This topic seems to come up whenever I speak at industry events. Because private label and cheap imports worries people.
They read about job losses and how production in Australia is closing to be taken up somewhere overseas.
And they talk about the ‘push’ from major retailers to provide ‘home brand’ products in greater quantities, at the expense of the ‘well known’ Brands.
Here’s a few thoughts on who the Villains really are …
- It’s easy isn’t it to blame the major retailers for destroying local businesses merely to chase the increased profits that home brands and imports can provide.
- It’s easy to rant and rave that the government should slap higher import duties on products to protect local business. And to a degree they do this, via the anti-dumping legislation.
But is this issue really all about retailer greed? It’s certainly easier to blame the retailers. Like you, I worry when I hear that Beetroot production is now going offshore or that Fruit farmers are ripping out their trees because they no longer have a viable market.
But I think there might be broader issues at play here. I have a confession to make. In fact two confessions, from different perspectives that might seem contradictory. But they each make a point.
One. I buy all my books from Amazon! Why do I do that? Well, mainly because of convenience, range and reliable delivery. In this case, it’s not about price. Local book stores are probably cheaper. I have no idea.
You see the point here, is that the changing habits and demands of the consumer may be just as much to blame in destroying our local industry.
Two. When I go to the Supermarket to buy Milk, I make a point of buying Dairy Farmers. And it’s not always easy to find on the shelf. Why do I do that? Because I want to support local industry, and I can’t see how paying 1 Dollar per litre will do that for very long! It may not be too far off, before we can’t even buy fresh milk, but have to make do with UHT milk that’s imported …
But I’m lucky; I can afford to buy ‘full price’ milk. Others can’t. Like the single Mum with three kids from Mount Druitt or Sunshine. For many people, the chance of discounted ‘home brand’ or ‘imported’ food products that helps to make their dollar stretch further are more than welcome.
It’s a bit of a chicken and egg scenario really isn’t it?
If we demand lower prices and better ‘value’ that local industry can no longer provide, what are retailers to do? Our cost base here in Australia is one of the highest in the World.
Our CPI (Consumer Price Index) on a Global scale ranks #3. Only behind Switzerland and Norway. In the rankings for hourly pay scales in Manufacturing, again we rank #3, only behind Switzerland and Denmark.
So how can we compete against cheaper imports? Do we even have a right to? Or should the market determine the products that we find on the Supermarket shelf and in the fashion store?
If market forces are to determine the future of our domestic industries, I wonder what we’ll see in 10 or 20 years’ time? Local businesses are likely to be merely focused on services and distribution. What might your business or Supply Chain look like?
The ‘shock jocks’ on our radio stations talk about future food security being an issue. Sadly I think that might be just the tip of the iceberg …
Food for thought.
And maybe try to ‘buy local’ when you can?
Footnote 15/11/2013: I was listening to a Radio Interview this morning with Peter Kelly, MD of SPC Ardmona. He was explaining how cheap fruit imports have reduced demand for local grown/canned fruit, to the extent that 750,000 fruit trees in Australia may now have to be ripped out and destroyed. (due to the risk of disease if not used). 100,000 have already been lost. Many of which were 100 year old Peach Trees. The remainder will go soon if no solution is found, such as a WTO approved emergency tax on imports.
More Food for Thought ….
