A major South Australian dairy company is closing after a “perfect storm” of challenges forced it into voluntary administration.
Beston Global Food Company, which produced Beston’s Edwards Crossing and Mables dairy brands previously sold at Coles and Woolworths, went into voluntary administration in September.
The company will stop milk production operations on December 6, resulting in hundreds of job losses and significant financial losses for farmers.
About 160 factory employees will lose their jobs on Friday, while the company owes about $10 million to unpaid creditors, including 41 dairy farmers, according to the South Australian Dairy Association.
One farmer, John Hunt, reported that the company owes him more than $700,000, which he said could set his business back three to five years.
Despite posting $170 million in revenue during fiscal 2023, Beston blamed its collapse on high operating costs and an influx of cheaper imports.
Some 160 Beston Global Food Company employees will be out of work on Friday after administrators failed to find a buyer for the business.
“Over the past 12 months, Beston has experienced exceptionally high operating costs, particularly due to onerous energy prices at a time when Australian farmgate milk prices have not been competitive in global markets,” the company said. management in September.
The company had entered Covid with “relatively little debt” but was weighed down by rising interest rates.
Beston said it absorbed about $28 million of additional costs in 2023, including a 300 percent increase in energy prices.
The company also criticized the mandatory dairy code of conduct, which the Morrison government introduced in July 2020.
“An unintended consequence (of the mandatory dairy code) has been to keep farmgate milk prices high and disconnected from global dairy prices,” the company said in a statement.
Cheap dairy imports and an unexpected increase in milk production left the company with “more than $20 million in inventory,” which it was forced to sell at discounted prices.
The administrators will now sell the company’s assets to pay creditors.
The South Australian Dairy Association described the closure as a blow to the state’s dairy industry.
‘This announcement is extremely disappointing. “SADA has worked to support our farmers and the industry, and Beston’s demise is a huge blow to us all,” he said.
“However, the South Australian dairy farmer is nothing if not resilient and SADA will find other mechanisms to help members protect their interests in the future.”