Tankers stop rolling for Challenge suppliers

CAD, a joint venture company between the co-op and Singapore-based QAF Group, went into voluntary administration on October 29 and on Friday the co-op's board voted to wind up its operations, expected to happen this week.

It had been trying to forge a supply deal with Harvey Fresh which fell through on price.

The co-op's 50 or so suppliers have been desperately trying to find other processors to take their milk with fears it would not be picked up.

Since CAD went into administration the co-op has been collecting the milk and selling it to other processors.

The co-op, which stopped picking up milk on Tuesday, wants to distribute that money before going into administration.

Some of the co-op's larger suppliers will be owed hundreds of thousands of dollars in lost delivery right units and non-payments going back to September when the co-op officially folds.

During a meeting at Cowaramup on Sunday, Harvey Fresh, which has bought the co-op's six tankers, made an offer to take the milk of all the suppliers who attended, estimated to make up at least half the 50 suppliers.

But it is understood the amount of milk Harvey Fresh takes will also depend on it being able to take over the co-op's 20 million litre fresh milk export contract.

During the Cowaramup meeting farmers were offered a yearly average milk price of 34.5c/L which is below what the company's existing suppliers receive.

Farmers say Fonterra was initially offering new suppliers only about 19c/L but hadn't come back with a final price while National Foods would not indicate how much milk it would take from former co-op suppliers or how much it would pay until its present arrangement changed.

National Foods had been taking about 35 million litres of the co-op's milk each year.

In response to a Farm Weekly inquiry a company spokeswoman said "National Foods has a contractual arrangement with Challenge Dairy Co-operative to procure milk in WA each year and we have been advised that this will continue business as usual."

Margaret River farmer Myles Mottershead, who milks nearly 600 cows, was one of the farmers who attended the meeting and was offered a contract to supply Harvey Fresh.

"I am happy to go with them and am hoping to get picked up tomorrow," he said on Monday.

He said he was angry the co-op had gone another month before winding up, which had increased his debt.

Mr Mottershead, who was owed nearly $400,000 for unpaid milk, said he had been told they would only receive about half of what they were owed for the milk.

He was also critical of Agriculture and Food Minister Terry Redman for his apparent lack of action or interest in the plight of the co-op suppliers.

"I think some of these farmers will not get picked up and this is where the Government needs to do something for these farmers like it does for drought-affected farmers," he said.

"He hasn't been down here to find out what has been going on.

"Some farmers need exit support."

He said National Foods had said it would not come as far south as Cowaramup to pick up milk.

WAFarmers dairy section president Peter Evans said all farmers would be picked up by one of the three remaining processing companies and that no milk would be dumped.

He said the big financial problem for the co-op suppliers would be that they hadn't received any milk payments for the past couple of months.

He said WAFarmers had not called on government support for the co-op's dairy farmers.

"The Government is doing a bit for the workers who have been retrenched and there is probably not a lot of need for them to do anything about the farmers at this stage," Mr Evans said.

"We have not asked the Government for assistance because it was a commercial arrangement and as you know the Government will do nothing."

Cowaramup dairy farmer Paul Miller was also at the Cowaramup meeting and had taken up the Harvey Fresh offer.

"I'm on a promise of a milk cheque as compared to no cheque," Mr Miller said.

"I think we are at a level most of us can operate at.

"We are coming in slightly below their own producers and the other producers of Fonterra and National Foods.

"More importantly the long term and price looks comfortable with where it is heading but I would be looking for price parity in the short to medium term."

Mr Redman said he understood it was a difficult time for Challenge suppliers who were in a state of transition and having to negotiate new contracts with processors while also awaiting outstanding payments for milk.

"I have been in discussions with industry for some time, including farming groups, members of the Challenge board and management and other processors," Mr Redman said.

"These discussions will of course continue following these latest developments."

"I have been concerned about suppliers feeling as though they are left out in the cold and the State Government has arranged to fund on-farm visits to suppliers of Challenge."

"The visits will enable farmers to discuss their situation in a non-intimidating environment and receive advice on what support is available to them, whether it be counselling or financial services."