Beston Global Food Company sells Mt Gambier dairy farms
Beston Global Food Company has sold its four Mt Gambier dairy farms to a Canadian Government fund.
SOUTH Australian food processor Beston Global Food Company has sold its four Mt Gambier dairy farms to a Canadian Government pension fund.
Aurora Dairies, owned by Canada’s Public Sector Pension Investment Board, will buy the farms for $40.4 million, with the deal to be concluded by September 30.
The deal is subject to approval by the Foreign Investment Review Board.
Aurora Dairies was established in February last year through the acquisition of 11 dairy farms run as Warakirri Dairies.
It now operates 18 dairy farms in southeastern Australia.
Under the deal with Beston Global Food Company, Aurora will continue to supply Beston with all milk produced at the farms — currently 17 million litres — for the next 10 years with the option to extend beyond that period.
There is scope for Beston to increase its supply from Aurora.
The company also has a number of independent dairy farmer suppliers.
Beston produces a range of cheeses and lactoferrin at its plants in Murray Bridge and Jervois.
The company put the dairy farms on the market in January through an international tender but COVID-19 slowed negotiations.
Beston chairman Roger Sexton said the deal allowed the company to release capital for reinvestment in higher returning dairy factory assets while still securing milk supply from the farms.
“The dairy farms allowed us to secure milk supply during our start-up phase,” Dr Sexton said.
“Beston is no longer reliant on owning farms due to our long-term milk supply contracts with independent farmers.
“The company’s focus, as it moves into its next stage of growth and development is on increasing the utilisation of its production capacities and generating enhanced margins with a product mix based around higher production of mozzarella and lactoferrin.”
Beston chief executive Jonathan Hicks said demand for mozzarella had been steadily increasing, despite COVID-19 impacting on food service outlets.
Mr Hicks said it had jumped 59 per cent for the six months to December 31 to 4290 tonnes, up from 2690 tonnes in the previous half.
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