Farmers Unpaid and Hundreds of Jobs Lost as Australian Food Company Collapses
Source: DairyNews.today
A major Australian food company, once valued at $130 million, is set to cease operations this week, leaving nearly 200 workers unemployed and farmers owed millions of dollars.
Beston Global Food Company, a South Australian dairy producer known for brands like Edwards Crossing Cheese and Mables, will shut down on Friday after failing to secure a buyer. The company, which entered voluntary administration in September, cited a “perfect storm of adverse events” as the cause of its collapse.
Unpaid Debts and Job Losses
The closure leaves approximately $10 million unpaid to creditors, including 41 farmers who have not received payment for milk supplied prior to the administration. Among those affected is John Hunt, a dairy farmer in South Australia’s southeast, who says he is owed $700,000.
“We still had hope… and it’s not there now,” Hunt told 9News, adding that the loss will delay his farm’s capital investments by years.
The company’s administrator, KPMG, acknowledged the impact on farmers and employees, stating that efforts to sell the business were unsuccessful due to ongoing financial losses. KPMG plans to liquidate the company’s assets to repay creditors.
Industry Challenges and Market Forces
Beston’s demise highlights the mounting pressures on Australia’s dairy industry. Despite recording $170 million in sales for the 2023 financial year, the company struggled with soaring operating costs, including high energy prices and record farmgate milk prices.
In a statement to the ASX, Beston criticized the 2019 Australian Dairy Code legislation, which it claimed set uncompetitive farmgate milk prices disconnected from global market rates. The company argued the regulation contributed to the closure of 11 Australian dairy processors in the past 18 months.
Global market conditions further exacerbated Beston’s challenges, with volatile dairy commodity prices, increased domestic milk production in China, and an influx of low-cost imports from New Zealand, Europe, and the United States squeezing margins.
Broader Implications
Beston’s collapse comes amid a turbulent period for Australian businesses, with other ASX-listed companies, such as craft brewer Mighty Craft, also entering administration this year.
Listed on the ASX in 2015 with a $130 million valuation, Beston’s shares plummeted to 0.3 cents by mid-2023, reducing its market capitalization to $59 million.
The closure underscores the need for greater support and competitive strategies within Australia’s dairy sector to address domestic and global pressures threatening its sustainability.
Unpaid Debts and Job Losses
The closure leaves approximately $10 million unpaid to creditors, including 41 farmers who have not received payment for milk supplied prior to the administration. Among those affected is John Hunt, a dairy farmer in South Australia’s southeast, who says he is owed $700,000.
“We still had hope… and it’s not there now,” Hunt told 9News, adding that the loss will delay his farm’s capital investments by years.
The company’s administrator, KPMG, acknowledged the impact on farmers and employees, stating that efforts to sell the business were unsuccessful due to ongoing financial losses. KPMG plans to liquidate the company’s assets to repay creditors.
Industry Challenges and Market Forces
Beston’s demise highlights the mounting pressures on Australia’s dairy industry. Despite recording $170 million in sales for the 2023 financial year, the company struggled with soaring operating costs, including high energy prices and record farmgate milk prices.
In a statement to the ASX, Beston criticized the 2019 Australian Dairy Code legislation, which it claimed set uncompetitive farmgate milk prices disconnected from global market rates. The company argued the regulation contributed to the closure of 11 Australian dairy processors in the past 18 months.
Global market conditions further exacerbated Beston’s challenges, with volatile dairy commodity prices, increased domestic milk production in China, and an influx of low-cost imports from New Zealand, Europe, and the United States squeezing margins.
Broader Implications
Beston’s collapse comes amid a turbulent period for Australian businesses, with other ASX-listed companies, such as craft brewer Mighty Craft, also entering administration this year.
Listed on the ASX in 2015 with a $130 million valuation, Beston’s shares plummeted to 0.3 cents by mid-2023, reducing its market capitalization to $59 million.
The closure underscores the need for greater support and competitive strategies within Australia’s dairy sector to address domestic and global pressures threatening its sustainability.
