Bega Group to close its peanut processing business in Qld

Following a strategic review, Australian-owned food manufacturer Bega Group has announced its plans to wind down and close its Peanut Company of Australia (PCA). The PCA facilities at Kingaroy and Tolga in Queensland will be closed in a phased shutdown which is expected to take 18 months.

Purchased by Bega Group in 2017, PCA had been under sustained financial pressure for several years prior to this acquisition. Despite ongoing investments, including significant upgrades to site safety and initiatives aimed at supporting local growers to boost production, Bega Group has not been able to establish a sustainable business model for PCA.

Continued financial losses and industry challenges led to the need for the review and ultimately the conclusion that the business would be better served by a change to more local and focused ownership or, in the absence of that being achieved, unfortunately a closure. PCA has been incurring operating losses of $5–10 million per annum.

Bega Group Chief Executive Officer Pete Findlay said: “We announced the strategic review over 12 months ago and we have explored several options to sell the business. Unfortunately, we’ve been unable to find a buyer that could sustain a long-term future for employees and growers.”

The peanut industry in Australia is facing a combination of headwinds including increased competition from imports, stronger returns for growers from other crops, high input costs and declining production.

Bega Group notified both employees and growers of the strategic review in June last year, and in August also advised growers the company could make no commitments beyond the current season’s crop.

“We understand the impact this decision will have and we will work closely with growers and the approximately 150 employees at the Kingaroy and Tolga facilities to support them through this period. Employees will be offered redundancies, support services and redeployment incentives and opportunities where possible. Some employees will also be able to continue in their roles until closure.” Findlay said.

Bega Group continues to have a strong presence in Queensland, retaining two processing facilities in Crestmead and Malanda, as well as its distribution network.

Image credit: iStock.com/Andrey Elkin