THE US company, Universal Foods Corporation, which trades in the Republic as Freshfield Foods, has decided to close its frozen vegetables facility in Midleton, Co Cork with the loss of 65 jobs.
The company supplied major Irish multiples but said its frozen vegetables facility had been making losses since it was set up in 1994. It said this was because of the "limited size of the Irish market". It intends to close the plant in August.
"The company cannot benefit from the economies of scale enjoyed by its European competitors," said a company statement.
The company's freeze-dried plant in Midleton will remain operational, but employing fewer than 10 people. A spokesman for the company said the main reason this operation was remaining in business was that it exported almost all its products.
The company said it was making the announcement now to give farmers notice, allowing them to switch to other crops without losing a year's harvest.
In a statement, the Irish Farmers' Association said the closure of the Midleton plant would mean a loss of £1 million (#1.27 million) a year to the 100 farmers who supplied vegetables to the plant.
Discussions with Enterprise Ireland and IDA Ireland have taken place and the company is likely to sell the plant. It said any decision taken would seek to "maximise local employment".
Sources in the retail industry were surprised by the company's announcement. It is understood Freshfield was in the process of agreeing a significant contract with Tesco Ireland. The company already supplied Tesco frozen vegetable products under the KVI label.
The decision is not part of any world re-structuring programme by Universal Foods Corporation, which is headquartered in Milwaukee, Michigan said a spokesman.
The chairman of the IFA's vegetable committee, Mr John Donovan, said the decision by the company had "devastated" the farming community in Cork. "Over 100 farmers have been producing in excess of 2,000 acres of vegetables for the frozen market in recent years," he said.
"The industry has been in the area for 35 years and this will result in the loss of £1 million annually to local producers."
He said the IFA was demanding that an alternative processor be found.
