
Kingaroy Reels as 101-Year Peanut Plant Shut Down, 150 Jobs Lost.
Kingaroy, Australia’s renowned “peanut capital,” is grappling with the significant decision by food manufacturer Bega to close the town’s 101-year-old peanut processing company. This move will result in approximately 150 redundancies at Bega’s wholly owned Peanut Company of Australia (PCA), affecting operations in both Kingaroy and Tolga in Queensland. The closure marks a challenging period for the community and highlights broader pressures facing Australia’s agribusiness sector, even for companies known for dairy products like Bega.
Bega, a major ASX-listed food manufacturer also known for cheese and Vegemite, stated that the phased shutdown of the Kingaroy processing plant would occur over the next 18 months. The company revealed that PCA had been under “sustained financial pressure” for several years prior to its acquisition by Bega Group in 2017. Despite subsequent investments in PCA’s operations, including significant safety upgrades and initiatives to boost local grower production, Bega was unable to establish a “sustainable business model” for the peanut arm, following a 12-month review and failed attempts to sell the business.
The decision underscores a combination of headwinds impacting the Australian peanut industry. Bega cited increased competition from imports, stronger returns for growers from alternative crops, high input costs, and declining domestic peanut production as key challenges. While the Kingaroy plant is closing, Bega affirmed that its peanut butter manufacturing operations will continue unaffected at its Port Melbourne facility, indicating a strategic shift rather than a complete exit from peanut products for the company.
Financially, PCA had been incurring annual operating losses ranging from $5 million to $10 million. The one-off cash costs associated with the shutdown, primarily for redundancies, are also projected to be between $5 million and $10 million, with limited impairments anticipated. Despite this divestment, Bega Group maintains a strong presence in Queensland, retaining two processing facilities in Crestmead and Malanda, which continue to produce dairy products and drinks, alongside its established distribution network.
PCA was initially established in 1924 as the Peanut Marketing Board and evolved into a leading global processor of Hi-Oleic peanuts, known for their health-promoting fats. Bega Cheese acquired PCA in 2017 for nearly $12 million to secure Australian-grown peanuts for its peanut butter operations, a move that followed its purchase of brands like Vegemite and Kraft peanut butter from Mondelez. Despite the factory closure, Kingaroy’s historic connection to peanuts is expected to endure, with other operators, such as the third-generation family-owned G Crumpton & Sons, maintaining a strong presence in the town’s enduring agribusiness legacy.
Source: The Australian: Peanut capital cheesed off after Bega closes famed factory
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