McCain Foods has told growers in Victoria, South Australia and Tasmania it requires 10 per cent less potatoes for the 2010-11 season and wants to cut the price by AU$45 per tonne.
A meeting of potato growers at Ballarat last week angrily rejected McCain's request for a price reduction and refused to suggest a counter offer.
McCain Ballarat Growers Group chairman Dominic Prendergast said a AU$45 a tonne drop in price to AU$255 a tonne would leave growers unable to cover the cost of production.
"They (McCain) say they've lost contracts and volume, but the company is still making a profit,"he said.
A circular to McCain Growers Group members warned that altering contracts "might set a dangerous pattern for future negotiations with the company"despite assurances it would honour contracted price and tonnages whether or not growers agreed to amend contracts.
"McCain Foods have once again used the threat of imports as the main reason they are asking for this drastic cut again in grower price,"the circular said.
"They believe they are losing market share because of imports, which interestingly have not significantly increased on last year - and we know that Simplot have decreased their requirement for imports and can afford to give their growers a far better deal."
McCain Foods has reportedly lost a contract to supply potatoes, equivalent to 15,000 tonnes of french fries, to fast food chain Hungry Jack's (Hungry Jack's is a franchise of Burger King Corporation).
Victorian Potato Growers Council executive officer Laura Bowles said it appeared Hungry Jack's was now buying most of its french fries from Canadian supplier Lamb Weston [PvE: Lamb Weston is not a Canadian company but has factories in Canada].
"We are at a point where growing processing potatoes will not be viable for growers in Australia next year if we continue to lose market share to imports,"Ms Bowles said.
Processed potato imports, most from New Zealand and Canada, jumped from $65 million in 2007-08 to $109 million in 2008-09.
