Factory future brighter as Simplot signs $16m supermarket deal
There are fears the backing of both supermarket giants may not be enough to save Simplot's Tasmanian vegetable plant from closure.
Woolworths has signed a $16.5 million contract to increase the amount of vegetables it buys from Simplot.
Under the five-year deal, Woolworths will buy an extra 5,000 tonnes of frozen vegetables to make its house brand line entirely Australian grown.
It matches a similar deal reached with supermarket rival Coles with Simplot last month.
Woolworths' managing director of supermarkets, Tjeerd Jegen, says customers want Australian-grown produce.
"We strongly believe that customers will buy more."
In June, Simplot announced it as reviewing the future of its Devonport and Bathurst factory due to falling profits and rising costs.
The company had warned the plants would close within five years unless finances improved, putting hundreds of jobs at risk.
Simplot has about 140 Tasmanian growers, mainly based in the state's north and north-west.
The Tasmanian Farmers and Graziers Association's Andrew Craigie says the extra volume will help keep growers profitable.
"That probably equates to somewhere around a 10 per cent increase in volume that Simplot will be looking for on those figures," he said.
"We've also had some severe commodity price cuts, but we've gained it through efficiencies.
"So it'll mean that the growers that are left growing for Simplot can probably fill up their contracts to where they need to be to remain viable."
Premier Lara Giddings is also hopeful the deal help safeguard almost 300 local manufacturing jobs.
Simplot says it still needs to reduce costs to survive and Ms Giddings says the State Government has stepped in to help.
"This $16.5m injection from Woolworths goes some way to helping in their sustainability," she said.
"The fact is they still have work to do to be competitive and the State Government is working with Simplot around how we can help them and once that package is finalised, we can make that public."
The Federal Government is not considering financial assistance.
The Liberal member for Braddon Brett Whitely says he has met Simplot's managers twice in the past month and the Coalition looking at other ways to help.
"It's not about a cash flash, throwing money on the table with no plan for the future," he said.
"What the government's conscious of is a good use of taxpayer's money, that's what you would expect as a taxpayer, that's what everyone expects that we make sure there's a sustainable plan."
An announcement on the factory's future will be made next week.
Source: ABC News, 18 October 2013
