Industry outlook The food processing industry has been experiencing a general trend towards increased consolidation and greater foreign competition for some time. In the short term, the outlook for the industry also depends on favourable weather conditions for local agricultural production and the level of the $A. Victorian farmers have benefited from favourable seasonal conditions and good rainfall in 2010 and 2011. The rainfall that boosted Victorian crop production was also a blessing for irrigation-dependent farms in the . Water storages in dams are now just below 80% of capacity, compared with 52% as recently as a year ago. The improved conditions for Victorian agriculture are also favourable for the local food processing industry. The increased water storages in the will be a positive in the medium term, especially for production and processing of meat and dairy. In some sectors of the food processing industry, input prices determined on international markets are important drivers of production costs. Most agricultural commodity prices are relatively high in historical terms. Sugar prices were pushed very high in January after Cyclone Yasi and, despite easing back more recently, remain relatively high. That is having an effect on the confectionery industry based in . The impact of the high $A and the trend toward consolidation in the food processing industry are illustrated by recent high profile factory closures during the course of 2011 to date. These include the closure by SPC Ardmona of a manufacturing facility in northern Victoria with the loss of around 150 jobs, largely due to the impact of the $A making competing imported products cheaper and its export business uncompetitive. recent announcements include HJ Heinz reducing the size of its Australian workforce by 20% or 346 jobs, and closing a tomato sauce factory at Girgarre in northern Victoria with the loss of 146 jobs, while Lion (previously National Foods) announced that it would close its Simpson and Campbellfield cheese making sites over three years, with the loss of 133 jobs. Employment outlook Victorian food processing industry – Source: Deloitte Access Economics, Australian Bureau of Statistics
Industry outlook The food processing industry has been experiencing a general trend towards increased consolidation and greater foreign competition for some time. In the short term, the outlook for the industry also depends on favourable weather conditions for local agricultural production and the level of the $A. Victorian farmers have benefited from favourable seasonal conditions and good rainfall in 2010 and 2011. The rainfall that boosted Victorian crop production was also a blessing for irrigation-dependent farms in the . Water storages in dams are now just below 80% of capacity, compared with 52% as recently as a year ago. The improved conditions for Victorian agriculture are also favourable for the local food processing industry. The increased water storages in the will be a positive in the medium term, especially for production and processing of meat and dairy. In some sectors of the food processing industry, input prices determined on international markets are important drivers of production costs. Most agricultural commodity prices are relatively high in historical terms. Sugar prices were pushed very high in January after Cyclone Yasi and, despite easing back more recently, remain relatively high. That is having an effect on the confectionery industry based in . The impact of the high $A and the trend toward consolidation in the food processing industry are illustrated by recent high profile factory closures during the course of 2011 to date. These include the closure by SPC Ardmona of a manufacturing facility in northern Victoria with the loss of around 150 jobs, largely due to the impact of the $A making competing imported products cheaper and its export business uncompetitive. recent announcements include HJ Heinz reducing the size of its Australian workforce by 20% or 346 jobs, and closing a tomato sauce factory at Girgarre in northern Victoria with the loss of 146 jobs, while Lion (previously National Foods) announced that it would close its Simpson and Campbellfield cheese making sites over three years, with the loss of 133 jobs. Employment outlook – Victorian food processing industry Source: Deloitte Access Economics, Australian Bureau of Statistics
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