-loved products that fill our supermarket shelves.

Whether it’s food manufacturers using superb produce from our farmers or grocery manufacturers creating everyday essentials, this work is the heartbeat of regional Australia, providing for the nation and supporting communities by creating jobs, opportunity and a vision for the future.

The relationship between regional Australia and the food and grocery manufacturing industry runs deep. It’s an ongoing exchange of expertise and support that builds strong businesses and vibrant, sustainable regional communities.

In northwest Tasmania, for example, the Cadbury factory, owned by Mondelez, takes the output of 42 local dairy farms for that famous “glass and a half” of milk in every block of chocolate.

Mondelez’s presence in Burnie and Claremont doesn’t just provide more than 400 jobs, it takes 10 per cent of Tasmania’s milk supply and its investment in the Claremont factory – more than $100m over the past five years – has bolstered the long-term future of dairy farming in the region.

In Devonport, Tasmania, and Bathurst, NSW, Simplot deals with 300 growers to produce 73,000 tonnes of frozen and shelf-stable vegetables each year.

Simplot is the only remaining major provider of Australian-grown frozen and shelf-stable vegetables but less than a decade ago its facilities were at risk of shutting down as local products underperformed and struggled to compete with cheap imports.

The business has since revitalised and invested more than $200m in its Tasmanian operations alone and Simplot remains an integral part of its local communities.

Similarly in Millicent, South Australia, Kimberly-Clark makes products including Kleenex tissues and toilet paper.

Its mill has operated since 1960 and with almost 400 people working there today, is one of the largest employers in the region.

And as farmers confront a changing climate, manufacturers Mars, Kellogg and Manildra Group are working with industry, scientists and grain growers on the Cool Soil Initiative, a project examining how crop management can increase soil carbon to reduce on-farm greenhouse gas emissions.

Aerial view of the Simplot operation in Ulverstone, northwest Tasmania.

Aerial view of the Simplot operation in Ulverstone, northwest Tasmania.

Food and grocery manufacturing is a $127bn industry in Australia and, in this nation where we pride ourselves on our ability to make things, food and grocery is the biggest manufacturing sector, accounting for 32 per cent of total manufacturing output.

The sector’s importance to regional Australia can’t be overstated: of the 276,000 people employed in the industry, more than 40 per cent are in the regions. Indirectly, the sector supports thousands more people working in areas such as farming, transport and logistics, and local services.

As the Covid-19 pandemic has shown us, food and grocery manufacturing is strong and resilient, having maintained supplies to supermarkets despite enormous disruption. But the industry can’t be taken for granted; action is needed to ensure it has a prosperous future.

Remaining competitive in domestic and export markets requires innovation, new technology and added scale.

This requires investment, but over the past decade profitability in Australia’s food and grocery sector has declined and capital investment has stagnated. Investments by many companies, like Simplot and Mondelez, demonstrate commitment to communities and the industry. Another example is Arnotts which, as Australia’s largest buyer of soft wheat – vital for making biscuits and cakes – has made significant investments in the domestic soft wheat industry.

Across the country, however, further investment is needed. This requires policy and regulatory settings that help retain companies, encourage new investment and support a vision for a strong industry future.

Important first steps have been taken with the federal government’s Modern Manufacturing Strategy, acknowledging the need for new thinking. We know more can be done to encourage new investment in the industry and retain the significant investment in regional areas that exists now.

The AFGC’s recent landmark report, Sustaining Australia – Food and Grocery Manufacturing 2030, outlines desired policy steps to secure the industry’s future.

Building on the federal government’s recognition of food and beverage as a national manufacturing priority, we’ve urged the inclusion of non-food grocery manufacturing as a priority industry and the implementation of annual policy and regulatory reforms that move the industry towards its 2030 growth target of $250bn in value.

We’ve recommended additional funding under the Strategy’s Modern Manufacturing Initiative to support the uptake of new manufacturing and digital technologies. This would enhance the competitiveness and sustainability of local operators facing international competitors who already benefit from substantial support from their own governments.

And with the current Covid-related restrictions on travel, there has never been a more urgent need for a food and grocery industry skills audit to understand existing workforce capabilities and the investment needed to support a more automated and digitalised workplace.

The right settings can transform the food and grocery manufacturing industry, its contribution to the economy, and the future so many communities across regional Australia.

Tanya Barden OAM is chief executive of the Australian Food and Grocery Council



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