- Focus areas and priorities
- Following on from the previous chapter on opportunities to increase market share, this chapter focuses on the enablers that would further advance the Australian food and beverage manufacturing sector.
Biosecurity
5.2Biosecurity protects our unique biodiversity, promotes food security, and minimises the risk of transmission of infectious diseases. Dr Jen Taylor, Acting Director of Agriculture and Food at CSIRO, told the Committee that biosecurity is an important area in Australia’s food and agriculture sectors:
CSIRO has recently launched Catalysing Australia's Biosecurity, which is what we call a mission. It's essentially a national coalition together with the Department of Agriculture, Fisheries and Forestry. That looks at things like modern technology in terms of at-the-border surveillance but also within-country detection. I think that, with some of those new technologies and new science to detect things early, that is the best response, because we have to be ever-vigilant, and there are technologies there that allow us to detect it early and contain it.
5.3Dr Taylor added that another area of focus for CSIRO has been working on a trusted supply chain:
… for example, if something does go wrong in the supply chain, tracking down where that thing came from in the supply chain—a provenance understanding—and which area, which manufacturer and which country that came from and being able to shut down that supply chain very rapidly are another area that science and technology are focusing on.
5.4Professor Michelle Colgrave, Deputy Director of Agriculture and Food at CSIRO, added that the technology Dr Taylor explained in the above paragraph also works in reverse:
It's part of building the trust around our products, being able to detect things like fruit flies within the different jurisdictions within Australia but also being able to use that traceability and provenance to ensure that the premium that Indigenous foods, bush foods and native foods could attract in external markets is built on the trust of being able to track that back to where it was produced and show its credentials. That will also work as we move into a world where consumers are increasingly aware of sustainability and want to understand the carbon or other footprint of their food products and ingredients.
Imports
5.5The recent cost-of-living crisis has driven a change in consumer behaviour, with consumers choosing frozen and canned/tinned produce over fresh produce. Data from the Australian Bureau of Statistics shows that fruit and vegetable prices rose 7.5 per cent in the 12 months leading up to July 2024.
5.6Surprisingly, many of the frozen and tinned vegetables on offer at supermarkets are imported. For the financial year 2022-23, Australia imported over $1,266 million of processed fruit and $990 million of processed vegetables.
5.7
The value of imports by group is profiled in the chart and table below. The table contains the top three import categories by value within each group. The value for nuts includes some processed nut products.

Source: Horticulture Innovation Australia, Australian Horticulture Statistics Handbook 2022/23, p. 14.
Research and development
5.8Collaboration between the research and development (R&D) sector and industry stakeholders is critical to foster innovation and address challenges in the Australian food and beverage manufacturing industry. The R&D sector drives growth of the food and beverage ecosystem, including enhancing its competitiveness in the global market, sustainable agriculture practices, food processing and packaging techniques, and waste reduction strategies.
5.9The Australian Government provides support for the research workforce through various mechanisms, such as grant funding, tax transfers to industry, and providing funding through research councils and block funding to universities. The Australian Government also provides several incentives to assist SMEs with access to R&D. This assistance is available through a range of government supported tax incentives and competitive grants, as outlined in Chapter 2.
Funding
5.10According to the Australian Universities Accord and other recent reviews and inquiries, Australian public and private sector investment in R&D is low by global benchmarks. It is also heavily concentrated in a few industry and economic sectors (especially health and medicine), a few institutions, and very few locations.
5.11Charles Sturt University emphasised that the low level and high concentration of research funding has a direct impact on the Australian food and beverage manufacturing industry:
Ensure research investment is geographically spread to ensure all industries have an opportunity to engage in research. Food industries are more likely to engage with research providers if they are located in close proximity. To ensure equitable access to food innovation expertise and equipment, there needs to be a greater geographic spread of food innovation infrastructure.
5.12The Australian Academy of Technological Science and Engineering (ATSE) submitted that there should be government funding to strengthen collaboration between R&D and industry:
Large research programs like Cooperative Research Centres (CRCs) have a proven track record of shaping industries. CRCs have boosted the food and beverage sector, with initiatives such as the One Basin CRC, Marine Bioproducts CRC, and others working in sustainability. However, CRC Program funding has stalled, hindering new projects. Australia’s low research spending – just 1.6% of GDP – threatens innovation. Uplifting research and development funding to internationally comparable levels of 3% of GDP will lift progress across a number of sectors, including food and beverage manufacturing, bolstering Australia’s competitiveness.
5.13Professor Owen Atkin, Director of the Agrifood Innovation Centre at the Australian National University (ANU), similarly commented that government investment in the research sector is on the decline rather than on the increase:
We're down to 1.68 per cent of GDP, and that's on a downward trend. That's well below our OECD counterparts. If we are to maintain a capability that's going to help us underpin a future vibrant food and beverage industry, we need to have the appropriate investment as a nation. Government plays an important role within that.
5.14There were also calls for funding to be accessible and inclusive, ‘allowing new companies to enter the market without overly stringent requirements’ and increased support for local industry R&D specifically designed for smaller manufacturers.
Fit-for-purpose R&D
5.15Queensland University of Technology’s (QUT) Centre for Agriculture and the Bioeconomy provided evidence to the Committee that ‘in spaces where food innovation is a focus, too often natural scientists dominate, the goals and processes are narrow, and technological choices are made without adequate consideration of societal impacts and alternatives.’
5.16QUT considered that opening up the dialogue and building ways to engage with public and social scientist knowledge systems to avoid technological lock-in would assist in developing technologies that better fulfil the public interest.
