Australia: Western Australia potato battle heads to court after negotiations fail

Western Australia’s potato wars have landed in court, after the state’s all-powerful potato regulator and its biggest grower failed to come to terms.

The Potato Marketing Corporation (PMC) and Tony Galati, the self-styled “rebel” grower and founder of grocery chain Spudshed, were listed for a directions hearing at the supreme court on Thursday, after the former made good on its threat to take its dispute with Galati to court if he did not cease his unauthorised potato production.

Galati and the PMC have been warring since 2013, when, the PMC alleges, Galati breached his agreement with it and deliberately grew more than his allocated share of potatoes, which he then sold in his Spudshed stores. In January Galati gave away 2,000 free potatoes in protest and as late as last week he remained unrepentant, reportedly claiming he would go to jail for contempt rather than stop growing potatoes.

The PMC, which first threatened legal action in April, didn’t hold back either, obliquely identifying him in its annual report as one of the biggest challenges facing the industry.

Galati was holding firm on Wednesday, reportedly telling the West Australian: “We have worked too hard to grow our business to give it away to other growers when we are more than capable of growing our own potatoes.”

Guardian Australia has contacted both parties for comment.

The court appearance came two days after the Smiths Snackfood Company announced planned to close its chip factory in Canning Vale, an outer suburb of Perth, by mid 2016.

Parent company PepsiCo Australia and New Zealand announced the decision, which will also involve redundancies for factory staff, in a statement released on Tuesday.

“This difficult decision was made with careful consideration, and The Smiths Snackfood Company will provide outplacement services and redundancy support to affected employees,” the statement said.

Dean Ryan, the president of the Potato Growers Association, told Guardian Australia that Smith’s announcement was a “triple-blow” for growers already reeling from competition from Galati and the state government’s announcement earlier this year that it would disband the PMC after the 2017 election. WA is the only state in Australia to still have a regulated potato market.

Ryan told Guardian Australia that most growers supported the PMC’s legal action.

“Out of the 78 growers there would be 77 who are pleased with what the PMC is doing,” he said.

Ryan said about 12 of those 78 growers sell to Smiths, which buys about 12,000 tonnes of potatoes a year – roughly $5m worth – to supply the factory.

Some of those growers have other contracts with the PMC to grow potatoes for the domestic market, but others, like Ryan’s neighbour at Pemberton, an area of the state’s south-west favoured by potato growers for its ready access to water, sell exclusively to the chipper.

“They are finished, basically,” Ryan said. “They are gone, there’s no other alternative.”

Not even the PMC’s optimistic market research, which reported a 3% uptick in the “intention to purchase more potatoes in the future” category, largely driven by the poor student category of 18 to 24 year olds, could lighten the outlook.

The market research is included in the 2014-15 annual report (pdf), and noted that 50% of WA households purchased potatoes, compared with 49% of households nationally, and that shoppers in WA bought slightly more – 1.52kg to 1.44kg – and consequently spent slightly more – $4.53 – for potatoes per supermarket trip.

Ryan said those heartening statistics were not much good for growers who were now trying to find a new market for their crop.