SPC Ardmona Operations Ltd
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- SPC Ardmona Operations Ltd
Submission from SPC Ardmona Operations Ltd
SPC Ardmona is a division of Coca-Cola Amatil (CCA) which is publically listed on the Australian Securities Exchange. SPC Ardmona has a proud history of manufacturing food in Australia within the Goulburn Valley, a regional area of Victoria. We have been operating for over 90 years, and the company has grown from the consolidation of 3 individual food manufacturing companies, Shepparton Preserving Company, Henry Jones Foods and Ardmona. We currently have over 700 permanent employees and in the fruit processing season we increase our workforce, adding over 1000 employees to operations within the Goulburn Valley making us the second highest employer in the region. Recently in the light of the unprecedented strong Australian dollar which has negatively affected our export markets and increased pressure on our domestic market by enabling an increase of cheap, imported product, we have examined our operating model and had to make the difficult decision to right size our business to current requirements. This resulted in 22% of our work force being made redundant.
We are committed to the Australian food Industry and the survival of food manufacturing in regional Australia using local produce and employing local people. Like all our peers we face an increasing number of operating challenges, including but not limited to raw material sourcing and costs, exchange rates, consumer support for local innovation, retailer concentration, labour costs, an increasing regulatory burden and an increase in business costs driven by the environmental agenda. We therefore appreciate the opportunity to input into the Issues Paper to Inform Development of a National Food Plan.
The national food plan has to tackle a broad range of areas that must be co-ordinated efficiently to ensure food security for our nation. Australia is a country that needs to maintain a safe, sustainable and viable agriculture and food industry. It must remain globally competitive, through investment in research and development, leading edge technologies, education and rural infrastructure. Government policy, regulations and oversight must ensure a fair and level playing field is created and not place un-necessary burden or costs on food supply as these negatively impact food affordability and industry competitiveness.
Whilst the fundamental role of food is to provide nutrition, it should not be the role of the national food plan to create strategies that deal with public health issues. Consideration must be given to the interface between the two areas, to ensure that regulations support the development of solutions to public health issues. The primary responsibility for public education on nutrition and lifestyle awareness should be the within the health portfolio policy and framework, rather than a food security framework which should deal with how we ensure we are able to maintain food supplies to our country and the global market.
General Questions Questions Questions
1. What is the most important thing you think that a national food plan should try to achieve?
Australia has a wealth of resources to provide the population with a plentiful supply of safe and nutritious food. We are also in the enviable position of producing enough food to support an export market which is a vital contributor to the financial status of our country, and allows us to contribute to global food security. In recent years there has been significant pressure on our food supply chain which has put question to its long term viability.
The national food plan needs to address these current pressures and ensure that in a changing environment we continue to have local food security and maintain our contribution to global food supplies.
The plan needs to produce a framework that ensures Australia has a food supply chain that is globally competitive. We must maintain our reputation as a country which produces leading research and products that meet the highest safety and quality standards, from an affordable manufacturing base.
The food plan needs strategies that
- Support the growing local and global population.
- Ensure base nutrition is available at all times (including during crisis), to all communities (including those in remote and rural areas).
- Ensure that Australians have the available knowledge and resources to understand basic nutritional and diet principles.
- Address rising local production costs.
- Encourage and support investment in research and innovation.
- Addresses the reduction in interest in studying agriculture and food sciences.
- Tackle the key issues that prevent sustainability
- Create consistent regulation and oversight that does not add complexity or cost
Importantly the National Food Plan should create an integrated food supply model that ensures there is the freedom for all aspects of the food chain to grow and prosper.
2. What do you think the vision and objectives of the national food plan should be?
A suitable vision would be;
- Australia is a country with a sustainable food industry which enables all occupants to have access to safe and affordable nutritious food and beverages.
- We understand the benefits from operating within a market driven economy, and strongly believe objectives of a national food plan should
- Ensure the food supply chain is always able to provide affordable nutrition and choice to consumers.
- Ensure Australian Food and Agriculture remains globally competitive, so that agriculture and food and beverage manufacturing remains viable for future generations.
- Increase the education and skills in the industries that support sustainable food production.
- Ensure government policy, regulations and oversight are developed and applied to guarantee a fair and level playing field.
3. What do you see as the major risks to Australia’s food supply in the coming years and decades? How could they be avoided or managed more effectively?
Australia has always been considered the “lucky country” and her ability to produce in excess of the domestic nutritional needs is one of the contributing factors. We have a major risk in that our local food chain is becoming uncompetitive due to the current economic environment with a strong Australian dollar providing an attractive avenue for international manufacturers. Many Australian produced products are disappearing off the supermarket shelves as the retail prices cannot compete with cheap imported products from countries that may have lower production costs or may be subsidised by their governments. Food dumping is still an issue, because despite current antidumping measures, it is still difficult to prove.
