Costa Group's South Australian mushroom expansion garners govt funding

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Costa Group's South Australian mushroom expansion garners govt funding

The AUD$60 million (US$44.64 million) expansion of Costa Group's (ASX: CGC) mushroom facility in Monarto, South Australia is set to make it the country's largest, doubling production from 120 metric tons (MT) per week to 240MT. 


In announcement early this week, South Australian government representatives gave an extra boost to the company through a AUD$1.8 million (US$1.34 million) funding contribution to the facility, which is one of seven Costa operates around the country.

South Australian Premier Jay Weatherill said the expansion would make the operation the largest and most technologically advanced mushroom production facility in the country.

"This is another welcome investment in South Australia and reflects the state’s reputation for producing high quality and safe premium food," Weatherill said at the announcement, also in the presence of Minister for Trade, Martin Hamilton-Smith at the site outside the state capital Adelaide.

Costa Group CEO Harry Debney said the company was very pleased to have the support of the South Australian Government and its contribution to the project which would create 200 new jobs. 

"South Australia is an important state for Costa as we also have significant citrus plantings in the Riverland, along with avocados and a wholesale stand at the Adelaide produce markets," Debney said.

"I want to commend the Premier and Minister for their support in growing South Australia’s agricultural footprint and in particular horticulture."

In its most recent annual report Costa has highlighted its Mernda, Victoria mushroom facility is currently the largest, in its portfolio, with a water recycling plant which has helped reduce water use by 40%. 

However, in the release this week Costa described Monarto is the "most modern and state-of-the-art" of its mushroom facilities, and also the most efficient in terms of cost of production while playing a central role in its network of mushroom farms. 

"The availability of land on the existing site has helped make this investment happen with supporting infrastructure already in place and the existence of a one kilometre buffer zone around the site," Debney said.

"This provides Costa with longevity of tenure and is important to ensure a return on our investment."

Debney told the Australian Financial Review the expansion of Costa's Adelaide Mushrooms business would be completed by 2018, while the group hoped to raise its market share from the current 45%. 

He told the publication the Australian mushroom market was growing by 3-4% per year, with particularly quick growth fro brown mushrooms.

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