4. Increasing market share
   1. Australia’s comparative advantages, capabilities, and trade partnerships present strong opportunities for Australian food and beverage manufacturers to increase their market share. This chapter examines export opportunities for growth, including consumer trends and opportunities in innovative manufacturing.
   2. Australia is well-positioned to capitalise on its clean and green reputation and ability to innovate and expand product range to further increase its market share, both domestically and internationally. Evidence received by the Committee also provided insights into emerging market trends, such as:

• organic food and beverages
• AI, automation, and digitisation
• value-adding to raw materials.

Export opportunities for growth

4.3The ability to move into new markets and increase revenue is critical to longevity. Entering new markets and developing new products requires a multifaceted approach by food and beverage manufacturers to make informed decisions about the branding of products, marketing strategies, and overall business direction. Market research is important to gain insights on consumer preferences, behaviours, and buying patterns, both in mature and emerging markets.

Global consumer trends

4.4By 2040, the global population is expected to reach nine billion. This will shape the global economic and consumer landscape and, while the advanced and developed countries have a greater capacity to spend now, economic power will shift to emerging and developing countries, translating to a growth in purchasing power.

4.5Long-term consumer spending trends show declining expenditure on staples (like rice and wheat) and increasing shares for higher value food items, such as meat, dairy, fruits, and vegetables. This shift coincides with growing global consumer trends affecting food and eating, such as health and wellness, sustainability, and convenience.

4.6Ms Louise Talbot, General Manager, Sector Development Branch at DISR, told the Committee that Australia has an ‘excellent reputation for clean and green’:

Our food is valued highly, so premium and niche products, I think, will continue to be a trend: alternative proteins; Indigenous and native foods; personalised nutrition, which I think really is a growing area for consumers; food fortification; and 'free from' foods—foods that are free from gluten are a common one—to account for consumers' changing preferences. Australia is well placed for that in the future, given we have such a great reputation for the quality and safety of our food.[1]

4.7AUSVEG submitted that Australia's reputation positions it favourably for future growth in the global food market:

As consumers worldwide increasingly value food safety and quality, Australia's stringent standards and progressive practices set its agricultural products apart, ensuring continued demand and market expansion.[2]

4.8Food South Australia stated that ‘Australia is leveraging its diverse agricultural landscape and rich culinary heritage to meet both domestic and international demands for high-quality, sustainable products.’[3]

4.9Australian Organic Limited observed that there is a demand for health-focused alternatives such as local and third-party certified produce that meets stringent standards and is free from toxic persistent pesticides, and products which focuses on improved soil health and sustainable land use.[4]

4.10According to Spirits Victoria Association, the drinking habits of Australians and drinkers around the world is to reduce consumption and increase the quality of the product they consume. This presents a big opportunity:

The Australian spirit industry has significant opportunity to promote itself to the export market – our produce generally is well regarded, our production techniques are modern yet environmentally sensitive and the offering is increasing all the time. The potential to leverage off these natural marketing strengths by showing the world our industry […] is significant.[5]

4.11No and low alcohol (NOLO) options are also seen as an emerging trend, in-line with the moderation trend, as above:

Health and wellness is arguably the most influential trend impacting wine consumption. This has seen alcohol consumption fall, including for wine. Some people are abstaining from drinking wine, others are drinking less but paying more while some are seeking no and lower alcohol options. The ever-growing focus on health and wellbeing, including drinking in moderation is having a profound impact on consumer purchasing decisions, driving them for quality over quantity and wines of lower alcohol content.

NOLO wines and other grape based products provide an avenue through which we can drive positive trends in moderation, while continuing to drive economic growth.[6]

Consumer trends in Asia

4.12According to La Trobe University, over the past decade, there has been a shift of Australian food exports to Asia. This is due to strong population and income growth in the emerging markets of China, India, Indonesia, South Korea, Vietnam, and the Philippines.[7]

4.13The share of Australia's agricultural exports to Asia has increased from 52 per cent in 2007–08 to over 70 per cent in recent years. This demand is expected to increase, and Asia will be a key export market for Australia’s beef, milk, sheep meat, wheat, and other food products.[8]

4.14La Trobe University believes that there are opportunities in the Asia-Pacific region for Australian food and beverage products:

As La Trobe highlighted in the recent Inquiry into Australia’s Food Security, given its robust regulatory system, Australia has the potential to be the premium provider of high-quality foods to the Asia-Pacific region.

Australia could also do more to promote itself as a “clean and green” net exporter of food which adds value to commodities. This has the potential to transform the industry and create significant growth. Overall, there is a trend for consumers to seek more sustainable food choices and a global trend for finding alternatives to meat, which Australia could maximise to its own advantage.[9]

4.15Australian Organic Limited has identified Southeast Asia as a region which offers growth potential for organic food and beverage products:

With rapid economic growth and a middle class projected to reach 3.5 billion people, these markets present significant scope as lucrative organic markets. Moreover, as Southeast Asian countries begin to develop organic regulatory standards, there is an opportunity to establish Australia as a key supplier of high-quality organic produce in these markets. Our proximity to this market and our reputation for high quality produce is an opportunity to increase organic exports to these new markets that are currently non-existent or still in the early stages of development.[10]

4.16The Northern Australian Government & Charles Darwin University determined that demand for shelf-stable and long-life foods is expected in the Asia-Pacific (APAC) region:

The region is home to a significant portion of the world’s population, which is rapidly growing and urbanising with a rising middle class. This will drive exponential growth in the demand for temperature-controlled foods. Shelf-stable meats and seafood alone constitute a market of around $US13.5 billion in 2022 in the APAC region.[11]

4.17The Australian Dairy Products Federation believes that there are strong opportunities for profitable growth in Southeast Asia, where there is growing demand for high quality, nutritious dairy products.[12]

4.18Further, the Australian Export Grains Innovation Centre and Grain & Legumes Nutrition Council believe that there are opportunities to build and strengthen partnerships—particularly with Southeast Asia—to build capability in the region, including in animal and plant biosecurity, adapting to a changing climate, improving agriculture sustainability, and agriculture technology and innovation.[13]

Reputational advantages and branding opportunities

4.19Australia’s world-leading safe, clean, and green reputation gives its food and beverage manufacturers a competitive advantage in both domestic and international markets.[14] There are two major factors to Australia’s positive reputation:

1Australia has strict food safety regulations enforced by various federal- and state/territory-level government departments and bodies, such as Food Standards Australia New Zealand (FSANZ) and Safe Food Production Queensland. These regulations cover the entire supply chain from farm to table, ensuring that products meet high safety and quality standards before they reach both domestic and international consumers.

2Australia benefits from its natural environment that is perceived as clean and relatively free from pollution and high pesticide use, especially compared to other countries. This perception helps bolster its reputation for producing natural, high-quality agricultural goods, which is then manufactured into a variety of food and beverage products.

4.20Professor Owen Atkin, Director of the Agrifood Innovation Centre at the Australian National University (ANU), remarked that ‘Australia really has an enviable record in how we produce abundant food’:

We do it in a way that is environmentally sustainable. We make nutritious products that feed Australians and feed the world. Associated with that is extraordinary development of agricultural technologies. We've been a world leader in that, in how we grow and harvest food—again, in ways that are profitable but also environmentally sustainable. Food manufacturing is an aspect which is also where you'll find global excellence within Australia…[15]

4.21Food and Agri Australia was of the view that Australia’s competitive strengths include its diverse agricultural production and robust food safety standards, a reputation for high quality produce and manufactured products, and access to cutting-edge research and development capabilities.[16] However, it contended that capitalising on these strengths would require strategic investments in advanced technologies, infrastructure, and workforce development.[17]

4.22The Food and Beverage Accelerator claimed that globally, consumers increasingly demand to know from where ingredients are sourced and where their food is manufactured:

Australia’s ‘Nation Brand’ is strong and highly regarded internationally, currently 9th out of 60 nations, providing a strong platform from which to promote Australian-made products and ingredients. Many international consumers target Australian products because they are trusted. Domestic consumers also want to know whether a food is sourced from Australia or overseas, so they can make an informed purchase decision.[18]

Provenance claims

4.23Submissions called for clear guidelines to support tracking of provenance to help distinguish Australian products.

4.24Professor Mike Gidley, Director of the Centre for Nutrition and Food Sciences at the Queensland Alliance for Agriculture and Food Innovation, expressed that marketing of Australian products should highlight its provenance:

With a developing global interest from consumers wanting to know where their food comes from and a growing, newly-affluent population in many Asian and other export markets, there is an opportunity for Australia to build on its reputation as a producer of quality foods to develop added-value products. This may also lead to a redefinition of Australia’s potential regional role from being a food bowl to being a provider of high-value niche products backed by technical evidence of quality, nutrition and sustainable production processes.[19]

4.25AUSVEG was of the view that ‘without clear messaging and promotion, Australians will default to cheaper imports which will threaten the viability of Australian producers and could ultimately lead to greater reliance on imported food products and [cause] vulnerabilities to Australia's food security.’[20]

4.26The Food and Beverage Accelerator recommended that the Australian Government develop a framework for trustworthy and accurate provenance labelling for Australian food and beverages, so both domestic and international consumers can be assured of the quality, sourcing, and credentials of Australian produce.

