Bega steps in to keep the milk flowing

Bega Cheese works with suppliers to limit lossses as bushfires continue to devastate large parts of the country.

Bega says no dairies have been lost to the bushfires

Listed dairy processor Bega Cheese has confirmed it expects to lose 1.9 million litres of milk as bushfires continue to devastate large parts of the country.

The loss of milk accounts for less than 0.2 per cent of Bega’s 1 billion litres of supply. Acting chairman Max Roberts said the company was working closely with fire-affected suppliers, including supplying power generators and feed so cows could still be milked.

“While the bushfires have had a significant impact on some farmers and employees, there has been minimal impact to the company overall or milk supply of its ongoing operations,” Mr Roberts said.

“As the remaining road access restriction is lifted in the next two days, and full milk supply resumes, the total volume of milk unable to be collected is expected to reach 900,000 litres.”

Mr Roberts said the company was expecting an additional loss of 1 million litres after the fire risk prompted two suppliers to dry their herds off earlier than planned. “(But) these losses will have no material overall impact on Bega’s operations.”

The bushfires have damaged the farms of about 23 Bega suppliers. Mr Roberts said the impact ranged from burnt pasture to loss of power and fencing.

He said no dairy sheds had been lost, with asset protection focused on farmers’ homes and dairies during last week’s fires.

Bega chief executive Paul van Heerwaarden said ensuring cows could continue to be milked was a priority for the company.

“Once cows stop milking, you can’t get them back going again,” Mr van Heerwaarden said.

“Where farmers couldn’t cool their milk or we couldn’t collect it, we didn’t hesitate in recommending they dump it. They will be all compensated for the loss of milk.”

Mr van Heerwaarden said he expected losses to be covered by business disruption insurance but the company was still working through that process.

Milk production is returning to normal in the Bega Valley, after Bega reopened its two factories in its namesake town this week. During the shutdown, which lasted five days, Mr van Heerwaarden said milk from the Bega Valley was diverted to other sites, such as Tatura in Victoria, which helped mitigate milk losses.

The company has formed a crisis management team and, along with teams of volunteers has provided farmers with power generators, feed, fencing and other assistance to repair farms and keep milk flowing.

Bega shares took a hit at the start of the week but rose 3.6 per cent yesterday to close at $4.20.

Separately, listed agribusiness Elders confirmed that trading in the first quarter was in line with expectations.

“It is too early to assess the full impact of the fires, which are still burning in many parts of Australia,” chief executive Mark Allison said. “But in the immediate term, we expect that livestock agency commissions and farm supplies sales will be negatively impacted in bushfire-impacted regions.

“However, we expect this will be offset by increased demand for farm supplies including fencing, and the need for restocking once fires ease and the rebuild effort commences.

“We remain comfortable with market consensus for the full-year trading result.”