Could the supermarkets cripple our food industry: Gottliebsen

Rarely are chief executives more frank that Elders’ Malcolm Jackman. At the end of his KGB interview, without naming Woolworths, Coles or Metcash, Malcolm Jackman accuses the supermarket chains of having a small group of buyers who are wiping out Australian food processing. You can read his exact words with this link.

I suspect that the chief executives of Wesfarmers, Woolworths and Metcash have no idea that this is their unintentional master plan. They are simply producing house brands and they are seeking the lowest possible source of food processing. They don’t care a damn where the processed food comes from so long as it meets their standards. I was alerted to the enormity of this process when my wife purchased breakfast cereal which had been shipped all the way from Wales.

Jackman says he is able to buy cans of Italian tomatoes for $1 a can. Clearly there are many countries that intensely value their food processing industries and are prepared to subsidise those industries with all sorts of goodies.

At the same time, in fairness to the small group of processed food buyers at Woolworths, Coles and Metcash, militant Australian unions have demanded crazy work practices in many Australian food processing plants. As a result, companies have not invested in the latest technology and therefore they have much higher costs than they need to have.

So the Australian food processing industry is being caught in a four-way squeeze – short-term thinking by supermarkets, crazy work practices, insufficient investment and subsidisation of rival producers by many countries. If this continues, in a few years almost all major food processing plants will be shut down and once they are shut down, subsidised exporters will know they have us at their mercy and will charge a lot more.

Meanwhile, it seems we will ship low-cost Australian crops into Asia and Europe, who will process them and send them back to Australia – if they don’t grow their own raw material.

Just as in minerals, we have become a quarry. We are going to emerge as an efficient producer of bulk products but we are in grave danger of closing our steel and food processing plants. Leaving aside small specialty plants, Australians will have to rely on overseas food processing if they want their bulk products converted to edible food items.

Jackman says the matter has been placed before the current government but it is almost impossible that a Labor government could tackle the militant food unions that are more intent on getting retrenchment benefits than protecting jobs. All we can hope for is that Malcolm Jackman’s warning falls on fertile ground.

This article first appeared on Business Spectator.