In response to an article below from the Australian Food News Website on 5 June 2013.
Stop whinging – we have done this to ourselves!!! Simplot (USA) has been a relatively benign foreign investor since it bought many of the brands and factories formerly owned by the Australia Public Company in the mid 1990s (Edgells). Likewise we thought McCains (Canada) was here to stay. Will they follow the Heinz example to set up in New Zealand and sell back to us? Decisions are now made overseas about the closure of factories.
We have been complicit in the decline of our food manufacturing in Australia. Over the past three decades we have allowed majority control beyond the farm gate of every major food commodity except rice. The Australian Consumer and Competition Commission has overseen the loss of control to overseas interests and retailers in the name of competitiveness, while our farmers and our local manufacturers are expected to play to a different set of rules to their competitors.
While we claim food manufacturing is the largest manufacturing sector we have remaining, Australia has no major food companies. Decisions about our manufacturing are made in overseas board rooms, not here.
Other countries look after their own. New Zealand has the largest dairy company in the world, Fonterra. New Zealand obtained an amendment under the WTO rules to stop imports which impact their strategic industries. New Zealand stopped the sale of eight dairy farms to the Chinese last year because it did not meet the natioanl interest test. Its government cannot divest assets which are their for the long term interest of its citizens. Australians have no rights. Countries such as the USA strictly control manufactured goods through labelling law compliance. They decide what products will be sold in the USA.
Despite the warning signs, Australian decision makers turned a blind eye. Foreign investment at any cost has been the call cry! And our people are bearing the consequences! In recent years we have condoned the importation of packaged foods and fresh produce which does not meet our standards. Dumping is rife! Our labelling laws are inadequate. We have under resourced our gate keepers AQIS, Bio Security Australia and Australian Standards.
In recent years, aided by our high A$, our open door policy to imports, and our largess and benevolence to help developing countries, we have imported foods in direct competition with own farmers and their skills.
Our borders are not secure. Imports are coming from countries with labels which do not meet our standards, are replacing local producers on the shelf.
The growth of private label among the retailers has also put addition burden on our manufacturers to compete on price with overseas manufacturers if they want to keep their factories operational.
In addition, in recent years we have been net importers of food. While retailers might espouse their support for fresh produce on the shelves, imported foods are being substituted for local produce in many manufactured goods. Made in Australia does not mean it is owned here or sourced here with the current rules of 51% substantial transformation.
The problem in Australia is further exacerbated by the closures in our regional areas where produce is “value added”, creating skilled manufacturing jobs while our farming skills are retained.
The Australian owned businesses who are competing in this environment deserve our support. AUSBUY was prescient in warning of the consequences of loss of control of our wealth creating assets when it formed during the recession we had to have in 1991.
Australia’s challenge in the coming years is to rebuild our nation, get our people working productively for Australia again, and reinvesting in our future. If we cannot find answers to the questions we are asking then ask other questions. The seeds of the future are in those Australian owned companies and our farmers, many of whom have the answers. Are we listening?
Interviews can be arranged – 02 94375455 or 0418314923
Simplot and McCain both announce cut backs, threat of closures
- June 5, 2013
- Sophie Langley
Two prominent Australian food manufacturers have announced they are feeling the pressure from a “very competitive food industry environment” and may forced to make closures and reduce grower contracts.
Simplot Australia Pty Ltd has announced that two of its vegetable processing plants are at risk of closure, while McCain Foods Australia has confirmed that four potato growers in Ballarat have been notified they will not be offered contracts for the upcoming harvest period in late October – November 2013.
Simplot plants at risk of closure
Simplot Australia today advised employees at its plants in Bathurst (New South Wales) and Devonport (Tasmania) are under threat of closure. The Company said this was due to “unsatisfactory financial returns arising from a very competitive food industry environment and unsustainably high costs associated with manufacturing in Australia”.
The Company said the plants, which have both in the Simplot business for many years, are currently not competitive in the face of much lower cost imported product alternatives. According to Simplot, the high Australian dollar, while not causing the underlying lack of competitiveness, exacerbates the issues facing the plants.
“The frozen and canned vegetable categories have been chronic profit under-performers for years, regardless of the value of the Australian dollar,” said Terry O’Brien, Simplot Australia Managing Director. He said that the Company’s immediate imperative was to seek “sustainable improvement opportunites” with key stakeholders to help return the plants’ financial performance to the required level.
Simplot said meetings are being scheduled with local, State and Federal government representatives, employees, unions, suppliers and growers to discuss profit improvement opportunities.
“If insufficient opportunities are identified, we will be forced to close our Bathurst plant after the next corn season. Our Devonport plant will be required to produce a five year improvement plan with satisfactory outcomes or face the prospect of a longer term (3 to 5 year) closure,” Mr O’Brien said.
Australian vegetable and potato growers’ representative body AusVeg has said it is “deeply troubled” by Simplot’s announcement, and has called for the Australian Government to re-evaluate the food processing sector.
Simplot Australia said its parent company, the US-based JR Simplot Company, “remains steadfastly committed to the Australian food manufacturing industry” and is seeking ways for its Australian operations to improve returns in the face of “significant structural changes in the dynamics of the Australian market”.
The announcement follows an intensive six-month review of Simplot’s supply chain operations in the vegetable category.
McCain cuts growers
Meanwhile, McCain Foods has announced that four potato growers in Ballarat will not be offered contracts for the upcoming harvest period in late October – November 2013 because of surplus potatoes from 2012 and lower customer demand for the local product.
“The company has a long-standing history with many growers in Ballarat, Tasmania and South Australia, and we are committed to maintaining those relationships where we can,” said Mr Farnell. “It’s important we give as much notice as we can for this year so growers can look for other opportunities. We believe six months before planting is sufficient notice in the circumstances,” he said.
McCain Foods said it has been in discussions with growers across Australia for the past three months over the tonnage available and individual requirements.
“Australian potato prices were still very high compared to cheaper processed imports, and it’s important for grower committees across Australia to take leadership roles in tackling reforms to reduce inefficiencies in the system, which is vital in making our industry sustainable and competitive,” said Gerry Farnell, McCain Foods Integrated Supply Chain Director for APMEA.
McCain Foods said it had discussed the threat of imports with grower representatives and Victorian and Tasmanian State Government officials over the last 18 months through a working party to tackle reforms. McCain Foods said it would continue to consult with grower communities in each State on improving industry efficiencies and the development of new technologies to make the industry sustainable.
“Only a decade ago, Australia’s potato growers were competitive and import-resistant, and this should be the number one priority for growers,” Mr Farnell said.