How much does food contribute to Australia’s economy?

December 13, 2018
Food&Beverage

Australia’s food and grocery manufacturing sector is in many respects the quiet workhorse of the national economy. Australia’s largest manufacturing sector comprises companies that typically take produce from the farm and transform it into food and the consumer goods that every Australian needs every day. Fundamentally, the essentials of life.
While this industry has built a strong reputation for quality, safety and environmentally responsible production, its importance is further realised when you examine its contribution to the communities in which these companies operate.
For Northern Victorian regional economies, the food and grocery sector contributes $12 billion in annual output and makes the largest contribution. It employs 21,500 Victorians and pays $119 million per annum in tax – more than any other sector. The sector’s contribution to regional communities is even greater when you take into account the supply chain linkages for example through local farming, engineering and transport jobs that the sector stimulates.
These are impressive numbers, with major global companies like Fonterra at Stanhope, Mars Pet Care at Wodonga and Nestle at Tongala through to small, local companies like Beechworth Honey driving jobs and local economies across Northern Victoria.
The far more urban region of Western Sydney has also emerged as a food and grocery manufacturing powerhouse, generating $17 billion in output per year and $138 million in taxes.
The sector employs 24,400 workers whose wages and salaries pump $1.9 billion into the local economy annually. On average, workers can earn up to $80,000 a year.
Western Sydney’s current population of 2.1 million is expected to grow by a further 1 million people over the next 18 years, and it is critical to ensure jobs are available in the same areas in which people live.
While manufacturing has had a bad rap of late, we still make things in this country, with the highest quality standards. There is no doubt Australia’s largest manufacturing sector is being challenged by input costs, which are rising on everything from commodities to labour to energy; and seven years of continuous retail deflation.
Looking ahead, as Australia’s food manufacturing sector relies so heavily on Australian farmers, shortages caused by the drought will have considerable flow-on effects for food processors through increased input costs. Given the challenge posed by ongoing retail price deflation, this places greater stress on jobs and investment in manufacturing.
Yet this sector is incredibly resilient and is worth backing, because we have a globally competitive edge. Our “Clean and Green reputation” is the envy of the world and it enables some companies to get premium prices for value-added food and beverage products in growing export markets.
Northern Victorian food and grocery manufacturers exported over $2.1 billion last year, and Western Sydney $2.5 billion (a growth of more than 10 per cent from the previous year) showing our trading advantages in ensuring our products are served up on Chinese, Japanese and Korean dinner plates.
The ability to fully capitalise on these advantages is not going to happen without an ongoing push for trade competitiveness, a stable regulatory environment and reform to drive down input costs. Importantly we also need to look at ways to encourage these companies to continue to invest in their manufacturing plants and people.
Australians have long been proud of making things and now is the time to get behind what we are making in our regions and cities alike.
The AFGC has recently launched a public affairs campaign to do just that – demonstrate the true value of the $131 billion food and grocery industry to all levels of government and the Australian public.
Built around the central theme We’re from here, the campaign message is: Australian food and grocery manufacturers and processors play a key role in Australia’s communities and economies in which they operate. This is being dissected further into the areas of quality, choice, jobs and engagement with the community – all of which are key drivers of our sector.