KPMG appointed voluntary administrators of Beston Global Foods After a series of setbacks in 2024,
Beston Global Foods has entered voluntary administration. Here’s how it happened.
Beleaguered dairy group Beston Global Foods has entered voluntary administration, following a series of sales of its manufacturing assets.
Multinational accountancy firm KPMG confirmed the South Australian-centred business would continue to trade in administration while either options for sale or recapitalisation are explored.
The news comes less than a fortnight after Beston management confirmed Megmilk Snow Brand had entered talks to buy Beston’s Jervois plant, near Tailem Bend, east of Adelaide.
In a statement released on Monday, management described the past few years as “a perfect storm of adverse events in recent times.”
“Beston went into Covid with relatively little debt and came out the other side with a debt burden which has weighed heavily as interest rates have increased,” the statement read.
“Over the last 12 months, Beston has experienced exceptionally high operating costs particularly due to onerous energy prices at a time when Australian farmgate milk prices have been uncompetitive in world markets.”
Beston management also took aim at the mandatory dairy code of conduct, introduced in July 2020 by the Morrison Government in response to the Fonterra/Murray Goulburn 2016 clawback.
“An unintended consequence of (the mandatory dairy code) has been to keep farmgate milk prices at high levels and disconnected from the global prices of dairy commodities,” today’s announcement read.
“The government regulated operating model between dairy processors and dairy farmers embodied in the Australian Dairy Code does not recognise the volatile nature of dairy markets globally.
“Nor (does the code) allow appropriate price signals to be captured through the movements in supply and demand and has contributed to the closure of 11 dairy processing businesses in Australia during the past 18 months.”
In July, Beston management confirmed the sale of its meat division, Provincial Food Group to a Victorian-based consortium for $4 million, with the money to be paid to its major creditor NAB, which was owed $55m as at the end of March.
The company’s most recent quarterly for the March period had the company’s debt load at $69.1 million.
Earlier this year, Beston chief Fabrizio Jorge said a flood of cheap dairy imports and an unexpected surge in milk production had left the company with “north of $20m in stock” in February, which the company had to sell down to bring more cash back into the company.