The McCain Negotiating Committee Chair for the South East Potato Growers Association (SEPGA) has brokered a reasonable base price increase for their potatoes, as well as an additional levy arrangement, to reflect the volatility of fuel and fertilizer costs.

Tim Heysen, chair of the SEPGA, told ABC Rural that this is the first time a levy has been included in a contract for spud growers in south-east South Australia.

According to media reports, the system means that the processor will pay a price that reflects changing fuel and fertilizer costs. The price adjustment is based on any changes in input expenditures between 2020 and now. According to Heysen, if the price of fuel and fertilizer rises, so will the payment to growers.

“It’s really been the only way to address the volatility that we’re seeing. We’ve seen fertilizer prices triple, we all know what fuel’s been doing,” SEPGA’s chair added.

He mentioned also that it had not been decided whether this levy would be added to future contracts.

“We’d like to think that this time next year, we will have returned to much more normal trading conditions. I think that’s unlikely but if that was the case, then there probably wouldn’t be a need for the levy,” Haysen mentioned.

A McCain Foods spokesperson said the company talked to its growers throughout the year.

“We are focused on working with our growers to find sustainable ways to address significant inflationary impacts in these current unprecedented conditions,” the McCain representative said.

Contracts are negotiated annually between growers and processors. The agreement comes as growers in Ballarat demand a significant pay rise to reflect rising input costs. The spokesperson added that it was still in ongoing discussions with growers in Victoria and Tasmania.