McCain Closes Australian Plant in Penola

McCain Foods Limited will have one of their Australian division plants closed this December, according to a company announcement. The Canadian founded company and world's largest producer of French fries and other oven-ready frozen food products is closing the plant in Penola, South Australia.

The Penola plant, known as "Safries", has a capacity of around 130,000 tonnes of raw potato, taken from 15 growers. The local industry has been deemed "unsustainable in the long term" by McCain's regional president, Louis Wolthers. In just 10 years imports of cheaper processed potatoes had risen from 10,000 tonnes to 130,000 tonnes at the end of 2012 and cited rising input costs and surplus capacity as drivers of the closure, he explained. By 2010, Safriers had a reported output of 40,000 tonnes of fries.

Other factors that determined the company to reach this decision were increasing labour and electricity costs, as well as the prices of raw materials and surplus capacity. "Cheaper potato imports are seriously threatening the future of the processing industry in Australia, and will place further cost pressures on Australia's growers", said Wolthers, quoted by Market Watch. However, McCain will continue their potato processing activities at Smithton, Tasmania and Ballarat, Victoria.