Tasmania's biggest grower and seller of fresh carrots and onions is on the brink of bankruptcy, with debts of more than $6.6 million and voluntary administrators called in.
Family-owned vegetable company Premium Fresh Tasmania is the fifth mega-sized vegetable business in Australia to suffer financial woes, blaming low prices, rising costs, the impact of the high Australian dollar on exports and the supermarket discounting war between Coles and Woolworths.
In the past 18 months, Australia's two biggest tomato growers, Queensland's biggest capsicum business and one of the nation's biggest strawberry growers have faced financial collapse with debts of $10m to $31m each.
The decision of the three Ertler brothers of Forth, near Devonport, to appoint Deloitte to see if the 55-year-old company can trade its way out of difficulties in the next two months has again focused attention on the plight of vegetable and horticultural industries.
Yesterday vegetable grower group AusVeg called for immediate government intervention and a national summit to end the spiralling crisis hitting some of the best and biggest vegetable producers in Australia.
AusVeg said it was clear that selling carrots for $1 a kilogram bag in Coles and Woolworths was not sustainable, and that farmers could not continue to bear prices being pushed down to just $200 a tonne, or equal to 20c/kg for growing top-grade fresh carrots.
About half of Premium Fresh's business of harvesting, packing and selling 40,000 tonnes of Tasmanian carrots, onions, swedes, turnips, shallots and echalions every year is reliant on sales to Coles and Woolworths, mainly of bulk carrots and bagged onions.
Federal Parliamentary Secretary for Agriculture Sid Sidebottom, whose northwest Tasmanian marginal electorate of Braddon is home to Premium Fresh, warned that banks cracking down hard on rural borrowers had played a part in the company's difficulties.
Mr Sidebottom said the Gillard government had decided to give Premium Fresh an immediate grant of $500,000 so it could stay open while administrators examined its books to see if it could be saved. The Tasmanian government has also given $250,000 to the struggling business -- Tasmanian Exporter of the year last year -- which is one of the biggest employers in the Devonport region with 30 full-time and 80 part-time employees and farm workers.
Another 80 local farmers, including vegetable grower Colin Chaplin of Wesley Vale, grow onion, carrots, swedes, turnips and specialty products such as purple Dutch carrots for Premium Fresh.
Mr Chaplin said he was still owed money for carrots and onions he had sold to the company earlier this year, joining a long list of creditors that include fuel, freight, power and machinery companies as well as farmers.
He has not been contacted by the company or Deloitte yet about what will happen now Premium Fresh is in administration -- to either the debts he is owed or the new onion crop he has just planted under contract to the company, due to be harvested in early January. "With margins so small and the trading environment as tough as I've seen it in 30 years, every small thing that goes wrong really knocks you around."
Deloitte administrator Sal Algeri said he was confident Premium Fresh Tasmania, with annual fresh vegetable sales exceeding $35 million, could continue "ticking over", with normal trading continuing and all employees' salaries and benefits being paid.
But he said its long-term survival relied on creditors, including growers such as Mr Chaplin, being prepared to accept their existing debts would not be paid in full.
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