Industrial policy in Australia could be strategically leveraged to address food system challenges by promoting health, sustainability, social equity and economic resilience through coordinated innovation and exnovation, infrastructure support for local small producers, improved labour conditions and coherent cross-sectoral policies.

From renewable energy technologies through to shipbuilding and defence, economies around the world are increasingly influenced by industrial policy interventions – targeting and shaping specific industries, firms and technologies towards national strategic goals. In recent years, there has been renewed interest in industrial policy approaches, not just to address market ‘failures’ and support economic growth, but to shape markets themselves for greater economic complexity and resilience.

In Australia, food security and food systems have not been a focus of industrial policy despite being critical to national wellbeing and security. Yet, there is significant advantage to utilising these approaches more strategically to support healthier and more sustainable food systems.

Australia’s food system challenges

Like many other countries, Australia faces several food systems challenges. Poor diets are one of the greatest contributors to the chronic disease epidemic. For example, ultra-processed foods represent approximately half (40 per cent) of the calories consumed daily – and are linked to increased risk of premature mortality and several diseases.

Food systems also remain one of the main drivers, and victims, of environmental degradation and climate change. A CSIRO report highlights that Australia’s food system’s hidden costs - mainly environmental and health impacts – ranged from $98 to $274 billion in 2020. Increased environmental degradation, economic shocks and geopolitical factors will exacerbate food system challenges.

There is an opportunity to incorporate indicators that reflect societal objectives such as environmental preservation, social equity and health into new industrial policies. To do so, the first step is to start considering ‘food system problems’ as ‘industrial policy challenges’.

New industrial policy approaches should consider more than basic economic growth indicators. By rethinking industrial policy, Australia can create incentives for healthy food environments. For example, through the Food for Thought Report, the government aims to change food system incentives to support innovation and technological advancement. These include “AI-driven and automation technologies” that “drive innovation and productivity in the Australian food and beverage manufacturing industry”.

Supporting domestic, local and small-scale producers

Industrial policy can be leveraged to advance social and governance innovations that support Australian industries. For example, small- and medium-scale producers face challenges in accessing land and, for livestock producers, it has become increasingly difficult to access abattoirs, both of which could be addressed through more joined-up approaches.

To enable food sovereignty and bolster local small- and medium-scale production, industrial policy could design and support access to the infrastructure required for production, processing and distribution.  Industrial policy measures could also improve the employment conditions for workers in food systems, shifting from merely boosting jobs to boosting ‘good jobs’. This is particularly important in a sector faced with chronic labour and skills shortages, as well as an aging workforce – the average Australian farmer is 57 years old. Additionally, such measures could include incentive frameworks, such as procurement policies that integrate targets for healthy and sustainable diets. More broadly, industrial policy can shape the general conditions in which resilient, equitable and sustainable food systems can thrive.

Industrial policies adopted by Denmark illustrate how a whole-of-government approach can foster social and ecological improvements in food systems. For example, the Danish public procurement of organic foods plan supported the conversion of public sector kitchens to use more organic products, working with wholesalers and others. The governance arrangements and the public-private partnerships built resulted in successfully stimulating the demand – consumption - for organic food products. Denmark’s strategy for Green Jobs in Agriculture, Action Plan for Plant-Based Foods, alongside its Food Nation Initiative and Strategy for Green Proteins, which treat plant-based and alternative protein sectors as fields of future economic competitive advantage, provide other examples of government plans and interventions. The Danish Government explicitly aims at strengthening policy coherence.

Towards a more coherent and coordinated food system

Industrial policy provides a critical framework for coherent and effective food systems transformation. Stakeholders report that the lack of “a national and consistent direction on food policy” remains a problem. Not only do policies fail to consistently support food systems across Australia, but they can also conflict with and contradict each other. For example, there is a tension between public health policies that aim to reduce consumption of unhealthy foods to reduce the risks of non-communicable diseases, and government industrial and trade policy strategies that include incentives and support for the companies that produce unhealthy food products. Without efforts to address policy coherence, these divergent policy measures undermine positive outcomes for both economies and population health.

As part of a more coherent industrial policy approach, there is an opportunity for the government to establish long-term goals and foster synergies across departments and the many fragmented programs; effectively, establishing food systems as a ‘mission’ for industrial policy.

Consultation with the wide range of food system stakeholders will be essential for articulating a mission that considers economic, social, health and environmental costs of food systems. In doing so, industrial policy could support current food system coordination efforts in Australia. As noted in the World Trade Organisation’s (WTO) Global Value Chain Development Report 2025, “modern industrial policy is understood less as a national corrective measure and more as a coordination process operating within complex value chain systems”. While in Australia, a National Food Council has been established, Council membership is oriented towards farming, agriculture and food industries, with limited expertise supporting consideration of the public health and sustainability impacts of food systems. Industrial policy could be used to strengthen cross-sectoral partnerships and place-based research and innovation hubs in food systems, improving the diversity and representation of the various actors.

Stripping back undesirable practices

As a third step, industrial policy could help advance food systems innovation and ‘exnovation’ in ways that support economic, health, justice and environmental gains. Exnovation is the deliberate and planned process of phasing out undesirable and unsustainable technologies, practices, business models or entire socioeconomic systems. Our recent study, which explored exnovation in food systems across G20 countries, for example, found that countries advance several socioenvironmental goals, but exnovation policies remain insufficient in scope, fragmented and not structural. From exnovating the usage of pesticides harmful to the environment to reducing the availability and marketing of unhealthy foods, industrial policy could play a role in fostering a long-term plan in which innovation and exnovation complement each other, enabling coherent and transformational food systems transitions.

In sum, a new strategically designed industrial policy framework will be essential to strengthen food security, food sovereignty, ecological sustainability, economic stability and national innovative capability, reducing Australia’s vulnerability to economic, geopolitical and environmental shocks.

Dr Sabrina Chakori is a Chancellor's Research Fellow at the University of Technology Sydney and an Honorary Lecturer at The University of Sydney.

Professor Anne-Marie Thow is a Professor of Public Policy and Health at the University of Sydney.

Emeritus Professor Roy Green is Special Innovation Advisor at the University of Technology Sydney, where he was Dean of the UTS Business School.

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