McCain Foods, a frozen food company based in Canada, is set to close its Penola potato processing plant in South Australia by the end of this year, while leaving 59 jobs at risk.
The decision has been taken due to rising input costs, raw material costs and excess capacity, the company said.
McCain Foods Australia/New Zealand and South Africa regional president Louis Wolthers said, "Cheaper potato imports are seriously threatening the future of the processing industry in Australia, and will place further cost pressures on Australia's growers.
"At the same time, Australia has one of the highest raw material costs in the world, which is unsustainable in the long term."
McCain stated that it will offer redundancy packages and assistance to the affected employees.
The company will continue to process potatoes at its other plants in Smithton, Tasmania and Ballarat in Victoria.
