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in either the domestic or export markets into the future,” she said. “The sector’s growth is contingent on significant investment – in new product development, sustainable packaging, advanced manufacturing and digital technologies – to boost the sector’s competitiveness, agility and resilience.” The report, based on analysis from economist Warren Hogan of EQ Economics, finds that: • Australian food and grocery manufacturing has strong growth potential in domestic and export markets. • The food and grocery sector is under pressure from declining profitability due to high costs and a highly concentrated retail marketplace, resulting in a decade of stagnant capital investment and low innovation. • Australia faces an uneven playing field through foreign governments providing significant financial incentives, and non-tariff barriers to export trade. • Australian food and grocery manufacturing risks losing global competitiveness unless steps are taken to boost investment in new advanced manufacturing technology to improve efficiency and innovation. • With a strategic focus, the right policies and incentives, the size of Australia’s food and grocery sector can double to $250 billion by 2030, with a resulting 54 per cent increase in employment to 427,000 people. If, however, settings are not changed, the sector will either “muddle through”, underperforming the broader Australian economy or, at worst, face a progressive decline with increased offshoring of production, job losses and increased import penetration, the report warns. “Australian food and grocery manufacturing is strong, dynamic and critically important, but there are important decisions that need to be made now about the sector’s future,” Ms Barden said. The full report is available at afgc.org.au/industry-resources/ sustaining-australia-food-and-grocery- manufacturing-2030. Selected report recommendations Strategic industry policy The AFGC recommends: • Non-food grocery manufacturing be added to the food and beverage priority manufacturing sector within the MMS. • The Minister for Industry, Science and Technology, in consultation with other portfolios, should develop an annual set of policy and regulatory reforms that move the sector towards its growth ambition of $250 billion by 2030; and ensures any new government policy or regulatory proposals explicitly consider the impact on the sector’s ability to achieve this goal. Investment incentives The AFGC recommends that the federal government: • Allocates additional funds to a dedicated co-investment grant program within the MMS, specifically for food and grocery manufacturers to adopt advanced manufacturing technologies that improve efficiency, innovation and global competitiveness. • Implements a co-investment grants program that supports and fast-tracks food and grocery manufacturers’ research, development and testing of new sustainable packaging formats, and changes to packaging equipment to facilitate a circular economy. • Alters the eligibility threshold for the temporary full expensing (instant asset write-off) measure to include companies with significant manufacturing capital stock in Australia that don’t meet the alternative eligibility test. Skills The AFGC recommends the federal government provides funding for: • A skills audit to understand the gap NEWS • • between the sector’s current skills capabilities and the needs of a more automated and digitalised food and grocery manufacturing sector. A sector-wide, advanced food and grocery manufacturing training centre with access to virtual and augmented reality technology to help train local workers to operate advanced manufacturing equipment and digital technologies. A grant process that supports food and grocery manufacturers to offer on the job training or integrated learning programs that connect the sector with education/ training providers. Export growth The AFGC recommends that all governments and industry develop an export growth strategy that aims to deliver food and grocery export growth of 10 per cent a year to 2030. JUN, 2021 RETAIL WORLD 5