Tasmanian poppy growers are considering whether to plant crops this winter after pricing talks with Tasmanian Alkaloids and Sun Pharma broke down.
Poppy Growers Tasmania announced on Friday that it did not support the 2018-19 contracts being offered to growers by either company.
Body president Philip Loane said the Tasmanian industry was now at a crossroad, and he expected some growers would exit the industry altogether rather than face financial loss.
Tasmanian Alkaloids is offering growers prices between 2.5 and 5 per cent less than the 2017-18 price for codeine and thebaine respectively, and Sun Pharma cut its thebaine price by 12 per cent.
“It was bad last year but it’s now seriously worse,” Mr Loane said.
“In the last four years the price has remained the same or gone down. How could we recommend such a huge price cut?”
Tasmanian Alkaloids chief executive Doug Blackaby said growers could sustain reductions on some varieties, but the price for a third variety had increased because “it was too low” in the 2017-18 season.
“Our position is that the offer that we put on the table is the same as we put on last year, in terms of benefits to growers,” Mr Blackaby said.
Some seasons see productivity gains passed on to growers, or shared between growers and Tasmanian Alkaloids, but this year the business is “keeping them in house”.
“This industry is a tough place to be in,” he said.
The Tasmanian poppy industry has seen productivity gains, but with price drops some farmers will not have a sustainable base from which to farm the crop.
Mr Loane estimated that growers could lose millions of dollars collectively.
“Growers are at different levels so it affects everyone differently, but as a group, growers would lose millions of dollars,” he said.
“[Tasmanian Alkaloids and Sun Pharma] said the market is tight and they’re under pressure. It’s a tough market, but it’s tough in grower land too.”
Poppy Growers Tasmania recommended growers consider the prices being offered for their crop, as not all crops are priced at the same rate.
“Growers need to look at their own circumstances. They need to know which variety and the cost of production.”
For growers, it not just about getting the price they want; poppies are a high-risk crop.
“It’s one of the hardest crops to grow.
“You can grow it until it’s ready for harvest and then have a big weather event, which we seem to be having a lot of recently, and you can end up with nothing,” he said.
Poppy Growers Tasmania said it was not trying to destabilise the industry, however the body wanted a fair return for the state’s growers.
“That’s what we’re trying to achieve,” Mr Loane said.
Sun Pharma was also contacted for comment.