Coles in five-year produce deal SUPERMARKET giant Coles has thrown a lifeline to struggling produce growers, striking a long-term deal with vegetable processing group Simplot. The five-year contract, set to be announced today, will see Coles increase its frozen vegetable and potato orders from the group by 12 per cent a year in a boost for local producers. Under the deal, all Coles house-brand frozen vegetables will be Australian grown by the start of next year. It was prompted by warnings from Simplot in June that its factories in Bathurst, New South Wales, and Tasmania's Devonport were under threat of closure after becoming uncompetitive. "When the potential closures were indicated by Simplot, Coles offered its support because they are a very important and valued supplier for us," Coles spokeswoman Anna Kelly said. The closure of the Simplot factories would have put 400 jobs on the line and left hundreds of growers struggling to sell their wares. It would also essentially mark the end of vegetable processing in Australia, with Simplot operating the nation's last remaining processing operation. The US-owned food processing group said in June that its Australian business was floundering in the face of cheap international imports, combined with high labour costs. While Simplot is still to make a final decision on the future of the factories, the Coles deal is expected to be a major boost to the embattled sector. Wesfarmers-owned Coles said Simplot had been a supplier for 15 years, and the supermarket group had offered the contract in order to give Simplot and local vegetable growers some long-term certainty. While the lengths of contracts between Coles and its suppliers vary widely, Ms Kelly said five years was considered a long-term agreement. The deal is in the final contractual stages and set to be officially signed off by both parties in a matter of weeks. Coles, which has previously faced accusations of squeezing suppliers, said it recognised Simplot and local growers were facing a challenging period. The supermarket group said it was also expanding its commitment to Australian growers by ensuring 100 per cent of the vegetables and potatoes in its Smart Buy house brand were locally grown. This means at least 2.4 million kilograms of produce that Coles used to buy internationally will now be sourced within Australia. The changes push the total volume of vegetables and potato Coles sources from Australia to more than 19 million kilograms a year. "This new offer is a further demonstration of our commitment to Simplot, local growers and to delivering a quality product for the value-conscious customer," Coles chief operating officer John Durkan said. Wesfarmers shares closed down 0.4 per cent at $41.14.