Domestic landscape

Dairy products

4.27Australian dairying is a $17 billion industry, through farming, manufacturing, and exports. According to the Australian Dairy Products Federation, in 2019–20 the dairy processing sector contributed more than $12.4 billion to the Australian GDP.[21]

4.28However, the dairy industry is under pressure, with year-on-year raw milk production volumes decreasing, hitting a 30 year low of 8.1 billion litres in FY 2022–23. Australia’s dairy industry has dropped its export competitiveness from 36 per cent to 30 per cent in FY 2022–23, not only due to lower supply availability but also due to price competitiveness.[22]

4.29It conceded that ‘Australian consumers have accepted imported dairy products, and retailers and food service outlets are interchanging Australian cheese and butter with cheaper imported products at their discretion.’[23] Statistics show that more than 2billion litres of milk equivalents entered the Australian market this year, and that Australians consumed close to 30 per cent of dairy from overseas. As a comparison, Australians consumed just 11 per cent of dairy from overseas in the year 2000.[24]

Organic products

4.30According to data prepared for the Australian Organic Market Report 2023, there are approximately 1,400 certified organic food and beverage processors in Australia, employing around 7,440 full-time equivalents (FTEs). Among these processors, alcohol is the leading value-added commodity, accounting for 30 per cent of processing, followed by ‘other food products’ manufacturing at 27 per cent and dairy products at 9 per cent.[25]

4.31In terms of economic performance, organic processors report an average revenue of $2.3 million, compared to operating costs of $660,000. The Australian organic industry produces approximately 541,000 tonnes of processed goods each year. Despite these numbers, Australia’s organic sector holds only a 1 per cent share of the global market, indicating the potential for expansion. Given Australia’s advantage in organic landmass (Australia currently has approximately 60 per cent of the world’s organic land), there is opportunity to increase local inputs into processing, leading to greater production and market share.[26]

4.32According to Australian Organic Limited, countries such as Vietnam and China—two of the fastest growing export destinations for Australian red meat and livestock—have demonstrated a willingness to pay premiums of up to 35 per cent for Australian organic beef. Failure to capitalise on Australia’s organic premium products could result in missed opportunities, particularly as countries like New Zealand could potentially seize these markets, given their established organic regulatory framework and similar proximity to Southeast Asia.[27] More discussion around organic food regulation is in Chapter 6.

AI, automation, and digitisation

4.33According to the Australian Academy of Technological Sciences and Engineering (ATSE), the Australian food and beverage manufacturing industry is on the brink of transformation, with emerging technologies such as artificial intelligence (AI), automation, and digitisation offering opportunities to drive innovation, enhance productivity, and promote sustainability.[28]

4.34The ANU’s Agrifood Innovation Institute remarked that ‘technology is now a critical element in food and beverage production and manufacturing.’[29]

4.35Food South Australia stated that ‘the integration of technologies such as 3D printing, robotics, and automation is streamlining production processes, reducing labour costs, and boosting productivity in food processing and packaging operations.’[30]

4.36The William Angliss Institute listed the benefits of these technological advancements for food and beverage manufacturers:

• Production: optimisation, predict and prevent equipment failures, error reduction, and increase capabilities and capacity;
• Supply Chain: traceability, transparency, and optimisation; enable real-time management: enable real-time monitoring of production lines incorporating predictive maintenance;
• Product Development: facilitate the design and engineering of new and innovative products, tailor products to individual customer preferences; and
• Logistics: ability to streamline and manage complex distribution processes within domestic and export markets.[31]

AI-driven processes

4.37ATSE provided several examples of how the use of AI can drive innovation and productivity in the Australian food and beverage manufacturing industry:

• Integrating AI-driven analytics into supply chain management can optimise processes, reduce waste, and improve efficiency.
• Predictive maintenance using AI can minimise downtime and increase productivity while automating repetitive tasks can further boost efficiency and reduce operational costs.
• Smart manufacturing platforms utilising AI can help the industry adapt quickly to changing market demands and consumer preferences, enabling the development of new products tailored to evolving consumer needs.
• AI is also valuable for quality assessment in the food sector, ensuring consistent product quality and reducing waste.
• For beverage manufacturers, digital technologies in fermentation processes can improve product quality and consistency.
• Innovations like personalised nutrition, intelligent packaging, and advanced quality control systems can result from the integration of AI and automation, helping meet the demand for healthy, safe, and sustainable food products that contribute to both emissions reduction and population health.[32]

Smart manufacturing technologies

4.38Utilising smart manufacturing technology can address some of the common constraints faced by food and beverage manufacturers, according to Rockwell Automation, an industrial automation and digital transformation company. It submitted that, to meet changing consumer preferences for products, e-commerce channels, or subscription sales, businesses can deploy smart technology to permit flexible decision-making and protect product quality.[33]

4.39CSIRO submitted that AI has the potential to improve competitiveness and create distinctive value propositions for customers:

The extent of AI integration into food manufacturing processes is expected to increase as the technology advances. This optimisation can improve efficiency and quality consistency and reduce waste. AI can also enhance food safety and traceability systems to meet the quality assurance required in domestic and international markets. However, successful implementation requires collaboration between industry practitioners, food scientists, and AI experts to develop solutions tailored to the specific needs of the food manufacturing industry.[34]

Funding

4.40Submitters to the inquiry highlighted that government assistance and funding for the purchase or upgrading of automated equipment is needed for further innovation in the sector. These technologies, processes, and practices will enable the sector to improve their productivity and competitiveness.

4.41The Australian Beverages Council called for investment in advanced manufacturing equipment to support Australian producers to be competitive in global markets.[35] Likewise, the Australian Food & Grocery Council suggested introducing an investment tax incentive to drive the adoption of new technologies and capital equipment that boost productivity, achieve de-carbonisation and other sustainability outcomes.[36]

Value-adding

4.42Value-adding is the process of adding value to a raw material and transforming it into a more valuable product. For example, the price of flour increases when it is sold as bread, and its price further increases when the bread is of a different variety, such as fruit loaf. Value-addition in food and beverage products allows manufacturers to focus on consumer needs instead of only product production.

4.43Value-adding typically falls under two categories:

1Processing: Increasing the value of the input through transformation using manufacturing processes (e.g., increasing nutritional profile or shelf stability).

2Method of production: Attracting a higher consumer willingness to pay by using differentiated production techniques (e.g., organic produce, free range livestock, or selectively breeding for desirable traits).[37]

4.44The evidence presented to the Committee suggested that there were significant opportunities for value-adding in food and beverage manufacturing in Australia. Recent research has identified the opportunity to increase the value-add provided by the Australia’s food and agribusiness sector to $200 billion by 2030.[38]

4.45The Tasmanian Institute of Agriculture submitted that the economic development of regional food producing areas can be enhanced by retaining more value from produce through more value-added processing. However, this requires innovations that can offer superior products, niche local products, and process efficiencies to overcome the problems of distance to market and smaller production scales.[39]

4.46Professor Tony Bacic, Director of the La Trobe Institute for Sustainable Agriculture and Food, told the Committee that ‘there's an opportunity here to transition Australia from a commodity-based exporter to a value-adding proposition, which actually has enormous economic benefit, and not just for the farming community but also for sustainable agriculture.’[40]

4.47Dr Nigel Barrett believes that, along with being a renewable energy superpower, Australia should be a food industry powerhouse:

We should be processing our clean and green food raw materials into value-added products that we sell into export markets. We should have a massive positive balance of payments in the food space not a negative balance as we have at the moment. This will not happen unless we help Australian companies to grow and prosper.[41]

Maintaining sovereign capabilities

4.48Accord Australasia Limited noted in its submission that one of the Australian Government’s seven priority areas for diversifying and transforming industry and the economy includes the priority area of ‘adding value to agriculture, forestry and fisheries’. It was of the view that achieving this priority will require new markets for agricultural produce and the catch and harvest from fisheries, and that value-adding by turning produce into secondary manufactured food and beverage products will stimulate other manufacturing and commercial activity within Australia.[42]

4.49However, Accord Australasia Limited contended that ‘realistically this may collide head on with the commercial reality that some overseas markets will pay a premium for quality Australian agricultural and fisheries produce that a local food manufacturer cannot match’:[43]

Though Accord notes this reality, there is also a cost to the nation and to the goal of increasing Australia’s manufacturing and economic complexity - and, importantly, our sovereign capabilities - if we simply revert to shipping raw produce overseas to the highest bidding export market. Investigating this issue strategically, through the lens that is now being employed in government policy on other nationally vital Australian commodities like critical minerals, would seem a sensible approach for gaining a better balance on this challenge.[44]

Alcohol industry

4.50The size and value of the Australian grains industry has increased significantly over the past 35 years, from approximately $2 billion to $4 billion in 1990, to a record return of $31 billion in 2022–23, from a 70.8 million tonne crop.[45] Grain Producers Australia submitted that grains are a low-value commodity which generates an ‘economic multiplier effect across the economy’.[46]

4.51The inquiry received numerous submissions from the distilling industry commenting on grains and its value-adding processes.[47] For example, according to New World Whisky Distillery, ‘a tonne of barley sold on the open market attracts a price of somewhere between $300 and $500. But when Starward sells that tonne of barley as whisky overseas, it's worth closer to $40,000 or $50,000.’[48]

4.52Mr Will Edwards, Founder of Archie Rose Distilling Co., explained to the Committee how Archie Rose developed special malts in partnership with Voyager Craft Malt, which has seen immense value-add:

Through this R&D partnership with Voyager, we have innovated to create Australia's first commercially available native timber-smoked malt, eliminating the need to import thousands of tonnes of peated malt from the UK, and creating a highly value-added Australian grown and made product able to be sold for an approximately 400 per cent premium to the feed barley farmers in the region we previously relied on.

