The federal government is under pressure to support major food processor Simplot after the company warned of hundreds of job losses and possible plant closures.
The multinational vegetable processor has made the bittersweet announcement that its NSW and Tasmanian plants will stay open, but only for a guaranteed three years.
It comes at the cost of 110 jobs in Bathurst in central NSW and possibly 200 casual positions in Devonport in Tasmania.
"In the absence of a lower cost structure, neither plant has a strong business case long-term," Simplot Australia managing director Terry O'Brien said in a statement on Thursday.
The Bathurst plant is being massively downsized while the Devonport operation will close after the three years if it fails to become financially viable.
The company, also behind labels like Edgell and Birds Eye, had announced a review of the two plants in June.
And in what appeared to be a swipe at the federal government, it said that was a also challenge to "stakeholders" to come up with financial support.
"The outcome of that challenge has been very disappointing," the Simplot statement said.
The announcement unleashed a political spat, with the federal Labor opposition slamming the new government for not matching an $18 million election promise to help the company upgrade its plants.
"These losses were preventable," shadow industry minister Kim Carr said.
"Simplot is prepared to make the big investments needed to upgrade their plants and keep them competitive.
"A responsible government would be prepared to back them, and all the jobs they provide."
Employment minister Eric Abetz said company representatives would meet with industry minister Ian Macfarlane this week.
Senator Abetz said the talks had been scheduled before Thursday's announcement in the lead-up to this weekend's Liberal state council in Tasmania.
"The food manufacturing sector has been facing difficult times and Labor's carbon tax clearly made that situation more difficult," Tasmanian Senator Abetz said.
The Tasmanian government announced a $500,000 grant on Thursday.
Mr O'Brien said looming enterprise agreement negotiations with unions would be crucial.
The Australian Manufacturing Workers' Union described the job losses as "devastating" and said its members would work with Simplot on efficiencies.
"We need all other stakeholders, including government, to do their bit as well," spokesman Tom Hale said.
Simplot and Woolworths announced a $16.5 million deal for the supermarket giant to source only Australian-grown vegetables for its frozen range from next year.
Peak body AUSVEG said cheap imports remained a major concern for vegetable growers.