•Food manufacturing profits to fall average 4.4%
•Meat and dairy to be hardest hit
•Indirect costs from electricity, transport and packaging costs to hit hard
•More help needed for food manufactuers to go green
A new report to be released by the Australian Food and Grocery Council today forecasts that profits for food manufacturers would dive under the recently passed carbon tax.
The study, conducted by global consulting AT Karney, said that indirect costs on the sector would be surprisingly high. Much higher than the 0.9% direct impact of the carbon tax itself.
The study assumed that food manufacturers would be reluctant to pass on the costs to consumers.
“Given the increasing level of international competition and hevily concentrated and competitive retail landscape, it will be difficult to pass through cost increases” said the study
Tom Mahar, Director of Sustainability from the AFG, told Food Magazine that Australian food manufacturers were already dealing with competitive pressures from offshore companies.
“[Australian Food Manufactuer’s] are already dealing with the high Australian dollar and rising costs. The carbon tax will make them even more uncompetitive” said Mr Mahar.
He further noted that despite the study, it would be hard to determine what the impact final impact on consumer prices would be.
In launching the report at parliament house in Canberra today, AFGC Chief Executive Kate Carnell said:
“The carbon tax will increase the cost of Australian manufactured goods – but will not affect imports, which are already cheaper due to the high Australian dollar. This will ultimately impact industry competitiveness affecting its capacity to employ, innovate and invest.
“To maintain its competitiveness, industry will need to upgrade plant equipment and invest in low emissions technology to use less energy and become more efficient. To enable this to occur, industry urges the Government to improve the business case for investment and innovation to encourage companies to improve their Australian manufacturing operations rather than moving offshore, which will impact local jobs.”
Key sectors to have profits impacted include:
•11.5% drop in dairy
•11.6% fall in meat processing
•0.9% fall in beer
•0.8% fall in soft drinks