This has resulted in a uniquely Australian whiskey, which is authentically Australian, differentiated by our use of lower yielding but more draught-tolerant malts better suited to the Australian climate; a smaller carbon footprint, as the grains don't need to be shipped from overseas; is value-added at every stage of production and is genuinely world-class, our rye malt having won world's best whiskey four times and single malt two times.[49]

4.53Ms Holly Klintworth, President of Australian Distillers Association and Managing Director and Head Distiller of Bass & Flinders Distillery, similarly told the Committee how local grapes are sourced for wines and brandy:

We're a vine-to-bottle distillery that use locally sourced fruit, native botanicals and Victorian wine to make our range of gins, brandies and liqueurs, so we have a really strong and direct link to local agriculture.

We're able to value-add to local vineyards by turning $16,000 of wine into $1.5 million worth of brandy.[50]

Upcycling of produce

4.54Waste reduction and reuse is inherent to many food and beverage manufacturing processes, presenting innovative and lucrative opportunities for Australian food system circularity.

4.55Food Frontier submitted that many domestic plant protein processing companies are pursuing circular and low-waste ingredient production, seeking to utilise the entire grain or pulse to produce high-protein ingredients and useful byproducts, including starches that can be directed into other agrifood supply chains such as bakeries.[51] Another example was using whole pulses to produce an isolate protein powder, and the remaining carbohydrate pulp byproduct leftover at the end of the fractionation process is then repurposed as animal feed.[52]

4.56End Food Waste Australia described how the food and beverage manufacturing sector could harness techniques such as value-adding to food surplus and by-products, known as ‘upcycling’, to convert food that would otherwise be wasted into new products using simple techniques such as freezing and dehydration, through to complex nutrient extraction.[53] It noted that:

Upcycling can help to:

• Reduce food waste.
• Increase food supply through using more of the food that is grown.
• Deliver increased value to farmers, growers and manufacturers by converting a ‘waste cost’ into a valuable resource.
• Provide consumers with more sustainable food choices.
• Grow Australia’s international reputation as a sustainable food producing nation.[54]
  57. End Food Waste Australia provided the example of how retailer Harris Farm Markets has a ‘repurposeful range’ where short-dated ingredients are upcycled in-store, for example, by turning wilted herbs into pesto sauce.[55]
  58. In Tasmania, research is looking at how produce that does not meet industry specification for sale can be value-added, such as turning fruit waste into nutraceuticals.[56] Cider Australia estimates that its members produce approximately 6 million litres of craft cider made from the juice of Australian grown apples and pears.[57]
  59. The Tasmanian Government’s submission commented on Forager Food Co. and its work. Forager Food Co. is Australia’s pioneering and largest producer of freeze-dried products, specialising in the production of shelf stable foods:

This technology approach of processing to shelf stability also represents a significant opportunity to value add to Tasmanian produce. It would build on the lead example of Forager Foods having grown freeze dried (FD) processing from a defence foods concept to Australia’s largest FD plant upgrading primary products into snacks and valorising second grade produce that at present ends up as waste or animal feed.[58]

4.60Although not for human consumption, Stay Loyal Dog Food, a NSW based manufacturer of grain-free dog food, submitted that ‘Australian pet nutrition is stuck in the 1980s’ and through leveraging the latest food and beverage science and manufacturing technologies, it has been able to create dog food that is more digestible and nutritious:

Unlike traditional pet foods that use low-quality byproducts, our wild game harvesting strategy utilizes whole animals, ensuring a superior, balanced protein source for pets.

This initiative not only promises a significant nutritional upgrade but also aims to activate an underutilized national resource—Australia's wild game—enhancing both the quality and sustainability of pet food production.[59]

Innovation

4.61Innovation enables manufacturers to continue to find new ways to value-add to primary produce, develop healthier products desired by health-conscious consumers, and take advantage of new technologies such as AI and machine learning.

4.62Australia’s novel and native food sectors are an important part of innovation in food and beverage manufacturing, offering unique tastes, new concepts, and flavour profiles to consumers. Throughout the inquiry, the Committee heard from submitters about the opportunities and challenges surrounding each sector.

Why the Australian industry needs innovation

4.63The Australian Food and Grocery Councils’ (AFGC) 2021 report Sustaining Australia: Food and Grocery Manufacturing 2030 stated the importance of innovation to the food and beverage manufacturing sector’s growth trajectory:

To entrench the food and grocery manufacturing sector on a high growth path, action needs to be taken to accelerate sector innovation and the development of new, high value-added products that meet changing consumer preferences particularly regarding sustainability, health and wellness, convenience and functionality.

Such innovation has the potential to grow the share of consumer spending on Australian manufactured products in domestic and international markets.[60]

4.64Ms Samantha Blake, Deputy Chief Executive Officer of the Australian Food and Grocery Council, emphasised to the Committee that innovation is critical to the sector:

The first comment I'd make is that innovation is the lifeblood of our sector, and it has been for forever [...] Our member companies in the industry more generally are constantly looking at how they can innovate product, either bringing new products to market to meet consumer demand, innovating for sustainability credentials or other packaging innovations and so forth. That is very important to the sector.[61]

4.65Australia’s research sector enables innovation for the wider sector and the continued development of novel foods. Research institutions and universities conduct studies and experiments which lead to the development of new technologies, processes, and products. This supports the Australian food and beverage sector to continue to innovate.[62]

4.66The Queensland Department of Agriculture and Fisheries and Department of Regional Development, Manufacturing and Water provided an overview on the importance of the research sector to innovation, outlining that:

Research plays a critical role in driving innovation, competitiveness, and sustainability in the food and beverage manufacturing sector. By investing in research and development, manufacturers can enhance product quality, improve production processes, reduce costs, extend shelf-life and differentiate themselves in the market. Research can also inform strategic decision-making, helping manufacturers identify growth opportunities, optimise supply chains, and navigate regulatory challenges. Furthermore, research collaboration between industry, academia, and government can facilitate knowledge exchange, technology transfer, and the commercialisation of new products and technologies, ultimately driving economic growth and job creation.[63]

Long term sustainability

4.67In the coming decades, feeding the growing world population will become a global food-supply challenge for our existing food systems. Recently, the global food-supply chain has been severely affected due to disruptions caused by the COVID-19 pandemic, climate change, and geopolitical conflicts. Innovation will be critical to solve these problems and new ones that may emerge.

4.68Professor Owen Atkin, Director of the Agrifood Innovation Centre at ANU, observed that Australia’s ability to maintain the capacity in which it produces food in ways that are sustainable and profitable will come down to its ability to innovate:

There has to be innovation continually in how we grow, harvest, transport and process food … Global climate change is making it difficult. A lot of my work is on the impacts of extreme temperatures and heat. Fifty degrees Celsius scenarios are going to become common in this country, and that is going to seriously challenge some of our primary productivity that underpins our food systems. We've got to minimise the environmental footprints. The emissions and the energy components of food systems need to be looked at, and it's the whole system that needs to be looked at in that context.[64]

International competitiveness

4.69Submitters to the inquiry foresee a range of growth and export opportunities for Australia’s novel food and beverage products, emphasising Australia’s ability to become a leader in different novel categories.

4.70Dr Simon Eassom, Chief Executive Officer of Food Frontier, stated that Australia has an opportunity to become an ‘alternative proteins powerhouse’:

The number of alternative protein companies in Australia has risen from less than five in 2017 to more than 30 in 2024. This number does not include the domestic plant-based dairy manufacturers, nor does it include the growing number of startups, small and medium businesses and multinational companies across the broader value chain, with the capabilities in alternative proteins. For example, of the nearly 300 plant-based meat products available in 2023 in supermarkets, 63 per cent are made by Australian manufacturers. Despite economic headwinds and slower than predicted consumer sales, Food Frontier's plant-based meat 2023 State of the Industry report revealed a maturing domestic industry with large growth opportunity, especially in the areas of food service and institutional food.[65]

4.71Dr Eassom also told the Committee that Australia’s nascent precision fermentation and cell cultivation industries are ‘on track’ for substantial growth as well:

There are now nine domestic companies. Australia is on the verge of having its first cell-cultivated meat product approved for domestic sale. If Australia positions itself correctly, global companies could use Australia as a production base to service the growing global market, bringing with them significant investment and employment opportunities, including into Australia's regional communities. Australia has the right mix of agricultural, manufacturing and research capabilities, as well as established trade routes across the Asia-Pacific region, where demand for protein is highest and will grow substantially in coming years.[66]

4.72Submitters identified Asia as a key export opportunity for alternative proteins, with Nourish Ingredients indicating that it is a $13 billion opportunity.[67] The Asia-Pacific region is familiar with consumption of plant proteins and has a growing population with a correlating growing demand for food.

