Tony Abbott urged to save food jobs

Food producers are seeking help from Canberra to shield their 300,000 workers from a dangerous spike in the Australian dollar, as new figures reveal growing threats to the sector despite the huge potential for exports to Asia.

The Abbott government will be urged this week to remove burdens on the $111 billion industry and free up investment in new production, amid fears of further job cuts to add to factory closures last week.

Escalating the debate on industry policy, the peak food and grocery council will release a detailed report showing the sector took another hit to growth last year, even as it made up lost ground against imports.

The industry sees the results as proof of its resilience but will also use the findings to press for federal incentives to unleash investment in new production, hoping that automation can offset the nation's high labour costs to match cheaper producers overseas.

Beerenberg boss Anthony Paech, in the Adelaide Hills yesterday, urges the government to hasten FTA talks with Asia.

The Australian Food and Grocery Council findings, obtained exclusively by The Australian, show the industry lost about 170 employers in 2012-13 and 1000 workers. Export growth outpaced imports to narrow the industry's trade deficit to $2.2bn but the sector as a whole is struggling to return to the brighter days of a decade ago, when it posted a $5bn trade surplus.

Tony Abbott pledged to "unleash" the potential of Australian manufacturers, in his pitch to voters this year, but is now facing pressure for concrete assistance after Golden Circle cut 123 jobs and Simplot, the maker of Edgell and Bird's Eye products, cut 110 jobs in NSW last week.

Industry Minister Ian Macfarlane is in talks with SPC Ardmona in the hope of saving thousands of jobs at, or dependent on, the fruit company's factory in the Victorian town of Shepparton.

Australian Food and Grocery Council chief executive Gary Dawson said the new figures showed the industry was "running fast to stand still" but could grow strongly if federal and state government removed the burdens on business.

Asian markets represented a huge opportunity for the sector and could fuel a surge in exports as food manufacturers invested in new equipment to keep running costs down.

"When you look at the opportunities we have, with the Asian middle class buying a broader range of high-quality, premium-priced food, there is a step-up required of Australia to capture those benefits," Mr Dawson told The Australian. "That means better access to markets on the trade front, regulatory reform on the domestic front and some targeted investment incentives to help drive capital upgrades."

Simplot chief executive Terry O'Brien said last week that labour costs were one of the company's challenges as it set a three-year deadline to consider whether to close its operations in NSW and Tasmania. On the company's agenda is a new enterprise bargaining agreement with unions that it wants to allow for more flexible working conditions, in the hope of lifting productivity.

Mr Dawson pointed to a surge in capital investment as proof of the industry's effort to cut the cost of production, with $3.1bn spent on equipment in food, beverage and tobacco manufacturing last year. Food manufacturing alone saw a 26.5 per cent jump in capital investment.

Mr Dawson said much of the capital investment was going into automation to counteract high labour and energy costs and deal with the pressure of the higher Australian dollar.

But he said more investment could be poured in to the sector if the government adjusted its policies, pointing to the mining industry as an example of the economic payoff from investing in exports.

Talks over potential government action are at an early stage but will escalate this week when about 150 industry leaders fly to Canberra for an annual conference on Wednesday and Thursday. The executives will hear from Small Business Minister Bruce Billson on competition policy, parliamentary secretary Bob Baldwin on industry policy and parliamentary secretary Josh Frydenberg on regulatory reform.

One of the food industry's targets for reform is the overlapping state and federal regulation of the sector despite earlier promises to "harmonise" rules across all jurisdictions. Two decades ago legislation was passed to discourage different rules in each state but the industry wants tougher oversight to prevent exemptions to the regime. As well as pushing for investment incentives, such as by amending tax rules, the industry wants trade deals with Asia to open up new markets.

Companies including South Australian jam producer Beerenberg Farm have increased sales to Thailand in the wake of a free trade agreement with that country and a similar agreement with China could lead to a similar boost.

Beerenberg managing director Anthony Paech yesterday urged the government to accelerate free trade negotiations with Asian countries to help producers counteract the high dollar.

Despite building a reputation of quality produce and marketing extensively throughout Asia, the small family-owned company was hit by the surge in the dollar and found it could not compete against cheaper European jams and inequitable trading rules.

"Five or six years ago it was pretty even - we could definitely compete - but overnight it turned against us by nearly 30 per cent through country currency movement, and all of a sudden no amount of quality or good branding could overcome a gap that big," Mr Paech said.

Mr Dawson, who will also address the National Press Club on Wednesday, cautioned against limits on foreign investment in agricultural businesses as the Coalition puts lower thresholds on deals. "A lack of foreign investment could see more domestic production capability move offshore, reducing Australia's long-term food security," he said.

The report on the industry, compiled from official government statistics, shows a 0.3 per cent fall in turnover to $111.2bn in 2011-12 compared to a 4.5 per cent decline the previous year.

While the sector posted a trade deficit across all its products - including some non-food grocery items - the results countered fears about the nation's food security. In the food and beverage categories, Australia exported $18.8bn in produce and imported only $11.4bn before including the vast bulk exports of wheat and other commodities.

Source: The Australian, 28th October 2013