5.17QUT highlighted the importance of:
- identifying and understanding stakeholder preferences and values before zeroing in on a particular technology
- embedding social and environmental factors into the design, development, and execution of technologies
- engaging with ways to find common ground between conflicting views about food technologies.
Scaling up and commercialisation
5.18In addition to supporting the R&D sector, the Australian Government provides support for commercialisation and business growth through a range of initiatives. These initiatives include schemes intended to encourage investment in, and growth of, innovative Australian businesses and to enhance export, as outlined in Chapter 2.
5.19However, evidence to the inquiry has suggested that securing adequate investment at various stages of a business’ development was a significant challenge for many innovating SMEs.
5.20According to the Food & Agribusiness Network / TURBINE, one of the most formidable barriers for SMEs is the financial risk associated with scaling up operations:
As companies aim to grow from a modest business to a significant market player, they require considerable capital investment in technology, equipment, and human resources. This investment often leads to a precarious financial position for years, during which the company must not only sustain the increased operational costs but also compete with larger, more established companies.
Moreover, SMEs in this industry face logistical complexities due to Australia’s vast geography, which can increase transportation costs and complicate supply chain management. Another challenge is the fierce competition imposed by a market often dominated by a handful of large players, including foreign-owned corporations and major retailers, leaving SMEs with less negotiating power and market access.
5.21CropLife Australia asserted that Australia’s policy settings should aim for start-ups to commence and maintain their commercial production here in Australia:
Failure to do so, risks the flight of these innovative businesses and their science savvy entrepreneurs to set up their production facilities and headquarters elsewhere.
5.22There is a similar gap where the agri-food industry lacks infrastructure to scale food processing from lab to pre-commercial production to test and take new food innovations to markets.
5.23The Australian Institute of Food Science and Technology was of the view that a major barrier to commercialisation for Australian food and beverage manufacturers was the lack of scale-up facilities and remarked that ‘federal and state/territory governments have very limited investment in pilot and full-scale manufacturing even when it may benefit existing industry to provide more jobs for Australians.’
5.24The CSIRO and La Trobe University plan to leverage and extend the innovation and industry ecosystem via AFIC, through collaborations and networks in the Asian region such as with Astar in Singapore and the Chinese Academy of Science, where both R&D and technology transfer is being enhanced through partnerships.
Valley of growth / valley of death
5.25SMEs in the food and beverage manufacturing sector often find themselves at a critical juncture when they attempt to transition from a small-scale operation to a larger, more competitive entity. This ‘Valley of Growth’ (a term redefined from the more daunting ‘Valley of Death’) represents a challenging phase, where the need for investment in capital, people, and infrastructure can strain the resources and operations of these businesses.
5.26Mr Andrew Eves-Brown, Chief Executive Officer of TURBINE, told the Committee that for food and beverage manufacturers, one of the biggest challenges to scale is the capital investment needed to do so:
Usually when you're going from a small kitchen operation or your first factory operation to actually scale, the infrastructure of boilers, chillers, wastewater systems and air is where the costs are. If you're a business that's around that $1 million to $2 million mark, it probably costs you about $1 million to $2 million to take that leap of faith. As a small business, you really can't afford to do that.
5.27TURBINE was created to help bridge that gap, as explained by Mr Eves-Brown:
What we envisioned with Turbine—and this has been a vision from FAN [Food & Agribusiness Network] and Turbine for probably the last five to 10 years—is we would build a precinct where people can share the infrastructure, the physical space, but we would provide shared services, boilers, chillers, et cetera, that can actually be shared amongst a number of businesses. Again, as you buy that infrastructure, the more you can spend and the better the equipment—for instance, with chilling, if you can afford an ammonia over CO2 system, that system runs at half the running cost of a normal HVAC [heating, ventilation, and air conditioning] system, and all of a sudden you bring down everyone's operating costs.
The ultimate idea with Turbine is […] to also share resources. A lot of the time during that 'valley of death', businesses have to almost overresource. They have to employ the engineering manager before you bring in the engineers. You have to employ the R&D manager before the R&D staff can come in. The vision and the view from Turbine is that if two or three businesses within the precinct need an engineering manager they can share that cost between three or four businesses. They might all have their own engineers, but then they can all relate back to the engineering manager.
Hubs and clusters
5.28A large volume of evidence recognised that sharing knowledge is a critical component of innovation, and that developing linkages and collaborations between businesses, the R&D sector, and industry is crucial. Cluster initiatives have been shown to promote collaboration between public, private, and academic sectors, and stimulate a broad range of activities such as marketing local regions, supply chain development, incubator services, and setting technical standards.
5.29The Food & Agribusiness Network / TURBINE wrote in its submission that ‘creating industry-specific R&D hubs can provide the tailored support and infrastructure that SMEs require to innovate effectively.’
5.30The Australian Institute of Food Science and Technology stated that ‘there is strong and clear evidence that investment of time and money into collaboration, framed carefully and allowing room for some competitive tension, provides worthwhile returns.’
5.31CSIRO emphasised that increasing collaboration between academia, industry, and government agencies will foster knowledge and facility sharing, technology transfer, and collective problem-solving:
Establishment of such hubs will be essential to support new and emerging industries. To build these infrastructure hubs and growth centres, financial support is required to ensure innovations are successfully translated into commercial outcomes for industry. Additional incentives for R&D in the form of grants (SME connect and other industry grants), cash contributions, and tax incentives will also support these industries.
5.32The Central Coast Industry Connect wrote that fostering connectedness and collaboration is a key enabler in supporting the growth of the food and beverage manufacturing industry:
A key strength of the Food and Beverage Manufacturing sector […] is the extent to which businesses and other key stakeholders are connected and open to collaboration. This enables the rapid transfer of knowledge, talent mobility and businesses to easily access external capability, all of which contribute to enhancing innovation, productivity and competitiveness. Importantly also, connectedness leads to positive mental health outcomes and resilience for businesses owners and leaders.
