The Visy Industries executive chairman will also call for a new “coalition of the willing”, comprising federal, state and local governments, to put the national interest above political, sectional and regional interests and save the embattled food manufacturing industry.
…Mr Pratt will say that feeding “a hungry world” will be Australia’s “greatest responsibility and opportunity in the 21st century”.
“We can quadruple our exports to feed 200 million people,” he will tell today’s forum. “We can bring together rich natural resources, innovative research and development, smart investors and risk-taking farming and manufacturing entrepreneurs.”
Mr Pratt will argue that transitioning from a “mining boom” to a “dining boom” will require changes in competition laws to allow consolidation among rural companies and the suspension of payroll tax for food manufacturers, as well as government incentives for innovation in agriculture.
He also wants accelerated depreciation for new manufacturing investments in food and for Australia to follow the American example on anti-dumping practices by putting the burden of proof on the offending party to prove “they are not doing it”.
Australia produces more food than it needs – enough to feed 60 million people a year.
…Comparing the contrasting plights of the food and car industries when it comes to government subsidies and community concern, Mr Pratt will today say: “In recent years, we have lost significant capacity in regional abattoirs, fruit and vegetable processing, flour milling, and baked goods, to mention just a few. And these losses, including many iconic brand names, such as Heinz and SPC, have received relatively little attention.
“But the food industry decline has had a bigger impact than the close-down of car factories. The irony is that we have a competitive advantage in food manufacture. We don’t have that competitive advantage in producing cars.”
Sadly the only time business leaders seem to appear with speeches like this is when it’s in their own interests. As even The Australian confesses, food packaging is the dominant business for Visy.
But there is still some wisdom here. The kind of “behind the border” incentives that Pratt discusses are more than fair game if you have an industry policy. It is a little ironic that Pratt calls for them versus the car industry. After all if they weren’t needed then they aren’t needed, no?
But a quick glance at recent years of performance for processed food exports can tell you what the real issue is:
For the past five years, processed food exports have fallen. There was better growth in the decade prior, from $9.5 billion in 1998 and to $15.8 billion in 2006 so it probably doesn’t take Einstein to work out that it’s the dollar that’s weighing on the sector.
At the same time, however, the boom in unprocessed food exports fingers a second cause. The difference between the two will in part be attributable not just to the currency value but the real exchange rate, including the labour costs embedded in manufacturing.
It’s another example of the the houses and holes economy squeezing out all else. Why should food be any different?
