The head of Victoria’s peak dairy farming body has expressed disappointment milk broker National Dairy Products (NDP) has been put into voluntary administration.
United Dairyfarmers of Victoria (UDV) president Adam Jenkins said it appeared to be “business as usual” a week ago.
“We’ve had a tough couple of years and we don’t need these type of people, operating in our industry,” Mr Jenkins said.
“At the end of the day, as a farmer advocacy group, we are very disappointed and feel for the farmers who have been caught up in this type of exercise."
Administrators have been appointed to run NDP.
Deloitte Restructuring Services partners, Glen Kanevsky and Sal Algeri, were appointed voluntary administrators of NDP this morning.
Glen Kanevsky, Voluntary Administrator and Deloitte Restructuring Services partner said it was “early days, as far as our appointment is concerned.
“We are aware of recent media reports related to the company’s operations, but it would be inappropriate for us to comment on these reports,” Mr Kanvesky said.
“We need to do our own investigations to understand the events and circumstances leading up to our appointment.
“We are engaging with suppliers and other critical stakeholders and will provide them with further communications as soon as practical.”
Earlier this week, NDP managing director Tony Esposito admitted the company owed farmers between $1.2 and $1.3 million.
Most of the company’s 30 farmer suppliers have left the company in recent weeks, after claiming NDP had failed to pay them for milk.
It’s believed that resulted in a shortfall of around 50 million litres of milk; NDP supplies processors and dairy product manufacturers.
Mr Esposito said any outstanding payments would now be handled by the administrators.
“They will go everything and see what we can put together,” Mr Esposito said.
“We sat down with our lawyers and over the last week and asked what the best action would be - that was the recommendation.”
“They will go through all the accounts and work out what is available to them.”
“It’s now in the hands of the administrator and we won’t know (who will be paid) until this process is gone through.”
He said he hoped to restructure the company and start it up again.
“I have no intention of lying down on this, no intention whatsoever,” Mr Esposito said.
The major processors, Murray Goulburn and Fonterra, were to blame for undercutting NDP and causing its financial woes.
Mr Esposito said they had offered discounts of up to 10 cents a litre on milk, which he couldn’t match.
The major processors had moved in on small manufacturers NDP had supplied for many years.
“I had a small cheese factory, which makes Kosher products, and they had been my customer for 15 years – they were never interesting in supplying him,” Mr Esposito said.
“They want to discount that milk into the local market place, that is just pathetic, they are overusing their market power.
“It’s a crock of rubbish, the disrespect they show.”
The claim was denied by Fonterra, while MG declined to comment.
Fonterra’s general manager, milk supply, Matt Watt, said claims Fonterra had picked up new clients in the liquid market by discounting its milk supply were false.
“We have not been in recent discussions with any NDP customers.” Mr Watt said.
”Like any business operating in a competitive market place, we speak to many prospective customers everyday about how we can meet their needs.
“What we offer to our customers is a high quality product, portfolio optionality, a competitive price and with surety of supply.”
Former NDP suppliers, Simpson’s Alex Robertson and Chris Gleeson, Crossley, said it was now a question of waiting to see what happened next.
Mr Robertson said he did not know how much, of more than $250,000 he was owed, he would eventually receive.
“That’s the million dollar question - we will wait and see what report comes back with,” Mr Robertson said.
“It’s too early to tell, they (the administrators) will go through all that.”
Mr Gleeson said it was now up to Deloitte to determine what assets the company owned and how they should be distributed.
“In 28 days we will know where we stand, we will find out how much is owed, how much is to be paid to each farm, and what assets can be recouped to help farmers cover their loss,” he said.
Meanwhile, Dairy Food Safety Victoria (DFSV) chief executive Jennifer McDonald has moved to assure suppliers their licence fees had been paid.
Carpendeit farmer Donna Edge, who now supplies Murray Goulburn (MG) said she was worried Dairy Australia (DA) levies and the licence fee may not have been passed on to the appropriate bodies.
“To supply milk in Victoria to a processor, you are supposed to have a dairy food safety licence,” Ms Edge said.
Ms McDonald said DFSV was not aware of any issues, which would put farmers’ licences in jeopardy.
“We are receiving the appropriate payments,” Ms McDonald said.
“There is nothing in the financial reports that indicates farm fees are outstanding at this point in time.”
She said DFSV would talk directly to farmers, if it had any concerns.
But she said now NDP was in voluntary administration, “that will trigger us being more vigilant, in making sure we don’t put those farmers into any difficult situations.”
MG and Fonterra have been contacted for comment.