5.33Below are some examples of current and future industry hubs and clusters the Committee received in evidence.
Food & Agribusiness Network and TURBINE
5.34Food & Agribusiness Network (FAN) is a not-for-profit food cluster that has been operating for eight years. Its aim is to grow the industry by creating an ecosystem that supports collaboration, accelerates innovation, and drives trade locally and globally. FAN is a voice of more than 390 members from across the food value chain, including suppliers, growers, manufacturers, retailers, food service operators and affiliated services.
5.35Through the Australian Government’s Modern Manufacturing Initiative, funding has been provided to build TURBINE, Australia’s first purpose-built, end-to-end food and beverage manufacturing and education precinct. The TURBINE precinct aims to bring together a critical mass of expertise and capability that spans the entire value chain.
5.36TURBINE stage 1 will include a large-scale contract beverage facility, co-located manufacturers, a collaborative R&D centre, and an expertise and training hub. It is expected to be operational in mid-2025.
Australian Food Innovation Centre by La Trobe University
5.37The Australian Food Innovation Centre (AFIC) is a proposal to establish a new and purpose-built facility at La Trobe University’s Bundoora campus, to support research innovation, (re-)skilling of the agri-food sector future workforce, commercialisation and manufacturing of food and beverage by providing state-of-the-art research facilities and expertise, as well as opportunities for co-location, industry collaboration, and start-up incubator spaces.
5.38La Trobe University believes that AFIC could play a pivotal role in unlocking the potential of the food and beverage manufacturing sector, including:
- Creation of new food products and export markets to unlock more than $200 billion value added in 2030 – tripling the current size of Australia’s food and agribusiness sector.
- Opportunities in unprocessed, organic, and ‘free from’ foods could amount to $45 billion in demand by 2030.
- Growing demand for traditional proteins could present an additional opportunity worth $31 billion.
- In 2019, the food agribusiness sector employed approximately 538,000 people. Targeted innovation would lead to the creation of 842,000 potential jobs in 2030. These jobs will come from health and wellness, supply chain transformation, and targeted eating.
- AFIC is expected to help generate 20-30 new food manufacturing facilities across the Australian food and beverage industry, leading to a financial growth of the industry of approximately $680 million per annum after 10 years. This will facilitate an increase in employment as new start-up businesses and SMEs grow, leading to further increases in jobs for Victoria and Australia.
Fermentation Hub by Fermentation Tasmania
5.40Fermentation Tasmania recognised that the biggest hurdle to setting up or scaling up businesses in the fermentation and wider agrifood and beverage sector was the capital cost of a physical facility and highly specialised equipment required for operations.
5.41To create opportunities for regional Tasmania and Australia over the next decades and create an ongoing centre for job and sustainable business creation, Fermentation Tasmania created the Fermentation Hub. The Fermentation Hub, situated in Tasmania’s Tamar Valley in Legana, is an 1800m2 facility with multiple factories housed inside to make:
- traditional fermented alcoholic beverage products such as wine, beer, cider, and distilled spirits
- dairy products such as cheeses, yoghurt, and kefir
- vegetable products such as kimchi, sauerkraut, miso, kombucha, vinegar, and pickles
- fermented bakery products such as sourdough.
- The Fermentation Hub also contains research laboratories, a sensory lab, and a teaching and training space to grow the skills of a future workforce:
This physical space is facilitating a step change for industry as the incubator for new product development, skills and training, commercially focused research and agritourism experiences. Experts will be able to guide people and businesses from concept to market testing to commercial production levels before the business is fledged from the facility to set up their ongoing commercial production facility back on-farm, in the food tech subdivision the West Tamar Council is developing around the Fermentation Hub at Legana or elsewhere.
5.43Fermentation Tasmania has been awarded $7.5 million in funds by the Australian Government through the Building Better Regions Fund Infrastructure Project Stream.
North Melbourne food innovation precinct
5.44According to NORTH Link, Melbourne’s food and beverage manufacturing ecosystem is unique and contains the ingredients to make it the leading food and beverage manufacturing region in Australia:
The region contains over 400 food and beverage manufacturers of scale (turning over $1 million or more), roughly 10,000 food and beverage manufacturing workers, two universities with noted food and beverage (including agrifoods) research capability (La Trobe and RMIT Universities), two TAFEs capable of training a skilled food and beverage manufacturing workforce (Melbourne Polytechnic and Bendigo Kangan Institute), an international passenger and freight airport, the Melbourne Wholesale Fruit, Vegetable and Flower Market, the Hume, Calder and Tullamarine, Freeways and the Metropolitan Ring Road, the under-construction North East Link and two emerging intermodal freight terminals (Beveridge and Somerton).
5.45NORTH Link was supportive of the move of the Melbourne Market to Epping (in Melbourne’s north) in 2015, which ‘has been an unbridled success and the Market has proved to be a major engine room for the region, with thousands of people working there each trading day.’
5.46NORTH Link believes that there is room to build on the market’s success by developing the 51 hectares of vacant land next to the markets. It suggests that the 51-hectare site could provide a location for a critical mass of highly valued international and national agri-food businesses, leveraging on the location proximity to port, airport, and major arterials connecting to western and northern districts.
5.47The National Institute of Economic and Industry Research estimates that the redeveloped Epping site would create 6,500 ongoing jobs in Victoria by 2027, as well as 3,500 construction jobs and approximately $3 billion of value added to the Victorian economy over a 10-year period.
