Farmers owed millions and 200 without jobs after major Australian food company collapses

A major Australian food company will end production this week, leaving farmers who are owed millions in the lurch.

A major Australian food company – once worth $130 million – will end production on Friday, leaving farmers who are owed millions for milk in the lurch.

The Beston Global Food Company was placed into voluntary administration in September blaming “a perfect storm of adverse events” for its demise.

The South Australian dairy company employs 160 people in its factories, which produce cheese, butter and milk and include brands such as Edwards Crossing Cheese Company and Mables.

The company’s administrator, KPMG, has been unable to find a buyer despite several companies expressing interest.

“Ultimately, the sales process has failed to secure a buyer in the time frame required given the trading losses being incurred,” KPMG said in a statement to 7News.

Beston Global Food Company's master cheesemaker Paul Connolly with a wheel of romano cheese. Picture: Beston/Supplied

The closure will result in the loss of nearly 200 jobs.

According to the South Australian Dairy Association, about $10 million also remains unpaid to creditors – 41 of whom are farmers who are owed money for milk supplied to the company prior to the administrator's’ appointment.

“The winding up means they will not be paid for their milk,” it said in a statement to the outlet.

One South East dairy farmer, John Hunt, claims he is owed $700,000.

“We still had that hope … and it’s not there now,” he told 9News.

“We knew that money was gone, it’s going to put things back three to five years of capital expenses that we were going to do.”

The administrator said it will begin selling off the company’s assets to attempt to pay creditors.

John Hunt claims he’s owed $700,000 by the company and has given up hope. Picture: 9News

‘Avalanche of cheaper imports’

While Beston Global Food Company racked up record sales of $170 million for the 2023 financial year, it said the past year had been dire in a statement to the ASX.

“Over the last 12 months, Beston has experienced exceptionally high operating costs particularly due to onerous energy prices at a time when Australian farmgate milk prices have been uncompetitive in world markets,” it said in September.

The company was highly critical of “unintended consequences” of the Australian Dairy Code legislation introduced in 2019, which it said kept farmgate milk prices at high levels but were disconnected from the global prices of dairy commodities.

Beston Global Food Company has collapsed. Picture: Facebook

Beston added as a result, the legislation had contributed to the closure of 11 dairy processing businesses in Australia during the past 18 months.

The company said it was impossible to be competitive at a global level.

“Favourable weather conditions in quarter two of financial year 2024 substantially increased the supply of milk to our factories, at a time when farmgate milk prices were at record highs,” it said.

“Global dairy commodity prices remained volatile during this period on the back of China’s rising domestic production and lower imports.”

Beston Global Food Company also blamed an “avalanche of cheaper dairy imports” that have reached the Australian market during 2023 and 2024 from overseas producers including New Zealand, Europe and the USA, which have impacted the company’s sales margins and short-term liquidity.

Beston was listed on the ASX in 2015 with a market valuation of $130 million.

Its shares traded in June at a value of 0.3c resulting its in valuation plummeting to $59 million.

It comes at a torrid time for companies with other ASX listed companies also going under this year, including brewer Mighty Craft which was sent into administration in July.