4.73Vow sees Asia as a target market for their cell cultivated products, with Mr George Peppou, Chief Executive Officer, Vow stating:

… there is a big opportunity for emerging manufacturing leaders, like Vow, to build up capacity in Australia, to focus on exporting to the large markets on our doorstep, ranging not only from key trade partners like China but also and especially across Asian regions, like Singapore, Japan and South Korea, which are all countries that are actively investing in and regulating cultured meat to be approved as foods entering the market.[68]

Novel foods

4.74Novel foods are non-traditional foods that do not fit within existing food standards and therefore require assessment by FSANZ before they are sold. Novel foods offer solutions to ongoing food challenges, such as the global need for more protein and meeting shifting consumer trends.

4.75According to Food Frontier, new or alternative proteins, including proteins that are plant-based, cell-cultivated, or precision fermented, have the potential to bolster sovereign manufacturing capability and the sustainability of Australia’s agrifood sectors, while also delivering significant economic, health, security, and environmental benefits.[69]

Novel food examples

4.76Below are three examples of new and emerging products and industries, as raised in evidence.

Cultured and cultivated meat

4.77Australian novel food company, Vow, is the first company of its kind in Australia to develop and market cultured meat products. Vow identifies and isolates cells from an original source (such as quail and crocodile), and cultures the cells in a bioreactor, which then grows into its products. It then sells its products under the brand name Forged.[70]

4.78Vow’s products have not yet been approved for sale in Australia. However, Vow’s cultured meat products have been approved in Singapore by the Singapore Food Agency and have been selling there since the beginning of April 2024.[71]

4.79Mr George Peppou, Chief Executive Officer, Vow, told the Committee that it launched its Forged brand through tastings of a seven-course menu at a restaurant in Singapore:

The feedback that we gathered anonymously from those customers showed that 94 per cent would definitely eat it again, and 75 per cent said it completely exceeded their expectations ... We've seen, from working with chefs at some high-end restaurants in Singapore, a similarly positive experience and reception, not because it's similar to what they know, but because it offers both consumers sitting at the dining tables and chefs putting together a menu something unique. Overall, the feedback early on has been really positive. Testament to that is working with more high-end chefs in Singapore and selling more volume through the restaurants we're working with—significantly more—for better or worse, than we had projected and planned.[72]

4.80Vow told the Committee that it is not Vow’s approach or intention to compete with traditional meat:

We've been very clear from the get-go that we see this as a companion to the farming we practise in Australia and the meat production we have in Australia. Because of that, we have developed really good relationships with the Meat and Livestock Association, the Red Meat Advisory Council and the farming community, just because they see this as a new market, not competing with theirs. We specifically don't denigrate farming as a practice. We think it is a really important part of it. We are all meat eaters—most of us are meat eaters; we love eating meat. We see this as just another meat to add to the options on the plate.[73]

4.81In response to a question from the Committee regarding branding separation between traditional and cultured meat and plant-based options, Vow agreed that there should be a clear distinction between the two, with clear labelling:

One of the challenges that plant-based meat, or plant-based alternatives, has is that they aren't derived from animal products. They are trying to imitate an existing product. There are those who have accused them of trying to pretend that they are beef, chicken or pork, labelling their products as such and confusing consumers. I understand the ACCC have dealt with that and said that they haven't received any substantive complaints, but we still take the point that we want people to know it's cultured meat. […] We definitely don't want to be misleading consumers. We want to make sure that they know exactly what they're eating and that they're buying it for the reasons for which we hope they're going to buy it.[74]

Precision fermentation

4.82Precision fermentation refers to the use of microorganisms (such as yeast and bacteria) to produce specific, customised complex molecules that can be used as new food ingredients. It differs from traditional fermentation which involves the propagation of microbial cells without genetic modification.[75]

4.83Precision fermentation is an established technology which has been used since the 1980s to produce high-value pharmaceuticals. Recently, as costs associated with the biomanufacturing technique have reduced, food and beverage manufacturers have started using the technology to produce new products.[76]

4.84Submitters raised many applications of precision fermentation for the food and beverage manufacturing industry, particularly in the creation of sustainable alternative protein products ranging from alternative meats to alternative dairy products.

4.85Recognition of the value of biomanufacturing has seen an increase in recent years. CSIRO released its National Synthetic Biology Roadmap in 2021,[77] followed by its Synthetic Biology National Progress Report in 2023, which outlined that synthetic biology is a $700 billion global opportunity, with Australia having the potential to capture $30 billion of revenue and create 50,000 jobs by 2040, should key enabling government policies and conditions be met.[78] While the creation of food and beverage products through biomanufacturing processes such as precision fermentation will only be part of the total value of biomanufacturing, there is still significant value to be captured.

4.86Eden Brew considers that there is a significant opportunity for Australia to take a leading role with precision fermentation, which could be a $750 million to $2.2 billion opportunity by 2030, with the potential to create up to 2,000 jobs.[79]

4.87Ms Camilla Roberts, Government Lead, Cauldron Molecules discussed the importance of the opportunity of biomanufacturing, stating:

Harnessing the power of biomanufacturing would allow Australia the onshore critical capability that can produce almost anything we use in our day-to-day lives, including food and beverages, medicine, fuels and plastics. It also complements conventional methods, accelerating our path to decarbonisation, improving food security and supply chain resilience and growing regional economies.[80]

4.88Dr Simon Eassom, Chief Executive Officer, Food Frontier explained that precision fermentation provides a big opportunity for Australia:

The biggest opportunity for Australia, without a doubt, is in food manufacturing with ingredients. Just about everything we eat that is processed on the shelves has things like milk powder as a fortification or egg proteins in there because they have a binding or a gelation functionality. There is enormous capability with precision fermentation to produce those ingredients that then go into food manufacturing, both onshore and offshore.[81]

Plant-based protein

4.89According to Alternative Proteins Global data, Australia ranks eighth globally for total alternative protein investment from 2022–23.[82] The number of alternative proteins companies in Australia has risen from less than five in 2017, to more than 30 in 2023.[83] Of the nearly 300 plant-based meat products available at the supermarkets, 63 per cent are made by Australian manufacturers.[84] The plant-based protein sector is estimated to be worth $1.6 billion by 2033.[85]

4.90v2food, an Australian company developing a range of plant-based meat products, submitted that increased manufacturing of plant-based alternative protein products will meet a growing consumer need and increase Australia’s food manufacturing competitiveness, profitability, and exports, along with reducing emissions from agriculture and food production overall[86]. It added that:

There is a huge opportunity for Australia to increase the production of protein rich legume crops such as soy and pulses, to establish local factories to process and extract the valuable protein fractions and increase the manufacture of added value-added, plant-based alternative proteins foods (alternatives to animal based meat and dairy products).[87]

4.91Food Frontier observed that the industry ‘must improve on three key elements of price, taste, and texture, and improve on communicating its value proposition to customers to expand its consumer base’.[88] Looking ahead, Food Frontier exclaimed that health remains the biggest driver for consumer interest in plant-based proteins, and manufacturers should look to communicate the health benefits of plant-based proteins, such as high fibre and low saturated fats.[89]

4.92Plant molecular farming was another biomanufacturing process raised during the inquiry. Plant molecular farming involves the use of plants to produce targeted functional ingredients such as proteins.[90] Applications of this technology has been predominantly in the pharmaceuticals and cosmeceuticals area; however, it is currently an emerging technology in food and beverage manufacturing.[91]

Environmental impact

4.93Increased consumer preference for foods that have a low environmental impact are a key driver of alternative proteins. As quoted in v2food’s submission, there are opportunities offered by alternative proteins, as stated in the USA Good Food Institute’s 2023 State of the Industry report:

Alternative proteins–which include cultivated, plant-based, and fermentation-derived proteins–represent an opportunity to significantly reduce risks and improve the efficiency of meat production, while offering consumers the meat-eating experience they crave. Rethinking how meat is made can dramatically decrease emissions, protect human health, ensure food security for all, and maintain and improve biodiversity.[92]

4.94v2food was of the view that increasing the production and consumption of plant-based alternative protein products would provide ‘ready-now, low-risk, and low-cost’ outputs that will:

• increase added value manufacturing and exports,
• improve population health,
• reduce emissions,
• improve the sustainability and resilience of the Australian food production system.[93]

Nutrition

4.95Submitters to the inquiry highlighted alternative proteins as a way to meet specific health and nutrition needs. Australia has the opportunity to be a significant producer which can feed both the domestic and international market.