Ongoing support and funding
5.48Dr Nigel Barrett was of the view that food industry clusters, such as FAN, should be funded more to build networks and support new businesses:
Many of these clusters exist on a very slim budget and thus are not to provide the support that is needed, such as training and building business resilience. Properly funded clusters could ensure that new food businesses and SMEs are not left on their own when dealing with the supermarket duopoly. Business could be educated as to their rights and what to accept not accept in matters such as supply contracts. The clusters could provide legal services that many SMEs could not afford.
5.49Fermentation Tasmania also believed that ‘ongoing government support at federal and state levels is essential’ to growing industry clusters.
Workforce and skills
5.50As Australia competes globally for skilled workers across multiple disciplines, attracting and retaining talent in specialised and technical fields can be challenging.
Perception of manufacturing
5.51Even as domestic manufacturing is viewed as increasingly important to the economy, public perceptions of manufacturing are not in line with the current reality of the manufacturing environment.
5.52Central Coast Industry Connect (CCIC) stressed the importance of fuelling the pipeline of skilled workers:
A strong talent pipeline is essential for fostering innovation, ensuring product quality and safety, enhancing productivity, and driving sustainable growth for Food and Beverage Manufacturers in our region. There are several barriers hindering the development of a strong talent pipeline for businesses. There’s a lack of awareness - particularly from young people - of the breadth of available roles. Manufacturing suffers from a perception problem, with many people viewing it as low-skilled and unattractive compared to other industries. There is often also a disconnect between the skills demanded by employers and the skills possessed by job seekers. Education and training systems may not always align with industry needs. The manufacturing industry faces an ageing workforce resulting in the loss of valuable institutional knowledge. Limited access to training and development opportunities can hinder the growth of talent within the manufacturing industry. Small and medium-sized enterprises (SMEs) may particularly struggle to provide training programs due to resource constraints, leading to skills gaps among employees.
5.53To address these barriers, CCIC suggested the government should promote a positive industry image, enhance education and training programs, implement effective workforce planning initiatives, promote diversity and inclusion, and foster collaboration between industry and academia to ensure that the talent pipeline meets the evolving needs of food and beverage manufacturers.
5.54The FAN / TURBINE stated that these efforts must be coupled with clear communication about the exciting technological shifts occurring within the industry:
By highlighting the innovate aspects of food and beverage manufacturing and its contribution to sustainability, the sector can attract talent that is passionate about making a difference through advanced technology and environmental stewardship.
5.55Ms Louise Talbot, General Manager, Sector Development Branch at DISR, agreed, telling the Committee:
And making jobs in the manufacturing sector attractive for young people is something that we all have to play a role in, understanding that jobs in manufacturing are maybe not the same as they were 20 or 30 years ago; they're actually really high value, often high tech, jobs.
Specialist skills
5.56As the food and beverage manufacturing industry continues to evolve, there will be a growing demand for skillsets spanning various disciplines.
5.57Food South Australia was of the view that the following five skillsets will be essential in the future workforce of the food and beverage manufacturing industry:
1Technical skills such as food science, food technology, and culinary arts: These skills are essential for product development, quality assurance, and innovation within the sector.
2Sustainability and environmental awareness: Having the knowledge and skills related to sustainable agriculture, waste reduction, and eco-friendly manufacturing practices will benefit the future workforce.
3Digital literacy skills: Future workers will need strong digital literacy skills to navigate digital platforms, analyse data, and leverage technology to optimise operations and enhance efficiency.
4Entrepreneurship and business acumen: These skills are essential for business management, finance, marketing, and strategic planning to successfully navigate the competitive landscape of the food and beverage sector.
5Soft skills such as communication, teamwork, problem-solving, and adaptability. These skills are important for fostering collaboration, driving innovation, and building strong relationships with customers and stakeholders.
5.58ATSE acknowledged that challenges for the Australian food and beverage manufacturing industry include adapting to new technologies, reskilling for the digital economy, and sustaining a diverse talent pool:
To mitigate these challenges, the Australian Government can implement policies supporting training and upskilling, incentivising businesses to invest in employee development, and attracting talent (including from historically underrepresented groups) to the industry.
5.59The FAN / TURBINE put forward in its submission that it will be important to attract a future workforce with the right skills, particularly as the sector evolves towards ‘a clean, green approach’ and rapidly integrates digital technologies:
The traditional image of production lines and factories is being transformed by robotics, AI, and other technological advancements. To align with these changes, it is imperative to reshape the industry’s perception, showcasing it as a high-tech and sustainable field attractive to the emerging workforce.
5.60The Australian Dairy Products Federation submitted that the dairy processing sector is experiencing labour pressures:
There is also a need for a higher proportion of skilled labour in dairy foods processing than most food processing systems because of the higher-level sophistication of most dairy manufacturing facilities and processing systems […]
This means person vacancies, such as specialist dairy processing technologists or service or maintenance personnel, can have a significant disruptive impact on dairy processing business productivity and profitability.
5.61Australian Grape and Wine Incorporated commented that retaining access to a skilled workforce with advanced technical and analytical expertise has been difficult:
The wine sector competes with many other industries for people who have expertise in artificial intelligence, machine learning and big data and other skills require to address the most pressing problems facing advanced manufacturing. These skills are important to the ongoing futureproofing of our sector but also provide a transferable base across many industries including defence, space, and engineering.
5.62The Independent Brewers Association (IBA) submitted that over the past decade, the rapid growth of the craft beer industry has led to a significant skill shortage of brewers. This has been further exasperated by the loss of talent to higher paying manufacturing industries:
To address that shortage the IBA has facilitated and supported a number of grants and programs to ensure training opportunities are available in each state and territory and so there are skilled and qualitied teachers. This includes IBA and volunteers actually writing course material, facilitating partnerships and alternate ways of upskilling other brewery employees, assisting TAFE and private RTOs to prove demand and applying or supporting grants to establish courses across the nation.
