Simplot factories could be saved by Coles contract

The future of the Simplot Devonport and Bathurst vegetable plants is being decided at board level in America this week, but an announcement by Coles could tip the scales in their favour.

Coles has announced a five-year contract for Simplot to produce all its Coles brand frozen vegetable and potato products.

Back in June, Simplot declared that the future of both plants were uncertain unless their profitability could be increased.

Coles head of communications John Church says the new contract will mean extra production for Australian farmers.

"It means something like two and a half million additional kilograms of Australian grown product [a year], so essentially those farmers are going to be asked to source that product.

"It's a good boost for those growers right across the board in terms of frozen vegetables and potato products," he said.

Mr Church says the contract would equate to a 12 per cent increase in volume for Simplot and would substitute for the imported frozen product that is used for Coles 'Smart Buy' brand.

While the final decision on the fate of both plants lies with Simplot, he says the offer of the contract must help secure the future of the plants.

"We'd be very keen to see the product keep coming out of Australia. We know Australian grown products are something our customers want more of."

Mr Church is also optimistic that talks currently underway will resolve calls for a voluntary code of conduct for supermarkets.

"There are ongoing discussions taking place between the supermarkets and the Australian Food and Grocery Council about a voluntary code of conduct.

"There's a review getting underway with the new government on the whole issue of competition laws.

"I think this whole space is being looked at very closely and we're quite confident we will get a solution out of the discussions going on, on the voluntary code, which will satisfy all parties."

Source: ABC News, 25 September 2013