The managing director of a Victorian dairy company was shocked by a sudden mass exodus of milk suppliers, despite owing them 10s of thousands of dollars in unpaid milk cheques.
Milk broker, National Dairy Products (NDP), is on the verge of collapse after losing the bulk of its suppliers within 48 hours this week.
NDP had about 25 suppliers in south west Victorian and Gippsland, but as of Friday only three remained.
Managing director Tony Esposito is the same man behind brokering company United Dairy Power, which was sold to a Chinese company and subsequently closed down in April 2015.
When UDP collapsed, Mr Esposito started up the much smaller NDP operation and secured some of the former UDP suppliers.
Farmers have told ABC Rural they are owed up to half a million dollars by the company and that Mr Esposito was not responding to phone calls about the debts.
‘Farmers knew we could not pay up front’: MD
Mr Esposito said he had been open with suppliers about the company’s financial woes and that they knew milk cheques would not be paid on time.
He denied ignoring farmers’ phone calls and requests for an explanation.
“We weren’t paying all farmers on time, we had a group of farmers that we were dripping their pay rather than paying them up front,” he said.
“It’s not the perfect scenario but we were trying our best to make sure everyone got paid.”
Mr Esposito could not confirm how much he still owed farmers or if he would ever be able off the debts.
“This has just happened over the last 48 hours so I still need to sit down and go through all of it to work out what the numbers are,” he said.
“It’s too early to say [whether I’ll be able to pay the debts].”
Farmer turns truck driver away
National Dairy Products managing director Tony Esposito says he was shocked his suppliers staged a mass exodus, despite months of unpaid milk cheques.
Former National Dairy Products supplier Donna Edge describes why she and nearly all other farmers found a new home for their milk this week.
When a truck arrived to pick up the milk from Donna Edge’s 115 cows in Carpendeit on Thursday, she made a quick decision.
“I said to the driver ‘I’m not sure that I want you to take my milk because I’m not sure that I’m going to get paid for it’,” she said.
“I’m owed money still, from our autumn-winter payment, and I have been trying to ring the office … to try and get clarification as to when we were going to get paid.
“They weren’t answering their phones, they weren’t returning messages, they didn’t want to know us suppliers.”
Ms Edge is a former UDP supplier, who believed Mr Esposito’s new venture would be a success.
“While he owned UDP things were good,” she said.
“We trusted him, he’d been good to us in the past and the price that he was offering at the time of starting up the new venture was superior to the other milk companies around.”
Smaller players pushed out of the market
Mr Esposito said it was impossible to retain suppliers when the Government was offering assistance to those supplying large processors, Fonterra and Murray Goulburn.
“When the big guys can get Government support and make $150 million, such as Fonterra did … it’s pretty hard for a smaller guy to compete against that,” he said.
“I understand the farmers’ position is really tough, the market conditions are really tough and the requirement for more money is high.
“Every one of them that’s left, I’ve wished them all the best and I hope it all works out for them.”