Lack of food science education
5.63Charles Sturt University lamented that the challenges associated with building food innovation capacity in Australia begins with a school curriculum which lacks food science education:
To address the skills shortage in food science in Australia, changes are needed in the school curriculum. A clear pathway is needed for students to transition from school into food technology training opportunities.
To achieve this, there is a need to upskill schoolteachers in the instruction of food technology. Teachers also need access to appropriate pilot scale equipment to provide students with authentic learning experiences.
5.64To attract and nurture talent for the future food and beverage manufacturing industry, Food South Australia suggests implementing high school programs supported by industry, to provide students with the skills, experiences, and connections they need to succeed in the industry. High school programs can play a crucial role by:
- Providing hands-on experience: Industry-supported programs can offer students opportunities to gain hands-on experience through internships, apprenticeships, or work placements in food and beverage companies. This practical exposure helps students develop relevant skills and allows them to explore career pathways within the industry.
- Exposing students to career opportunities: By collaborating with industry partners, high school programs can expose students to a wide range of career opportunities available in the food and beverage sector. This exposure can help students make informed decisions about their career paths and inspire them to pursue careers in the industry.
- Fostering industry connections: Industry-supported programs provide students with access to industry professionals, mentors, and networking opportunities. These connections can be invaluable for students as they navigate their career paths and seek guidance and support from experienced professionals in the field.
- Promoting innovation and creativity: High school programs supported by industry can encourage students to explore their creativity and innovative ideas through project-based learning, competitions, and challenges. This fosters a culture of innovation and entrepreneurship, inspiring students to pursue careers in food and beverage innovation.
- CSIRO concurred that the educational sector (primary school, high school, tertiary and TAFE education) must align its curricula to upskill in technologies such as automation, robotics, cutting-edge food science, food processing methods, engineering, mechanics, and digitisation.
- Food and Agri Australia was also of the opinion that the government should collaborate with industry to develop curriculum and training programs that align with the rapidly evolving needs of the food and beverage manufacturing sector.
Workforce shortages
5.67Competition for talent is more intense in the current tight labour market, with the food and beverage manufacturing sector competing with globally and well-known retail, service sector, pharmaceutical, and technology brands for skilled labour. Additionally, with the introduction of advanced technology such as robotics, automation, and AI, there has a been a skills shift, with businesses needing to find workers who can fill the skills gap.
5.68The Australian Dairy Products Federation submitted that half its current workforce is over 50 years old and are likely to leave the industry within the next five years. The sector will need to recruit approximately 2,600 people over the next 12 months and 13,000 people over the next five years, with most of these jobs located in rural and regional Australia.
5.69Suntory Oceania stated that the technical equipment in its facilities requires skilled beverage technicians and manufacturing specialists, and these individuals are hard to find as they are high in demand:
Particular shortages include operators, electricians, various mechanical trade roles, as well as engineers across many disciplines (project / mechanical / electrical / process / production / chemical).
5.70Projecting ahead, Suntory Oceania was of the view that the food and beverage manufacturing industry will continue to innovate and automate processes, which would mean that:
Industry will require a far greater level of automation literacy in the workforce, and the skills of our mechanical and technical employees will need to develop and adjust over time. How Australia educates and trains the workforce of tomorrow is incredibly important and we must start this thinking now. To ensure we can meet the growing demand of Australia’s food and beverage manufacturing industry, the public and private sectors need to partner with universities, TAFE institutions and training providers to develop the range of skills needed in engineering, robotics, data analysis, advanced automation, and technical manufacturing.
5.71Pernod Ricard Winemakers concurred that the shortage of skilled tradespeople must be addressed:
Australia has a shortage of tradespeople which are required for manufacturing as well as other industries such as mining and construction. At our production facility at Rowland Flat, we have difficulty recruiting people with these skills such as electricians. Those with skills in AI and Machine Learning will also be required to take […] innovations forward.
Skilled migration and visas
5.72Several submissions called for the expansion of and amendments to migration programs to allow for skilled migrants to participate in Australia’s food and beverage manufacturing industry.
5.73The IBA submitted that ‘bringing in expertise from overseas via the Skilled Migration Program would provide the opportunity for new techniques and innovation therefore adding to the overall quality from a manufacturing perspective.’
5.74The Government of South Australia explained that temporary and permanent migrants contribute significantly to the food supply chain workforce:
Skilled migration has long been used as a means of addressing workforce shortages in the food and beverage manufacturing space, especially for niche skills. But there are also shortages and skill needs in relation to food science and nutrition research and general manufacturing skills.
Addressing workforce and skill needs in the food and beverage manufacturing sector requires a focus on skilled migration, food science and nutrition research, and general manufacturing skills.
5.75Norco Co-operative was of the view that the Australian Government should increase the number of seats for the Skilled Work Regional (Provisional) visa (subclass 491) for overseas skilled workers to move into regional areas in Australia and extending the Temporary Skill Shortage visa (subclass 482) to have more of a regional focus.
Tourism and hospitality
5.76From foraging for native foods to producing our award-winning wines, Australians are rightly proud of the high quality of our local food and beverage products. Australian diners, and international diners visiting Australia, are increasingly searching for authentic food and beverage experiences at restaurants, cafes, and bars.
5.77The Restaurant & Catering Industry Association submitted that hospitality businesses have greatly benefitted from this consumer trend:
More premium, domestically produced products allow for a more vibrant, exciting dining scene here in Australia that is more attractive to domestic and international tourists when visiting Australia.