As input costs to local agriculture production and food and beverage manufacturing rise, there is a risk that the cost of growing and manufacturing will become too high, resulting in manufacturing being forced to move off shore where labour and materials are cheaper. This would not only impact food security, but would also have a negative effect on our economy, especially in rural communities.
The risks can be managed with strong government support to local food growers and manufacturers. This could be in the form of:
- Support to growers by supporting research to develop crops to withstand our challenging environment.
- Developing a secure financial plan to ensure that the agricultural industry maintains a consistent cash flow in difficult times.
- Payroll tax concessions for food and beverage manufacturers.
- Support and encouragement for higher education in food technology and agriculture.
- Accelerated depreciation for re-equipment for the non-mining manufacturing sector.
- Accelerated depreciation for water and carbon emissions saving equipment and technology.
- Restoration of a reasonable level of R&D for the manufacturing sector, particularly food and beverage manufacturing.
- Proper examination of the input costs which will result from proposed further regulation of the food and beverage manufacturing sector – eg – “traffic light” labeling laws; carbon tax; container deposits.
4. What does food security mean to you? How would this be achieved/ how would we know if/when our food is secure?
We support the FAO definition of food security -
“ When all people, at all times, have physical, social and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life.”
Food security within Australia means that all Australians have access to affordable nutritious food and beverages and the knowledge to ensure that they are making food choices to support a healthy lifestyle. We will know we have food security when we have a sustainable and growing food industry, agriculture free from disease, world renowned research capability, innovative manufacturing and supply chains that are able to continue to supply safe and nutrition foods, even in times of crisis.
5. What are the most important benefits that Australian consumers’ get or should get from our food supply? Why?
We believe that the most important benefit that Australian consumers should get from our food supply is access to a variety of foods that provide safe and affordable nutrition from trusted sources. With all the increased pressures on the Australian consumer they need to be given the knowledge to make informed food choices and have the ability to access food to support their nutritional needs.
Additionally Australia is a country with a strong heritage in a successful agricultural industry. Australians should share in the economic and social benefits that local agriculture and manufacturing bring to society.
6. What are two or three actions:
-By the government sector would most benefit the food consumers?
1. Listen to consumers.
2. Ensure that there are sufficient regulations, policies and procedures in place to guarantee that all food entering the supply chain is safe for human consumption, without creating unnecessary costs that will impact food prices and affordability.
3. Invest in research and enhance nutrition education programs to resonate with all demographics. This will ensure consumers have access to information and can make informed food choices.
- By the non-government sector would most benefit the food consumers?
1. Work closely with leading researchers to create innovative products that meet consumer needs, particularly in relation to health.
2. Continue to work collaboratively through organisations like the AFGC, or other industry bodies to improve the nutritional status of some food categories, and to provide accurate definitions and information for consumers.
7. What do you see as the major opportunities for Australia’s food industry in the coming years and decades? How could they be realised?
The major opportunity we have is to regain momentum as a global food supplier. We have global recognition in agricultural research but we are also aware there is a declining interest in education in agriculture and food technology and employment in these sectors. We need to reinvigorate our interest in agricultural production with investment in education and research, and promote the benefits of working within and creating a sustainable industry.
There has also been a decline in interest in careers in food technology, research, agriculture and manufacturing. As it is becoming increasingly difficult for local food manufacturing to remain globally competitive, we must focus on becoming leaders in food science and manufacturing innovation. As well reinvigorating our interest in agriculture we need to invest to increase our capability in food research and innovation, including food design, engineering and packaging development, and create a dynamic and interesting environment in order to attract future industry leaders.
Finally the agriculture and food manufacturing industry recognises the opportunity it has to play a significant role in improving the nutritional status of the population. A boost to research funding to gain a broader knowledge of consumer nutrition understanding, dietary diseases and the effectiveness of food technology solutions in the improvement of the health and nutritional status of Australians is essential. Such research needs significant government investment and incentives and will not only ensure we begin to tackle some key issues in Australian public health (including obesity and aging), it will also increase our global competitiveness in what is an emerging problem in affluent economies.
8. What are two or three actions:
-By the government sector would most benefit the businesses that make, distribute and sell food?
1. Conduct a value chain assessment of locally produced food versus imported food to highlight the gaps in the value chain that impede Australia from being globally competitive and implement plans to reduce the gap.
2. Ensure adequate investment in research and development to maintain our innovative approach to agriculture and food manufacturing. In order for Australia to remain competitive on a global stage we must spend at least 5% of the gross value of agricultural and food production.
3. Examine payroll tax concessions for food and beverage manufacturers
4. Support and encourage higher education in food technology
5. Support accelerated depreciation for re-equipment for the non-mining manufacturing sector
6. Properly examine input costs which will result from proposed further regulation of the food and beverage manufacturing sector – eg – “traffic light” labeling laws; carbon tax; container deposits
- By the non-government sector would most benefit the businesses that make, distribute and sell food?
