In north-west Tasmania, a large portion of Australia's potato crop is processed into frozen chips and other products, but growers report increasing pressure over prices and contracts. While consumers now pay about US$3.25 for a large fries at fast-food outlets, growers supplying the potatoes receive about US$0.11 per kilogram.
Tasmania is the country's largest potato-growing state, and most of the potatoes are supplied to Simplot's factory at Ulverstone. Farmers estimate it costs about US$14,150 to grow a hectare of processing potatoes, covering wages, electricity, water, fertiliser, and freight.
Farmers requested that Simplot adjust its 2026 prices to reflect higher costs. While in previous years Simplot had followed that model, growers say a new US-based management team has rejected it. Instead, the company cut the 2026 price by 6 percent. Farmers calculate the change, combined with rising costs, would cut profits by 39 percent.
Tasmanian grower Matt Ryan said the company refused to negotiate. "Unfortunately, the lack of negotiation has dragged on for so long that growers have absolutely no idea where they're heading other than suck it up, take it or leave it," he said.
Simplot Australia reported a net profit of US$49 million last year. A company spokesperson said, "The previous cost model, which has guided negotiations in recent years, was appropriate for a time when international potato imports were less prevalent. However, the potato landscape has shifted significantly, with increased competition from overseas markets." The spokesperson added that Simplot remained committed to dialogue with growers.
Growers said the company had warned it could import frozen chips from its processing plant in Gujarat, India. Imports are already increasing. Simplot told growers that potato imports from China and India have quadrupled in seven years to 100,000 tons. National trade data shows 188,339 tons of frozen potatoes were imported in the year ending June 2024.
In late 2023, India's Hyfun Foods signed a deal with Woolworths to distribute potato products across 1,000 stores under the "Your Spud Co" label. The Potato Processing Association of Australia said: "Emerging markets in China and India are increasingly becoming potential threats as improvements in their quality standards may challenge our competitive advantage."
Supermarkets are required to label imported frozen potatoes, but traceability in the fast-food sector is less clear. McDonald's said it sourced "100 per cent of Aussie potatoes" from Victoria and Tasmania, purchasing 134 million kilograms in 2024. KFC stated its potatoes "generally" came from Tasmania and Victoria, while Hungry Jack's declined to comment.
Source: ABC News