Hollow support from Woolies

WOOLWORTH'S backing of Tasmania's ailing vegetable processor Simplot could be perceived as superficial, with the announcement possibly highlighting the supermarket's aggressive public relations campaigns more than supporting an industry.

Simplot called for an internal review of its factories in Devonport, Tasmania, and Bathurst, NSW, in June because they were deemed uncompetitive in a market saturated with cheap imports.

The Labor Government then followed with a $15 million investment promise to Simplot growers. However, since the Federal Election, the silence from the Abbott Government has been deafening.

The new government had previously stated in opposition it would not throw money at a business they deemed unprofitable, but why is Simplot unprofitable?

An alleged water price hike of $2 million from TasWater and issues with re-negotiating penalty rates with the Australian Manufacturers Workers Union (who represent 95 per cent of Simplot factory workers) appear to be further restrictions on the factories profitability.

Simplot's factories are struggling to process vegetables efficiently, which makes Woolworths decision to effectively match Coles' five-year deal to source 2.4 million kilograms of additional volume from Australian growers that were previously sourced internationally, all the more puzzling.

Securing extra volume won't solve the problem, if anything it could exacerbate it.

However, from a public relations perspective, Simplot's travails could be viewed as a pot of gold.

Woolworths and Coles have embraced the Australia-made, Australian-grown rhetoric, which has become increasingly apparent with the struggles of SPC Ardmona suppliers in the Goulburn Valley, by sourcing local produce despite a considerable amount of conjecture about the future of both factories.

The similarities of both supermarket deals - Woolworths also offered growers a five-year deal worth $16.5m - could also be far from coincidental.

If the supermarkets were serious about securing Australian-grown produce for its shelves, it should provide immediate support to the processor, and not leave a financial carrot dangling at the end of an arduous review.

Coles corporate affairs manager Robert Hadler recently revealed the supermarket chain used "every PR tactic possible to neutralise the noise" around $1 a litre milk.Could these last-minute offers from Woolworths and Coles be perceived as another savvy PR move?

StockLand
A matter of opinionA selection of editorials from around the Fairfax Agricultural Media group covering the issues of the week.

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