Sectors of the Australian Food industry Notes PDF

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Sectors of the Australian Food industry Glossary Functional foods: foods that surpass the nutrients found in foods with extra health benefits  Probiotics: types of bacteria found in the gut, and are incorporated into foods for extra health benefits

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1.1.Sectors of the Agri-food chain in the Australian food industry - Agriculture and fisheries - Food processing and manufacturing - Food service and catering - Food retail Agri-food chain o

Is the production and supply of food for consumer use

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Each sector works interdependently to perform efficiently and effectively If a problem arises in one sector it will impact all other sectors (esp. sales and income)

Agriculture and fisheries o

Agriculture: the cultivation of land to produce food derived from plants and animals

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An important sector to the AUS economy, and:  Provides employment (rural + urban areas)  Contribute to GDP  Impact positively on the balance of trade  Can produce a flow-on effect (of wealth) too other industries such as transportation, packaging and marketing aspects  Provide training opportunities for staff which can be transferred to other industries and therefore contribute to economic profit

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Plant production involves; Preparing soil for planting, selecting seed, sowing, fertilising, irrigating, harvesting, treating illnesses/diseases, breeding, transportation and storage Farmers have had to adapt to changing environmental conditions/issues:  Drought, flood, water shortages, over-grazing problems + pests/feral animals  External issues: high transport costs, government taxes + AUS dollar (impact value of export goods) Such issues have resulted in agricultural practises becoming more mechanised, dependant on new technologies and be more sustainable to be viable into the future AUS consumers are favouring healthier cuts of meat = farmers have responded by supplying products such as lean pork/beef Benefits of AUS for farmers-> Geographical position; seasonal differences Technological developments-> irrigation systems, genetic engineering + breeding programs -> to compensate for extreme conditions

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Main cereal crops-> wheat, oats, barley Export-> beef, lamb + poultry (2nd largest exporter of beef) = 7billion in export earnings

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Fisheries- refer to the production and cultivation of plants and animals in an aquatic environment Aqua-culture -> a means of breeding seafood in a controlled environment to protect wild species Popular species -> Atlantic salmon, prawns, snapper + oysters

Food processing and manufacturing o

Involves ‘adding value’ to raw materials (such may derive from agricultural/fisheries sector)

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More value added = higher the price Value adding through; heating, cooling, grinding, and separating -> enhancing a products worth (by ^ shelf life) Largest sector – employing a large majority of AUS Has had to become mechanised to ensure economical viability in conjunction to rising labour wages + further enforces a constant food supply = cheaper transformation process This sector competes with cheaper overseas labour markets + imported goods (that can potentially dominate the market) The market has opened to greater opportunities, for product differentiation + adding value to commodities External issues within the sector:  Loss of constant supply of inputs (due to natural disasters)  Unreliable suppliers (in regards to quality or consistency of resources)

Mechanisation factors: Advantages  Time efficient  Labour saving  ^ in production (machines can run 24/7) = reduced transformation costs  Less wastage = more profit  Consistency = maintains reputation

Disadvantages  High set up costs  Can have faults = causing major problems in production + stops production if machinery needs to be fixed  Need qualified staff= higher pay  ^ unemployment

Food service and catering sector o

Where food is prepared and served to customers  Includes all aspects of commercial food prep, production and service

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Made up of 2 types of sectors:  Commercial – cafes, pubs, fast food, airline catering companies, school canteens, restaurants (Maccas, subway, KFC)  Non-commercials- hospitals, nursing homes, prisons, armed services

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Referred to as the ‘hospitality sector’ Importance:  Maintains the continual cycle of selling of food -> transferring them into products (without this sector purchasing products off the agriculture industry it will collapse)  Enable products to be sold  Generator of income for AUS

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Growing rapidly due to:  Expendable income  People have less time to cater/cook  Reduced skill among younger generations to be able to cook  A way to be sociable  A perceived social status of being able to cater

Food retail sector o

Provides place, in which consumers can purchase processed goods, also known as the ‘marketplace’

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Vary in size and dominance Includes; woollies/Coles + small shops; butchers/petrol stations Specialty stores are becoming increasingly popular feature of AUS shopping (e.g. bakers + delicatessens) This industry is ever changing to meet the demands of consumers + ^market share Trends emerging:  ^ Purchase of convenience foods  ^ Internet shopping -> offering an efficient alternative to shopping in-store

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Lifestyle changes (^work hours) = less time to shop around = requiring 1 stop shop Self-serve shopping ^ impulse buying (ikea)

Issues in retail industries  Predatory pricing -> reducing prices so low, that their competitors will go bankrupt  Greenfield acquisitions-> purchasing land, that competitors were intending to purchase to block out competition  Creeping acquisitions-> buying out smaller rivals, to reduce competition

1.2.Emerging technologies - Investigate one emerging technology in one sector of the AUS food industry - Discuss the potential risks and benefits of emerging technologies Emerging technologies o

