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Woolworths deal secures SPCA's future, though farmers remain wary

By RJ Whitehead , 11-Mar-2014

Woolworths deal secures SPCA's future, though farmers remain wary

The future finally looks bright for troubled SPC Ardmona following the announcement of a five-year, A$70m (US$63m) partnership with Woolworths that will see an extra 24,000 tonnes of fruit, tomatoes and navy beans sourced locally for the last remaining Australian-owned fruit and vegetable processor.

The reaction among farmers was a little more muted, though, with one regional industry group reminding growers of the need to know the prices SPCA was offering before expressing jubilation.

Gary Godwill, deputy chairman of Fruit Growers Victoria, who will meet with SPCA later this month, also told AAP that the farmers who lost their contracts with SPCA in December last year—many later filing for bankruptcy— shouldn’t have been sacked in the first place, even though the current growers should be able to meet demand from the Woolworths order.

Triple tonnage

The additional volume generated as a result of the new partnership will require the equivalent of 86,000 fruit trees in the Goulburn Valley.

The agreement will also triple the tonnage over the next five years of Australian-grown tomatoes supplied by SPCA to Woolworths, with a new range of Woolworths Select and SPC Canned Tomatoes available in stores this October.

From 2015, SPC will begin supplying all fruit for Woolworths Select fruit snacks and jelly snacks, and for the next five years, will continue to supply all the fruit for the Woolworths Select Multi-serve fruit range.

It builds on the arrangement with Woolworths announced last year to sell only Australian, SPC-sourced apricots, peaches, apples and pears under the Select brand.

While not just good for the Australian farm economy, the move by Woolworths also represents good business stemming from the strong yet still anecdotal trend among consumers towards domestically sourced produce.

Green and gold

As part of the partnership, Woolworths will be highlighting Australian-made and grown products to tap into this market.

Woolworths has really embraced the fact that Aussie consumers are demanding more and more home-grown products," said Peter Kelly, SPC Ardmona’s managing director. "Consumers really do care where their food comes from."

Kelly added that SPCA had recently seen a massive surge in sales as more Australians opted to get behind local companies and buy Australian made and grown products. 

"In Woolworths alone, we’ve seen a 60% increase in sales of SPC fruit in the first two months of this year, so we’re hoping this will continue and move to our other brands," he said.

Fruit Growers Victoria’s Godwill concurred. “People are actually buying Australian now. It's a very good trend,” he told AAP.

The partnership will also see both SPC Ardmona and Woolworths look at ways to innovate and increase sales of products as SPC spends its A$100m capital investment package from the Victorian Government and parent company Coca-Cola Amatil from last month.

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