Western Australian potato growers are shell-shocked after being informed the Smith's Snackfood Company will close the doors on its Canning Vale crisp manufacturing plant next year.

About a dozen WA potato growers in Busselton, Myalup, Dandaragan, Gingin, Manjimup and Pemberton supply 12,000 tonnes of potatoes to the factory, which is worth about $5 million to growers each year.

The closure follows a long-running debate about the future of the industry continuing to operate in a regulated market.

Wade DeCampo is the Manjimup Shire president.

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He supplies about 1,000 tonnes of potatoes to the company each year and has a contract to transport potatoes around the state to the Canning Vale factory.

Cr DeCampo said it was another blow for the manufacturing industry, and ended a long history of local crisps produced and processed in WA.

"Grown by, handled by and manufactured by Western Australians," Cr DeCampo said.

"Smith's has been going through an Australia-wide review and Smith's is owned by Pepsico, which as we all know is a multinational in America and they take no prisoners unfortunately, and today we are being cut loose."

The decision will have significant consequences for local growers, Cr DeCampo said.

"For some of them a complete change or a new start, and for some others a look in the mirror and see what else they can do to top up their budgets.

"It's a significant blow and we are still coming to terms with it. The shellshock is still ringing in our ears."

Smith's Snackfood Company said in a statement that following a strategic review of manufacturing operations across Australia, the company had announced its intention to close its manufacturing facility at Canning Vale in WA.

"At this point it is anticipated the site will close in mid to late 2016," the statement read.

"The company's recently-upgraded oat milling facility located in Forrestfield, Western Australia, which exports oats to Asia, is not affected by this change.

"Our current contractual agreements with our local agricultural suppliers will also remain unaffected.

"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 concluded.

Major grower will lose 20 per cent of business

A major south-west potato grower and processor says 20 per cent of his business will be directly affected by the Smith's closure.

Bendotti Exporters in Manjimup grows more than 10,000 tonnes of potatoes, as well as manufacturing and exporting fresh frozen chips.

Bendotti supplies about 1,000 tonnes of potatoes to Smith's, which makes up 20 per cent of its production.

Gary Bendotti said his company had been working with Smith's for decades and the closure would have a significant effect.

But he said the closure of the crisps manufacturer was just one of a range of changes and challenges for the industry at the moment.

"We've got deregulation of the West Australian industry happening simultaneously," he said.

"It really has changed the face of potato production."

Mr Bendotti said there was not much growth in the industry at the moment.

He said there was a limit to how far he would be able to spread the 20 per cent of volume that would have been destined for Smith's.

"We're in a state where the population is pretty set. We're quite remote so export isn't much of an option," he said.

"It's going to be pretty tight and pretty hard."