Reasons for implementation of new developments:  New developments = innovation = fulfilling customer demand  Reduces labour costs  Concern for safety (ensures staff safety)  Expanding customer base -> need to produce more faster  Pressure to produce innovative products- that meet the changing needs of consumers

Agriculture and fisheries Genetically modified foods o

Foods that has had its genetic material altered in some way for more desirable characteristics

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Has the potential to increase the worlds food supply and food security Only a small number of GM crops have been approved to be farmed in AUS  Canola is GM (used for cooking oil)  Cotton

Advantages  Increases crop yield  Possibly more affordable – as crops produce ^ yield – prices can be lowered  Crops have the potential to become disease resistant  Increase shelf life  Increased nutritional value

Disadvantages  Has he capacity to create new allergens in foods = ^ rates of allergic reactions  Ecology may be damaged (through the use of chemicals used on crops)  Contain carcinogenic material – linked to cancer  Ethical controversy  Toxins-> GM can cause unexpected mutations in organisms, which can create higher level of toxins in foods

Organic food o

Agricultural production without the use of harmful chemicals that can damage the environment

Sustainable agriculture-> agriculture that does not deplete natural resources + does not use harmful substances that can accumulate in the environment – also known as organic farming -

Deemed to be the only feasible agricultural method in the long term (organic food) Believed to be superior in quality, thus individuals are willing to pay extra Foods are grown in a natural manner meaning they are grown, processed and manufactured without the use of herbicides, pesticides, fertilisers or growth hormones Excludes the use of GM, traditionally used to alter DNA structures of plants/animals to prevent diseases from occurring + produce larger crop yields Organic foods can fulfil consumers demand for clean, natural and green

Advantages Disadvantages  Production of organic farms takes longer periods  Closely regulated -> for foods to be classified as organic the entire production process is monitored of time + effort to successfully grow crops thoroughly  Typically produce smaller yields, due to a reduced resistance to disease and pests  The enviro is not harmed -> no harmful chemicals are used in production  Cost-> cost more to produce and sell (thus being a  Promotes sustainability over the long-term, deterrent for consumer purchase of organic foods) through practises that aim to establish an  Cost may prohibit access for general population ecological balance to prevent soil fertility and pest problems while maintaining a constant food supply  Animal welfare Food processing and manufacturing In-vitro meats o

The process of producing cultured steak involves obtaining samples of muscle tissue from live animals that have the ability to turn into different forms of cells in the muscle and when provided with nutrient rich serum the muscle cells double in size. The developed tissue can then, be sold as a boneless processed meat product.

Advantages  Would sufficiently supply the global demand for meat (with advances in tech)  Improvement in quality (through manipulation of flavour, texture, quality)  Reduction in green-house gases (from reduction in animal waste)  Has the potential to address global famine  More ethically viable in contrast to animals being slaughtered

Disadvantages  Expensive to produce with current tech  Requires substantial R&D, for in-vitro meat to move from labs to be being available in stores  Subject to media and public criticism -> if they cannot visualise the long-term benefits of sustainability  Potential health consequences

Aspects of the Australian Food industry 2.1 Operations within the food industry with particular attention to -

Levels of operations Research and development Quality assurance

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Consumer influences Impact on the -> environment, economy, society Career opportunities and working conditions

Level of operations and mechanism o

Level of operations refer to the scale of food production as well as the extent and complexity of technology used

Household -

Low levels of output/high labour Equipment is restricted to home appliances (hand beaters + measuring spoons) Ex. Making brownies for local cafes/ local markets

Advantages  The ability to change products/ingredients quickly without hassle  Artisan feel to products (attracts customers)  Can specialise products easily  Flexible work hours (work from home) Small businesses

Disadvantages  Cannot produce a large profit margin  Does not have the ability to mass produce, achieve economies of scales or cost leadership  May not be financially viable  Hard to maintain consistency  Production may be affected by seasons

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Small output + equipment use is not industrial but may be semi-automated (e.g. bread slicers) Less than 20 staff employees Tends to follow larger companies but with greater flexibility Ex. Boutique bake shops + gourmet butcher

Advantages  Good local customer base  Access to small scale machinery  The ability to diversify production range

Disadvantages  High labour  Low production  Must have a good location to succeed  Inability to store large quantities

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Operate numerous stores (with 50+ employees) Large output (due to a large customer base) Majority of duties/processes involves automated equipment/machinery (decreased need for unskilled labour) Ex. Bulla + nudie (premium juices distributed to outlets)

Advantages  Large profit margin  Benefits of automation (24/7 production)  Exerts greater influence on food sector (with larger voice when dealing with government)  Brand recognisability

Disadvantages  Inability to produce artisan styled products  High costs of machinery/maintenance  Expensive to establish machinery  Open to extortion attempts

Multi-national companies -

Highly sophisticated technology (ensures processes are consistent, e.g. measuring ingredients) Larger companies have more opportunities for problems to occur e.g. broken glass/metal into production line  Special machines have been developed to identify such problems e.g. metal detectors in processing lines Operate many stores across several countries Huge output volume + profit margin Can achieve EOS Ex. Maccas + Nestle

