McCain to close Penola potato plant

McCain has announced it will close its South Australian potato processing plant in December this year. A total of 59 permanent employees at the Penola plant will be offered redundancy packages and offered counselling and support to find new jobs.

Continuously rising input costs such as labour and electricity and high raw material costs - coupled with a surplus capacity - have contributed to the closure decision, according to Louis Wolthers, McCain Foods regional president Australia/New Zealand and South Africa.

Imports of cheaper processed potatoes have risen from 10,000 tonnes in 2002 to 130,000 tonnes at the end of 2012, Wolthers said.

“At the same time, Australia has one of the highest raw material costs in the world, which is unsustainable in the long term,” said Wolthers. “Cheaper potato imports are seriously threatening the future of the processing industry in Australia and will place further cost pressures on Australia’s growers.

“Major food industry companies in Australia would welcome any federal and state government support to address the structural issues in order for the potato industry to be more competitive.

“This step is not a reflection on the performance of the workforce, but it is influenced by the rising costs of manufacturing in Australia.”

McCain will continue to process potatoes at its plants in Smithton, Tasmania and Ballarat, Victoria.