The Victorian State Government has announced a $100 million co-investment with Coca-Cola Amatil to rescue SPC Ardmona, including $22 million rescue package in February. This announcement came after the refusal of $25 million grant from the federal government. However, there is also doubt why the taxpayers have to pay for the company’s mistake, and whether it is an effective use of tax money to save this company. This report provides a brief overview of SPC Ardmona’s problems, and based on triple bottom line analysis and PESTLE analysis, shows why it is necessary to secure SPC Ardmona’s fruit business.
Background: Overview of SPC Ardmona’s problems
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According to Peter Kelly, SPC managing director, sustained high Australian dollars (Long et al. 2014). Under the pressure from dumping of imported fruits in Australian markets, this troubled fruit processor requested for temporary tariff protection in 2013, but the Productivity Commission held that it was unnecessary to do so (Greenblat 2014). Their parent company, Coca-Cola Amatil, sought $25 million assistance each from the federal and state government to spend on their new products. However, the federal government refused to rescue SPC after thorough analysis and heated discussion, hold the opinion that it was their own responsibility to solve these problems rather than use tax payer’s money (Packham 2014). As for the Victorian government, they agreed to provide assistance package to secure this company’s future.
Critical evaluation on the bailout
1. The significance of SPC Ardmona – Triple bottom line analysis
Triple bottom line is a business framework that emphasises the value of people, planet and profits in decision-making. It works as the criteria to measure sustainability only if these three goals have been achieved (The Economist 2009). In SPC Ardmona’s case, associated aspects include the potential impacts on the economy and job security in northern Victoria, food security concern, the survival of the unique farming tradition, and the destruction threat to the farming land.
The market demands have shifted to imported packaged fruit from China, who are the SPC Ardmona’s main competitors. In 2012, SPC sold excessively than 36,000 tons of canned fruits in Australia, while the figure of imported Chinese fruits was 27,000, which has increased nine fold during the last decades (Baker 2014). However, Chinese food are labelled to be “cheap, dumped and frequently contaminated”. It is reported that the underground water and soil have been vastly polluted and 3.3 million hectares of farming land has been contaminated. Crops growing in these land are irrigated by waste water and chemical pesticides are frequently used. As a result, chemicals can be detected in the market food (Baker 2014). Despite the lack of clear evidence whether it is also the case to those imported to Australia, these systematic problems are still worth noticing.
Australian food products are generally to be regarded safe and of good quality as the result of the world-class food standards and strict supervision. As the largest fruit processor in Australia, SPC claim that the sources of the fruits are all grown in Australia, whose products are relatively safer than imported counterparts.
SPC Ardmona not only plays an important role in economy, but also is regarded as the identity for the Victorians. Growers have dealing with this only canned fruit producer in Shepparton for SPC for many generations, and therefore have built up a strong connection with SPC economically and ideologically (Griepink 2013).
Shepparton, where the...