5.78The Restaurant & Catering Industry Association added that hospitality businesses in tourist areas are especially experiencing a boom of domestically produced alcoholic beverages:
… the rise in Australian spirits is equally helpful as it adds to the tourism experience, in the same way wineries and breweries have for decades in Australia. Distilleries, breweries and wineries represent more than 7.3 million domestic visitors across Australia per year according to Tourism Research Australia, with distilleries the fastest growing tourism attraction in Australia.
5.79Retails Drinks Australia was of a similar view, submitting that ‘our producers (breweries, wineries, distilleries etc.) are more than manufacturers; they are destinations for domestic and international tourists seeking unique, first-class, and authentically Australian experiences.’
5.80Ambra Spirits noted that ‘associated tourism growth is only just beginning’, citing figures in its submission which showed that distillery visits were the fastest growing tourist activity for overnight domestic visitors in Australia, up 16 per cent on year.
5.81Night Time Industries Association called for the government to ‘redouble efforts, through agencies like Tourism Australia, to put Australia’s outstanding food and beverage produce at the heart of our tourism offer’:
For example, the Tourism Australia website, which is a key gateway for international tourists, lists as ‘things to do’ activities of culture, adventure, nature, relaxation, family and backpacking. There is no headline for food and beverages, a surprising oversight.
5.82According to Clubs Australia, consumers have shown a growing interest in Australian-made products and craft goods on-site from clubs. Due to this, clubs are increasingly interested in establishing micro-breweries and small distilleries on their premises. Clubs Australia submitted that clubs’ efforts to diversify through the inclusion of small distilleries and micro-breweries has expanded consumer choice options, thereby increasing patronage at venues. For example, in regional NSW, Wests Cardiff features a small batch micro-brewery that produces a variety of beers under the Cardiff Brewery Label, available on tap at the bar. This offering has increased the number of club visitors, attracting both locals and tourists.
5.83Lion noted that Australian breweries and distillers are not only significant employers in their local communities, but in many cases, are also visitor attractions that support increased tourism:
As an example, Lion’s historic James Boag Brewery and Visitor Centre is Launceston’s second-most popular visitor attraction, and the Four Pillars distillery in Healesville will attract approximately 180,000 visitors this year.
Corporate concentration and centralisation
5.84Grocery retailing in Australia is not a competitive, well-functioning market. Previous food and beverage innovation has driven, and greatly exacerbated, corporate concentration and centralisation, and as a result, is hurting not just consumers but stakeholders throughout the supply chain.
5.85Australia is the land of the supermarket duopoly, where the big two of Coles and Woolworths control 65 per cent of the grocery market. Aldi accounts for 9.8 per cent, followed by Metcash at 6.9 per cent of the market share. Only 17.8 per cent of the market share is held by other retailers such as Amazon, Costco, and independent retailers.
5.86Unlike other countries such as the USA, UK, and France, which have at least six or more core supermarkets chains, Australia’s market is highly concentrated. The highly concentrated market share in the Australian system gives the duopoly a high degree of bargaining power in commercial negotiations with suppliers.
5.87AUSVEG argued that this power imbalance has made it increasingly difficult for suppliers to receive competitive and sustainable prices for their goods:
The concentrated retail sector limits supplier options and significantly reduces their bargaining power, meaning many struggle to receive fair prices for their product. With rising input costs suppliers are becoming financially unviable as they are unable to pass on price increases to the supermarket retailers.
5.88The level of market concentration (with two chains accounting for about two-thirds of the total grocery market) is excessive and acts as a barrier to new entrants and stronger competition. This, in turn, hurts consumers through higher-than-necessary prices, along with farmers and other SMEs/food suppliers through repressed purchase prices and other costly practices.
5.89QUT emphasized that to expand innovation in food and beverage manufacturing, it is essential to incorporate innovation that supports and increases the number of SMEs and fosters decentralized supply chains:
This involves:
- Facilitating food retail diversification and viable alternatives to the supermarket duopoly and the centralised cold chain model more broadly;
- Investing in food innovation manufacturing equipment and ensuring cost-effective access to this equipment by diverse groups;
- Incentivising open access knowledge about a particular technology;
- Supporting small businesses involved in food innovation through grants and incentives even where they are not yet turning a profit;
- Ensuring food retailers allow innovative and healthy products on shelves;
- Including market access and establishment costs into funding and grant designs; and
- Consider options to prevent the further concentration of markets such as ways to avoid small innovative businesses (e.g., craft brewing, organics) being acquired by major food and beverages corporations.
Regional communities and freight
5.90Several submissions to the inquiry called for recognition and support to reinforce food security for regional, remote, and isolated communities, where cool-chain continuity is tenuous and regular re-supply is a logistical challenge.
Tasmania
5.91The food and beverage manufacturing sector is the largest manufacturing sub sector in Tasmania, representing 39 per cent of the state’s Gross Value Add, and contributing $785 million to Gross State Product.
5.92According to the Tasmanian Government, the biggest issue for many Tasmanian food and beverage producers are the costs associated with transporting goods across the Bass Strait to the mainland:
Currently, manufacturers wishing to take advantage of markets outside Tasmania can access the Tasmanian Freight Equalisation Scheme (TFES). The scheme was implemented to bring the cost of transporting goods to Melbourne closer to the cost of mainland road transport for the equivalent distance.
Although companies shipping large quantities of goods can benefit from the economies of scale that are associated with the scheme, and it is considered a vitally important program for Tasmanian industry, it does not meet the full needs of all freight users. For those for whom the scheme is not so beneficial, the added cost of transportation is passed on to the end user through higher pricing and therefore the ability to compete in interstate markets is affected.
