McCain to close potato processing factory in South Australia

McCain Foods has announced it will close its potato processing factory in Penola, South Australia.

McCain says its Penola plant, about 380 kilometres south east of Adelaide, will shut down before Christmas, putting 59 staff out of a job.

McCain cites increasing amounts of cheap imported potatoes and the rising costs of manufacturing in Australia as the reasons for the closure of the Penola plant: "Cheaper potato imports are seriously threatening the future of the processing industry in Australia, and will place further cost pressures on Australia's growers,"the head of McCain Foods in Australia, New Zealand and South Africa, Louis Wolthers, said.

"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."

McCain Foods regional president for Australia, Louis Wolthers, says the decision will not affect the quantity of potatoes it buys from local growers.

Currently half of the potatoes grown in south east South Australia are processed in Victoria, at Ballarat.

Mr Wolthers says once the Penola plant ceases operation, all potatoes from the south east will be processed at Ballarat.

But he could not say who will pay the extra costs associated with transporting potatoes further for processing.