SP Hay falls into hands of receivers with $10m debt

Farmers across South Australia are among close to 70 creditors chasing millions owed by a failed hay exporter, which has partially blamed China tensions.

Farmers across South Australia are among close to 70 creditors left chasing more than $10 million owed to them by failed hay exporter SP Hay, with trade tensions with China flagged as a reason for the company’s demise.

That explanation is disputed by some creditors however, who say the company’s problems started before the Chinese government cracked down on Australian hay exporters.

Operating from two factories in Paskeville on the Yorke Peninsula and in Brookton, southeast of Perth, SP Hay produced hay, grain and straw products for domestic and export markets including China, Japan and Taiwan.

It was owned and operated by director Stuart Price.

Liquidator Stuart Otway from SV Partners was appointed last week to wind up the company, which owes about 20 farmers close to $2.5 million. Most are based in South Australia, with a small number in Western Australia.

According to early estimates, a long list of other suppliers and service providers are owed an additional $1.5 million, while secured creditor, NAB, is owed $6 million.

On Wednesday, the bank appointed receivers KPMG to take control of the company’s affairs.

Earlier this year SP Hay became embroiled in the simmering trade tensions between China and Australia, when the Chinese government chose not to renew the export licences of 25 of Australia’s 28 hay exporters.

Mr Otway said it had caused a major disruption to trade.

“The main business was exporting hay overseas so what happens when Covid hits is you’re not getting it out of the country anymore, and particularly with China’s relationship, they’re not buying it anymore,” he said.

“10 employees were stood down shortly prior to our appointment and their entitlements are not yet known.

“The debts to unsecured creditors could be $4 million, it could be $4.5 million, it could be $5 million – some of the claims put before the court by supporting creditors, the director disputes them, so the number is going to vary significantly between now and when we actually sort it all out.”

Several farmers, who declined to be named, disputed suggestions the China ban led to the company’s downfall.

One farmer in Clare said he was owed $600,000 for hay supplied to SP Hay between March and October of last year, well before the Chinese ban was enforced.

“He wasn’t paying so I had to stop supplying,” he said.

“It’s made it pretty hard. It’s quite expensive to grow crops now – fertiliser and diesel are quite expensive and there’s payments on machinery, so we had to increase our overdraft.

“There’s blokes out there who have lost their farms because of what happened. They (SP Hay) stopped pressing hay at the end of last year and the creditors were owed their money way before the China thing – it’s got nothing to do with the China thing.”

Another farmer based near Paskeville said he stopped supplying to SP Hay after it failed to pay about $170,000 for hay supplied during the 2019 season.

“We sat down and organised a payment plan and there was promise after promise but it never went anywhere,” he said.

“It was a challenge to find alternative markets because we had a relationship with SP Hay for so long and we didn’t have any ties to other companies.”

Mr Otway said Mr Price had been in talks with a potential buyer of the two factories, land and equipment, but the deal fell through when Queensland’s Supreme Court ordered the company be wound up.

The assets of the company are likely to be put up for sale in the coming weeks.

Mr Price has been contacted for comment.