Advantages  Machineries can operate 24/7 (continuous production) = reduce need for unskilled workers  High use of machinery = causes less errors + more consistency in product + more reliable  Highly influential + has economic power (can control the market + suppliers) + brand recognisability  Provides employment to many

Disadvantages  Cannot achieve artisan feel to their products – because it does not present consistency in their products  Hard to change production line  Open to extortion

Research and development o

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R&D - the process used to create new products, improve existing products and explore the market to discover product opportunities Is costly but necessary to ensure products remain up to date and competitive R&D allows companies to identify continual changes in consumer wants/needs -> to ^ their overall market share (leading to ^ profits) + ^ popularity with customers Large Companies dedicate entire departments to (R&D) the success of food products to satisfy customer demands Investment in innovation is essential for continual growth + prosperity in the food industry, helping to maintain the companies; profitability, productivity, competiveness + long-term sustainability

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Benefits of R&D:  Ability to response to changing market and consumer demands  Developing new technologies to assist (in ^ efficiency) the processing and manufacturing of food products  Ensures safer, more consistent nutritious food supply  Increased export opportunities Methods of R&D:     

Surveys Internet Taking to customers Government grants for R&D External agency

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Reviews/social media Taste testing ->customers Internal R&D team Partnerships with Universities Partnerships with CSIRO

CSIRO (commonwealth scientific and industrial research organisation) o

CSIRO – completes research in all sectors of the food industry R&D

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The gov. provides funding to assist in R&D, some of which is completed by the CSIRO Completes research into the makeup of plant crops + animals and food processing systems -> to produce more safe, healthy and sustainable food for AUS Work with farmers to develop innovative agri-food processing technologies to increase sustainability and prosperity in Australia’s agribusiness sector

CSIRO research areas:  Nutrition and health  Partner with AUS’s food, health and wellness industry to develop innovative ways to ensure health and economic benefits for all AUS  Ex. Total wellbeing diet books  Food science  Scientist of CSIRO aid the AUS food industry to be competitive by ensuring food products are safe to eat, through research into food borne bacteria + fungi and chemicals  Work carried out assist the industry in supplying safe food supplies  Animal science  CSIRO works with livestock farmers and allied industries to improve the productivity, profitability and sustainability of the industry through developing premium feeds for animals, improving gene tech and livestock and agricultural management practises Quality assurance o -

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Refers to the process(promise) of ensuring that set standards are met at all stages of the production process QA ensures product consistency is met -> leading to customer satisfaction + good reputation QA is the responsibility of everyone from the production of raw materials to the processed product QA personnel’s:  Continually monitor incoming raw materials and products to ensure they comply with set quality standards (e.g. microbial standards + physical standards-> shape/colour)  Can stop production, refuse acceptance of raw materials + halt delivery of products if specifications of a product are not met Designing a food safety program (based off HACCP) is important as is demonstrates to consumers that a business is committed to delivering a safe food supply at all times Consumer complaint systems -> can be used to ensure products are meeting acceptable standards

Features of a QA department

 Compliance with specifications: legal requirements, industry standards, shelf life tests + internal company standard  Test procedures: testing of raw materials and finished products  Sampling schedules: using a sampling schedule to maximise probability of detecting issues, while minimising workload  Records and reporting: maintaining all QA records so that customer complaints and legal problems be followed up Quality control o

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Involves conducting tests to ensure standards of raw materials and products are checked before, during and after production QC ensures high standards are met Measures of QC at all levels of production:  Development of clear specifications for measuring the quality of each product/service  Set procedures to systematically check the quality standards being achieved  Satisfying external quality management standards (FSANZ, NSW food act 2003)  HACCP

HACCP -

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QA program HACCP is a seven point process that is used to identify hazards and manage risks during the production of food Critical control points are identified and limits are set to ensure food safety is maintained e.g. temp limits + storage times CCP’s are monitored and corrective action is undertaken to prevent unsafe food reaching consumers (ex. chicken stored for more than 3 days may be discarded)

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HACCP can be used as a promotional strategy to attract the attention/money of customers Hazards may be:  Biological – bacteria, yeasts + moulds  Chemical – Agricultural sprays  Physical – metal + glass

Consumer influences -

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The changing nature of AUS society, has led to demands for different products For businesses to remain competitive they must meet consumer demand through new products The demographics of consumers (age, income, ethnicity) can influence their purchasing choices R&D teams must work efficiency to identify consumer consumption patterns to design products to meet such demands, to gain competitive advantage over competitors Consumer demand drives manufacturers decision on what to produce Businesses need to be aware of the features in products that consumers are willing to pay more for; longer shelflife + organic foods The food industry has responded to the changing needs of consumers, by:  Varied in costs from generic to high quality to gourmet  Quick + simple to prepare  Nutritionally enhanced  Single-serve portion  ^ demand for functional foods

Social trends Reduction in cooking skills

Changing demand More partially prepared products

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Increased desire for healthy nutritious meals

Increased production of products...