Dick Smith with a pallet load of his Australian grown sliced beetroot. Photo: Ben Rushton
The pool of Australian food producers is shrinking so fast that it is becoming difficult for patriotic players like Dick Smith to stay in business.
In the end Dick Smith Foods is going to be forced to close
Mr Smith - the entrepreneur who launched a crusade against the foreign ownership of Australian food processors in the late 1990s – says his company's ''days are numbered''.
His comments came after the private equity owners of Peters Ice Cream entered into exclusive negotiations with French ice-cream giant, R&R.
The brand, which owns a factory in Melbourne's east, is expected to sell for more than $400 million.
Mr Smith said it is getting increasingly harder for his company to source Australian-owned food producers – with overseas buyers snapping up at least one local manufacturer about every six months.
''For example, I want to get a beetroot made but the only Australian cannery was Windsor Farms at Cowra, '' Mr Smith said. ''It has gone broke, closed down, it doesn't exist. So we can't get any beetroot anywhere because there are no Australian [owned] canneries.
''This is going to happen more and more where in the end Dick Smith Foods is going to be forced to close.''
The turnover of Dick Smith Foods has fallen sharply in the past 10 years from about $80 million a year to as low as $8 million.
Mr Smith said he has managed to lift that figure to about $20 million after an ''enormous amount of work'', but he doesn't know how much longer he can continue.
''I've kept it going for 12 years.
''[But] I think the days are numbered because basically anyone who is any good as a food producer is pretty much immediately bought out by the Northern Hemisphere. These companies have to get growth and the only way they can get growth is by buying out other companies.''
He said Dick Smith Foods was set to make about a $1 million profit this year, which the company would donate to charity, bringing the total amount given away to about $5.5 million.
''I run it like Paul Newman Foods. But he is an American company and he has given away $16 million in Australia. We would love to compete with that but I'm sure we won't be able to.
''I reckon from now on it will start to drop how much we give away.
''We have a running battle with Coles and Woolworths. They are always going to drop our products because they don't meet the hurdle rates.''
Mr Smith said Australian companies struggled to compete with overseas players, who have deeper pockets and greater economies of scale.
''You can't compete with the salaries being paid. The last time I looked the chief executive of Kraft, with bonuses, got $26 million a year so that means you just simply get the most astute business people ever.
''The Northern Hemisphere is an example of ultimate capitalism and as you start to get to the limits of growth these companies get the absolute best leadership and ... very quickly they will do ruthless things that a typical Australian businessman wouldn't do.''
For example, Mr Smith said when US food giant Heinz closed its tomato sauce plant in northern Victoria two years ago, sacking 150 people, in favour of moving production to New Zealand – they did so ''save about 5 cents in the dollar''.
''The labour rate is slightly lower there. Once you're big and global you can do that, whereas if you're and Aussie company it's hard to suddenly say 'we're manufacturing in Victoria lets move to NZ'.
''If you're a global company you can change to any country virtually instantly.''
A spokeswoman for Peters' owner Pacific Equity Partners declined to comment.