Simplot blames farmers for food services price rise

Simplot’s food services customers have been told that prices will rise, even as Tasmanian potato growers supplying the processor have received an average pay cut of 2.5 per cent.

In a letter sent to food services customers, Simplot said higher raw potato input costs and agricultural cost pressures meant it had to increase its prices.

TasFarmers is calling on Simplot to explain why it is increasing prices for customers while cutting the prices paid to Tasmanian potato growers.

The peak body’s chief operating officer, Neil Grose, said Simplot’s hypocrisy has reached new levels.

“Simplot has aggressively pushed prices down to Tasmanian farmers, yet seeks to blame their own price increase on the very farmers they are driving to the wall,” Mr Grose said.

“Simplot has bullied Tasmanian family farmers into accepting a 2.5 per cent overall cut in their farm gate price, yet for them to increase prices now is almost incomprehensible.

“Farmers are carrying higher fertiliser, fuel and production costs, yet they are being paid less.

“Simplot cannot use those same pressures to justify charging customers more while pushing family farmers closer to breaking point.”

Simplot potato grower committee chairman Leigh Elphinstone said it was another blow for Tasmanian spud farmers.

“To drive down the price to growers yet increase the cost to consumers is outrageous,” Mr Elphinstone said.

“Diesel has just hit $3 a litre, fertiliser has doubled, farmgate returns have been gutted in the past two years by Simplot, yet they increase their price to their consumers.”

Mr Elphinstone questioned how it was a fair deal for anyone, let alone farmers.

“There is no justification for Simplot to increase prices for customers while paying farmers less.

“Simplot must explain itself to growers, its customers and the Australian public.”

During price negotiations, Mr Elphinstone and TasFarmers claimed that Simplot bypassed the grower committee and negotiated with farmers individually.

“They near on bullied growers into signing a contract on the threat that they might lose the contract,” Mr Elphinstone said.

“A 2.5 per cent price cut doesn’t sound like much, but what that’s meant with inputs going up – and spuds are a very high input crop – is about a 60 per cent gross margin reduction over the last two years for Tasmanian potato farmers.”

Mr Elphinstone said he and other growers had no other option but to sign the contract.

“Potato growing isn’t something that you just decide one day that you are not going to grow.

“There’s a lot of planning that goes into organising seed and fertiliser.

“We’ve invested reasonably heavily into our machinery that is potato-specific.”

In future seasons, Mr Elphinstone said he might not grow potatoes.

“If this sort of behaviour continues by Simplot, I’m contemplating my position within the industry.

“Normally we would be looking at upgrading our potato harvester now, but that’s definitely not on the cards.

“I'm not investing any money into anything potato-specific.”

Mr Elphinstone also runs beef cattle at his property at Sisters Creek and said he would focus more heavily on that if he stepped away from potatoes.

He also said that many Tasmanian growers who supply potatoes to Simplot were feeling outraged.

“I’ve never talked to so many growers that are so upset, angry, and uncomfortable about having to sign a contract of intent.

“All growers seem to be the same – they are contemplating their future within the industry and what this is going to mean for the coming years.”

Mr Grose asked Simplot to pass the price rise on to food services customers.

“Simplot have been caught out telling farmers one thing and their customers something else.”

Simplot has been contacted multiple times for comment but has not responded.