Bega Group to close peanut processing business

Bega Group has announced that it will wind down operations of its subsidiary peanut processing business, Peanut Company of Australia (PCA), following a 12-month strategic review. This will mean a phased shutdown of its facilities at Kingaroy and Tolga in Queensland over the next 18 months.

The company said that PCA had been under sustained financial pressure for several years prior to its acquisition by Bega Group in 2017. Despite ongoing investments made by Bega Group into PCA’s operations, including significant upgrades to site safety and initiatives aimed at supporting local growers to boost production, Bega Group has not been able to establish a sustainable business model.

Continued financial losses and industry challenges led to the need for the review and ultimately the conclusion that the business would be better served by a change to more local and focused ownership or, in the absence of that being achieved, unfortunately a closure. PCA has been incurring operating losses of $5–10 million per annum.

“We announced the strategic review over 12 months ago and we have explored several options to sell the business. Unfortunately, we’ve been unable to find a buyer that could sustain a long-term future for employees and growers,” said Bega Group Chief Executive Officer Pete Findlay.

The peanut industry in Australia is facing a combination of headwinds including increased competition from imports, stronger returns for growers from other crops, high input costs and declining production.

Bega Group notified both employees and growers of the strategic review in June last year, and, in August, also advised growers the company could make no commitments beyond the current season’s crop.

“We understand the impact this decision will have and we will work closely with growers and the approximately 150 employees at the Kingaroy and Tolga facilities to support them through this period,” Findlay said. “Employees will be offered redundancies, support services and redeployment incentives and opportunities where possible. Some employees will also be able to continue in their roles until closure.”

Earlier this year, Bega announced it would close its Strathmerton cheese factory in Victoria, slashing about 300 jobs, and in 2023, closed its Vegemite factory in Port Melbourne.

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