The Australian Food and Grocery Council (AFGC), representing key food industry companies, has just made its submissions to the Federal Department of Treasury in relation to the upcoming May 2012 Federal Budget.

Key elements advocated by the AFGC cover the following:

–       Fresh moves for a Supermarket Ombudsman and a Fair Trading Code of Conduct

–       Accelerated Depreciation request

–       Proposals for the governance of the National Food Plan

–       Industry seeking more food regulatory consultation

–       Review of Australia’s food image

–       Improved industry  partnership with government on preventative health policies

1.    Fresh moves for a Supermarket Ombudsman and a Fair Trading Code of Conduct  

The submission says the heavily concentrated Australian retail sector, where Coles and Woolworths share 80 percent of the retail market, puts “extreme pressure on suppliers (food and grocery manufacturers) to support their aggressive price competition”.

The AFGC say the power imbalance between manufacturers and the two major retailers has reached the point where manufacturers have no leverage at all and there is a market failure.

The introduction of a new Code of Conduct and a special Ombudsman to regulate “acceptable approaches for trading terms and contract negotiations” is advocated as a way of combating this market failure.

The Supermarket Ombudsman ought have oversight and enforcement of the Code, with the function of investigating and resolving disputes between large retailers and suppliers.

Powers of “name and shame” as well as large fines are recommended for the Supermarket Ombudsman.

Incorporation of the Code is suggested to be by contract, applicable to all those with over 20 percent of market share.

2.     Accelerated Depreciation request

The management of currency exchange rates is cited as a major challenge for the food and grocery manufacturing sector, especially in light of the high Australian dollar.

The AFGC claims that high level domestic competition due to cheaper imports and a loss of competitiveness in export markets discourage manufacturing sector participants from investment in plant upgrades, new products and processes and the like.

The AFGC submission argues the introduction of accelerated depreciation for new plant and equipment within tax arrangements, for three years commencing 2012-2013, would make the business case for investment more attractive, especially by Australian operations to their head-office overseas.

3.    Proposals for the governance of the National Food Plan

The AFGC submission is requesting:

–       a Parliamentary Secretary (which is a role equivalent to a deputy minister) be appointed within the Department of Prime Minister and Cabinet (DPMC) to be responsible for delivery of the National Food Plan;

–       that officers be appointed within the DPMC to liaise and coordinate with other government departments to implement the National Food Plan, suggesting they be called National Food Plan officers;

–       that senior departmental officers coordinate the Plan across government portfolios, suggesting they be called ‘National Food Plan Coordination Group’;

–       that a collection of industry and major stakeholders be appointed to provide advice on the Plan, to be called the ‘Food Sector Advisory Group’.

4.    Industry seeking more food regulatory consultation

 The AFGC says that the conventional formal processes for FSANZ Standards development were being bypassed by legislators. The AFGC seeks the assembly of a cross-jurisdictional working group of senior governmental representatives to integrate industry interests in food regulation development.

The submission expresses concern at the dissemination of food regulations without adequate stakeholder consultation, citing the gazettal in NSW of Food Amendment Bill 2010 requiring display of nutritional information on menu boards and food displays and the Food Standards Amendment (Truth in Labelling Palm Oil Bill) 2011.

5.    Review for improving Australian food image

The AFGC wants to be involved in a review of the success or otherwise of the Brand Australia/Australia Unlimited program in promoting the Australian food and grocery sector. The industry also wants government help for a campaign to increase international awareness of Australian food and grocery products and enhance the “clean and green” image of Australian products.

6.    Improved industry  partnership with government on preventative health policies

The AFGC submission advocates that future initiatives such as of the Australian National Preventative Health Agency will require “broad reaching and in depth advice from the industry on the development of partnership programs for effectiveness (likelihood of affecting obesity)”, and in relation to to “practicalities of implementation (costs, timelines etc)”. The AFGC wants the establishment of a small advisory group to represent food-industry views on initiatives to tackle obesity.