Peanut Capital Shaken: Bega Closes Historic Factory

In a significant move for Australia's 'peanut capital,' Kingaroy, renowned food manufacturer Bega has decided to close the town's 101-year-old peanut processing company, Peanut Company of Australia (PCA), which it wholly owns. This closure, set to occur over the next 18 months, will affect around 150 jobs, impacting operations in Kingaroy and Tolga, Queensland.

Bega's decision reflects broader challenges within the agribusiness sector, despite its well-known dairy product reputation. Bega cited sustained financial pressure, increased competition from imports, and declining domestic production as contributing factors. Although Bega implemented significant investments following the acquisition of PCA in 2017, including safety upgrades and efforts to boost local grower production, a sustainable business model could not be established.

Though the Kingaroy processing plant will close, Bega intends to continue its peanut butter production at its Port Melbourne facility, suggesting a strategic shift rather than a complete industry exit. Bega, an ASX-listed company also known for its cheese and Vegemite products, saw PCA incur substantial annual losses. Following a yearlong review and unsuccessful divestment efforts, Bega will face one-off cash costs ranging from $5 million to $10 million mainly due to redundancies.

The closure of the Kingaroy site underlines the difficulties within the Australian peanut sector, spotlighting high input costs and more lucrative alternative crops for growers. Nevertheless, Bega's presence in Queensland remains strong with continued dairy production at its Crestmead and Malanda facilities.

While PCA's long-standing history dating back to 1924 as a cornerstone of Kingaroy's economy will end, other local entities, such as family-owned G Crumpton & Sons, continue to sustain the region's agribusiness legacy.