5.93The Tasmanian Government’s submission shared that exporters would commonly report that the cost of freight from Tasmania to the port of Melbourne costs more than the cost of freight from Melbourne to Singapore or other global hubs.
5.94The Tasmanian Government also observed that in a 2021 report by independent economist Saul Eslake, freight rates across Bass Strait increased by 45 per cent between 2010 and 2019 without any commensurate lift in the rates paid out under the scheme, and that beyond 2019, rates have continued to increase.
Northern Territory and northern Western Australia
5.95The Northern Territory Government & Charles Darwin University’s joint submission outlined the case for developing advanced food manufacturing in northern Australia (Northern Territory and northern Western Australia, north of 20°S latitude), highlighting the two-year study undertaken by the Northern Australia Food Technology Innovation (NAFTI) project, which was funded by the Australian Government’s Department of Education.
5.96The NAFTI project investigated value-adding of out-of-specification and low value primary produce in northern Australia, deliberately not competing with premium classes of production. It focused exclusively on the prospects for shelf-stable food manufacturing using advanced food processing technologies, to help address the significant issues associated with operating in a regionally remote and climatically tropical environment with limited existing processing infrastructure. There is currently no medium to large scale commercial shelf-stable food processing facilities in these regions of Australia.
5.97Potential shelf-stable food products which were identified by the NAFTI project include:
- Functional meal ingredients: This includes ready-to-use, pre-prepared food ingredients for consumers, as well as for manufacturers and other food service organisations. For example, meat protein powders or pectin powders from fruits.
- Ready meals and emergency foods: These constitute home and out-of-home use, for example for campers, defence forces, aid/relief agencies, caterers, and others in the food service industry.
- Snacks and convenience foods: Including fruit powder and ready-to-drink juices, as well as ready-to-eat snacks such as dried beef and fruit straps.
- Health, well-being, and beauty products: Ingredients for cosmetics, protein powders (meat or plant-based), and nutraceuticals (e.g., plant/fruit powders and collagen powders).
- Pet food/pet snacks: This involves opportunities from waste meat and fish produce, including human-grade premium pet food products for cats and dogs.
- The Northern Territory Government & Charles Darwin University believes that in addition to a northern Australian context, shelf-stable food manufacturing would also benefit the needs of nutritionally challenged populations in the Asia-Pacific (APAC) region.
- The Northern Territory Government & Charles Darwin University strongly advocated for a pathway to establish a northern Australia based advanced food manufacturing centre, much like the Food Innovation Precinct Western Australia (FIPWA) site in the Peel region, south of Perth. FIPWA is a state-of-the-art facility fostering industry innovation to drive business growth and develop new products and exports.
- The Northern Australia Aboriginal Kakadu Plum Alliance (NAAKPA) raised similar points in its submission, arguing that the lack of access to food processing capacity in the Northern Territory and northern Western Australia was a significant challenge:
NAAKPA currently coordinates food processing through contract manufacturers in southern Australia, resulting in high transport costs, risks, and limitations to processing innovation. To address this, NAAKPA aims to establish a small processing operation in Darwin specifically for member use under supervision of a food technologist …
The establishment of a processing facility in northern Australia, collectively owned by a cooperative of bushfood producers, would significantly enhance the sector’s growth. Such a facility would foster innovations in processing Australian native foods, leading to the development of valuable intellectual property related to processing technologies and methodologies. Importantly, it would create an entity capable of collectively holding intellectual property innovations in the bushfoods sector for Aboriginal organizations operating in the bushfood production space.
5.101NAAKPA is therefore calling for government support and funding, and highlights that investment is ‘urgent and crucial’ as Indigenous producers need accessible food processing facilities in northern Australia:
By investing strategically in processing facilities, we not only empower Indigenous communities but also safeguard Australia’s unique flora and cultural heritage. Let us prioritize sustainability, economic growth, and Indigenous leadership in the native food industry.
Improving logistics networks
5.102Another issue raised in evidence was in relation to supply chain integrity issues. Recent disruptions to global supply chains have highlighted that these complex supply chains have many potential points of vulnerability, and submitters urged the government to address these issues by diversifying and decentralising food supply chains by strengthening local and regional supply chains.
5.103The Northern Territory Government & Charles Darwin University submitted that the remote north of Australia is characterised by a seasonally tropical monsoon environment, vast expanses, and dispersed populations reliant on extended lines of food supply:
Food supply chains for Northern Australia are 3000 – 4000 km in length, and are vulnerable to a wide range of disruptions. Supply shortages were observed during the coronavirus pandemic; and also with interstate road closures with flooding during recent La Nina years. Typically, there is also the impact of the annual wet season which severs lines of supply to remote towns and communities. Being so heavily reliant on road transport over extended distances, potential interruptions to the national fuel supply consequent of international hostilities could cause a food crisis in remote Northern Australia.
5.104Due to these vulnerabilities, the Northern Territory Government & Charles Darwin University was of the view that ‘building the capability for protection against global instability should not be understated as a motive for standing up regional shelf-stable food processing capability and bolstering food security in the north of the country.’
5.105Further, costs associated with long distance food supply systems, including having to store perishable food commodities remotely, results in a situation where food and beverage costs in regional communities are substantially more than in metropolitan areas.
5.106According to the Northern Territory Government & Charles Darwin University, in the last 20 years, price differences for the same basket of food between remote stores and town supermarkets in the Northern Territory have increased from 30 per cent more expensive in remote communities ($502 vs $385), to 56 per cent more expensive in remote communities ($848 vs $542):
Consequently, there needs to be ongoing economic support interventions to ensure the sustainability of retail outlets working to feed these centres. Having more regionalised core food manufacturing capability, especially of higher-quality shelf-stable foods, would assist in shortening supply chains to these areas, improving reliability, reducing associated costs and providing more healthy food choices.