4.96Food Frontier observed that the recognition of the nutritional benefits of plant-based protein has increased consumption of products like plant-based meats, while concerns around ultra-processing has acted as a barrier to dietary adoption. It was of the view that:

New product development to deliver superior nutritional qualities and ‘simplified’ products, including through plant protein ingredient diversification and reduced ingredient lists, is therefore a key opportunity for Australian manufacturers.[94]

4.97Food Frontier also noted that the growing domestic demand for high protein products can also be, and is already being, serviced by a wide array of food and beverage categories, with increasing numbers turning to plant-based protein ingredients.[95]

Energy efficiency

4.98Vow told the Committee that it had a low emissions profile for its cultured meat products:

We try not to draw too many comparisons, just because we are definitely not trying to compete with traditional meat production, and we see that it has a role. …. The initial analysis, from our first production process, which has since been improved, suggests that we're slightly less efficient than chicken, which is the most efficient production of the four mainstream meats in terms of emissions profile.[96]

4.99Vow added that it is conscious of ‘the list of things that we know we can do’ to further increase energy efficiency:

We are doing them as part of our up-scale that will reduce that emissions profile below the four mainstream meats. We will continue to go further than that. That's not the value proposition that we want customers focusing on. But, as we increase the overall production of protein coming out of Australia, particularly, this is a way to produce more protein and capture more of the market—particularly in Asia—without adding to the resource burden and without adding to the emissions burden. At scale, it has great potential.[97]

4.100Nourish Ingredients outlined the benefits of alternative proteins in comparison to traditional proteins:

… traditional protein production methods are resource-intensive, leading to significant environmental impacts. Studies reveal that plant-based foods boast substantially lower carbon emissions, with up to five times less greenhouse gas emissions per 100 grams of plant protein compared to animal protein.[98]

Shelf stable / less waste

4.101Food South Australia shared that in South Australia, there has been an uptake of aseptic filling technology by food and beverage manufacturers. Aseptic filling is a process used for packaging products in a sterile environment to extend shelf life and maintain product quality without the need for refrigeration or preservatives.[99]

4.102The Tasmanian Institute of Agriculture called for support for new technologies that can extend the shelf life and enhance safety and quality of fresh regional produce and products:

Local examples of critical shelf-life issues are in berry fruit, fish and salad vegetable crops. Targeted assistance for regional processors would improve national and export opportunities for these products. However, the returns on quality production, in a recognised food region like Tasmania, also extend to regional branding values. Recognition of provenance from high quality production areas like Tasmania raises demand and supports agri-food tourism development as a major area for further potential growth.[100]

4.103Further, the Tasmanian Institute of Agriculture remarked that frozen foods, which are considered least cost supermarket commodity items, require high inputs of electrical energy to maintain the cold chain, and called for support for the development and implementation of innovations that can make high-quality ambient stable products:

The Centre for Food Innovation, was set up in Tasmania between UTAS [University of Tasmania], CSIRO and the Defence Science and Technology Group to progress joint opportunities between Defence food needs and civilian applications. This has included new technologies for shelf stable foods that could compete with fresh and frozen products but not require the energy and costs of frozen or chilled storage. Example technologies include microwave, pressure accelerated sterilization processing, and high rate drying technologies that can preserve product quality at lower energy costs. These technologies are accessible in their early forms but the costs and time for adaption and optimisation are not affordable by individual SME businesses. The applied research needed for successful commercial applications is also not well supported by research funding systems that focus on fundamental science. This creates a gap in the ability of local companies to develop and adopt processing technology innovations and is a major brake on growth of food manufacturing capabilities. Federal support for lead application developments, as part of a regional industry clusters, could greatly accelerate the modernisation of Australian food and beverage manufacturing.[101]

Challenges of novel foods

4.104Although there is great potential for novel foods, there are also challenges. Newly created or inventive foods made using new and advanced technologies or methods must undergo a safety evaluation to ensure consumer safety and to avoid misleading information. Novel foods also must pass consumers’ acceptance of new foods and ingredients.

4.105Dr Dirk van der Kley, Research Fellow of National Security College at ANU, told the Committee that while hosting focus groups on consumer perceptions around new technologies such as alternative proteins, there was ‘cautious optimism’ to novel foods:

It’s not to say, 'We're going to go out and buy it tomorrow,' but they understand why we need to change how the industrial and agricultural sectors work both in this country and globally. They're open to that. They're aware of the carbon footprint of agriculture. They're aware of the broader environmental concerns. But where this hits the road is that that doesn't mean blind acceptance. You need a lot of public messaging explaining what is safe but also what is unknown, because, with any new technology, there are unknowns. It's better to come out and straightforwardly admit that rather than what we tend to do in all critical and emerging technologies, which is to downplay those pieces.[102]

4.106Dr van der Kley emphasised that transparency is paramount to earning the trust of consumers when introducing novel products. Dr van der Kley provided the example of when cow-free milk became an option for consumers in the milk section:

A lot of them said, 'Yes, we're absolutely willing to try this in theory, even at a price point that might be slightly higher if it's environmentally friendly, but we need to know that the regulations are there that are making it safe.' It's not a case of, 'We would never do this'—but there's a lot of messaging to go on. I think we can actually say there's a cautious optimism that companies haven't felt yet in terms of being able to make sales. But I do think we can move forward to that.[103]

4.107Professor Owen Atkin, Director of the Agrifood Innovation Centre ANU, told the Committee that ‘when you start looking at a lot of these alternative protein products, you must understand the full value chain, and part of that would be around understanding cultural influences on what types of food you're willing to eat and also what the attitudes of people are around the type of regulation they want to see around those.’[104]

4.108The regulatory framework for novel foods is further discussed in Chapter 6.

Challenges / responses to innovation

4.109Novel food and beverages in Australia require the right settings for success. While Australia does have some support for novel foods and beverages, there is an opportunity for a more dedicated structure to be developed.

CSIRO

4.110The work of CSIRO is an important support system for novel food and beverage manufacturers in Australia. CSIRO hosts research missions on various topics which support the development of new industries such as plant-protein related industries.[105]

4.111For example, CSIRO’s Future Protein mission is seeking to capitalise on global demand for protein and to build Australia’s sovereign manufacturing capability. The mission’s focus is to ‘support innovation and growth across traditional proteins like meat, fish and legumes, as well as new sources to complement them’.[106]

Funding

4.112Several government grants and funds are available for food and beverage manufacturers, such as the National Reconstruction Fund, Industry Growth Program, and the Research and Development Tax Incentive, as discussed in Chapter 2.

4.113For example, the Industry Growth Program has provided $4.3 million to Cauldron Molecules to support its fully automated hyper-fermentation technology.[107] The Research and Development Tax Incentive, which funds Australian businesses to pursue research and development, was vital for Vow’s business expansion:

The R&D tax incentive is a key reason why Vow is remaining in Australia and why R&D activities are here. Scale-up activities have now been established here as a result of having that core technical team on the ground already.[108]

4.114However, financing the translation of innovations from the research and development phase to the scale-up and manufacturing phase was a particular issue for those who were making innovative products.

4.115Ms Camilla Roberts, Government Lead, Cauldron Molecules explained that there is an urgent need for Australia to build industrial-scale facilities to enable start-ups to pursue manufacturing opportunities onshore:

Australia's biggest challenge in realising this opportunity is in fast financing for first-of-a-kind facilities. We need fast incentive packages from government to retain the manufacturing capability onshore. Current government grants are too small on their own, especially compared with the speed and deep pockets of other countries, such as the US's $603 billion in incentives across the CHIPS Act, the Inflation Reduction Act and the Executive Order on Advancing Biotechnology and Biomanufacturing. Government-backed debt is crucial, and finding an appropriate model quickly will be essential for growing our bioeconomy.

[…] Our pockets may not be as deep as other countries, but Australians are nimble, so we must move fast to fund these first-of-a-kind facilities before we lose this high-growth manufacturing opportunity and a critical sovereign capability.[109]

4.116Mr George Peppou, Chief Executive Officer, Vow called for the establishment of a $1billion bio-shot program, modelled on the Solar SunShot program:[110]

… to incentivise and accelerate commercial scale-up of Australian-based biomanufacturers so that we can retain our large-scale manufacturing here and not just our small-scale R&D, which, while valuable, ultimately will lead to fewer jobs, less leverage. We will be able to capture less of the overall supply chain if we just retain R&D and not the large-scale manufacturing.[111]

4.117Nourish Ingredients also called for strategic investment to support the alternative proteins industry:

Our request is to seek more government support through strategic investments through equity partnerships and more grant funding in companies actively working to grow the alternative protein industry as we believe Australia is poised to capitalise on the immense potential of alternative protein manufacturing, paving the way for a more prosperous and sustainable future. Additionally, we advocate for funding opportunities that are accessible and inclusive, allowing new companies to enter the market without overly stringent requirements. It's crucial to recognise that the alternative protein industry encompasses a diverse array of sub-industries beyond protein production, including precision fermentation, and others. These sectors play a vital role in supporting and enhancing the overall ecosystem of alternative protein manufacturing.[112]

4.118Australian Plant Proteins commented that for any investment made into emerging industries, a ‘long-term view’ must be taken, and that investors—whether they be governments, the food industry itself, or other investors—must understand that building an industry takes time. Australian Plant Proteins suggested that funding considerations should focus on the economic benefit that the investment will generate for the wider economy, rather than focussing on direct job creation.[113]

4.119Submitters to the inquiry also called for support for better and dedicated research support for novel and niche foods. For example, Food Frontier was of the view that the establishment of dedicated alternative protein innovation facilities would bring together expertise and advance R&D of new ingredients, products, and production processes:

