US-based food group Simplot, which has said two plants in Australia could close, has been offered a new contract to supply more frozen veg to local retail giant Coles.

Coles said the deal would see Simplot increase the amount of frozen vegetables and potatoes it supplied to the retailer by 12%.

The retailer said it would also mean all its Smart Buy frozen veg and potato products would Australian grown by early next year.

In June, Simplot advised employees at plants in New South Wales and Tasmania the sites, which produce frozen and canned vegetables, are under the threat of closure.

The company cited “unsatisfactory” financial returns arising from a “very competitive” food industry environment and “unsustainably high costs” from manufacturing in Australia, for the planned closures.

Coles COO John Durkan said: “Simplot has been a valued supplier of Coles for over 15 years. This new offer, including the sourcing of Smart Buy frozen vegetables from Australia, is a further demonstration of our commitment to Simplot, local growers and to delivering a quality product for the value-conscious customer.”

According to reports in Australia, the future of the two sites is being deciding by the Simplot board in the US this week.

Officials at Simplot Australia could not be reached for immediate comment.