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Carbon tax to hit Australian food manufacturing sector

Carbon tax to hit Australian food manufacturing sector, Australia Food and Grocery Council, AFGC, packaging, Asia
Imports will now be favoured over domestic food products due to food price increases resulting from Australia’s carbon tax, warns the Australia Food and Grocery Council (AFGC).

According to Dr Geoffrey Annison, acting chief executive officer of AFGC, the carbon tax implemented by the Australian government on 1 July 2012 will have adverse impacts on the country’s already fragile food manufacturing sector.

“The whole point of the (carbon tax) policy is to allow the tax to flow down the supply chain including to the consumer to provide effective market signals,” warned Dr Annison, who explained that food prices will still be hit despite the food industry’s best efforts to try to improve efficiency and avoid passing on these costs.

“The unfortunate thing is that passing on the prices rises, manufacturers risk becoming less competitive compared to imports which don’t carry the burden of the carbon tax,” he said.

Noting that the high Australian dollar already puts imports at an advantage, Dr Annison asked, “If consumers choose these products over more expensive local products, how can we maintain an Australian food and grocery manufacturing industry?”

In October 2011, AFGC commissioned an independent review investigating the impact of the carbon tax on food and grocery companies.

The review results suggested the tax would hit the industry hard, particularly where profits are concerned, with losses of more than 11% forecast for dairy and meat products.

While, as part of the carbon tax legislation, the Australian government is issuing grants to help industries upgrade and become more energy efficient, Annison said, “This may not be sufficient to negate the substantial impact of carbon tax.”


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