Trends and challenges facing Australia's food processing sector
Gary Dawson
CEO, Australian Food and Grocery Council
The Australian Grains Industry Conference – 31 July 2013
33.3%
66.7%
Were you able to pass through any of the increase in costs from the carbon tax to
your customers?
AFGC Carbon Tax Survey July 2013
NO
YES
Food & Beverage manufacturing sector - Turnover
Meat, meat product mfg
Dairy product mfg
Sugar and confectionary mfg
Bakery product mfg
Other food product mfg
Fruit & Vegetable processing
- $87.4bn (2010-11), down 5%
Food & Beverage manufacturing sector - Employment
Meat, meat product mfg
Dairy product mfg
Bakery product mfg
Beverage mfg
- 222,300 directly employed (2011-12), down 2.5%
Source: Competitive Alternatives / KPMG’s Guide to International Business Location Costs, KPMG (2008, 2010, 2012)
Consumer Price Index for Food
Source: AFGC, State of the Industry 2011-12
Source: AIG Performance of Manufacturing Index, April 2013
-
5,000
10,000
15,000
20,000
25,000
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
$ m
illi
on
s
Trade Surplus Exports Imports
Imports and Exports of Substantially and Elaborately Transformed Food Products ($ 2011-2012)
- Surplus of $6.8bn in 2011-12
Key cost categories as a proportion of gross sales FY09-12
Source: AFGC / KPMG Competitiveness and Sustainable Growth Report 2013
CAGRFY09-12
(6.0)%
0.2%
(1.6)%
6.4%19.5% 20.8% 22.2% 23.4%
50.6% 48.4% 48.4% 47.9%
23.0% 22.8% 22.4% 23.1%
6.9% 8.0% 6.9% 5.7%
0%
20%
40%
60%
80%
100%
FY09 FY10 FY11 FY12
%
Trade discounts and promotional allowance Cost of Goods Sold Operating Costs EBIT
Capital expenditure split by purpose and Depreciation FY09-12
Source: AFGC / KPMG Competitiveness and Sustainable Growth Report 2013
187.3 240.5 230.3 213.9
122.9
115.4
204.9 239.9
351.7
399.2 464.3 467.2
346.3
388.9 384.5 383.6
-
50
100
150
200
250
300
350
400
450
500
FY09 FY10 FY11 FY12
$ m
illio
n
Stay in Business Cost Savings / Profit Generation / Expansion IT Depreciation
CAGRFY09-12
— 3.5%
(31.4)%
25.0%
4.5%
9.9%
Keys to competitiveness Play to our comparative advantage
Improve productivity
Brand building
Removing trade barriers
Confidence & incentives to invest
Regulatory relief
Agribusiness challenges Large scale, rural/ regional location
Trade-reliant
AFGC Agribusiness Forum Improve cost-competitiveness
− energy, infrastructure, tax
− foreign investment
Increase exports
− increase market access
− remove trade barriers
− Brand Australia
Source: ABARES, Food Demand to 2050: Opportunities for Australian agriculture
70% increase in global food demand by 2050
Representing Australia’s Food,
Beverage And Grocery
Manufacturing Industry
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