Another Dairy Industry Casualty

Written by: Duncan B. on 4 October 2024

 

(Murray Bridge News  Photo: Peri Strathearn)

In late September this year South Australian dairy processor Beston Global Foods was placed into administration, making it the thirteenth dairy processor to suffer the same fate since mid-2022.

The company blamed high operating costs, including interest costs, energy, labour and the farm gate price paid to farmers for their milk. They also blamed a high level of dairy products being imported into Australia.

About 160 jobs in two factories are at risk, and farmers who supply the company are in limbo. In July the company sold its meat processing section, Provincial Food Group, to raise some cash to pay down some of its debt to the bank. Unfortunately for Beston, a proposed buyout of Beston’s dairy processing arm by Japanese company Megmilk Snow Brand fell through.

Beston joins other high-profile dairy companies in trouble, including the famous King Island Cheese factory, owned by the Canadian dairy giant Saputo, which wants to close the King Island factory down in mid-2025. King Islanders are worried about the effects this will have on jobs on the island, other King Island businesses and the prospects for the island’s young people.

Another famous Australian company at risk was dessert manufacturer Sara Lee, which went into administration last November. Fortunately for Australian sweet-tooths a rescuer was found for Sara Lee. It is also uncertain what the effects on dairy processing in Australia will be if New Zealand dairy company Fonterra goes through with its proposed sale of  its Australian assets.

As we have previously reported the Australian dairy industry has seen a reduction in the amount of milk produced in Australia, as many dairy farmers leave the industry due to rising input costs and receiving payment for their milk from processors that barely allows them to break even, let alone make a profit.

The chief financial officer of Saputo recently sparked outrage among dairy farmers when he said that the company wanted to keep farm gate prices low for as long as possible. He said, “We’re hopeful that this milk price will stick for as long as we can.”

In early September, ACTU secretary Michele O’Neil joined striking Saputo maintenance workers outside Saputo’s Burnie (Tas) plant. She lashed Saputo, saying that the company had badly treated workers and farmers time and time again. She said, “Saputo is a huge multinational. In the past two years they’ve made more than $1bn in profit globally. Between 2022 and 2023, they paid their CEO more than a 300% pay increase, where his pay went up from $1.6m to $5.1 m-so they’re not showing good faith. This shows a disrespect for farmers as well as workers.”

Michele O’Neil’s comments reinforce what Vanguard has been saying for a long time. Farmers and workers have the same common enemy. There is a strong basis for unity between these two important sections of Australian society.