Consumer products & retail

Potential Impact of Australia’s 2011 Carbon Tax for Food & Grocery Supply Cain

The Australian Government’s proposed Clean Energy Legislative Package is slated to commence in less than 12 months. While attention has mainly centered on the direct economic impact of the proposed carbon tax and on Australia’s largest emitters, the scheme will also indirectly impact companies that have significant emissions within their end-to-end supply chains. And it will potentially have an impact on Australian companies’ ability to compete with a growing trend in imports.

The Australian food and beverage, grocery and fresh produce processing sector is such an industry. While the direct impact of the proposed scheme is likely to be small, it will indirectly increase the cost of manufacturing. Costs associated with energy consumption, freight/ road transport, packaging and compliance are expected to increase and add further pressures on the industry.

The Australian Food and Grocery Council and A.T. Kearney examined the potential impact across the industry’s entire supply chain, including operating costs and competitiveness. The weighted average net economic impact in 2012-13, measured as costs resulting from the proposed scheme as a percentage of operating profit before tax, is estimated to be 4.4 per cent, assuming that zero per cent of these costs are passed through to retailers.

Forward-thinking companies have understood these expected cost increases, are implementing internal measures to reduce emissions, and will realize significant benefits from engaging and collaborating with their suppliers to reduce carbon emissions and potential cost increases across their supply chain. Others need to assess the materiality of their carbon footprint, and take necessary actions to identify the emissions profile of their business operations and products in order to mitigate the negative effects of the carbon tax.

Report

Impact of Carbon Pricing 2011—Potential impacts across the supply chain
Produced by the Australian Food and Grocery Council and A.T. Kearney

News release

Carbon Tax another Blow to Food and Grocery Manufacturing
13 October 2011 — Australian Food and Grocery Council (AFGC)
Operating profits of Australia’s food and grocery manufacturers are expected to fall by an average of 4.4 per cent in 2012-13 under the Federal Government’s carbon tax which will impact industry’s capacity to employ and innovate, according to new research released by the Australian Food and Grocery Council (AFGC) today.