1. Encourage collaboration between the food industry, tertiary institutions, growers and governments to support the sustainability of the Australian food industry.
2. Market the benefits of a career in the food industry to high school students and collaborate with tertiary institutions to ensure the course outlines are addressing the needs of industry.
3. Ensure that the Australian consumers are receiving the correct information to make informed choices that will encourage growth of the Australian food industry.
9. What specific food policy and regulatory functions within of between governments:
- Are at cross purpose?
- Have gaps?
The overlap of Australian Consumer Protection Laws and the Australian Food Standards Labeling Regulations has created complexity and uncertainty for food and beverage manufacturers. Claims and pictorials that seem to be appropriate in one category are challenged and prosecuted when used in a different category.
The advantage gained by those who import ingredients or finished product in the current climate given the strength of the Australian dollar is clear. Therefore it is important to ensure that they are scrutinized for compliance to Australian Food Regulations and more particularly ACCC misleading and deceptive conduct laws, as closely as the Australian Domestic Industry.
Compounding this issue is the lack of recognised legal definitions pertaining to consumer value claims for food. Definitions should sit within a food context, with consideration given to consumer understanding. These definitions should be co-regulated with industry developing the definitions, and the ACCC backing these definitions and applying them when considering Australia’s Consumer Protection Laws.
The lack of formalized nutrition and health regulation is another significant gap that has been waiting to be filled for many years. Industry finds itself assessing old codes of practice that in some areas are now incorrect, proposals that have not yet been approved and current regulations and having to make decisions about the appropriateness and validation claims. This results in an uneven playing field, adds to the regulatory burden and costs associated with creating a label, and has the potential to confuse the consumer, rather than assist them to make a purchase.
10. Which regulation or regulatory regime poses the greatest burden on the food industry along the food supply chain (production, processing/manufacturing, transport and logistics, wholesale, retail)? What could be done to reduce this burden?
There is a significant amount of regulation within the food industry, the complexity of which contributes to confusion and inconsistencies across states, companies and product categories. This creates a significant compliance costs and burdens to industry.
Many hours are now spent checking the size of fruit pieces are in-scale with the amount and type used in the product, or determining if an ingredient is contributing to the flavor or character of the product and therefore can be shown. Whilst we are highly supportive of the role of the ACCC in ensuring companies do not engage in misleading conduct, it appears that common sense and consumer understanding appears to have been forgotten in the current environment.
Greater co-regulation and alignment between oversight and enforcement agencies is required and government needs to review policy and regulations and assess the burden to industry versus the understanding of consumer purchasing behaviors and benefits.
11. What two or three actions:
- by the government sector would most benefit communities that are highly dependent on food production?
1. Encouragement for industry to retain manufacturing in regional Australia through continued support to regional communities including but not limited to investment in education, transport and medical services.
2. Incentives to invest in or expand industry food production areas including financial support and payroll tax concessions.
- by the non-government sector would most benefit communities that are highly dependent on food production?
1. Ongoing support to employ locally and support regional training and skills development programs.
2. Support to the government health messages surrounding diet and healthy lifestyle to ensure the workforce remains fit and able to work productivity.
3. Industry marketing of the benefits and opportunities within the food and agricultural industries in order to attract greater numbers of candidates interested in working in this field.
17. Do you see a role for the food industry in supporting population health and nutrition outcomes? If so what do you believe that role is and what support might industry need in fulfilling this role?
There is no doubt that the food industry can play a role in assisting to support improved population health and nutritional outcomes for the Australian Community. In fact this area presents one of the most significant Win – Wins for government.
By offering many varied nutritious food options and targeting products towards the needs of an aging or an increasingly obese population the food industry can make a positive contribution to population health and invest and innovate to become world leaders.
Creating an integrated interface between health and food policy that allows for regulations to be developed in support of the development of solutions is essential. These regulations however should not be developed to penalise or advantage one food category over another. Food contributes to both nutrition and lifestyle and how to balance those considerations is essential knowledge for Australians. It is the role of the food industry is to ensure it has products across its portfolio to meet the diverse needs of the population.
Clear roles for each area health policy and food policy need to be established. The role of the nutrition and health policy should be to research consumer understanding of nutrition, changing population needs, and ways to improve education and understanding of what a healthy life style and balanced diet consists of. This should be translated into health messages and education for the general population. Unfortunately the food label does not have enough space to do justice to this message. The food label should convey clear and accurate information about what is in a product, highlight any areas that are pertinent to the health and safety of the person consuming the product, and displaying the nutritional facts relating to that food.
It is not the role of the food label to interpret the health merits or otherwise of this product with in a consumers total diet. This advice should be a part of health and nutritional policy and education, and not the national food plan.
19 Oct 2011