Simplot and Potato farmers of Tasmania in standoff over rising prices

Simplot and Tasmanian spud farmers in standoff over rising prices.

Farmers are warning people need to pay more for their hot chips. (Courtesy: Hugh Hogan, ABC Rural)

July 18, 2022

Source

ABC Rural

Farmers have rejected a second price offer made by food manufacturer Simplot for their potato crop this season. They say the extra AUD 105 (about USD 71,50) a tonne the company has put forward is still not enough to cover the cost of growing their crop this season, which is around AUD 20,000 (about USD 13,600) a hectare.

Sassafras farmer and contractor Scott Rockliff said inputs including fuel and fertiliser were spiralling.

Scott Rockliff, Sassafras farmer and contractor:

"We've got sprays, diesel, machinery costs … everything has just gone up, and our growers can't sustain growing at the current prices we're getting for our potatoes."

"Most of us want to grow spuds for the next 20 years, but if we can't keep our head above water with costs it's going to die its natural death."

Scott Rockliff and his fellow growers are seeking more money from processors.(Courtesy: Luke Radford, ABC Rural)

Farmers said they were thinking about other options, whether it be more sheep or cattle or other crops.

Will you pay more for chips to help farmers?

Farmers have warned of a possible potato shortage this season because of the high cost of growing the crop.(Courtesy: Laurissa Smith, ABC Rural)

North-east Tasmanian potato farmer John Williams believed rural and regional Australia had been taken advantage of for too long. He said paying farmers more was small fry for chip lovers.

John Williams, North-east Tasmanian potato farmer:

"We're talking about 2 cents on a packet of chips for example at McDonalds. Now that's not a lot of money."

"Bunnings announced that the good ol' sausage sizzle went up a dollar for a sausage, from AUD 2.50 to AUD 3.50 (from about USD 1.7 to USD 2.4)."

"No-one will argue about it as long as people are being viable"

But agricultural consultant David McKinna said it was not that simple.

David McKinna says the cost of growing potatoes in Tasmania is higher than overseas.(Courtesy: David McKinna)

The bulk of French fries are sold through quick serve restaurants like McDonald's, which all have global sourcing and pricing policies, and standards.

David McKinna, agricultural consultant:

"We did a study in 2011 and it hasn't changed much — the cost of production of raw potatoes in Australia is substantially higher than other countries, even New Zealand."

"There are a lot of reasons for that. The cost of doing business in Australia is higher, we've got higher labour costs, higher government costs, et cetera."

"In Australia they're talking about 50 or 60 hectares of potatoes. I've been to properties in Idaho where there are 5,000 hectares of potatoes and they're using 18 row harvesters, so it's very efficient."

David McKinna:

"At a certain point if the price goes too high here it's more economic for McDonald's to source them out of another country or factory."

McCain in price talks as well

Last year's total Tasmanian potato production was 457,000 tonnes.(Courtesy: Tony Briscoe, ABC Rural)

Simplot contracts around 140 potato growers. Its competitor and frozen French fry maker McCain is also in the early stages of negotiating a new price with its 70 growers. It is looking to contract around 100,000 tonnes this season.

Last year the total Tasmanian potato production was 457,000 tonnes. Both companies process potatoes into frozen potato chips for food service and retail.