Food processing and packaging company with $27 million turnover collapses as industry spoils

A New South Wales food processing and packing business turning over $27 million in revenue has collapsed after 37 years in business.

The Windsor Farm Foods Group was founded in 1975 under the name Mushroom Growers and is composed of five separate companies including Cowra Canners, Cowra Export Packers and Windsor Farm Foods.

Grant Thornton administrators Trevor Pogroske, Paul Billingham and Said Jahani were appointed to the company on March 12.

The business has ceased operation and a spokesperson for Grant Thornton told SmartCompany investigations are underway to determine the amount of debt.

“The major creditors are still confidential at this stage,” a spokesperson said.

Between the Windsor Farm Foods Group operations at Cowra and Arndell Park, the business had 140 staff, but administrator Pogroske said in a statement the majority have lost their jobs.

“Unfortunately, it has been necessary to cease manufacturing and terminate the workforce without pay. However, a number of key staff will be retained in order to complete specific orders and to undertake certain financial reviews.”

The main activities of the company comprise the canning of food products for the retail and food service industry and the preparation and distribution of dry food products.

On the Windsor Farm Food Group website, the company says its products include petite potatoes, potato salad, sliced mushrooms in butter, or peppercorn sauce and canned mushy peas.

The administrators are investigating and reviewing the business in an effort to sell the company.

“We are holding urgent discussions with various interested parties in relation to the sale of the business. In the meantime, we will be speaking with employees, union representatives, customers and suppliers,” Pogroske said in a statement.

An advertisement for the company was placed in The Australian Financial Review this morning saying “the administrator’s sale includes land, buildings and cannery equipment in Cowra, stock in Sydney and Cowra, and intellectual property”.

A first meeting of creditors is due to be held in Cowra on Friday, March 22.

Many food business have collapsed in recent years, as the industry has struggled against cheap foreign imports, chronic supply-side issues and aggressive marketing of private label products.

An IBISWorld report says the increase in imports in the fruit and vegetable processing industry has been driven by “an ascendant dollar, reduced domestic inputs due to adverse weather conditions and an increase in supermarkets’ tendency to direct-source processed goods from overseas”.

IBISWorld senior analyst Naren Sivasailam told SmartCompany there have been a number of closures within the food processing industry over the past few years because of the increase in imports and dominance of multinational companies.

“Imports account for about 26% of demand and this has been growing a fair bit. When you look at the largest producers – Coca Cola Amatil, Heinz, Simplot and McCain Foods – they are large multinational behemoths.”

In tough weather conditions, for example at times of drought, they can source produce from overseas and these companies account for the largest share of canned imports,” he says.

Sivasailam says the industry is predicted to be worth $5.4 billion this year, but the industry growth rate is estimated to decline at a rate of 2.2% over the next five years.