Smith’s Snackfood Company has announced the closure of its Canning Vale crisp manufacturing plant in Western Australia.
The facility will shut its doors next year, meaning alternative markets will have to be sought from the 12,000 tonnes of potatoes worth A$5m that are supplyed to the plant each year.
"At this point it is anticipated the site will close in mid to late 2016," the Smith’s Snackfood Company said in a statement. "This difficult decision was made with careful consideration, and The Smiths Snackfood Company will provide outplacement services and redundancy support to affected employees," the statement concluded.
Paul Graham of industry regulator Potato Marketing Corporation of Western Australia (PMC) told Fruitnet that in a state that produces some 50,000 tonnes of fresh potatoes for a market that consumers around 10,000 tonnes annually, the closure of the crsip manufacturing plant would see many growers affected.
"It's a big chunk of the market that's being taken away, and many growers supply both fresh and processed potatoes," Graham said.“It’s a big issue that will have effects on growers in terms of their economies of scale, with supplying the manufacturing plant used as a way of mitigating risk. It’s not good news.”
Gary Bendotti of Bendotti Exporters told ABC Rural that 20 per cent of his business would be affected by Smith’s closure, with little options to find other markets for the 1,000 tonnes of potatoes that he was supplying to Smith’s annually.
"We're in a state where the population is pretty set. We're quite remote so export isn't much of an option," Bendotti said. "It's going to be pretty tight and pretty hard."
On top of the closure of Smith’s crisp manufacturing factory, the state’s premier Colin Barnett has flagged the deregulation of Western Australia’s potato industry after the 2017 state election. Western Australia is the only state in Australia that regulates the production of potatoes.
As a third blow to the industry, the PMC is in the midst of legal proceedings with potato grower Tony Galati, the founder of grocery chain Spudshed, who had been producing more then his allocated share of potatoes since 2013.
The PMC has taken the grower to the Supreme Court for breaching a commercial agreement at a time when the PMC is working to ensure that the deregulation of the industry would be as seamless as possible for the state’s growers.