Kagome chief executive Brad Free has signalled Australia’s increasingly unviable food production economy could drive business out of the regions.
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One of the nation’s largest tomato producers, Kagome Australia, has sounded the alarm over the growing financial pressures facing food manufacturers in Australia.
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On the back of SunRice reducing staffing hours at its Leeton and Deniliquin mills, Kagome chief executive Brad Free has issued a warning to government authorities that without meaningful reform to importation laws, energy costs and water prices, Australia risks losing more food manufacturing capability permanently.
The Echuca-based processor employs over 150 permanent staff locally, taking on hundreds more workers during the peak growing season.
It also has farms across the region, including at Deniliquin, Blighty and Mayrung.
The base is “critically important” to operations of Kagome, and while there are no immediate plans to close the site, Mr Free said something needed to change to make food manufacturing viable.
He identified overseas companies importing tomato products without meeting Australian food safety standards as the single biggest threat to local food production.
Australia’s biggest export locations include Japan, with 3.6 million units total, and Singapore and New Zealand with over two million units.
Mr Free pointed to the US — which moved to ban Chinese tomato products in 2021 — as a benchmark for the kind of decisive action he believes Australia should be considering given its own import and export imbalance.
“Like many food processors, we are dealing with sustained increases in operating costs while competing in global markets against countries with significantly lower input costs,” Mr Free said.
“Chinese processors utilise Aussie natural resources at reduced prices (such as natural gas), convert it into products, then sell it back into our country.
“For a vertically integrated company like Kagome, water security, availability and affordability are particularly important because they influence both agricultural production and manufacturing operations.”
Surging energy and water prices place Australian producers at a significant disadvantage against overseas importers who face far lower input costs.
Mr Free said Kagome had spent $11.3 million to relocate tomato farming regions due to water availability in zones less affected by the government’s water buyback program.
While he is not averse to the environmental outcomes central to the Murray-Darling Basin Plan, Mr Free said the reduction in productive water available to agriculture had driven increased competition and higher costs for irrigators across many seasons.
“The broader issue is that many Australian manufacturers are experiencing cost increases that cannot always be recovered through higher selling prices,” Mr Free said.
“Over time, that squeezes margins and reduces the ability to invest in productivity improvements and future growth.”
Combined with rising labour costs, Kagome’s customers are finding it increasingly difficult to remain price-competitive on supermarket shelves.
Federal Member for Farrer David Farley has been meeting with growers and producers along the Murray, describing Australia’s position as a food-producing nation as standing at a critical crossroads.
“Australia has some of the tightest local laws relating to food biosecurity and quality assurance, yet Canberra is happy to wave cheap, dodgy imports through the gate and on to our supermarket shelves,” he said.
“Growers and processors across Farrer are enormously frustrated.
“We have everything we need to locally grow the food this nation needs. We just don’t have the government prepared to back them.”
Kagome Australia warns without reform, “we risk losing our food manufacturing capability permanently”.
Photo by
McPherson Media Group
Mr Free has urged the government to reconsider reforming several essential services in order for Australia’s manufacturing system to stay competitive and resilient.
These include reforming gas prices to be equivalent to those offshore, put in place long-term water security policies, ensure manufacturers have access to competitively priced and reliable energy and put in place policies that encourage investment in automation, technology, innovation and workforce capability.
“We must ensure we make common sense decisions going forward and ensure we do not create irreversible damage to Australian food sovereignty,” Mr Free said.
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