Producers keen to see Challenge money

Dairy farmers throughout the South West hope the situation will be resolved this week because they are struggling to operate under the conditions.

Many co-op suppliers haven't been paid since CAD went into administration, and we are waiting to hear from the milk processor about future arrangements.

CAD met with the creditors, administrators and receivers last week to discuss the current situation, and while a few farmers were at the meeting, no questions were asked.

The major creditors of the company, apart from the debt owed to NAB, are CAD's shareholders, Challenge Dairy Co-operative and QAF limited.

Jared Palandri, senior manager with administrators PPB (WA), said CAD owed the co-op $3.43 million for milk supply.

Mr Palandri said there were still a number of interested parties looking at acquiring the business, but declined to name them.

"We are just waiting for an update from the receivers, and once we hear something back from them we will know, but that could be weeks away," Mr Palandri said.

Alexandra Bridge dairy farmer, Daniel Campbell, was one of the few farmers at the meeting last week, and he said apart from that meeting, they hadn't heard much.

"Our milk is still being picked up, but we haven't been paid since they went into administration," Mr Campbell said.

"We will be paid, but they have to get rid of the administrators before they can get rid of any capital."

Mr Campbell, who is currently milking 258 cows, said pricing had been very tough for the last 12 months, and if it was tough next year, he would consider moving out of the dairy industry.

"We averaged 28 cents a litre this year, but (to be viable) we need to average above 35c/L," he said.

However, Mr Campbell is still remaining positive that the co-op will get through this.

"It's a timing thing; it just has to work its way through it," he said.

Margaret River dairy farmer, Miles Mottershead, also said his milk was still being collected by the co-op, who was selling it on to Brownes and Harvey Fresh.

Mr Mottershead said they hadn't received a full milk payment since the middle of September and they hadn't been paid since CAD went into administration.

But he was expecting to get paid for the milk supplied this month.

"We got a small amount the week before they went into administration but just about all of September and October milk is outstanding," he said.

"We expect to get the money, but we are not sure when we will get it.

"As soon as the receivers have got their money, there will be money left to pay us."

Mr Mottershead said the co-op had been in contact with them and they were hoping to hear from it again this week.

But he said if he was to continue supplying to the co-op, it had to bring its prices in line with the rest of the industry.

Mr Mottershead said they had averaged about 32c/L this year, which was roughly 10c/L behind any other processors.

"We are still optimistic for the future that its financial situation will hopefully ensure its milk prices will meet the rest of the industry, and we can go forward and be quite profitable in the future," he said.

"And if that's with Challenge, then all well and good because that's the best outcome, but if it's without Challenge, it doesn't make any difference to us.

"We've been very loyal in the past, but the loyalty now rests with the milk price, and if it can't deliver the milk price, our loyalty is finished.

"If it can't come up with a better price, it might as well shut the doors and walk away."

Mr Mottershead, who is currently milking 550 cows, said a decision had to be made soon because they couldn't continue operating under the circumstances.

"We can go to the bank and organise something, but for our planning going forward we need to know what's happening," he said.

"It can't tell us anything, like when money will be coming, but it needs to make a decision quickly. It's gone on too long now.

"There is a lot of money owed and we need to know if there's an end in sight to the whole thing."