Premier Foods has offered Western Cape fruit producers R3,250 per ton to settle their delivery contracts. This offer comes as the company prepares to close its Rhodes Food Group canning factory in Tulbagh. The factory, which processes various fruits, including peaches, pears, apricots, and plums, has been in operation for years, purchasing products worth around R300 million from farmers annually.
The offer is a voluntary commercial settlement, according to Charl Herbst, chair of the Inmaakprodusentevereniging producer committee. Producers will likely receive payment by the end of October but will have to forfeit their contractual rights. The committee is urging producers to seek independent legal or commercial advice before making a decision.
The closure of the Tulbagh factory has raised concerns among over 200 producers, who have around 2,000 hectares of orchards. The factory's shutdown has also led to 424 workers facing potential job losses through Section 189 procedures. Premier Foods acquired Rhodes Food Group in March and announced the factory's closure three months later, citing a long-term decline in global demand for canned fruit and worsening export conditions.
The offer for peaches has raised questions about arrangements for producers of other fruits supplied to the factory. Meanwhile, Langeberg Foods is exploring options to take in extra fruit at its Ashton plant. However, the company's capacity to process additional fruit is limited by its production capacity and market demand.
Langeberg Foods is willing to play a role in helping producers affected by the factory's closure. According to Herbst, Langeberg will take in extra tons, but the exact amount and processing details are still unclear. Discussions are ongoing about the available capacity at the plant and which products can be delivered in specific weeks.
The Inmaakprodusentevereniging producer committee is working to ensure that available capacity is fairly distributed if there is not enough space for all producers. This comes as Premier Foods plans to process some of the fruit at its Groot Drakenstein facility into pulp and puree. The company is also in talks about the possible sale of the Tulbagh factory or the transfer of supply agreements to Langeberg Foods.
The Competition Commission is investigating the factory's closure following a complaint about potential breaches of conditions related to Premier Foods' acquisition of Rhodes Food Group. The commission's investigation aims to determine whether Premier Foods' actions comply with regulatory requirements.
Key points
- Premier Foods offers R3,250 per ton to Western Cape fruit producers to settle delivery contracts.
- The closure of the Tulbagh factory affects over 200 producers and 424 workers.
- Langeberg Foods may take in extra fruit, but its capacity is limited.
