McCain pointed to higher costs and imports of processed potatoes

McCain pointed to higher costs and imports of processed potatoes

McCain Foods said cheaper imports, combined with higher input costs and surplus capacity, were behind its decision to close a potato processing plant in Australia.

The Canadian food group said its facility in Penola in South Australia would shut by 20 December. A total of 59 staff will lose their jobs.

Louis Wolthers, president of McCain's operations in Australia, New Zealand and South Africa, said: "Australia has one of the highest raw material costs in the world, which is unsustainable in the long term."

Wolthers claimed imports of cheaper processed potatoes had risen from 10,000 tonnes in 2002 to 130,000 tonnes at the end of 2012.

"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.

McCain will continue to process potatoes at sites in Smithton in Tasmania and Ballarat in Victoria.

Last year, McCain faced claims it was ending contracts with potato growers in Ballarat in favour of cheaper imports.

McCain was reportedly accused of "bully-boy tactics" by pushing down prices paid to growers.

McCain confirmed it has told some growers they would not be offered new contracts but insisted reports it was "dumping" Ballarat potato suppliers in favour of cheaper imports were "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," Graham Harvey, integrated supply chain director for McCain, said at the time.