Building more sector-specific collaborative research initiatives and centres would enable researchers to develop intellectual property and market-leading products that establish Australia as a globally competitive centre for alternative protein innovation. For instance, industry has submitted its third bid attempt in the latest Collaborative Research Centre (CRC) program round to establish a dedicated Alt Protein CRC. If this bid is successful, it will be instrumental in advancing sector-wide R&D outcomes and attracting greater private investment to scale up the local industry.[114]

Mackay Renewable Biocommodities Pilot Plant

4.120Queensland University of Technology’s Mackay Renewable Biocommodities Pilot Plant[115] (MRBPP) is pioneering research and innovation in biorefining, by turning agricultural biomass into cleaner bioproducts. Queensland, particularly around the Mackay region, has a high level of agricultural output of plant-based feedstocks such as sugarcane, making the region highly suitable for biomanufacturing.[116]

4.121Rockwell Automation spoke positively of the MRBPP in its submission:

This facility is focussed on the creation of new food products using precision fermentation techniques, which are one form of cellular agriculture. This facility takes advantage of the nearby plentiful feedstock (sugar cane) and has been designed to “overcome the global lack of scale-up infrastructure” in precision fermentation.[117]

4.122Ms Camilla Roberts, Government Lead, Cauldron Molecules discussed the support it had received from the Queensland Government, stating that:

The Queensland government has been particularly progressive. I'll speak a bit to their funding. They funded Cauldron to undertake a feasibility study into the development of a precision fermentation contract manufacturing facility in Mackay. The proposed Cauldron facility would provide scale manufacturing capacity not currently available in Australia. The Cauldron facility will complement the QUT [Queensland University of Technology] Mackay Renewable Biocommodities Pilot Plant, which is a research facility. Collocating the research facility and an industrial facility would unlock our precision fermentation commercialisation bottleneck, which is stalled at around technology readiness level 4 or 5 because there are no industrially relevant environments in which to improve the techno-economics for those companies.[118]

Native foods

4.123Australia has a remarkable variety of native foods, including plants and fruits, animals and insects. Aboriginal and Torres Strait Islander people have utilised such ingredients for thousands of years and have developed a breadth of traditional knowledge on cultivation, harvesting, and use.

4.124Native foods, also known as bushfoods, are an important and growing trend within the Australian food and beverage manufacturing sector. In the 2019–2020 financial year, DISR valued the native food sector at $81.5 million,[119] with the potential to double by 2025.[120] This growth reflects the increasing recognition of native foods and its unique contribution to Australia’s culinary landscape.[121]

Opportunities

4.125Submitters to the inquiry advised that native ingredients and foods provided unique flavour profiles to food and beverages manufactured in Australia. Many food and beverage companies, along with hospitality businesses, are integrating native ingredients and foods into their products and menus due to rising consumer interests in Australia’s distinctive native food flavour profiles.[122]

4.126The Restaurant & Catering Industry Association was excited about the trend of native foods, stating:

Whether its finger limes, lemon myrtle or Davidson plum the culinary potential of bush tucker is an exciting trend that will only continue and complement our word class meat, seafood and vegetables on Australian menus. Encouraging this sector to grow has equally significant flow on benefits to the vibrancy and uniqueness of the Australian hospitality scene.[123]

4.127The Australian distilling industry also spoke about the use of native ingredients in its products.[124] For example:

• Seven Seasons Spirits, owned by a Larrakia man, is producing various alcoholic products utilising native ingredients such as green ants, bush apple, native yam, and bush honey. Notably, such ingredients are sourced from Aboriginal communities, creating jobs and economic benefits for Aboriginal people.[125]
• Beachtree Distilling Co., co-owned and operated by a Kamilaroi man, took out the best contemporary Australian gin award at the World Gin Awards in 2022 with their Quokka Gin, distilled from organic sugar cane featuring native pepperberry. Their Koala Gin, based on native lemon myrtle, won gold at the same awards.[126]
• Archie Rose has developed the Native Botanical Vodka, which has used individually distilled botanicals and the inclusion of some native Australian botanicals.[127]
• Lark Distilling Co. uses Aboriginal foods and botanicals to highlight its Australian and Tasmanian provenance, such as macadamia smoke water and Tasmanian pepperberry.[128]
• Cape Byron Distillery has incorporated a variety of Australian native botanicals in its products, including Davidson plum, roasted macadamia, and Australian wattleseed and finger lime.[129]
• The Tasmanian Whisky & Spirits Association submitted that Tasmanian native botanicals add unique flavours and aromas to the products, such as the Tasmanian pepperberry, Prickly Currant Bush, Alpine Baeckea, and white elderberry.[130]
  128. There is also recognition from the food and beverage manufacturing sector of the importance of Aboriginal and Torres Strait Islander peoples’ role within the sector. The Food and Beverage Accelerator was of the view that Australia has a unique opportunity for collaboration with Aboriginal and Torres Strait Islander communities, start-ups, and SMEs:

Australia’s Indigenous F&B [food and beverage] sector is growing and gaining profile in both Australian and international markets. Further sector growth requires ongoing targeted support, and collaboration with, and strengthening of Indigenous leadership, that will enable Indigenous F&B enterprises to grow. Support must include appropriate skills development in business, entrepreneurship and innovation. There is an opportunity to support Indigenous F&B businesses across the value chain and to position products in the market with clear and consistent Indigenous credentials which will benefit the wider Australian economy (tourism, restaurant trade, export).[131]

4.129The Food and Beverage Accelerator also spoke to innovation opportunities such as harvesting and stabilising raw materials close to production locations and then transporting for further processing and value-adding closer to market:

Decentralised models for processing and distribution – for example, micro-food processing on country or setting up of regional hubs for collection and distribution – should be considered, especially in remote communities. This would enable Indigenous SMEs to process native foods while fresh, maintaining produce quality and safety, and ensuring produce was ready for transport, leading to higher production and more local jobs.

For example: The Kakadu Plum is wild harvested by Aboriginal communities in remote parts of the Northern Territory and Western Australia. These plums need to be frozen within 24 hours of harvesting to maintain high vitamin C levels and safety during transportation. The University of Queensland has worked with remote Aboriginal communities to assist with starting new food businesses which process and commercialise the Kakadu Plum.[132]

4.130The Queensland Department of Agriculture and Fisheries & Department of Regional Development, Manufacturing and Water suggested that the government could adopt learnings from successful models such as the American Indian Food Program, which support Native American and Alaskan Native agribusinesses to expand their market reach and promotes certified American Indian products.[133]

Protecting Australian native species

4.131According to the Northern Australia Aboriginal Kakadu Plum Alliance (NAAKPA), the Australian native food industry faces challenges from overseas companies seeking to source Kakadu Plum tissue culture and/or Kakadu Plum seeds:

There is concern these seeds and tissue culture might be smuggled, leading to the establishment of overseas-based Kakadu Plum industries to directly compete with Australian industries. This fear is not unfounded, where overseas farmgate production of Lemon Myrtle and Australian finger limes now supersedes total Australian production. This apprehension is further compounded by the lack of effective enforcement of regulations protecting native species being exported.[134]

4.132NAAKPA suggested that one option to combat the issue is to invest in local food manufacturing capability, so that processed ingredients are exported, rather than raw materials.[135]

4.133NAAKPA also shared in its submission that it has encountered instances where frozen Kakadu plum fruit, seeds, and extracts are exported by organisations who have not sourced them from Approved Wildlife Trade Operations (WTO) under the Department of Climate Change, Energy, Environment, and Water regulations.[136] NAAKPA was approved as a WTO in June 2023.[137]

4.134Considering these challenges, NAAKPA urges government agencies to allocate more resources to enforce regulations related to the movement of native species, especially those not listed on the List of Exempt Native Specimens Instrument. NAAKPA is of the view that ‘strengthening enforcement helps protect Australia’s unique emerging industries and ensure the sustainability of Kakadu Plum and native food sector.’[138]

4.135NAAKPA acknowledged that ‘while international interest can be beneficial, it’s essential to balance it with preserving local resources and ensuring that Indigenous industries maintain control over their own food sovereignty.’[139]

4.136Charles Sturt University also acknowledged that ‘while there are many potential food innovation opportunities with Australian native foods, it would be appropriate for these opportunities to be investigated in collaboration with First Nations communities.’[140]

Funding

4.137NAAKPA also called for the government to prioritise investment into Aboriginal-led organisations within the Australian native food sector rather than giving funds primarily to researchers. NAAKPA consider that this would enable Aboriginal-led originations to conduct the research which benefits industry, while also empowering Aboriginal communities and protecting traditional knowledge.[141]

4.138A specific issue raised by NAAKPA is the lack of domestic investment in the sector. NAAKPA specifically raised the issue of the lack of interest in investment to establishment of food processing capacity in the Northern Territory or northern Western Australia. On the issue, NAAKPA submitted that:

There seems to be more investment coming from overseas countries such as China to partner in growing the Australian native food sector, however, there is the fear that the Kakadu Plum industry will be transplanted to China as has occurred with Australian lemon myrtle.[142]

Committee comment

Export assistance

4.139The population of Asia is projected to rise to 5.3 billion people by the year 2050. These changes will bring new opportunities for the Australian food and beverage manufacturing sector, as demand for Australian products grows due to demographic changes and evolving consumer needs.

