South Australian dairy farmers owed more than $10 million in unpaid milk cheques after the closure of processor Bestons late last year, have been thrown a lifeline from the South Australian Government, announcing a $3 million support package.
The support package has been welcomed by South Australian Dairyfarmers Association and the embattled suppliers who will receive around 25 cents for each dollar owed.
For Brad Fisher, the support payment will total close to $200,000 of the $760,000 he is owed from the processor.
He adds, when you consider the cost to produce the milk sold, he is actually looking at a loss closer to $1.2 million.
“This will help us pay down some of our debtors — every little bit helps and we are so grateful,” Brad said.
“SADA have been great and worked really hard to support us through this difficult time, and the payout from the government wasn’t something we ever expected.
“It is not the government’s fault this happened — it’s just been poor management from Bestons and the National Australia Bank who gave the processor way too much leash,” Brad said.
Depending on findings from liquidators, there is a potential $9 million insurance payout to be shared among the unsecured creditors which includes the dairy farmers.
Secured creditors including the Bestons workforce and NAB will be paid out by liquidation of assets.
“I don’t have a problem with workers receiving their entitlements as secured creditors, but I do have a problem with sharing a potential payment as an unsecured creditor with NAB after they received the majority of money from the liquidation of Bestons’ assets,” Brad said.
“Meanwhile, the farmers who supply the raw product just have to cop being out-of-pocket on the chin.”
Despite this, Brad is attempting to move his business forward and is now supplying Saputo and a couple of small niche processors.
“Saputo were very supportive and were able to take us on and make it happen and help us in about 10 days,” he said.
The failure of Bestons could not have come at a worse time for the South Australian dairy industry which is also grappling with one of the toughest droughts in living memory.
And with no immediate rainfall relief in sight, the situation remains dire.
“We sold 100 milkers and culled 80 cows from the herd — we needed to generate some cash flow to keep things happening,” Brad said.
Normally self-sufficient with 2500ha of cropping, Brad said he hadn’t sown a thing this autumn, and he has made 47,000 different plans with his cropping manager.
“I will probably make another 47,000 plans before this is all over,” he said.
“In the last few days I have had three phone calls from different farmers across my network asking where am I getting my feed from, and what are my plans moving forward?
“They have their balls to the walls as well, and some weren’t Bestons’ suppliers either.”
He said one of his farming mates was looking at a 91 cent cost a litre to feed his cows, while only being paid 71 cents.
“It is tough to be a South Australian dairy farmer at the moment,” Brad said.
A sentiment echoed by SADA president Rob Brokenshire.
“The state government recognises the plight of the former Bestons’ suppliers and they also recognise the importance of keeping farmers in the industry and growing it in the future,” Rob said.
“SADA is fortunate to have a good relationship with the government.”
In a joint media release, SA treasurer Stephen Mullighan and Primary Industries and Development Minister Clare Scriven said the assistance package would be administered by SADA.
“The state government is committed to ensuring the state’s dairy industry continues to thrive, despite the recent challenges,” Mr Mullighan said.
“We’ve listened to SADA, and through the $3 million support scheme, we’re helping South Australian farmers get back on their feet.”
“Our state’s dairy industry is valued for its significant economic contribution as well as its premium products, which are supplied around Australia and the world,” Ms Scriven said.