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AU: Regulations killing food processing

Australian food processors are facing an ever increasing list of challenges which, according to Simplot, is stifling growth in the sector.

Rising power bills, a high Australian dollar and growing labour costs are all having a huge impact on the industry.

The frozen vegetable processor Simplot remains the last of its kind in Tasmania. It has about 10,000 hectares of produce grown under contract this year, with 330,000 tonnes expected to go through the factory.

However, MD, Terry O'Brien says the industry does not need financial assistance or similar treatment to the economic measures taken to protect the car industry.

Instead he would like to see the Federal Government assess the impact of regulation on the industry before unveiling new ones, that he says are having a negative impact on an already fragile business.

One of the latest regulations to hit Simplot's pockets hard is the proposed $74 million licensing fee on the Port of Melbourne.

The port says it will pass on the entire cost to importers and exporters. And it's expected to cost Tasmanian exporters about $10 million.

For Simplot, the cost will be an estimated $500,000.

"Hopefully some of this will be offset by the Tasmanian Freight Equalisation Scheme (TFES) rebate but this is not clear to us," he said.

"I am not going to divulge the profitability of our vegetable business in Tasmania but I can tell you this is going to hit our business significantly and is yet another cost, which we have no power to avoid."

He pointed out that the extra fees came soon after increased freight charges and lower shipping availability - as a result of the governments regulations that forced international shipping companies operating in the country to up sea worker's wages.

"That one hit us for $1.5 million and so it goes on," Mr O'Brien said.

Source: sl.farmonline.com.au

Publication date: 4/18/2012


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