TFGA says only surprise about Simplot announcement was the timing

The Tasmanian Farmers and Graziers Association (TFGA) today expressed disappointment at Simplot’s announcement that it’s Devonport vegetable processing facility is under threat of closure.

“We can’t say this is a surprise, though,” said Jan Davis, TFGA CEO. “Tasmanian farmers have been warning for years that continued cost increases are not sustainable without increases in farm gate returns.”

“Food processors and farmers alike compete in a ruthless global marketplace; and we can only be successful if we can remain competitive. Costs have been rising rapidly, while at the same time returns have been falling. Tasmanian farmers have worked tirelessly with processors including Simplot to improve efficiency in an attempt to absorb costs. We estimate that this has delivered around 7-8% annually in cost savings from farm to factory over the past few years; while at the same time returns have fallen significantly. That simply can’t go on – and Simplot’s announcement recognises that farmers have run out of room to continue to deliver efficiencies without returns.

“A state government report released today estimates red and green tape compliance costs for the agriculture, forestry and fishery sector in Tasmania at $336m pa. That’s almost 17% of gross turnover – in an industry working on average margins of less than 5%,”she said, adding that industry actually considered the report underestimated the costs significantly.

Ms Davis went on to say food processing plants had pretty much disappeared from Australia as rising costs priced them out of the market.

“These problems have been exacerbated by the fact that low-cost vegetable imports have flooded into the Australia, often from countries that subsidise their farmers. The massive power of the supermarket duopoly has added to industry stress, as they have relentlessly focussed on lower prices at the expense of local producers. Rising input costs (including fuel, freight, power and labour) need to be contained, too.

“We have heard a lot over recent months about the Asian Century and the National Food Plan – and all the opportunities for agriculture. This will come to nought though unless governments address the cause of the problems facing our farming and food processing industries, rather than attempting short term fixes of symptoms. It is also time consumers recognised that if they want the best, they have to pay a bit more.

“Tasmanian vegetable producers are committed to working with Simplot to retain their processing capacity here for as long as we can. But, unless something changes, Simplot have now clearly signalled that may not be long,” she said.
TFGA chief executive Jan Davis