anufacturing company McCain Foods has announced it will close its potato processing plant in Penola, South Australia, by 20 December 2013.The closure will see 59 permanent employees lose their jobs. McCain Foods said the employees will be offered redundancy packages.
McCain Foods said rising input costs, such as labour and electricity, and high material costs coupled with surplus capacity, contributed to the closure decision.
According to the Company, imports of cheaper processed potatoes have risen from 10,000 tonnes in 2002 to a decade-high of 130,000 tonnes at the end of 2012.
“At the same time, Australia has one of the highest raw material costs in the world, which is unsustainable in the long term,” said Louis Wolthers, McCain Foods Regional President Australia New Zealand and South Africa. “Cheaper potato imports are seriously threatening the future of the processing industry in Australia, and will place further cost pressures on Australia’s growers,” he said.
“Major food industry companies in Australia would welcome any Federal and State Government support to address the structural issues in order for the potato industry to be more competitive,” Mr Wolthers said. “This step is not a reflection on the performance of the workforce, but is influenced by the rising costs of manufacturing in Australia,” he said.
McCain Foods acquired the Safries plant at Penola in 1992. The plant was built around 1986.
The Company said the majority of potatoes from Penola are processed in Ballarat, and sold in Queensland and New South Wales.
McCain Foods said it was committed to continuing its operations in Victoria, Tasmania, and New South Wales, where the Company recently acquired frozen dessert manufacturing company Sara Lee.
McCain Foods will continue to process potatoes at plants in Smithton, Tasmania and Ballarat.
The plant closure at Penola is not the first time this year that McCain Foods has faced troubles in its potato processing business. Australian Food News reported in June 2013 that the Company had announced it would not renew supply contracts with four potato growers in the Ballarat region.
