Farmers on the Australian island of Tasmania have rejected a second price offer for their potato crop this season from food manufacturer Simplot. They claim that the extra USD105 per tonne proposed by the company is still insufficient to cover the cost of growing their crop this season, which is estimated to be around USD20,000 per hectare.
According to ABC Rural, Scott Rockliff, a Sassafras farmer and contractor, said inputs such as fuel and fertilizer were skyrocketing.
“We’ve got sprays, diesel, machinery costs… everything has just gone up, and our growers can’t sustain growth 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,” Rockliff mentioned.
In his turn, the Northeast Tasmanian potato farmer, John Williams, thinks that rural and regional Australia had been taken advantage of for too long. He added that paying farmers more was small fry for chip lovers.
“We’re talking about two cents on a packet of chips for example at McDonald’s. Now that’s not a lot of money. Bunnings announced that the good ol’ sausage sizzle went up a dollar for a sausage, from USD2.50 to USD3.50. No one will argue about it as long as people are being viable,” Williams declared.
ABC Rural contacted also specialized consultants who declared that the bulk of French fries are sold through quick serve restaurants like McDonald’s, which all have global sourcing and pricing policies, and standards.
Based on their intel, the cost of production of raw potatoes in Australia is substantially higher than in other countries, even New Zealand. They say that the Aussies have got higher labor costs, higher government costs, etc.
The experts mentioned also that when Simplot and McCain went to companies like McDonald’s every couple of years and negotiated a price they were getting cross-quoted against other countries.
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.
In 2021, the total Tasmanian potato production was 457,000 tonnes. Both companies process potatoes into frozen potato chips for food service and retail.
A source: https://www.potatobusiness.com
