Discover why a major dairy business in Taupō and North Otago has entered receivership over a $36.5M debt. What led to this financial downfall? Read more.
Concerned about the dairy industry? An urgent update: A significant dairy enterprise operating three farms in Taupō and North Otago has recently entered receivership. This pivotal development signals a notable shift for the Waitonui Group, which was placed under receivership on April 15. The Bank of New Zealand has appointed Andrew Grenfell and Kare Johnstone from McGrathNicol as receivers to oversee this transition. The group includes the following entities:
- Waitonui Milltrust Agricultural Holdings Limited Partnership
- Waitonui Milltrust Agricultural Holdings Farm Management Limited Partnership
- Waitonui Milltrust Agricultural Holdings General Partner Limited
- Farm Management General Partner Limited
According to NZME, the business owes a substantial $36.5 million to its bank.
Milltrust International, once a significant stakeholder and UK asset manager, severed ties with the group in November 2021 by selling its subsidiary, Milltrust Agricultural Investments (MAI), to Future Planet Capital.
“Although Waitonui Milltrust Agricultural Holdings retains the Milltrust name, Milltrust International Group no longer holds any shareholding or managerial role in it,” clarified Milltrust International. “Post the 2021 transaction, management and control of these entities were fully transferred to new ownership.”
This upheaval marks a significant disruption in the local dairy sector. Immense financial burdens and liabilities necessitated this drastic step. Despite these pressures, the milk price calculation during receivership was regarded as fair and transparent.
Nevertheless, the timing of the receivership has exacerbated losses and raised concerns among Waitonui Group’s farmer members. Efforts to sustain milk flow have succeeded, with most former DFB (Dairy Farming Business) members securing new buyers, largely thanks to the diligent efforts of receivers and the dairy industry community.
The National Farmers’ Union (NFU) has advised including clauses in milk contracts permitting immediate termination should a receiver or administrator be appointed, aiming to provide additional safeguards for future industry participants.
The situation remains fluid, but the community’s resilience offers a measure of hope. Just as HSBC extended banking facilities to DFB until June 2009, similar financial interventions could stabilize the industry again. As we continue to track these developments, the collective resilience of the dairy industry’s stakeholders will undoubtedly shape its future trajectory.
Interestingly, while this financial turbulence has unsettled the industry, it underscores the necessity for robust financial management and strategic planning. Local farmers and business operators are reminded of the inherent volatility in agricultural enterprises and the imperative to remain vigilant and prepared for potential disruptions.
Episodes of financial distress in the dairy industry have historically triggered significant shifts and enhancements. The insights gained from the Waitonui Group’s receivership may catalyze improved practices and stronger financial health across the sector. This could involve the adoption of more stringent contractual clauses, as suggested by the NFU, and better financial safety nets for farmers.
The efforts of the dairy community deserve commendation. The swift transition for DFB members in finding new buyers showcases the industry’s solidarity and resourcefulness. The proactive measures taken by receivers and other stakeholders demonstrate that collaboration and quick action can alleviate some of the adverse impacts of such financial crises.
As the dairy industry navigates these challenging times, staying informed through reliable information and supporting local dairy farmers can make a significant difference. The resilience of Waitonui Group’s farmers and the proactive initiatives by industry leaders serve as a beacon of optimism, illustrating that the dairy sector can overcome even the most formidable challenges through collective effort.
Key takeaways from this event include:
- The Waitonui Group’s insolvency raises critical questions about financial management practices within large-scale agricultural businesses.
- Milltrust International’s departure from the group in late 2021 accentuates the challenges of maintaining robust stakeholder relationships in volatile markets.
- The National Farmers’ Union’s recommendation to incorporate termination clauses in milk contracts reflects a proactive approach to mitigating similar risks in future transactions.
- This incident highlights the resilience of the dairy community, as most former Dairy Farmers of Britain (DFB) members have successfully secured new buyers, ensuring the stability of milk flow.
