SPC production cut to slice 50 percent of fruit growers crop
Australian industry groups are offering support to 170 Goulburn Valley fruitgrowers after food processing company SPC Ardmona said it would not be taking their produce from 1 May 2013.
The Company, which is a subsidiary of Coca Cola Amatil (CCA), said the high Australian dollar and competition from cheaper imported products have left it no choice. It forecast a reduction of up to 50 per cent in intake for some fruit categories for the 2014 season.
Australian Food News reported in February 2013 that SPC Ardmona’s troubles had led to a 22 per cent drop in earnings for its parent company CCA.
SPC Ardmona said it is currently half way through what it termed a three-year “business transformation strategy”, which aims to address issues of efficiency and waste reduction throughout the entire business. The Company said it plans to work with key retailers, who it believes do want to support Australian fruit growers.
“We are not competing on a level playing field against the overseas sourced private label products,” said Peter Kelly, Managing Director SPC Ardmona. “We are competing against products from countries that have considerably lower labour and production costs and arguably lower quality standards than we have in Australia,” he said.
“A more than 50 per cent appreciation in the Australian dollar in the past four years has made cheap imported food even cheaper and has also severely impacted on our export markets,” Mr Kelly said.
SPC Ardmona said market share of imported private label canned fruit had grown to 58 per cent, while SPC Ardmona canned fruit share had declined to 33 per cent and the Company’s export market volumes had declined by 90 per cent in the past five years.
According to data from market research organisation Nielsen, published in ‘Retail World Grocery Guide 2012’, SPC Ardmona had 50.2 per cent value share and 40.8 per cent volume share of the shelf-stable fruit category in 2012. The grocery guide showed that in 2012, pirvate label products had 29.1 per cent value share in the category, and 39.8 per cent volume share.
The Company said it would be seeking temporary tariff protection relief from the Australian Government to assist the fruit processing industry during the period of the strong Australian dollar, and more effectively market its brands to consumers with “stronger Australian grown and Australian made messages”.
Speaking to the Australian Broadcasting Corporation’s (ABC) AM radio program, John Wilson, spokesperson for industry body Fruit Growers’ Victoria, agreed that the high Australian dollar was a big challenge for the sector.
“A combination of the collapse of global markets in North America and Europe and an oversupply of canned fruit; at the same time our Australian dollar purchasing power increased,” Mr Wilson told the ABC program. “And unfortunately the cannery can’t meet that competition on a short-term turnaround,” he said.
Mr Wilson said the fruit growing sector needed a “restructure program, a restructure package that has a transition and an exit component in it for the health of fruit growing right across the district”.