Although Oakville Produce, Australia's biggest supplier of potatoes and onions, went into receivership last week, Woolworths says there will be no potato shortage in its 960 supermarkets.
No supply disruptions
A Woolworths spokesman said on Thursday 19 May there would be "no disruption to supply" and the supermarket chain was working closely with Oakville's receivers and managers.
A Coles spokesman said on Thursday that Oakville Produce "is not a material supplier" to the supermarket chain. It is understood that Coles accounts for about 1 per cent of Oakville's total sales.
Woolworths and Coles have a dominant share of Australia's overall supermarket sector, which research firm Roy Morgan estimates to be about 70 per cent.
Both sell some potato varieties under their own house brands, along with loose potatoes from different suppliers in their fruit and vegetable aisles.
Deloitte outlined in advertisements earlier this week that it was seeking "urgent" expressions of interests for the business from potential buyers and that Oakville was a "major supplier to national retailers and supermarkets" with its fresh potato market share in excess of 23 per cent.
Oakville was 70 per cent owned by Chinese conglomerate Chevalier Group. The business was known as Moraitis Group when Chevalier acquired 70 per cent in 2013. Financial statements lodged with the Australian Securities and Investments Commission at the time showed the business had made $36 million in profits in the nine months ended June 30, 2013.
High debt levels
Banking sources said Oakville had battled with high debt levels after investments in infrastructure and profits had steadily declined. Commonwealth Bank is the major lender and put the company into receivership on May 11, while Rabobank is also a lender.
National vegetable industry body Ausveg says there are 880 potato growers in Australia. Oakville runs large potato and onion farms in regional South Australia and at Hillston in western NSW.
Potatoes South Australia chief executive Robbie Davis says profit margins across the industry have become increasingly thinner for growers, and corporatisation had become a consistent theme in the sector as larger companies bought up smaller farms to try and build up a bigger scale.
