Tasmanian potato growers say Simplot is not paying them enough for their vegetables, as they negotiate a new contract with the vegetable processing giant.
The claims come six months after The Australian reported that Simplot’s profits increased 10-fold in 2018.
Simplot’s Australian division made $62.3 million for its parent company’s American shareholders last year.
There are about 140 potato growers in Tasmania who sell to Simplot, and their vegetables become the product in the company’s brands, including Edgell, Leggo’s, John West, Chiko Rolls, Bird’s Eye, Raguletto, and Chicken Tonight.
But some growers say they are struggling to make ends meet, and they have collectively rejected the latest pay offer from the company, Simplot Potato Growers Group chairman Trevor Hall said.
They want an additional four cents a kilo for their potatoes, to come into effect immediately, and a two-year contract before they negotiate again.
Simplot are offering an additional two cents a kilo this year, with an additional one cent rise in each of the following two years, locked into a three-year contract.
“Four cents a kilo is all the growers are asking for,” Mr Hall said. “Not much really, is it.”
“Our margin is being eroded, with the rising costs over the past couple of years.
“It cost $16,000 per hectare to grow potatoes, and if you’ve got 30 or 40 hectares – you do the math.
“There’s just not enough margin there, and I would imagine there’s farmers that are unable to cover their costs.”
It has been a tumultuous decade for Simplot in Tasmania, with fears it would close its Devonport processing plant, before the company signed multi-million dollar deals with Coles and Woolworths to supply Australian-grown vegetables.
The jump in profits last year was due to “increased volume as well as continued focus on driving costs down,” directors stated in Simplot’s end of year financial report.
Negotiations between farmers and Simplot will continue.
Simplot was contacted for comment.