A perfect storm of adverse events has seen South Australian dairy company Beston Global Food Company go into voluntary administration.

Beyond the farmers who supply the milk to the company, an additional 159 workers at the company’s Jervois and Murray Bridge sites will be affected by the development.

Beston was known for its cream cheese as well as hard cheeses such as gruyere and parmesan.

It also produced lactoferrin, a high value dairy protein used in diet supplements.

Sale offer fell through

A combination of high operating costs due to power prices, dairy prices and a debt burden following the COVID-19 pandemic have been attributed to Beston’s financial difficulties.

Financial services company KPMG has started the voluntary administration process and taken control of the business’s assets, trading and day-to-day operations.

Beston chief executive officer Fabrizio Jorge said in a statement that while Beston’s lactoferrin and cream cheese business had earned strong profits over this period, the cheese and whey powder business had incurred losses due to the on-going cost and price pressures.

Megamilk Snow Brands, a Japanese company, had made an offer to buy the cheese and lactoferrin production facility at Jervois in South Australia’s Lower Murray region, however the sale did not eventuate.

“The Megamilk 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,” he 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”.

Farmers waiting for payment

Dairy farmers are concerned what the news means for milk deliveries and payments.

South Australian Dairyfarmers’ Association (SADA) president Rob Brokenshire said it would be business as usual for the 22 dairy farmers directly affected.

“Most of those haven’t had complete payments … over the last two months so SADA are very concerned for that,” Mr Brokenshire said.

“I’ve been assured they will be paid for any milk picked up by the administrators and obviously we are hopeful that the administrators will find a buyer for Beston because it is an important manufacturing and processing dairy plant for South Australia.”

Mr Brokenshire estimated Beston Food Company took about 20 per cent of all of South Australia’s milk production.

A first statutory meeting of creditors will be held on October 2.