ADJOURNMENT

Ms URQUHART (Braddon) (12:52): The Ulverstone Simplot processing plant provides the french fries that you'll get if you go to a McDonald's outlet anywhere in Australia except New South Wales. There are also the other fast food takeaway shops, restaurants et cetera that are supplied by Simplot Ulverstone. Simplot is one of two french fry processors in Tasmania, the other being the McCain Foods plant at Smithton.

Both of these are in the electorate of Braddon. Simplot Ulverstone was where I commenced my working life back in 1979 and worked there for 11 years. It was then known as Edgell-Birdseye.

The Ulverstone factory supports around 400 direct jobs, a significant number of growers from right across the north-western north-east of Tasmania and the hundreds of other jobs such as shipping, transport and logistics, carton providers et cetera, and the list just goes on, with many, many employees right across the spectrum. The workers who work at the factory support the small businesses right across the region when they purchase goods and services from them.

Growers from right across the electorate and beyond are in the process of negotiating with Simplot for the next terms of their agreement in terms of providing their product to the factory. In 2007, the growers through TasFarmers' potato negotiating committee worked with Simplot and agreed on a gross margin return. In 2019, farmers raised the issue of escalating costs with Simplot, and Simplot agreed that the differential margin was based on a cost based contract model plus a margin.

During COVID, the growers agreed to continue to supply on the cost based model and supported Simplot with enough potatoes to ensure the supply of french fries, as it was difficult to get them from anywhere else during COVID. During previous negotiations, the growers committee had negotiated with Simplot Australia's local management. The negotiations are now managed from the United States under a global procurement model, which is a very different model from before.

The change has been significant. Simplot walked away from the previous methodology of pricing with the growers and offered—if you can call it that—a six per cent cut, which reduces the margin to the growers to somewhere around 40 per cent. The growers told me that, with this increase in input costs, diesel, fertiliser et cetera, they cannot sustain a price cut and of course rejected the offer.

The price of a serve of fries from McDonald's has increased by around 14 per cent. From that $5 serving of french fries, the farmer gets just 11c. Given the small amount the growers receive as a proportion of the final price of the product, it's not unreasonable that they get a fair return for their product.

Simplot negotiators compared the unit cost with production from India and told the growers that, if they don't accept the offer of the price cut, they will close the factory and import the product from India. This opens up all sorts of questions regarding biosecurity, food security and food handling methods compared to products that are produced right here in Australia.

The growers are, of course, angry and disappointed about how they are being treated by Simplot's actions, after years of having a strong relationship. On Thursday last week, growers fired up their tractors to raise the issue of price cuts and the growing pressure from cheap imports. They travelled from all over Tasmania to Deloraine to raise their concerns.

It's time now for growers to be planting their crops. They need to get them in the ground, ready to start the harvest when the factory recommences in January with the new crops. Farmers, like everyone, are committed to mortgages, wages and loans for their equipment.

Simplot said: We remain focused on a sustainable outcome that supports the long-term viability of local farming and the broader industry … If this is really the case, then Simplot should come back to the negotiating table and negotiate in good faith with the growers, who have supported them over many years with a good quality product and a good working relationship.

So I call on Simplot, both the local management and the US management, to sit down around the table with the growers, who have supported them and who have been in a good relationship with them for many, many years, and put a fair price on the table so that the growers can continue to get on with what they're doing and grow the potatoes that Simplot need.