THE South Australian dairy industry has received a huge blow, with United Dairy Power (UDP) placed in receivership and its Murray Bridge and Jervois manufacturing factories set to close.
UDP’s SA suppliers were given just three days notice to find an alternative supplier for their milk with milk collections to cease tomorrow.
UDP’s parent company went into receivership in November last year and receivers had been negotiating to sell all or parts of the business.
This week it was announced that Murray Goulburn (MG) and Burra Foods had bought two of UDP’s assets enabling their continuation.
But no buyer emerged for the Murray Bridge and Jervois factories, which employ 100 staff, after several months of negotiations.
SA Dairyfarmers Association president David Basham said they were working hard to find a new home for the estimated 40 million litres of milk.
From the Barossa to Mount Gambier, 25 suppliers will be affected.
MG acquired the Caboolture cheese brand and some processing equipment from UDP.
The purchase price for the well-known mozzarella cheese brand and equipment was not disclosed, but is understood to be about $10 million.
MG was in talks with UDP receiver PPB Advisory for some time but was not interested in buying the whole business.
Managing director Gary Helou wrote to his farmer shareholders on Tuesday announcing the brand acquisition.
“Caboolture is a food service market-leading shredded-mozzarella brand, mainly used in pizza restaurants,” Mr Helou wrote.
“The strategic integration of the Caboolture brand into our growing food service business will strengthen MG’s position in this segment.” Murray Goulburn will move the cheese cut-and-shred equipment from UDP’s factories in South Australia to its site at Cobram, Victoria.
On Wednesday morning, Burra Foods said it has entered an agreement to buy the Gippsland assets of UDP, including its Poowong milk depot, and to underwrite the payment terms to UDP’s dairyfarmers.
Burra Foods CEO, Grant Crothers, said that the acquisition was an important growth step in the company’s 25 year history and would enhance Burra Food’s long-term future and its ability to meet the continued demand for high quality dairy ingredients from its primarily Asian customer base.
“We have built the business through organic growth so acquisition is new for us but the Poowong depot is a natural fit and we hold farmers who supply UDP in high regard.
“The acquisition will strengthen our market position by providing greater assurance for a secure and stable milk supply and that will allow us to confidently grow and access new markets,” he said.
“For suppliers of United Dairy Power, it will provide an assured future and premium for their milk, which we believe will be welcomed after a sustained period of uncertainty.” UDP fell into administration last year after Hong Kong businessman William Hui, who had acquired UDP only months earlier, failed to put extra capital into the business.
Source: The Australian Dairy Farmer
