Woolworths has beefed up its "Australian made" credentials just days before the federal election following growing criticism over the supermarket giant's treatment of local suppliers, inking a deal on Wednesday morning to source all of its private label packaged fruit from Victoria's SPC Ardmona.
The conversion of its entire packaged fruit range, which sells under the Select brand, to SPC is expected to save 50,000 trees in the Goulburn Valley, benefitting 118 local fruit growers and easing the worries of many farmers that they would be forced to destroy their produce due to a lack of buyers.
The deal will inject $3 million into SPC, which is wholly owned by beverages group Coca-Cola Amatil, and is expected to underwrite the future of its Victorian factory and operations, which directly employ about 1500 people on a casual and full-time basis as well as 2700 more jobs in the Goulburn Valley.
The decision to convert the entire Woolworths own brand packaged fruit category to 100 per cent Australian sourced product comes at a critical time for the supermarket industry as it faces accusations from some politicians and pressure groups that the sector's increasing reliance on private label groceries as well as overseas suppliers is crushing local manufacturers and farmers.
On Monday night Prime Minister Kevin Rudd upped the attack on the supermarket giants, Woolworths and Coles, telling an audience for the ABC television program Q&A that he was very concerned that $1-a-litre milk being sold by the supermarkets was having an impact on dairy farmers and the long-term sustainability of their businesses.
Under Wednesday's deal between Woolworths and SPC, the food manufacturer will supply all the apples, pears, peaches and apricots for its canned private label range.
Woolworths said the agreement built on work it had already done to source 13 lines of Select private label canned fruit from SPC in a deal worth $7 million to replace lines that were previously imported from South Africa.
SPC Ardmona managing director Peter Kelly said this was a great decision for the company and growers.
“This commitment to Australian grown and produced products is exactly what the industry and our Australian farmers need," he said.
"The volume generated by this decision from Woolworths equates to approximately 50,000 fruit trees per year in the Goulburn Valley. These are trees which may have otherwise been destroyed."
Mr Kelly said the decision will have an immediate impact on the fruit intake required for the 2014 season.
“Our team will meet with each of our 118 growers over the coming weeks to discuss the impact on their expected tonnages."
Woolworths will need to sell its current imported stock before it can begin stocking shelves with the SPC supplied packaged fruit.
The Woolworths decision comes two days after Minister for Innovation and Industry Kim Carr announced the federal government's decision to invest $25 million into the long-term future of SPC, conditional on matched funding from the Victorian government and significant funding from Coca-Cola Amatil.
SPC has also launched anti-dumping action with the federal government due to what it claims is overseas fruit being imported into Australia and sold below cost, and has made submissions to the Productivity Commission demanding safeguards against imports of canned tomatoes and multi-serve canned fruit in line with the World Trade Organisation's Safeguards Agreement.
Woolworths head of canned and frozen foods Jim Stephan said the supermarket wanted to see more Australian sourced products on its shelves wherever possible.