Supermarket giant Coles has partnered with canned fruit company, SPC, based in Shepparton in Victoria's north, to produce a new range of locally farmed peaches, pears and apricots.

Key points: The two-year supply deal will see an extra 1.8 million cans of Australian fruit processed for Coles each year

The two-year supply deal will see an extra 1.8 million cans of Australian fruit processed for Coles each year Four new canned fruit products will be sold for $2 per 825g can

Four new canned fruit products will be sold for $2 per 825g can Farmers are concerned at the price, likening it to $1 per litre milk

The two-year supply deal will see an additional 1.8 million cans of Australian fruit processed for Coles every year.

Four new products, including canned peaches, pears, apricots and fruit salad, all valued at two dollars per 825g, were today made available in Coles supermarkets.

Head of Coles Brand, Mark Field, said, as part of Coles' Australia-first sourcing policy, the company was always looking for opportunities to work with Australian food growers and manufacturers to deliver great local products to customers.

"Coles is proud to work with an iconic Australian company such as SPC and local growers to offer products with Aussie-grown fruit," he said.

"It's an opportunity for us to bring products into the market that we know our customers want but at the same time support an Australian business and Australian farmers."



SPC managing director, Reg Weine, welcomed the deal and said the newfound partnership would be a great boost for SPC, which has been preserving fruit grown by Australian farmers for more than 100 years.

"It is great to see Coles continue to support local businesses and growers," he said.

"The Coles brand volume will improve our factory utilisation and will also provide our growers with an additional outlet for their quality fruit."

Supermarket giant Coles has signed a two-year supply deal with Goulburn Valley fruit preserving company, SPC. ( ABC News: Tom Joyner )

Cheap cost of the products a concern for local farmers

Mooroopna orchardist, Peter Hall, welcomed the announcement by Coles and argued "any deal that's done to take Australian-grown products and put them on Australian shelves for Australian consumption in a competitive way is a good deal".

But he said he had concerns about the cheap price at which these new products were being sold.

Mooroopna fruit grower, Peter Hall, says says he's concerned about the cheap cost of the new products. ( ABC News: Cathy Jacobs )

He said that selling 825g of fruit at a value of $2 was like selling milk at $1 and cheese at $6, with the cost of production severely outweighing the return on investment received by Australian farmers.

"If people in Australia want to buy the high quality clean, green product that we grow, you've got to ask yourself — is two bucks a fair price to pay for almost one kilogram of fruit?" Mr Hall said.

"A chocolate bar or an ice-cream would cost more than that.

"Here you've got almost a kilogram of product that's the blood, sweat and tears of farmers and a huge processing facility in SPC that costs a lot of money and employs a lot of people to get that product into the cans.

"You've got to ask yourself the question whether the value's there for a farmer," he said.

Deal comes amid imminent sale of struggling fruit cannery

The deal comes after Coca-Cola Amatil last year announced it would sell the struggling Shepparton fruit cannery and slashed the value of SPC in its account by $147 million to zero.

In response to today's announcement, Amatil said the announcement was good news for SPC and espoused "a vote of confidence in Goulburn Valley fruit".

"A key thing for us is import replacement," an Amatil spokesperson said.

"This [deal] cuts off a supply of South African fruit and replaces it with Australian-made. That's good for the industry, as well as for SPC."

Coca-Cola Amatil last year announced it was selling its struggling SPC fruit and vegetable processing business. ( ABC Goulburn Murray: Allison Jess )

But, it is unclear how this deal is going to impact upon the cannery's future, with a sale announcement expected by the middle of this year.

"Negotiations started about 12 months ago, so it's unrelated to the sale process," the Amatil spokesperson said.

With regards to the sale of SPC, Coca-Cola Amatil said it had received strong interest from several bidders and was on track to conclude the process by the middle of this year.

The ABC contacted Coles about the cost of the products, and was waiting for their response.

SPC also declined the ABC's requests to comment beyond what was included in the press release sent out by Coles today.