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Rising imports damage Australia’s $102 billion food sector

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Australia’s $102 billion food and grocery industry remains the nation’s largest manufacturing sector but is under intense pressure from rising imports and falling exports. These findings are part of a new report by the Australian Food and Grocery Council (AFGC) and KPMG.

Launched today by Federal Industry Minister Kim Carr in Canberra, the second annual economic snapshot of the food and grocery manufacturing sector State of the Industry 2010 found for the first time in decades, the industry’s international net trade position fell dramatically from a $4.5 billion surplus in 2004-05 to a $1.8 billion deficit in 2009-10.

“This alarming result shows food and grocery manufacturing – which employs 288,000 people – is now a net-importer of food and grocery products which impacts industry’s growth and competitiveness,” said AFGC Chief Executive Kate Carnell. She highlighted the report showed industry remained large but growth, employment and turn-over are flat at best.

The detailed report –examining fresh and processed food, beverage and grocery industries – shows the complex industry was made up of 31,000 businesses in 2009-10 (236 fewer than the previous year), spends about $3.5 billion a year on capital investment and accounts for $44.8 billion of the nation’s international trade ($50.9 billion in 2008-09).

“Industry is still a major exporter but imports are rising fast, eroding the trade surplus historically enjoyed by the industry. To protect Australia’s food supply and overcome this challenge, there must be a ‘whole-of-government’ national strategy to ensure food and grocery manufacturing’s long-term growth, increase export earnings and boost competitiveness.”

Carnell said the wide-ranging report showed the industry represented 26 per cent of the total Australian manufacturing industry by turnover (compared with 28 per cent in the last report), and remained comparable ($102 billion in 2007-08) to the mining industry.

Carnell said the report also recognised the importance of protecting the future needs of industry in terms of job growth and investment as well as meeting the significant food supply needs into the future.

“The industry employs more than 3 per cent of all employed people in Australia but lost 3400 jobs since 2006-07. The sector pays wages of more than $13 billion a year,” she said.

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