In Tasmania, a bucket of large fries from a fast-food outlet costs consumers a staggering $5. Despite this record-high price, the local potato farmer who grew those spuds receives a mere $0.11 per kilogram. This stark contrast highlights the growing disconnect between retail prices and farmer compensation, as supermarkets increasingly rely on overseas processing for frozen potato products.
The situation is particularly pressing for Tasmania’s potato growers, who are grappling with rising costs and a lack of contractual agreements for the upcoming planting season. Many farmers are preparing to sow their crops without knowing the price they will receive after harvesting. The factory that processes their potatoes, located in Ulverstone, is owned by Simplot, a major player in the food processing industry. In the last financial year, Simplot’s Australian division reported a net profit of $76 million.
Growers like Matt Ryan have expressed frustration over negotiations with Simplot, which have failed to yield a satisfactory agreement. Farmers argue that it costs approximately $22,000 to cultivate a hectare of potatoes for chips, accounting for essential expenses like wages, electricity, and fertiliser. Despite previous agreements to adjust prices based on rising costs, a new US-based management team at Simplot has opted to cut prices by 6 percent for the 2026 season. This reduction, combined with increased production costs, could result in a significant 39 percent drop in profits for farmers.
Ryan criticized Simplot’s approach, stating, “I think that’s pretty poor behaviour and pretty poor tactics on their behalf. Unfortunately, the lack of negotiation has dragged on for that long that growers have absolutely no idea where they’re heading other than suck it up, take it or leave it.” He emphasized the financial obligations many farmers face, including mortgages and employee salaries, leaving them with little room to pivot to alternative crops.
Tasmania has a long-standing reputation for producing high-quality potatoes, but the landscape is changing. Simplot has warned local growers that competition from low-cost regions like India and China is increasing. At a recent meeting, growers were informed that frozen potato imports from these countries had quadrupled over the last seven years, reaching 100,000 tonnes.
In response to this shift, Simplot stated that it needs to align its pricing with global market dynamics to remain competitive. A spokesperson insisted that the company values its partnership with Tasmanian farmers and is committed to maintaining open dialogue. “The potato landscape has shifted significantly, with increased competition from overseas markets,” they said.
The total value of processed potatoes in Tasmania for the 2022-23 financial year was $463 million, with $431 million attributed to processed products like chips and hash browns. Despite this, the growing trend of importing cheaper potato products poses a threat to local producers. In 2023, Australia saw imports of 188,339 tonnes of frozen potatoes from various countries.
Local manufacturers are worried about the implications of these imports on their market position. Recently, Hyfun Foods, India’s largest producer of French fries, secured a deal with Woolworths to distribute its products under the ‘Your Spud Co’ label across 1,000 stores. This development has raised concerns among Australian chip manufacturers about their ability to compete.
With food budgets already tight for many consumers, the country of origin of potato products is often overlooked. Ryan expressed concern about this trend, stating that the community should support Australian growers to preserve local industries. He urged retailers to take responsibility for their sourcing decisions, saying, “As a community, we should be saying ‘hey, this isn’t good enough, we should be supporting Australian industry and Australian growers and find a pathway for that to be preserved.'”
While some fast-food chains, such as McDonald’s, claim to source all their potatoes from Australian farms, the supply chain remains complex. McDonald’s reported purchasing more than 134 million kilograms of potatoes for their menu in 2024, yet the specifics of profit margins on menu items like large fries are not disclosed.
As the potato industry navigates these challenges, the question remains: who truly profits from the soaring prices of ready-to-eat potato products? The answer seems elusive, buried within the intricate web of the supply chain and commercial contracts that dominate the market. The disparities between what consumers pay and what farmers earn continue to spotlight the urgent need for a more equitable system.
