Rising gas prices could jeopardise crucial investment by food, beverage and grocery firms, putting jobs at risk in Australia's largest manufacturing sector.
The Australian Food and Grocery Council on Monday said the huge leap in the cost of gas was one of a number of pressures on food and beverage, grocery and fresh produce industries, which employ a combined 320,300 people and represent more than a third of manufacturing jobs.
The industries have also experienced six years of retail price deflation and rising labour costs, according to AFGC chief executive Tanya Barden.
Capital expenditure rose in 2015/16, according to the AFGC's annual report, but Ms Barden said businesses' confidence to invest remained fragile.
"We are expecting these pressures to only increase as energy, especially gas, has seen a doubling and in some cases a tripling of price that is likely to have dire consequence for Australian jobs and investment, with some companies reassessing their long-term future in Australia," Ms Barden said.
"While a 4.7 per cent increase in capital investment is welcome, reversing the last three years of decline, expected increases in input costs could stall this recent turnaround in investment and employment."
Capital investment in food product manufacturing surged 12.7 per cent to $2.5 billion in 2015/16, with a big fall in beverage and tobacco manufacturing dragging the overall increase back to 4.7 per cent.
"Continuing to stimulate investment in site modernisation is critical particularly in light of mounting input cost pressures," Ms Barden said.
"We are now in danger of drifting into a low investment trap, where uncertainty about return on investment flowing from retail price deflation and rising costs is seeing investment decisions deferred or dumped."
