Beston administrators to sell South Australian operations

South Australian farmers are estimated to be out-of-pocket by a collective $10 million for unpaid milk following the collapse of Beston.

A leading Beston supplier says he and other farmers have “been left in the lurch” after the South Australian processor failed to attract a buyer.

Administrator KPMG confirmed they were unable to find a buyer for the SA business, with nearly 160 workers and 22 farmers facing an uncertain future.

Milk processing will end on December 6 and the infrastructure at Beston’s two SA plants at Jervois and Murray Bridge will be auctioned off.

KPMG tried to sell the business as an ongoing concern and several companies expressed interest, including Japanese consortium Megmilk Snow.

Former South Australian Dairyfarmers Association president John Hunt said farmers were furious with Beston management’s “poor communication to suppliers.”

“We’ve had a period of six to eight weeks without consistent payment. There’s been communication in dribs and drabs,” the Allendale region farmer said.

“It’s been hugely unprofessional. What’s frustrating for farmers is that we did the right thing by management, we hung in there together as they said they were seeking a buyer, and now we and their workers have all been left in the lurch.”

SADA has estimated more than 40 farmers are owed more than $10 million for milk supplied pre-administration and will now not be paid for their milk.

Mr Hunt said it was reassuring that a number of processors had approached him after filling the Beston void.

Dairy farmer John Hunt, with his grandson Iziah, at his Allendale East farm. Picture: Tom Huntley

“The fact that we’ve had processors approach us, by definition, shows there’s demand for milk,” he said. “If there’s demand for milk, then that would suggest we’ve had dumbfounding mismanagement at Beston.

“You’ve got a world-class lactoferrin processing facility at Jervois that was only opened a few years ago. So you have to ask the question: Why has this all fallen apart?”

In a statement a KMPG spokesman said due to significant trading losses being incurred on a weekly basis the administrators were not able to fund the business beyond November 30.

“While the administrators provided certain parties with additional time to finalise the terms of their respective offers, these parties have been unable to put forward a binding offer for a going concern sale,” the statement said.

“Ultimately, the sales process has failed to secure a buyer in the time frame required given the trading losses being incurred.

“The administrators have been left with no alternative but to wind down the business and begin an orderly sale of its assets.”

A second meeting of creditors is expected to be convened in late January or early February 2025.