McCain Foods is seeking a further cut of A$15 a tonne, or about $10, in the price it pays Tasmanian growers for processing potatoes after breaking off collective price talks, in the same week the Canadian fry maker shelved a €1bn plant in Germany.

The demand follows a cut of A$19.50 a tonne in 2025, which growers agreed "to help sustain the processor", the farm weekly Tasmanian Country reported. McCain, which processes Tasmanian potatoes at Smithton in the state's north-west, has not commented publicly on the talks.

Glynn Williams, chairman of the TasFarmers Growers Committee, which negotiates for McCain's Tasmanian suppliers, said talks had run since February.

"It is now the beginning of October, growers have ground worked up and ready to plant, and now they will receive an ultimatum from McCain to either take the cut or don't grow," Williams said. Growers "will have a week to decide", he said, with diesel approaching A$3 a litre and fertiliser at twice last season's price.

Processors took 88 per cent of Tasmania's 2022-23 potato crop, and processing potatoes were worth A$325mn at the farm gate in 2023-24, according to the state's Department of Natural Resources and Environment.

McCain is the second fry maker to bypass the growers' committee this season. "Simplot were quite brutal in the way they put their ultimatum to their growers, and we thought that McCain would be different," said Nathan Calman, chief executive of TasFarmers, the state's farm lobby.

Simplot, the US-owned processor whose Ulverstone plant takes about 300,000 tonnes a year from 165 Tasmanian growers, broke off committee talks in August before returning to the table. It then gave growers until 5pm on 15 September to sign contracts carrying an average price cut of 2.5 per cent. Most signed at 4.45pm, said Neil Grose, TasFarmers' chief operating officer.

One, "a fairly large grower", did not and will stop growing potatoes for the company.

Simplot's August offer was worth A$460 to A$490 a tonne, against growing costs of about A$420, ABC News reported.

TasFarmers says growers' margins have fallen by more than 60 per cent over two seasons. Simplot has also indicated it will cut the volume through Ulverstone by about 30,000 tonnes from the 2027 harvest, according to Mike Wickham, Tasmanian organiser for the Australian Manufacturing Workers' Union.

The Forth Valley in north-west Tasmania: rolling hills of ploughed red-brown paddocks and green fields around the town of Forth

EUROPEAN SURPLUS TURNS TO SHORTFALL

McCain said on 29 September it would not pursue "in its current form" a fry plant at Mehrum, in Lower Saxony, which was to cost up to €1bn ($1.13bn) and process up to 750,000 tonnes of potatoes a year.

It cited sharply higher project costs, overcapacity in processed potato products and weaker demand in key markets, the German farm publication agrarheute reported.

Lamb Weston, the New York-listed fry maker, said in its annual report in July that in the year to 31 May it "had an oversupply of potatoes, largely attributable to continued soft restaurant traffic trends in Europe, as well as significant surplus in the European potato market".

In February it permanently curtailed its Hallam South plant in Victoria, moving output to neighbouring Hallam North.

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That surplus has since become a shortfall in the field. The Netherlands, Belgium, France and Germany are forecast to harvest about 20.8mn tonnes this year, down roughly 23 to 25 per cent, according to Commodity Board Europe, a market-intelligence site.

It said growers had cut their planted area after the 2025 glut, and heat and drought then hit yields.

Europe's contract growers have not been paid for the shortage. "A large share of the 2026 crop was pre-contracted at terms that reflect last year's oversupply, with early-season contract prices reported around 25% below the previous year and later delivery contracts 15–17% lower," Commodity Board Europe said on 29 September.

[chart slug="tasmania-potato-mccain-price-belgapom-free-market-2026"]

Belgian growers' average contract price for 2026-crop potatoes delivered in mid-September is €132 a tonne, against €175 for last year's crop in the same week, according to weekly figures from Belgapom, the Belgian potato trade association.

Across the delivery weeks quoted in both seasons, this year's crop is contracted about 18 per cent cheaper. Only uncontracted potatoes on the free market, quoted at zero for most of April to mid-June, reflect the shortage. They have held at €200 a tonne every week since mid-August.

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IMPORTS RISE, BUT NOT CHEAPLY

Simplot cited imports when it sought a price cut last year. The cost model that had guided talks in recent years "was appropriate for a time when international potato imports were less prevalent", a company spokesperson told ABC News in September 2025.

EU exports of frozen fries to Australia rose 15 per cent to 57,063 tonnes in the first seven months of 2026, led by the Netherlands, according to Eurostat figures accessed via Cropli. July's 10,887 tonnes was the largest monthly volume since June 2023.

[explore reporter="eu" flow="exports" products="200410" partner="AU" period="ytd" metric="quantity" view="chart" years="2019-2026" title="EU frozen potato exports to Australia, January–July, 2019–2026" subtitle="Tonnes, HS 200410 (frozen fries and other frozen potato products), EU-reported; every bar covers January–July only"]

The fries are not arriving cheap. Australia paid an average of €1,332 a tonne, up 4 per cent on a year earlier, while the EU's average export price to all buyers outside the bloc fell 12 per cent to €1,112. Both are export values, before freight.

TasFarmers said on 22 September that Simplot had told food-service customers of permanent price increases, citing higher raw potato costs.

"The only honourable thing for Simplot to do is to pass on that price increase to growers," Grose said. Simplot said in August that its priority "remains reaching arrangements that provide certainty for growers, support Tasmanian potato production, and help ensure the ongoing competitiveness and viability of Australia's potato processing industry".

Tasmanian growers have been allowed to bargain collectively with both processors since 2004, but the Australian Competition and Consumer Commission's exemption for small-business bargaining groups does not oblige a buyer to deal with the group.

Growers made a similar complaint against McCain in 2012, alleging it had cut contracts and stopped bargaining collectively.

Gavin Pearce, Tasmania's primary industries minister, told parliament in August that prices were a commercial matter between processors and growers. But if "we lose one of those processors, then we're down to a unilateral pricing and that price pressure can be placed on to growers", he said.