THE past week has not been a good one for agricultural processors, with two major South West players – Finesse Foods and Challenge Dairy – facing financial crises.
THE past week has not been a good one for agricultural processors, with two major South West players – Finesse Foods and Challenge Dairy – facing financial crises.
On Monday, it was revealed suppliers are owed about $2 million by two companies in the Finesse Foods chicken-processing group after administrators from WA Insolvency Solutions were called in. Finesse Foods is behind the Ferguson Valley Country Chicken brand.
Last week, Capel-based Challenge Australia Dairy, which is jointly owned by Challenge Dairy Cooperative and Singapore-based QAF, appointed PPB as voluntary administrators claiming attempts to secure required funding had failed.
Both failures have left suppliers, creditors and staff scrambling.
The two Finesse companies are Gold Level Enterprises, which operates an abattoir in Dardanup, and Goldfin Enterprises, which operates a processing plant outside of Bunbury.
Kim Strickland and David Hurt from WA Insolvency Solutions were appointed as administrators to both companies, which employ more than 130 people between them.
Mr Strickland said they were assessing the financial position but confirmed about $2 million was owed to suppliers. National Australia Bank was owed an undisclosed amount of money.
The problem for Challenge comes after a second major dairy producer, Brownes, was recently sold by New Zealand-based Fonterra to private equity firm Archer Capital.
Archer Capital said in a statement at the time that the purchase reflected the company’s confidence in the strong, long-term outlook for the WA dairy industry.
WA Farmers Federation dairy president Peter Evans told WA Business News that WA dairy farmers were in for a tough summer season as a result of the Challenge problems.
“Hopefully they will get at least some of their money because at this time of year they need funds to invest in buying feed for the summer,” Mr Evans said.
“Bearing in mind those farmers had the lowest prices for milk for the past two years, let alone having that cash flow interrupted.”
Sue Daubney, managing director of rival producer and dairy farmer Bannister Downs Farm, said the situation had created uncertainty in the market at the time of peak production.
“If this had perhaps happened between January and April it would have been a slightly different scenario because milk would have been in high demand,” Ms Daubney said.
Agriculture and Food Minister Terry Redman said he remained confident for the outlook of the dairy industry as a whole.
