Australia: Simplot and Tasmanian spud farmers in standoff over rising prices

Key points:

Spuds are more costly to grow in Australia than the powerhouse of productivity in the US

Farmers here are pushing their large buyers for a price rise as their own costs skyrocket

An agricultural consultant fears fast food giants may turn to another country

They say the extra $105 a tonne the company has put forward is still not enough to cover the cost of growing their crop this season, which is around $20,000 a hectare.

Sassafras farmer and contractor Scott Rockliff said inputs including fuel and fertiliser were spiralling.

man standing in paddock with pink sunrise

Scott Rockliff and his fellow growers are seeking more money from processors.(ABC Rural: Luke Radford)

"We’ve got sprays, diesel, machinery costs … everything has just gone up, and our growers can’t sustain growing at the current prices we’re getting for our potatoes," Mr Rockliff said.

"Most of us want to grow spuds for the next 20 years, but if we can’t keep our head above water with costs it’s going to die its natural death."

Farmers said they were thinking about other options, whether it be more sheep or cattle or other crops.

Will you pay more for chips to help farmers?

two packets of frozen potato chips sit behind a bowl of chips

Farmers have warned of a possible potato shortage this season because of the high cost of growing the crop. (ABC Rural: Laurissa Smith)

North-east Tasmanian potato farmer John Williams believed rural and regional Australia had been taken advantage of for too long.

He said paying farmers more was small fry for chip lovers.

"We’re talking about 2 cents on a packet of chips for example at McDonalds. Now that’s not a lot of money," he said.

"Bunnings announced that the good ol’ sausage sizzle went up a dollar for a sausage, from $2.50 to $3.50. No-one will argue about it as long as people are being viable."

But agricultural consultant David McKinna said it was not that simple.

The bulk of French fries are sold through quick serve restaurants like McDonald’s, which all have global sourcing and pricing policies, and standards.

man sitting at desk

Dr David McKinna says the cost of growing potatoes in Tasmania is higher than overseas.(Supplied: David McKinna)

"We did a study in 2011 and it hasn’t changed much — the cost of production of raw potatoes in Australia is substantially higher than other countries, even New Zealand," Dr McKinna said.

"There’s a lot of reasons for that. The cost of doing business in Australia is higher, we’ve got higher labour costs, higher government costs, et cetera.

"In Australia they’re talking about 50 or 60 hectares [of potatoes]. I’ve been to properties in Idaho where there are 5,000 hectares [of potatoes] and they’re using 18 row harvesters, so it’s very efficient."

Dr McKinna said when Simplot and McCain went to companies like McDonald’s every couple of years and negotiated a price they were getting cross-quoted against other countries.

"At a certain point if the price goes too high here it’s more economic for McDonald’s to source them out of another country or factory," he said.

McCain in price talks as well

A pile of potatoes.

Last year’s total Tasmanian potato production was 457,000 tonnes.(ABC Rural: Tony Briscoe)

Simplot contracts around 140 potato growers.

Its competitor and frozen French fry maker McCain is also in the early stages of negotiating a new price with its 70 growers.

It is looking to contract around 100,000 tonnes this season.

Last year the total Tasmanian potato production was 457,000 tonnes.

Both companies process potatoes into frozen potato chips for food service and retail.