4.140The Committee is of the view that the fast-growing middle class of Asia will open opportunities for Australian food and beverage manufacturers to cater to consumers who are ready to spend money on more premium products and better-quality food.

4.141The Committee understands that Austrade provides support to SMEs through a variety of services and programs such as market research, trade promotion, export assistance, and grants and programs. One of the notable programs for SMEs is the Export Market Development Grant, which offers financial assistance for promoting products and services in international markets.

4.142Expanding business overseas can be a daunting prospect for SMEs. Austrade’s services, funding, and partnerships are important to help navigate SMEs entering the international marketplace. The Committee would like to see increased assistance provided to SMEs by Austrade, to ensure that SMEs are able to explore their opportunities and realise their potential for global expansion.

4.143The Committee recommends that the Australian Government provide increased Austrade assistance for small and medium enterprises looking to export Australian food and beverage products to Asia.

Funding smart technology

4.144AI is one of the technologies at the heart of the latest technological advancements, and the Committee acknowledges the wide scale of its impacts for the sector, as raised in evidence. Machine-learning models are already beginning to automate complex productive processes, and the Committee witnessed various types of these cutting-edge technologies during its site visits for this inquiry.

4.145Like previous waves of technological advancements, this has raised both opportunities and challenges. To make the most of the new emerging technologies’ ability to boost productivity and allow innovation, the Committee is of the view that the Australian Government should provide support and incentives for food and beverage manufacturers through funding for the purchase of automated equipment, training programs for employees to operate and maintain automation systems, and grants for research into new automation solutions tailored to the needs of the industry.

4.146The Committee recommends that the Australian Government support the uptake of AI-driven and automation technologies to drive innovation and productivity in the Australian food and beverage manufacturing industry.

Value-added products

4.147Value-added products and value-adding processes allow food and beverage manufacturers to achieve a higher return and diversify their operations. There are also significant opportunities, both at the primary production stage and processing stage, to generate edible and non-edible products from waste streams.

4.148The Committee believes that value-addition is important for sustainable agricultural practices, but also for improved food security, as the process increases the availability of nutritious food and beverage options for consumers.

4.149The Committee agrees that enhancing the proportion of onshore value-adding will be crucial for the sustainable growth of the Australian food and beverage manufacturing sector.

4.150The Committee recommends that the Australian Government, in consultation with industry stakeholders, identify specific opportunities for value-adding to food and beverage products which would increase the proportion of onshore value-added products.

Novel products

4.151The Committee recognises that novel foods have a lot to offer for consumers, especially those that have specific dietary requirements such as gluten-free, vegetarian, or vegan diets, or those with health, cultural or religious dietary needs. However, the benefits of novel foods must be considered against the challenges they present of safety and consumer acceptance.

4.152The Committee is of the view that novel foods, particularly those in the alternative proteins categories, will be unlikely to replace traditional proteins, but rather are an additional source of protein for consumers. As technology advances and consumer preferences evolve, it is likely that functional, novel foods will continue to redefine our palates, and contribute to a healthier, more sustainable future.

4.153Australia’s biomanufacturing capabilities in relation to food and beverage production are important to support the evolving landscape of the food and beverage industry. Therefore, the Committee sees value for the Australian Government to identify opportunities across the sector to assist the momentum and growth trajectory of these products, both domestically and internationally.

4.154The Committee was pleased to read and hear about numerous success stories of innovation across the Australian food and beverage manufacturing sector.

4.155The Committee recommends that the Australian Government, in consultation with industry stakeholders, identify opportunities to provide targeted support for the growing novel food and beverage industry.

Native products

4.156The Committee considers the use of native ingredients and foods within Australia’s food and beverage manufacturing environment to be an important opportunity for the sector to innovate and will provide exciting new products for both domestic and international sale. Native foods are also an important opportunity for Aboriginal and Torres Strait Islanders businesses to participate in the Australian food and beverage manufacturing sector.

4.157The Committee notes the small number of Aboriginal and Torres Strait Islander communities, start-ups, and SMEs being engaged in the manufacturing of food and beverage products using native ingredients and foods. The use of native ingredients and foods should be led by Aboriginal and Torres Strait Islanders peoples, considering they have been the custodians of traditional knowledge for thousands of years. The Committee was also concerned about international ownership of farmgate operations that produce and use Australia’s native species.

4.158The Committee recommends that the Australian Government review Australia’s current environmental protection laws to ensure that Australia’s native flora are protected from being propagated overseas for commercial use.

Footnotes

[1]Ms Louise Talbot, General Manager, Sector Development Branch, Department of Industry, Science and Resources, Committee Hansard, Canberra, 29 May 2024, p. 2.

[2]AUSVEG, Submission 30, p. 16.

[3]Food South Australia, Submission 52, p. 3.

[4]Australian Organic Limited, Submission 29, p. 5.

[5]Spirits Victoria Australia, Submission 83, p. 2.

[6]Australian Grape and Wine Incorporated, Submission 68, p. 6.

[7]La Trobe University, Submission 15, p. 7.

[8]La Trobe University, Submission 15, p. 7.

[9]La Trobe University, Submission 15, p. 4.

[10]Australian Organic Limited, Submission 29, p. 4.

[11]Northern Territory Government & Charles Darwin University, Submission 63, p. 7.

[12]Australian Dairy Products Federation, Submission 116, p. 4

[13]Australian Export Grains Innovation Centre and Grain & Legumes Nutrition Council, Submission 45, p. 2.

[14]Department of Industry, Science and Resources, Submission 104, p. 5.

[15]Professor Owen Atkin, Director, Agrifood Innovation Centre, Australian National University (ANU), Committee Hansard, Canberra, 26 June 2024, p. 5.

[16]Food and Agri Australia, Submission 65, p. 2.

[17]Food and Agri Australia, Submission 65, p. 2.

[18]Food and Beverage Accelerator, Submission 111, p. 12.

[19]Queensland Alliance for Agriculture and Food Innovation, Value-added foods – leveraging Australian attributes, qaafi.uq.edu.au/article/2018/03/value-added-foods-%E2%80%93-leveraging-australian-attributes, viewed 30 September 2024.

[20]AUSVEG, Submission 30, p. 17.

[21]Australian Dairy Products Federation, Submission 116, pages 4–5.

[22]Australian Dairy Products Federation, Submission 116, pages 5–6.

[23]Australian Dairy Products Federation, Submission 116, p. 16.

[24]Australian Dairy Products Federation, Submission 116, p. 16.

[25]Australian Organic Limited, Submission 29, p. 3.

[26]Australian Organic Limited, Submission 29, p. 3.

[27]Australian Organic Limited, Submission 29, pages 4–5.

[28]Australian Academy of Technological Sciences and Engineering, Submission 51, p. 2.

[29]Australian National University / Agrifood Innovation Institute, Submission 66, p. 3.

[30]Food South Australia, Submission 52, p. 2.

[31]William Angliss Institute, Submission 120, p. 2.

[32]Australian Academy of Technological Sciences and Engineering, Submission 51, p. 3.

[33]Rockwell Automation, Submission 98, p. 3.

[34]CSIRO, Submission 58, p. 8.

[35]Australian Beverages Council, Submission 113, p. 8.

[36]Australian Food & Grocery Council, Submission 76, p. 5.

[37]CSIRO, Food and Agribusiness: A roadmap for unlocking value-adding growth opportunities for Australia, p.16.

[38]CropLife Australia, Submission 43, p. 2.

[39]Tasmanian Institute of Agriculture, Submission 107, p. 2.

[40]Professor Tony Bacic, Director, La Trobe Institute for Sustainable Agriculture and Food, La Trobe University, Committee Hansard, Melbourne, 23 May 2024, p. 1.

[41]Dr Nigel Barrett, Submission 5, p. 1.

[42]Accord Australasia Limited, Submission 95, p. 4.

[43]Accord Australasia Limited, Submission 95, p. 4.

[44]Accord Australasia Limited, Submission 95, p. 4.

[45]Grain Producers Australia, Submission 115, p. 3.

[46]Grain Producers Australia, Submission 115, pages 8–9.

[47]See, for example: Concept Beverages, Submission 9, p. 4; HHH Spirits, Submission 46, p. 3; Casella Family Brands, Submission 54, p. 1; New World Whisky Distillery, Submission 55, pages 2–3; Australian Distillers Association, Submission 101, pages 14–15.

[48]New World Whisky Distillery, Submission 55, pages 2–3.

[49]Mr Will Edwards, Founder, Archie Rose Distilling Co., Committee Hansard, Sydney, 23 May 2024, p. 11.

[50]Ms Holly Klintworth, President, Australian Distillers Association, Committee Hansard, Canberra, 5 June 2024, p. 6.

[51]Food Frontier, Submission 96, p. 16

[52]Food Frontier, Submission 96, p. 16.

[53]End Food Waste Australia, Submission 90, p. 3.

[54]End Food Waste Australia, Submission 90, p. 3.

[55]End Food Waste Australia, Submission 90, p. 5.

[56]Fermentation Tasmania, Submission 13, p. 2.

[57]Cider Australia, Submission 22, p. 1.

[58]Tasmanian Government, Submission 110, p. 3.

[59]Stay Loyal Dog Food, Submission 73, p. 1.

