About 40 farmers are owed money after only receiving partial milk cheque payments dating as far back as June. Some farmers are owed more than $500,000.
South Australian Dairyfarmers Association president Rob Brokenshire said it was a terrible predicament, made even worse by tough seasonal conditions.
“Some suppliers left Bestons in the beginning of July and found other processors to take them on, while 22 farmers stayed with the company,” Rob said.
He said it was a condition of administration those farmers be guaranteed payment of any future milk supplied as per contract conditions dated at the start of the administration process, however there was currently no provision to pay any backdated payments.
Bestons employs about 150 staff who are also working under administration.
“To be fair, there can be no government support until the administration process is properly assesed,” Rob said.
“Obviously these farmers are very stressed and are moving forward for the moment, but it is a major hit to their cash flow.
“At SADA, we are offering as much help and comprehensive support as possible.
“We are sending out regular communiqués, ringing farmers and myself and the executive team are available 24/7. We are also hosting virtual meetings with the administrator.”
Rob said the best-case scenario was if someone came along and bought the company.
He said expressions of interest closed on October 9 and it was his understanding there had been quite a bit of interest.
“There is a creditors’ meeting scheduled for the end of October which should give us all a better understanding of where things are heading,” he said.
“It is very difficult for these unpaid farmers to continue to manage their cash flow.
“This has been a triple whammy on top a very difficult season due to lack of rain and no pasture growth, difficulty sourcing fodder with hay supplies exhausted and high input costs including inflation and interest rates.”
Rob said there were currently six processors in South Australia and it was imperative the facility continued to operate to continue to give farmers a choice in who they supplied.
“It’s always good to have competition to ensure best possible farm gate prices,” he said.
Bestons is well known for producing high-quality, value-added products from its Jervois Bay facility, including cream cheese, hard cheese, whey and lactoferrin, a high-value dairy protein used in diet supplements.
It recently won several gold medals at the dairy gala awards.
It is believed a combination of high operating costs, dairy prices and a debt burden associated with the COVID-19 pandemic contributed to the company’s financial difficulties.
In a statement, Bestons chief executive Fabrizio Jorge said while the lactoferrin and cream cheese business had earned strong profits, the cheese and whey powder business had incurred losses due to the ongoing cost and price pressures.
Japanese company Megamilk Snow Brands had offered to buy the facility, however the sale did not eventuate.
Megamilk already owns Udder Delights based in the Adelaide Hills, Unicorn Cheese in the Shoalhaven region, as well as Nowra Farmhouse in NSW and was previously known as the Nippon Milk Community Company.
Rob said the South Australian dairy industry had recently plateaued with only a few farmers exiting the industry.
“We are hoping for a quick resolution so the impacted farmers can get paid what they are owed and continue to do what they do best — produce milk and feed our nation,” Rob said.
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