BEGA Group has this week announced its decision to wind down and close its peanut-processing business, Peanut Company of Australia.

This will mean a phased shutdown of its facilities at Kingaroy and Tolga in Queensland over the next 18 months, and the closure of Australia’s largest peanut processor.

“We announced the strategic review over 12 months ago and we have explored several options to sell the business,” Bega Group chief executive officer Pete Findlay said in a statement.

“Unfortunately, we’ve been unable to find a buyer that could sustain a long-term future for employees and growers.”

Bega Group said PCA has been under sustained financial pressure for several years prior to its acquisition by Bega Group in 2017.

The South Burnett peanut industry based in Kingaroy gained traction in 1924 with the foundation of the Peanut Marketing Board, and the Queensland Peanut Growers Co-operative Association in 1927.

It remains Australia’s major peanut-growing region, with supplementary area on North Qld’s Atherton Tablelands, and small areas in other parts of Qld, as well as New South Wales and the Northern Territory.

Bega Group said despite ongoing investments into PCA operations, including upgrades to site safety and initiatives aimed at helping local growers boost production, it has not been able to establish a sustainable business model.

It said PCA has had operating losses of $5-$10 million per annum, and on top of industry challenges, Bega Group decided the business would be better served by a more local and focused ownership, or closure as a last resort.

Bega Group said Australia’s peanut industry 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, it advised growers that it could not make 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.

“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.”

PCA’s site in at Haly Street in Kingaroy. Photo: Kingaroy has a Big Peanut Facebook page

Bega Group plans to retain its other Qld sites, namely dairy-processing facilities at Crestmead in Brisbane’s south and Malanda on the Atherton Tablelands, as well as its distribution network.

Peanuts have been grown largely as a cash crop, but have also showed promising results in grain-and-graze trials.

Qld has at least one other peanut processor in Crumptons Interstate, which is also a grower of peanuts in the Kingaroy district, and a wholesaler and retailer of peanuts and peanut products.

Clifton Farming Company on the Darling Downs was also a grower and processor of peanuts, and closed in 2017.

Australia annually producers around 40,000 tonnes of peanuts, and imports supplementary tonnages to satisfy domestic demand, with China, Argentina, and the US generally the world’s major exporters.