5.107As reported by AUSVEG, people in rural and remote Australia cited more expensive food (due to freight and logistic costs) and transit-time related reduced shelf life as reasons for food insecurity.
5.108Suntory Oceania believes that Australia needs a greater diversity of infrastructure to keep pace with the freight demands of the growing population and to reduce the reliance on roads to move freight:
We urge the Federal Government to strengthen State/Federal partnerships aimed at unlocking bottlenecks in the freight supply and distribution chains vital to the competitiveness of Australian manufacturing by:
- Upgrading critical road infrastructure and expediting the Inland Rail Partnership to support industry growth and benefit local communities, including those in South-East Queensland.
- Improving maritime logistics networks to support export opportunities for the sector.
Committee comment
North Melbourne food innovation precinct
5.109The Committee recognises that collaboration between businesses is a crucial factor in supporting and enhancing innovation and appreciates the virtuous cycle of R&D that continues to attract more SMEs seeking the benefits of hubs and clusters.
5.110Given the importance of collaboration to facilitate technology interchanges, skill development, and commercialisation outcomes, the Committee considers that there is a definite role for government in ensuring appropriate frameworks and opportunities are in place to maximise a dynamic, interconnected system of linkages between businesses.
5.111The Committee is keen to see the opportunity to add economic value to the food and beverage manufacturing sector in Victoria realised through the Melbourne Market site. A redeveloped market site (including the 51 hectares of vacant land) would accommodate not only SMEs in food manufacturing but also host R&D networks such as universities, RTOs, and business incubators and accelerators that can support businesses with commercialisation and expansion.
5.112The Committee recommends that the Australian Government provide support and funding to activate the North Melbourne food innovation precinct.
Developing a future workforce
5.113The Committee heard extensively from inquiry participants about the challenges for the food and beverage manufacturers in adapting to new technologies and filling skill gaps. Additionally, the perception of long hours of repetitive factory line work, low pay, and minimal opportunities for career progression still surrounds the sector.
5.114Businesses are now focussing on more training and re-skilling of workers for staff retention. Ongoing training will be essential as technology evolves and will require closer industry partnerships across the vocational education sector for workforce development.
5.115The Committee believes that, to facilitate the transition to automation, the government can invest in skills development and training programs to upskill workers in the food and beverage industry. This includes training programs in robotics, data analytics, programming, and other relevant fields to ensure that workers are equipped to work alongside automated systems effectively.
5.116Further, evidence suggested that the Australian school curriculum lacks food science education. The Committee believes that the government has a role to play by bolstering food science and nutrition classes in the educational sector (primary school, high school, tertiary and TAFE education) to attract and nurture talent for the future food and beverage manufacturing industry. This must also include alignment of curricula with the rapid technological advancements, to equip the future workforce with the relevant required skills.
Recommendation 9
5.117The Committee recommends that the Australian Government, in consultation with industry stakeholders, identify areas of skills shortages and support solutions that will help provide immediate relief, while investing in the longer-term development of the workforce.
5.118The Committee recommends that the Australian Government investigate ways to update educational pedagogy and practice in food science and nutrition classes across primary school, high school, tertiary and TAFE education, to align with the rapid technological advancements occurring in the industry.
5.119This should be done in collaboration with state/territory governments, with a view to increase hands-on and on-site experiences to attract and nurture talent for the future of Australia’s food and beverage manufacturing industry.
Assistance for regional Australia
5.120Recent disruptions to the global supply chain due to the COVID-19 pandemic in 2020, extreme weather-related disasters, and various geopolitical frictions occurring around the world, have shown the importance of having a resilient food supply chain that can continue to feed 26 million Australians daily.
5.121The Committee agrees that shelf-stable food and beverage manufacturing would be an advantageous diversification avenue that would enable cushioning against these sudden and unexpected interruptions of supply chains. Further, the potential to create shelf-stable food and beverage products that could be disconnected from the reliance on cold chain for storage, transport, and distribution would reduce energy and logistics costs.
5.122The Committee also sees the need for a review of the Tasmanian Freight Equalisation Scheme (TFES). The additional burden of freight costs faced by Tasmanian food and beverage manufacturers is a major challenge to growth and success in reaching national and global markets. Reducing this cost burden would underpin growth across the entire sector and improve job opportunities, particularly across regional Tasmania.
5.123The development of an advanced food and beverage manufacturing facility in northern Australia would open the door for numerous efficiency gains in our food production system, including reductions on supply chain lengths, the ecological footprint of food transport, food waste, and generating increased regional employment, improved food safety, and overall improvements in northern Australian and Asia-Pacific food security resilience.
5.124Further, the Committee believes that Indigenous-led businesses play a pivotal role in shaping the Australian native food sector. As NAAKPA wrote in its submission, investment in processing facilities to support businesses in northern Australia is urgent and critical. Not only will this empower local Aboriginal and Torres Strait Islander communities, but it will also provide for Aboriginal-led leadership in the native food industry.
5.125The Committee recommends that the Australian Government, in collaboration with industry stakeholders, identify and map out key logistic infrastructure bottlenecks. This process should include a close analysis of the Tasmanian Freight Equalisation Scheme (TFES), with a view to lowering the freight rates.
5.126The Committee recommends that the Australian Government provide support and funding to establish strategically positioned food and beverage manufacturing facilities to enable increased regional food resilience, including:
- a manufacturing facility in northern Australia, to reduce the ecological footprint of food transport and increase regional employment, and
- a food innovation hub in northern Australia that is designed to support Aboriginal and Torres Strait Islander businesses.