Frozen food giant McCain Foods has denied reports it is severing contracts with its Ballarat potato suppliers in Australia in favour of cheaper imports.
A high Australian dollar has reportedly impacted on McCain exports and local reports have suggested the company has told some local growers their contracts would not be renewed.
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At least seven of the 33 potato growers supplying its largest frozen chip factory in Ballarat, that their contracts will not be renewed, The Australian reported. A number of farmers in Victoria and Tasmania have also reportedly had their annual contracts cut by up to 60%.
McCain had also reportedly been accused by the Victorian Farmers Federation (VFF) of using “bully-boy tactics” with its contract growers, according to local reports.
The company, which essentially sets the price for all local businesses buying potatoes for chips, has reportedly pushed down prices being paid to growers, from A$305 per tonne to $270 for this year’s spring harvest, The Australian reported.
A spokesperson for VFF told just-food it has “concerns” for the potato growers in the Ballarat area and it has sought meetings with McCain to “have the matter clarified”. The organisation could not be reached for further comment at the time of going to press.
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By GlobalDataMcCain, however, confirmed that it has indeed notified some growers they will not be offered contracts for the upcoming planting period in late October to November, but that reports the company is “dumping” Ballarat potato suppliers in favour of cheaper imports is “incorrect.”
“We are facing a difficult period with the doubling of imports, which effectively reduces the tonnage required locally. Not that we are replacing local suppliers with imports,” McCain integrated supply chain director for APMEA, Graham Harvey said.
“The company has a long-standing history with many growers in Ballarat, Tasmania, and South Australia, and we are committed to maintaining those relationships where we can. It’s important that we give us much notice as we can for this year, and we notified growers as soon as we could so they could look for other opportunities over the next five months.”
Harvey said McCain is still in discussions with individual growers and that it was therefore “too early to speculate on actual numbers of growers that would not be re-contracted for this year”.
“This would take a couple of months before we have final numbers of growers contracted for 2012-13,” he said.
He added that would be no job cuts at this stage at any of the plants in Smithton, Ballarat or Penola, in South Australia.
“Now there is a tide of cheaper potato imports, which have averaged around 80,000 tonnes per annum in the past two years, but since last July have doubled to 90,000 tonnes in only six months.”
McCain said it has discussed the threat of imports with grower representatives and state government officials over the last 18 months.
“We hope we can turn this situation around implement reforms with growers and other stakeholders so we can increase demand for 2013-2014,” Harvey said.
