Australia's food manufacturing sector will require substantial investment before the decade ends if it is to reach its full $200 billion annual revenue potential, says the Australia and New Zealand Banking Group.
An ANZ report suggests Australia's annual food and beverage sales have potential to double this decade.
Rising geopolitical uncertainty around the globe has also emphasised the need for to ramp up production to assist longer term supply and price certainty for the consumer food market.
However, ANZ Client insights director, Michael Whitehead, said the food sector's high growth scenario depended on a significant increase in investment.
"Investment in the industry is particularly important given recent discussions on the outlook for food prices," he said.
The bank's Food Manufacturing Sector Insights research paper echoes recent commentary on the food value-adding sector's impressive potential, and challenges, highlighted by groups such as the Food and Agribusiness Growth Centre and the Page Research Centre.
The Canberra-based Page Research Centre last year argued agriculture's $100b farm gate production goal could be doubled by 2030 if a serious national effort was made to unite food manufacturers and farmers under a peak strategy body.
The Australian Food and Grocery Council has forecast food and beverage exports could potentially rise to $90b by 2030 - about 200 per cent above current figures.
Mr White said capital expenditure and additional working capital investment of up to $87b was likely to be required this decade to achieve a targeted $216b annual revenue in 2030 from the food and beverage manufacturing sector.
ANZ analysed the financial performance of a sample of 41 food and beverage manufacturers, noting the need for industry operators to increase their existing capital expenditure rates to meet the required investment.
Capital was required to fast-track product innovation, including initiatives focused on sustainable packaging changes, digital labelling and traceability.
In addition to product development, investment was anticipated to help digitise the food and agribusiness supply chain and support the development of smart manufacturing technologies which can stimulate higher productivity throughout the industry.
It was assumed domestic population growth and product innovation would help drive an increase in spending on food products in local markets.
This would combine with a reduced growth in import penetration, giving improved competitiveness to Australian manufactured products.
"Growth opportunities will be bolstered by export markets, where Australia's penetration is currently relatively low at $28b in 2021," Mr Whitehead said.
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"Increased penetration will rely on product innovation, helping to increase Australia's market share in the growing Asian markets, which are expected to double food expenditure by 2030.
"Our food manufacturing sector industry is supported by a strong agricultural sector, which is targeting $100b farmgate output by 2030."
He said many Australian food manufacturers were developing and implementing investment plans to take advantage of shifting consumer behaviours as well as to improve their business's agility, particularly in relation to the supply chain.
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Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