[60]Australian Food and Grocery Council, Sustaining Australia: Food and Grocery Manufacturing 2030, p. 47, www.afgc.org.au/download/sustaining-australia-2030-report?wpdmdl=21600&masterkey=60a704a552347, viewed 14 August 2024.

[61]Ms Samantha Blake, Deputy Chief Executive Officer, Australian Food and Grocery Council, Committee Hansard, Canberra, 3 July 2024, p. 2.

[62]Food South Australia, Submission 52, p. 11.

[63]Queensland Department of Agriculture and Fisheries and Department of Regional Development, Manufacturing and Water, Submission 114, p. 14.

[64]Professor Owen Atkin, Director, Agrifood Innovation Centre, Australian National University (ANU), Committee Hansard, Canberra, 26 June 2024, p. 5.

[65]Dr Simon Eassom, Chief Executive Officer, Food Frontier, Committee Hansard, Melbourne, 7 August 2024, p. 23.

[66]Dr Simon Eassom, Chief Executive Officer, Food Frontier, Committee Hansard, Melbourne, 7 August 2024, p. 23.

[67]Nourish Ingredients, Submission 44, p. 1.

[68]Mr George Peppou, Chief Executive Officer, Vow, Committee Hansard, Sydney, 23 May 2024, p. 32.

[69]Food Frontier, Submission 96, p. 1.

[70]Vow, Vow, www.eatvow.com, viewed 27 August 2024.

[71]Mr Nicholas Chilton, Head of Government Affairs, Vow, Committee Hansard, Sydney, 23 May 2024, p. 36.

[72]Mr George Peppou, Chief Executive Officer, Vow, Committee Hansard, Sydney, 23 May 2024, p. 36.

[73]Mr Nicholas Chilton, Head of Government Affairs, Vow, Committee Hansard, Sydney, 23 May 2024, p. 36.

[74]Mr Nicholas Chilton, Head of Government Affairs, Vow, Committee Hansard, Sydney, 23 May 2024, pages 36–37.

[75]Eden Brew, Submission 70, p. 3; Cellular Agriculture, Submission 94, p. 7; CSIRO, What’s brewing?Precision food proteins from fermentation, www.csiro.au/en/news/all/articles/2022/january/whats-brewing-precision-fermentation, viewed 27 August 2024.

[76]All G Foods, Submission 97, p. 3; CSIRO, Reimagining food using fermentation, www.csiro.au/en/about/challenges-missions/future-protein-mission/novel-protein-production-systems/precision-fermentation, viewed 27 August 2024.

[77]Synthetic biology is the application of engineering principles and genetic technologies to biological engineering. It can add value to a range of industries by enabling both new manufacturing processes and new products. Synthetic biology is a wider field than biomanufacturing; however, the fields interrelate as synthetic biology is an enabler of biomanufacturing.

[78]CSIRO, A National Synthetic Biology Roadmap, pages iii and 4, www.csiro.au/en/work-with-us/services/consultancy-strategic-advice-services/csiro-futures/future-industries/synthetic-biology-roadmap, viewed 27 August 2024.

[79]Eden Brew, Submission 70, p. 1.

[80]Ms Camilla Roberts, Government Lead, Cauldron Molecules, Committee Hansard, Sydney, 23 May 2024, p.36.

[81]Dr Simon Eassom, Chief Executive Officer, Food Frontier, Committee Hansard, Melbourne, 7 August 2024, p. 25.

[82]Food Frontier, Submission 96, p. 2.

[83]Food Frontier, Submission 96, p. 2.

[84]Food Frontier, Submission 96, p. 2.

[85]Food Frontier, Submission 96, p. 7.

[86]v2foods, Submission 109, p. 2.

[87]v2foods, Submission 109, p. 2.

[88]Food Frontier, Submission 96, p. 6.

[89]Food Frontier, Submission 96, p. 6.

[90]Agrifood Innovation Institute at Australian National University, Submission 66, p. 4; Cellular Agriculture Australia, Submission 94, p. 8.

[91]Cellular Agriculture Australia, Submission 94, p. 22.

[92]v2food, Submission 109, p. 4.

[93]v2food, Submission 109, p. 4.

[94]Food Frontier, Submission 96, p. 14.

[95]Food Frontier, Submission 96, p. 14.

[96]Mr Nicholas Chilton, Head of Government Affairs, Vow, Committee Hansard, Sydney, 23 May 2024, p. 35.

[97]Mr Nicholas Chilton, Head of Government Affairs, Vow, Committee Hansard, Sydney, 23 May 2024, p. 38.

[98]Nourish Ingredients, Submission 44, p. 1.

[99]Food South Australia, Submission 52, p. 7.

[100]Tasmanian Institute of Agriculture, Submission 107, p. 3.

[101]Tasmanian Institute of Agriculture, Submission 107, p. 4.

[102]Dr Kirk van der Kley, Research Fellow, National Security College, Australian National University (ANU), Committee Hansard, Canberra, 26 June 2024, p. 6.

[103]Dr Kirk van der Kley, Research Fellow, National Security College, Australian National University (ANU), Committee Hansard, Canberra, 26 June 2024, p. 6.

[104]Professor Owen Atkin, Director, Agrifood Innovation Institute, Australian National University (ANU), Committee Hansard, Canberra, 26 June 2024, p. 6.

[105]CSIRO, Submission 58, p. 6.

[106]CSIRO, Future Protein, www.csiro.au/en/about/challenges-missions/Future-protein-mission, viewed 4September 2024.

[107]Hon Ed Husic MP, Minister for Industry and Science, ‘First funding from Industry Growth Program spans batteries to blueberries’, Media Release, 10 August 2024.

[108]Mr Nicholas Chilton, Head of Government Affairs, Vow, Committee Hansard, Sydney, 23 May 2024, p. 32.

[109]Ms Camilla Roberts, Government Lead, Cauldron Molecules, Committee Hansard, Sydney, 23 May 2024, p.36.

[110]The Solar SunShot program is a $1 billion Australian Government investment into solar power aimed at capturing more of the global solar manufacturing supply chain through support such as production subsidies and grants.

[111]Mr George Peppou, Chief Executive Officer, Vow, Committee Hansard, Sydney, 23 May 2024, p. 34.

[112]Nourish Ingredients, Submission 44, p. 2.

[113]Australian Plant Proteins, Submission 34, p. 15.

[114]Food Frontier, Submission 96, p. 18.

[115]The Mackay Renewable Biocommodities Pilot Plant is currently undergoing a $3.9 million upgrade to transform the plant into a state-of-the-art food-grade compliant facility. The project is part of an overall $16 million expansion, supported by the Queensland Government through the Industry Partnership Program and the Australian Government through the Regional Recovery Partnerships Program.

[116]Queensland Department of Agriculture and Fisheries & Department of Regional Development, Manufacturing and Water, Submission 114, p. 14.

[117]Rockwell Automation, Submission 98, p. 4.

[118]Ms Camilla Roberts, Government Lead, Cauldron Molecules, Committee Hansard, Sydney, 23 May 2024, p.37.

[119]The Department of Industry, Science and Resources based this data on market research from the University of Sydney.

[120]Department of Industry, Science and Resources, Submission 104, p. 4.

[121]Queensland Department of Agriculture and Fisheries & Department of Regional Development, Manufacturing and Water, Submission 114, p. 10.

[122]Restaurant & Catering Industry Association, Submission 18, p. 2.

[123]Restaurant & Catering Industry Association, Submission 18, p. 2.

[124]See, for example: Poor Toms, Submission 26, p. 1; New World Whisky Distillery, Submission 55, p. 4; Kilderkin Distillery, Submission 102, p. 3.

[125]Seven Seasons Spirits, Submission 24, p. 1.

[126]Queensland Distillers Association, Submission 100, p. 6.

[127]Archie Rose, Submission 69, p. 7.

[128]Lark Distilling Co., Submission 106, p. 7.

[129]Cape Byron Distillery, Submission 86, p. 3.

[130]Tasmanian Whisky & Spirits Association, Submission 80, pages 6–7.

[131]Food and Beverage Accelerator, Submission 111, p. 8.

[132]Food and Beverage Accelerator, Submission 111, p. 8.

[133]Queensland Department of Agriculture and Fisheries & Department of Regional Development, Manufacturing and Water, Submission 114, p. 10.

[134]Northern Australia Aboriginal Kakadu Plum Alliance, Submission 41, p. 1.

[135]Northern Australia Aboriginal Kakadu Plum Alliance, Submission 41, p. 1.

[136]Northern Australia Aboriginal Kakadu Plum Alliance, Submission 41, p. 2.

[137]Northern Australia Aboriginal Kakadu Plum Alliance, Submission 41, p. 5.

[138]Northern Australia Aboriginal Kakadu Plum Alliance, Submission 41, p. 2.

[139]Northern Australia Aboriginal Kakadu Plum Alliance, Submission 41, p. 6.

[140]Charles Sturt University, Submission 59, p. 4.

[141]Northern Australia Aboriginal Kakadu Plum Alliance Cooperative, Submission 41, p. 2.

[142]Northern Australia Aboriginal Kakadu Plum Alliance Cooperative, Submission 41, p. 6.