Aussie dairy brand enters into administration after ‘perfect storm of adverse events’
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In a turn of events rippled through the dairy industry, South Australian dairy producer Beston Global Food Company has entered voluntary administration.
This development has sent shockwaves across the state and beyond, as Beston is not only one of the largest exporters of dairy products from South Australia but also a significant employer, with 159 staff members relying on its continued operation.
Beston Global Food Company has been a household name, particularly renowned for its award-winning cheeses, whey products, and high purity lactoferrin protein, which is highly sought after by pharmaceutical and health nutraceutical companies.
The quality of their products has been recognised with over 160 domestic and international awards, and their mozzarella and cream cheese have been used by more than 30 major companies across Australia and Asia.
However, the company's fortunes have taken a downturn post-COVID-19. In a statement to the Australian Securities Exchange (ASX), Beston cited several factors contributing to its financial woes. These included a staggering 300 per cent rise in energy costs, the high cost of raw milk, and the impact of interest rate increases.
‘Over the last 12 months, Beston has experienced exceptionally high operating costs, particularly due to onerous energy prices at a time when Australian farm gate milk prices have been uncompetitive in world markets,’ the company said.
The company also pointed to the 'unintended consequences of the Australian Dairy Code legislation,' which has been blamed for keeping the farm gate price of milk high, thereby placing additional financial pressure on dairy processors.
‘(It) does not recognise the volatile nature of dairy markets globally, nor allow appropriate price signals to be captured through the movements in supply and demand and has contributed to the closure of 11 dairy processing businesses in Australia during the past 18 months,’ it said.
Local dairy farmers, some of whom are owed more than $600,000 each, face the prospect of devastating financial losses that could force them to shut down their operations.
The South Australian Dairyfarmers’ Association has expressed concern over the potential impact on its members.
In an attempt to navigate these troubled waters, accounting firm KPMG has been appointed as the voluntary administrator of Beston.
The firm has assured that business will continue as usual until recapitalisation is completed or a sale is secured.
Beston Chief Executive Fabrizio Jorge announced an offer from Japanese company Megmilk Snow Brands Co Ltd to buy the cheese and lactoferrin production facility at Jervois, South Australia.
Unfortunately, this deal fell through on 20 September, leaving the company with no choice but to enter administration.
‘The Megmilk offer would have enabled all of the jobs at Jervois to be preserved and would have led to an increase in demand for milk for processing at the Jervois factory over time,’ Jorge said.
‘It would have represented a win for the workers, a win for our loyal dairy farmers and ultimately would have been a win for the whole of South Australia as the significance of the Jervois plant introducing premium quality, health-enhancing products from dairy have (sic) become increasingly recognised around the world via the global marketing and distribution networks of Megmilk Snow Brands.’
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This development has sent shockwaves across the state and beyond, as Beston is not only one of the largest exporters of dairy products from South Australia but also a significant employer, with 159 staff members relying on its continued operation.
Beston Global Food Company has been a household name, particularly renowned for its award-winning cheeses, whey products, and high purity lactoferrin protein, which is highly sought after by pharmaceutical and health nutraceutical companies.
The quality of their products has been recognised with over 160 domestic and international awards, and their mozzarella and cream cheese have been used by more than 30 major companies across Australia and Asia.
South Australian dairy producer Beston Global Food Company has entered voluntary administration. Credit: Beston Global Foods
However, the company's fortunes have taken a downturn post-COVID-19. In a statement to the Australian Securities Exchange (ASX), Beston cited several factors contributing to its financial woes. These included a staggering 300 per cent rise in energy costs, the high cost of raw milk, and the impact of interest rate increases.
‘Over the last 12 months, Beston has experienced exceptionally high operating costs, particularly due to onerous energy prices at a time when Australian farm gate milk prices have been uncompetitive in world markets,’ the company said.
The company also pointed to the 'unintended consequences of the Australian Dairy Code legislation,' which has been blamed for keeping the farm gate price of milk high, thereby placing additional financial pressure on dairy processors.
‘(It) does not recognise the volatile nature of dairy markets globally, nor allow appropriate price signals to be captured through the movements in supply and demand and has contributed to the closure of 11 dairy processing businesses in Australia during the past 18 months,’ it said.
Local dairy farmers, some of whom are owed more than $600,000 each, face the prospect of devastating financial losses that could force them to shut down their operations.
The South Australian Dairyfarmers’ Association has expressed concern over the potential impact on its members.
In an attempt to navigate these troubled waters, accounting firm KPMG has been appointed as the voluntary administrator of Beston.
The firm has assured that business will continue as usual until recapitalisation is completed or a sale is secured.
Beston Chief Executive Fabrizio Jorge announced an offer from Japanese company Megmilk Snow Brands Co Ltd to buy the cheese and lactoferrin production facility at Jervois, South Australia.
Unfortunately, this deal fell through on 20 September, leaving the company with no choice but to enter administration.
‘The Megmilk offer would have enabled all of the jobs at Jervois to be preserved and would have led to an increase in demand for milk for processing at the Jervois factory over time,’ Jorge said.
‘It would have represented a win for the workers, a win for our loyal dairy farmers and ultimately would have been a win for the whole of South Australia as the significance of the Jervois plant introducing premium quality, health-enhancing products from dairy have (sic) become increasingly recognised around the world via the global marketing and distribution networks of Megmilk Snow Brands.’
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