Simplot, Australias largest vegetable processor, faces $4 million hit as gas costs rise

Simplot, Australias largest vegetable processor, faces $4 million hit as gas costs rise

In 2012 Simplot installed a gas cogeneration plant at one of their largest process facilities in north-west Tasmania to avoid being hit by large fluctuations in energy costs.

Managing director Terry o'brien said currently the gas price had caught the company in a pinch.

"Our estimates, based on the forward projections and what we've locked in already, could be a cost increase of 60 per cent over 3 years," he said.

"That hits us for an incremental $4 million of value in Tasmania.

Mr o'brien said passing the value on to consumers wasn't an option.

"We certainly do not find [room to move] within the market," he said.

He added the company was unable to reduce their gas usage at the Ulverstone plant.

Mr o'brien hinted {the costs|the prices} may be absorbed by the farm-gate price paid to growers.

"Ultimately, we have no control over the price of gas," he said.

"It's whole non-tradeable for USA. we will not go somewhere else for this stuff, thus we are captive.

"It's extremely disappointing."