ENTERPRISING Chinese-backed Western Australian beef and live export business Harmony Agriculture and Food Company is in liquidation following court action initiated by a New South Wales' feedlot preparing its Wagyu-cross cattle for market.
Documents lodged in the Federal Court in Victoria in mid-July claimed Harmony had $5.4 million in outstanding debts owed to JHW Paterson, which operates the Hell's Gate Feedlot at Balranald, in the State's South West.
The Federal Court issued a notice late last week ordering the company be wound-up.
At the same time the National Australia Bank, a secured creditor to Harmony, has also appointed a receiver to take charge of the company's assets.
The Harmony group blamed its Chinese backers, Dalian Hesheng Holdings, for being slow to provide equity funding and causing a breach of contract with Hell's Gate Feedlot.
Established in Australia in 2015, Harmony has its own feedlots in WA at Kalanie in the Dalwallinu shire and the Victorian Wimmera at Dimboola.
Within a year of setting up it spent more than $50m buying grazing properties in WA and Victoria and in early 2017 it sent a trial 12,500-head sheep shipment to Muscat, Oman, via its subsidiary company Phoenix Exports.
It began exporting chilled and frozen grain-fed Angus beef to China and other Asian markets later the same year.
Last November it shipped its first live consignment of 2382 cattle to Qingdao, in China and planned to export a further 12,000 cattle from WA and Victoria by July.
Instead, the focus switched to boxed grain-fed branded beef sales to Asia and the Middle East, citing market development complexity and delays in the China live export segment.
At the height of its growth spurt, Harmony had more than 17,000 head of livestock across its holdings and up to 40 employees.
However, it began downsizing this year, selling its one WA holding at Esperance, the 1600 hectare grazing and feedlot property, Rancho East and its showpiece 5900ha Victorian property, Mt Fryans.
Mt Fryans had been the first of the then Harmony Beef and Cattle Company's acquisitions, bought in 2016 for $34m from the Earl of Stradbroke, Keith Rous, with funding from China's Hesheng.
Harmony Ag and Food quit its involvement in live export shipping last year, but prior to that had been keen to make the most of live cattle export opportunities.
Executive director and one of the company's founders Steve Meerwald said it had invested in high protein ship-board rations to keep cattle growing while on the voyage.
Different results within the breed and feed groups provided information to help improve performance for future shipments.
"Harmony was particularly interested in the results of the heavier grainfed cattle which were loaded under specific export conditions," Mr Meerwald said.
"These included an additional pen area on the ship and daily photographic and video recording of their condition and habitat, as well as the usual regulatory conditions.
"These cattle moved through the supply chain particularly well, recording weight gains and slaughter yields above the average.
"The quality and presentation of the livestock was praised on arrival in China."
However, Mr Meerwald said the China live trade had not happened as fast as anticipated.
Accountants, Andrew Yeo and Giuseppe Rambaldi, with Melbourne-based private business, auditing and financial advisory firm, have been appointed liquidators.
The two are still establishing Harmony's full asset base and ownership structure and who its creditors were.
Mr Yeo said the liquidators were conducting enquiries into the company and its operations in WA, NSW and Victoria.
"We will be working with creditors, the business and staff to provide as much certainty as possible while liquidation process is underway," Mr Yeo said.
NAB's appointed receiver has not been named, but is expected to keep Harmony trading while an independent assessment is undertaken regarding the company's future.
Creditors have been urged to contact the liquidators if they questions regarding the process or believe they owed money by the company.
A creditors meeting was expected soon, but a date had not been set.
Pastoralists and Graziers Association of WA president, Tony Seabrook, said Harmony's liquidation was a "sad outcome" for what was once considered a highly exciting venture.
"It is very disappointing," Mr Seabrook said.
"Especially in relation to the company's connections with China."
Mr Seabrook was concerned the company's Chinese backers had been worried about their image and association with the live export trade's negative publicity in the spotlight last year.
In early August Harmony blamed its outstanding payment to JHW Paterson was due to a "misalignment of equity funding due to arrive from our primary shareholder in China".
"The initial stages of setting up the company's branded F1 Wagyu program required equity funding while brand and market acceptance are built and cash flow follows a positive trajectory", Harmony told Farm Weekly.
"Unfortunately, the Chinese equity funding has been slow to arrive resulting in breaches of supply between Harnomy Operations Australia and JHW Paterson," a company statement said.
While experiencing funding challenges the creditor issue was in isolation.
"The broader Harmony Group maintained good relations with all other operational creditors and management was doing everything possible to rectify the situation within the statutory timeframe."
