New figures released this week have proven what most in the food processing sector already know: the industry is close to collapse.
Financial specialists KPMG and the Australian Food and Grocery Council (AFGC) joined together to compile the report that offers a snapshot of Australia’s food sector.
And the figures are frightening.
Seven years ago, the sector was one of the most successful and profitable in Australia, producing an excess of $4.5 billion.
In the 2010-11 period it recorded a deficit of $2.7 billion.
In groceries alone, the deficit was almost $10 billion as Australia exported $4.6 billion of product and imported $14 billion in the 2010-11 year.
Australia a net importer of food
A recent Food Alliance report showed that Australia has become a net importer of processed fruit and vegetables, as the price is lower, but unfortunately, the quality often is also.
The Food Alliance report labelled local producers "vulnerable,” as they struggle to compete with the cheap imports, but if the Australian dollar fell to US55 cents, those cheap imports would suddenly become far more expensive.
A $1 tin of Italian tomatoes could become a $5 tin of tomatoes, Elders chief executive Malcolm Jackman warned.
Australia’s peak produce representative body AusVeg has been warning of this for some time, as has the Australian Manufacturing Workers Union.
In February, AusVeg’s Simon Coburn told Food Magazine that a decision by Coles to slash the price of produce “had the makings” of becoming the next milk price wars.
National Manufacturing Workers Union’s Jennifer Dowell also warned that produce and dairy farmers cannot afford to wait around, losing money, as supermarkets import products, in the hope that they reverse the behaviour and start using local products instead.
“My concern is that if we lose food sovereignty, if we lose control of our food chain we become hostage to other countries supplying our food,” she said.
“How ridiculous is that? In Australia we have the ability to produce the best food in the world, so how are we getting into this situation?
“Once these companies go, they won’t some back, they’re not going to come back and rebuild factories and businesses because Australia is upset after it basically kicked them out in the first place.
“If we rely on imports, and a country decides it is going to give its own market priority, as it very well should, what do we do? Where do we go?
“At a time when the world is saying Africa needs to have food sovereignty, we’re actually participating in a process where we won’t be able to feed our own people.
“We will be reliant on importing food.
“When we finally hit the wall and find that everything is coming from overseas and we no longer have any Australian food industries, it will be too late.”
How much is actually imported?
The supermarkets like to trumpet their success stories and gloss over their failings when it comes to local produce and their treatment of suppliers.
Coles made a song and dance about its decision to use Australian-grown produce in its own brand frozen vegetables, but omitted the fact that none of its 13 private label tinned fruits and vegetables are imported.
For its part, Woolworths imports 13 of 14 home-brand frozen vegetable lines, and 19 of its 21 private label tinned fruit and vegetable lines, according to the most recent report.
Woolworths released a statement labelling the Choice findings “inaccurate,” while a spokesperson told Food Magazine this morning that “we’re working very closely with the Australian agricultural sector, and we buy lot of produce from Australian farmers.”
“96 per cent of our fresh fruit and veg is from Australia.
“71 per cent of our own label products com from Australia, and that’s increasing.
“We’re now importing home brand rice from NSW and our focus is on increasing Australian grown products.”
The spokesperson did not answer questions, however, on whether the price the supermarket is paying local producers for those products is fair, or whether it shoulders some of the responsibility for the dire state of the food sector.
Coles accused Choice of pursuing a "public policy agenda on labelling” when the report was released, but did not respond to requests for comment by Food Magazine this morning.
"We know farmers are struggling": Coles GM
Last week Coles’ corporate affairs general manager Robert Hadler did acknowledge that local processing was in trouble, telling an agribuiness summit in that the high Australian dollar and increased labour costs were "catching many food manufacturers in a cost-price squeeze".
"We're quite concerned … we want security and sustainability of supply, particularly in processed product, so we've upped our game in working with local food manufacturers," he said.
Jackman has warned that it may not be just the supermarkets that are to blame for the state of the industry, but rather popular television shows, including Farmer Wants a Wife and Masterchef, are causing the damage.
"If we're not careful, MasterChef and My Kitchen Rules will all be made with produce produced overseas," he said.
“Long-term investment in agriculture, skills and people working in the field were needed to "drive the future.
"We can't afford to see production and food processing disappear out of Australia because the high Aussie dollar is making imports so much cheaper," he said.
He said food producers and processors needed to educate the public about why they should be willing to pay more for local produce.
How can we fix this important Australian industry? How would you make it profitable again?