Bega says Strathmerton closure ‘nothing to do with dairy industry’

A decision to axe Australia’s biggest cheese processing site “has nothing to do with the dairy industry,” Bega’s chief claims.

Dairy farmers claim Murray-Darling water policy and a gigantic Melbourne cheese processing development are driving factors behind the impending closure of Bega’s Strathmerton factory.

Last week, Bega management confirmed it would close its cheese processing and packaging operations in the Goulburn Valley by next year, with about 300 job lost by 2026.

Bega forecast $30m in annual savings through the closure of Strathmerton as part of a savings drive to eliminate duplication in its production lines.

Australian Dairy Farmers president Ben Bennett believed Murray-Darling water policy and the development of Pure Dairy’s new cheese processing site in Melbourne had led to the move to axe Strathmerton.

However, Bega chief executive Pete Findlay said changing consumer tastes meant the processor needed to consolidate its cheese processing into the one NSW site.

Bega says about 100 new jobs would be created at its NSW main factory as a result of the Strathmerton closure. Picture: Zoe Phillips

Mr Findlay said about 100 new jobs would be created at its NSW main factory as a result of the Strathmerton closure and consolidation.

“(The Strathmerton decision) actually doesn’t correlate with any of the milk volume in northern Victoria,” he said.

“It’s actually quite segregated from the dairy industry. So it’s actually got nothing to do with the dairy industry or milk production in Northern Victoria.”

United Workers Union national dairy co-ordinator Neil Smith raised concerns the Strathmerton axing was only the first of several factory closures by Bega nationwide.

“Why do they have $90 to $100m to shut (Strathmerton)?” he said.

“Why spend $40m on redundancies — putting 300 people out of work across the Goulburn Valley families and then why spend another $50m to upgrade the Bega site in Bega to do the work that is currently being done in Strathmerton?”

NSW Farmers dairy committee chairman Malcolm Holm said there was cross-border concern over the factory closure.

The Finley dairy farmer said the Murray-Darling water buybacks initiative had an indirect impact on the factory closure.

“Of course, the buybacks flow through to the manufacturing side. Dairy farmers leave the industry as a result of buybacks, there’s millions of litres less milk in the system and then that flows on down to major manufacturing decisions like this,” Mr Holm said.

Australian Dairy Farmers president Ben Bennett said while the news was disappointing, it was not surprising given external cost pressures on both primary producers and manufacturers.

“This is the latest wake up call about the pressure that the entire Australian dairy supply chain is under,” he said.

Mr Bennett said Pure Dairy’s Dandenong South development, which is set to use an unspecified volume of US and New Zealand cheese, was likely to be a factor in the decision to axe Strathmerton.

“The factory at Dandenong is bringing in tonnes and tonnes of foreign cheese and the question has to be asked – will it be branded ‘Made in Australia’. Because the signs are pointing to that happening and both the farmer and factory worker lose out.”

A Victorian government spokesman said Spring Street was “in regular contact with Bega” and that its management had not requested any financial support or assistance regarding the viability of the Strathmerton facility.

Mr Findlay confirmed Bega contacted the State Government shortly before making the Strathmerton news public.

“We appreciate this is a difficult time for Bega workers and their families following the company’s announcement that it will close one of its Victorian facilities in Strathmerton next year,” the spokesman said.