Heinz Factory Closure Prompts Renewed Call For Supermarket Ombusdman: Legal Matters

Heinz closure prompts renewed call for Supermarket Ombudsman

By Michelle Hammond
Friday, 06 January 2012

The Australian Food and Grocery Council has renewed its call for the Federal Government to appoint a Supermarket Ombusdman, following the closure of a Heinz factory in Victoria.


The closure of the Heinz tomato sauce factory, located in the small town of Girgarre in Victoria’s Goulburn Valley region, has put nearly 150 workers out of a job.


Heinz itself will continue to operate in the region through a smaller factory in Echuca. But according to the AFGC, the industry is under “immense” pressures.


AFGC chief executive Kate Carnell says local food and grocery manufacturers are struggling to deal with the rising cost of labour, energy, water, transport and high commodity prices.


“The high Australian dollar is also making imported products cheaper, making it even more difficult for Australian-made brands… to compete on Australian supermarket shelves,” Carnell said in a statement.


“Making matters worse, major retailers Coles and Woolworths are significantly increasing their private label brands and devoting more shelf space to these products, which are increasingly being sourced offshore due to lower production costs.”


AFGC spokesperson Brad Watts says the problems faced by Australian food manufacturers are “pretty much across the board”, with smaller players feeling the pinch even more.


In a report titled 2020: Industry at a Crossroads, the AFGC identifies other issues plaguing the sector, including a lack of incentives for investment and inadequate skills development.


In response to the Heinz factory closure, the AFGC is calling on all levels of government to intervene, renewing its call for the appointment of a Supermarket Ombudsman.


“Government needs to provide tax incentives to enable business to take advantage of the high Australian dollar to invest in large-scale plant equipment upgrades to improve efficiency,” Carnell said.


“To ensure a fairer trading environment, the government should appoint a Supermarket Ombudsman, who would enforce a Fair Trading Code of Conduct.”


When Carnell flagged the idea last year, she said the code could possibly fall inside the lines of the Australian Competition and Consumer Commission.


“We hope that this would include a limit on the amount of shelf space that could be taken up by private label or brands owned by major supermarkets,” Carnell said at the time.


“This would ensure that Australian manufacturers continue to have fair and equitable access to [the] market.”

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