Ferraro Dairy Foods and Nepean River Dairy go into administration

Two more dairy processors have gone into administration, after being crushed by soaring costs and stiff competition for milk.

Dairy processors are struggling as consumers trade-down in response to cost-of-living pressures and retailer competition from imports intensifies.

Two more dairy processors have gone into administration, on top of a dozen others that have already gone under, been sold or faced major losses over the past two years.

Australian Securities and Investments Commission records show Tullamarine processor Ferraro Dairy Foods was placed in administration on January 31, with creditors due to meet on Thursday March 6 to discuss whether the 35-year-old company should be wound up.

Administrators were also called in to deal with debt-ridden NSW processor Nepean River Dairy, which has the capacity to process about 60 million litres of fresh, UHT and extended-shelf-life milk.

Minutes of the last creditors meeting show Nepean River Dairy had accumulated losses of $68m, with its total liabilities sitting at $39.3m as of December 31, against assets of just $19.9m.

Administrators Ashton Chase Group are trying to sell the business to help recoup $16.8m owed to 150 creditors, plus $800,000 in entitlements owed to employees, on top of another $2.9m owed to Nepean River’s landlord and $9.3m to its parent company Nature One Dairy.

Processor peak body Australian Dairy Products Federation has repeatedly warned many of its members have struggled to compete with a flood of imports.

In its latest industry bulletin ADPF stated “on the domestic front, dairy product prices are under pressure, as consumers trade-down in response to cost-of-living pressures and retailer competition intensifies.

“One quarter of all dairy consumed is from cheaper imported dairy products, valued at $1.65bn.

“The latest ABS CPI data shows dairy products were the only food category whose prices fell on average for the year to December 2024.”

But while ABS data shows dairy food inflation over the 12 months to December 2024 was 1.2 per cent, it followed a 6.4 per cent rise over the 12 months to December 2023.

ADPF also reported:

THE spot commodity milk value increased sharply during the December quarter, with the strengthening of the US currency and improved cheese value;

THE ability of Australian processors to realise these benefits is constrained by availability of product for spot trade, given most cheese is contracted in advance, and milk growth has been limited in 2024-25 so far;

THE hedging strategies processors already had in place were likely to limit the impact of currency movements (depreciation of the Australian dollar against the greenback);

THE US Trump administration was adding complexity and uncertainty to global dairy markets, with talk of tariffs; and

THE US rollout of increased cheese production capacity, combined with sluggish domestic demand is likely to increase export availability and competition in contestable markets, including Australia.