Gas price hits Australian food firm

Simplot, Australia’s largest vegetable processor, is facing a A$4 million hit as a result of an increase in gas prices.

The company had installed a gas-fired cogeneration plant at one of their largest processing facilities in north-west Tasmania to avoid being hit by large fluctuations in energy prices.
Simplot Australia
However ABC Online reports that Managing director Terry O’Brien said now the gas price is having a negative impact on the company.

“Our estimates, based on the forward projections and what we’ve locked in already, is a cost increase of 60 per cent over three years,” he said. “That hits us for an incremental $4 million of cost in Tasmania.

“That’s around about 5 per cent of our total Simplot Australia profits, so it’s quite substantial.”

The vegetable processor has made significant moves towards cost saving over the last few years.

“I can’t see it being absorbed by the business; we are scraping the barrel now for cost savings,” Mr O’Brien said.

“Ultimately, we’ve got no control over the price of gas,” he added. “It’s totally non-tradeable for us. We can’t go somewhere else for this stuff, so we are captive.”

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