The cocoa market has recently experienced a dramatic surge, with prices increasing by 200% over two years. This spike is forcing chocolate manufacturers to reduce the size of chocolate bars—a trend known as shrinkflation. Consumers are feeling the direct impact of these price adjustments as they encounter higher costs while shopping for their favorite treats.
The food manufacturing sector is the backbone of the economy, generating $163 billion a year and employing 280,000 workers. However, rising costs of labor, transport, and packaging are making it increasingly challenging for businesses to operate profitably. Despite an 11% increase in turnover last year, profits fell by 7%, primarily due to skyrocketing energy expenses that put pressure on manufacturers.
Food manufacturers are urgently calling for targeted capital investment incentives to cope with soaring energy bills and compliance costs for clean energy updates. The government's current incentives, like the instant asset write-off, are viewed as insufficient given the high costs involved in food production. The industry argues that ensuring food availability must be prioritized alongside emerging sectors to safeguard future food security.
The food industry is currently facing significant challenges due to soaring cocoa prices and increasing costs of living. With a staggering 200% increase in cocoa prices over the last two years, chocolate bars are becoming smaller, a phenomenon known as shrinkflation. This trend is amplifying the pinch on consumers' wallets as they struggle with higher prices at the grocery store. Domestic food manufacturing is the largest manufacturing sector in the nation, generating an impressive $163 billion annually and employing around 280,000 people. However, manufacturers are also feeling the heat of rising costs related to labor, transport, energy, and packaging. Though there was an 11% turnover increase in the food industry last year, profits saw a decline of 7%, primarily due to escalating energy expenses. The push for compliance with clean energy transitions adds to the burden, leaving food manufacturers in desperate need of tax breaks and incentives for capital investments. Food manufacturers have expressed urgency in seeking targeted capital investment incentives. Their energy bills have surged by 30% over the past five years, reflecting a broader trend in a global energy market where prices are rising across various countries. The government's current energy policy, particularly regarding gas, has led to soaring energy costs, making it crucial for manufacturers to have access to more substantial financial support for upgrading equipment and remaining competitive. With the government's instant asset write-off scheme capped at purchases of only $20,000, the need for reform is clear as manufacturers require significant investments that extend into the millions. The food industry's greatest concern centers around not just economic survival but also their role in the government’s future policies. While the government’s focus is currently on emerging sectors like hydrogen and critical minerals, food manufacturers argue that providing essential nutrition is just as critical. Ensuring food availability for the population should not be overlooked in favor of newer industries. As the landscape changes, it’s vital that the food sector is seen as an integral part of Australia’s economic strategy, emphasizing the importance of keeping the population fed.
