Tuesday , May 11 2021

Electricity, work force, drought that causes packet reduction

Aussies may not like the impact of their grocery bills or reduced sizes in their trolleys, but they do not like food producers.

Experts say the reason for getting smaller packages and products for the same price is because manufacturers have no choice but to make changes to keep their companies alive.

Not everyone will notice, because the different are subtle – Little teens and shapes that appeared in 10 packs were reduced to eight, and Freddo Zhagi, who were once 15, are now 12.

If brands do not reduce their products, they increase prices in general – not just because of drought, but because of higher production costs through rising electricity prices.

Thousands of Aussies working in the food industry have already lost their jobs and the head of the Australian food and grocery council, Tanya Barden, warned that there could be more cuts.

She said companies can only absorb production costs for so long, with the latest cost increase that now impacts the sustainability of some operations that ultimately affect consumers.

"Suppliers of food and grocery, large and small, are aware of the cost of life pressures on consumers and for a while now they absorb the cost of production," she said.

"But high pressure on the largest manufacturing sector in Australia is expected to intensify with costs for everything from raw materials, especially caused by drought, to working on energy that continues to grow."

Ms Barden warned that the situation had now reached the stage where something had to give.

"Many companies need to increase their prices, reduce their production volumes, or reduce the range of products they produce if they want to continue producing in Australia," she said.

Other reduction packages include Red Rock Deli chips from 185g to 165g, Doritos from 200g to 175g and Weet-Bix from 1.5kg to 1.2kg.

The bigger box of Weet-Bix can be bought for $ 4, but the smaller package price is now at $ 5.

Last year, amid worsening of the drought crisis, experts warned that buyers would soon feel the bullying of the outcome.

They predict vegetable, bread, and even margarine to become particularly expensive.

In the drought between 2005 and 2007, food prices rose by 12 percent, a double increase in inflation.

In August, the Commonwealth Bank's report put potential drought costs in the economy at $ 12 billion, due to its "significant" effect on food prices.

Ms Barden said that people are losing their jobs and businesses are closing in or going abroad due to rising pressures.

"Food and grocery producers are under enormous pressure to be competitive and are continually looking for ways to keep the price cap, especially if they are aware that consumers with conscious values ​​could switch to alternatives to imported and private labels," she said .

"Companies reduce costs, automate, absorb cost-cutting and innovation, but cost increases now affect the sustainability of Australian operations, a recently lost job of 4,750 jobs and the potential for further job losses, closing businesses or transferring land operations ".

"In order to keep production here, companies need to look at job cuts or change or reduce the range of products they make, which in turn affects Australians in the long run."

With inflation still 1.3 percent below its potential, the industry needs more inflation for a sustainable future.

Industry experts say growth should recover to five percent.

The drought even forced Coles and Wolverts to withdraw from cutting fresh food, with prices starting to rise late last year for the first time in 10 years.

The industry's deflation rate declined in the last quarter, largely due to the rise in the price of fresh foods, including meat and dairy products.

A recent report by UBS retail analysts Ben Gilbert and Arian Norozi showed that prices fell 1.3 percent to Woolworths in the fourth quarter of June 30, compared with a fall of 0.6 percent in the September quarter.

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