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.