An award-winning SA dairy producer will wind up after failing to find a buyer during its months-long voluntary administration.
The closure of Beston Global Food Company will leave dozens of dairy farmers in the lurch, already owing them millions for milk previously supplied to the collapsing company.
Beston — known for its award-winning cheese products, whey, and high-purity lactoferrin protein that is sold to pharmaceutical and health nutraceutical companies — sells to dozens of companies worldwide.
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It will continue “the operations on a ‘business as usual’ basis until completion of the current production cycle”, administrators from accounting firm KPMG told 7NEWS.com.au on Wednesday.
That is expected to finish up in the next two weeks.
KPMG committed to paying for all the milk from dairy farmers which was collected by Beston from the date of the administrators’ appointment.
“Due to significant trading losses being incurred on a weekly basis, the administrators were not able to fund the business beyond November 30, 2024.”
South Australian Dairyfarmers’ Association on Wednesday said 41 farmers are owed money for milk supplied to the company prior to the adminstrators’ appointment.
The winding up means “they will not be paid for their milk,” SADA said.
Currently only 22 farmers are supplying Beston with milk, 7NEWS.com.au understands.
They have been given appropriate notice of the winding up, as agreed to by administrators, so they can make arrangements with other dairy processors.
The majority of 150 staff employed at Beston will lose their job.
Some will remain employed to ensure the final production cycle for milk collections, oversee the wind-down, and help with the sale of Beston’s land, plant and equipment at Murray Bridge and Jervois.
Beston previously announced to the Australian Securities Exchange (ASX) that, after COVID-19, its debts were weighing heavily as a result of interest rate increases, a 300 per cent rise in energy costs and the high cost of raw milk.
“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 statement to the ASX said.
The company also blamed “unintended consequence of the Australian Dairy Code legislation” that meant the farm gate price of milk was high, putting additional financial pressure on dairy processors.
Numerous opportunities for Beston’s sale have been explored, including an offer from Japanese company Megmilk Snow Brands Co Ltd to buy the cheese and lactoferrin production facility at Jervois.
But KPMG said: “Ultimately, the sales process has failed to secure a buyer in the time frame required given the trading losses being incurred.”
SADA said the outcome would leave a “hole” in the SA dairy industry.
“This announcement is extremely disappointing. SADA has worked to support our farmers and the industry and the demise of Beston comes as a blow to us all,” it said.
“However, the South Australian dairy farmer is nothing if not resilient and SADA will find other mechanisms to assist members in protecting their interests into the future.”