After 101 years in business Kingaroy’s peanut processing industry will soon be no more, with food producer Bega Group announcing on 9 July it will close down the Peanut Company of Australia over the coming 18 months.
Bega Group announced the shut-down just over a year after it employed corporate advisors to undertake a ’strategic review’ of the company.
A spokesperson for Bega Group confirmed approximately 142 employees will lose their jobs once PCA’s facilities at Kingaroy close. Around 60 South Burnett peanut growers will also be affected by the looming closure.
REGION’S PEANUT HISTORY
The Peanut Company of Australia can trace its beginnings back to Kingaroy, where in 1924 growers formed the Peanut Marketing Board.
In 1938, the Board began construction on the Kingaroy peanut silos, completing them in 1951; the Queensland Heritage Council added the iconic structure to the Queensland Heritage Register in 2010.
Bega Group, then known as Bega Cheese Limited, bought PCA – including its Kingaroy facility – in 2017 to broaden its food production portfolio.
The Peanut Company of Australia currently processes approximately 19,000 tonnes of peanuts at its facilities, including at Tolga in Far North Queensland.
In its statement on the impending closure of PCA, Bega Group claimed the company had been “under sustained financial pressure“ for several years prior to its sale; PCA reported a $1.442 million deficit in its 2017 annual report, following on from a surplus of just $834,000 the previous year.
Bega Group has gone on to claim that PCA’s operating losses have since grown to between $5 million and $10 million.
PCA’s parent company, meanwhile, reported a profit of $30.5 million in the 2024 financial year, according to its annual report.
BEGA TOLD TO GUT PCA: REVIEW
On 6 June 2024, Bega Group engaged Melbourne-based corporate advisory firm Kidder Williams to undertake a 12-month strategic review of PCA, with chief executive officer Peter Findlay citing a need to “optimise [Bega’s] core business“ and “evaluat[e] options for non-core assets.“
The Australia Business Review, a now-defunct online publication, cited Kidder Williams founder David Williams as saying that disposing of PCA’s Kingaroy facilities would be “the most likely outcome“ of the strategic review.
A new company could then partner with Bega Group to keep up production of its peanut butter brand.
“It [the sale of PCA] could be a very interesting opportunity for a food manufacturer to supply one of Australia’s premier brands, Bega’s peanut butter, as well as other food manufacturers,“ Mr Williams told Australia Business Review.
In its 9 July announcement, Bega Group justified the shut-down of PCA as the result of its failure to make its peanut processing operations financially sustainable.
“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,“ Bega Group stated.
“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 focussed ownership or in the absence of that being achieved, unfortunately a closure.“
Bega Group’s CEO admitted the company had been unable to find a buyer for PCA that could lead the business as well as its 142 employees and 60 growers to prosperity.
Mr Findlay said PCA’s employees will receive offers of redundancy, support ahead of the business’s closure, as well as chances to find other work with Bega Group. An unnamed number of employees, he added, will be able to continue their work until the day PCA closes.
MAYOR ’DISAPPOINTED’
South Burnett mayor Kathy Duff called Bega Group’s announcement a “massive blow to Kingaroy,“ saying the impending shutdown of PCA could have wide-reaching consequences for the region.
“From council’s point of view, we’re incredibly concerned for the employees and growers that all rely on Bega and that facility [at Kingaroy],“ she said.
“[Losing] 130 to 140 jobs, plus the 60 or so growers that depend on PCA as their outlet, is a massive blow to Kingaroy and for our region,“ she added.
Mayor Duff spoke to Bega Group’s Adam McNamara, executive general manager for ’Growth Channels and Customer Supply Chain’ on Wednesday afternoon regarding his company’s announcement.
She said that Bega Group were disappointed to force the shut-down of PCA – but that the company hopes a prospective buyer may yet emerge over the coming 18 months to rescue the venture.
“They’re hoping that this announcement brings other offers to the table,“ Mayor Duff said.
“Bega are hoping to bring it [the sale of PCA] to a head,“ she added.
