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Following the collapse of a Japanese takeover bid, prominent South Australian dairy Beston Global Food Company (BGF) has entered into voluntary administration.

Notwithstanding its impressive AU$170 million revenue in the previous financial year, the company's financial viability was compromised by pandemic-related debt, escalating interest rates, heightened operational expenses, and unsustainable milk pricing, which the company collectively described as the "perfect storm," reported Nine News.

BGF had initially entered a trading halt on July 1 to restructure its funding arrangements. The halt was extended in August, citing ongoing discussions and the potential for a binding offer in early September, reported Food and Drink Business.

"Over the last 12 months, Beston has experienced exceptionally high operating costs particularly due to onerous energy prices at a time when Australian farmgate milk prices have been uncompetitive in world markets," the company said in a statement.

"An unintended consequence of the Australian Dairy Code legislation introduced in 2019 (ie, four years after Beston commenced operations) has been to keep farmgate milk prices at high levels and disconnected from the global prices of dairy commodities."

"The business absorbed some $28 million in additional costs in FY23, including a 300% increase in energy prices. However, the persistence of cost pressures (particularly with gas, electricity, labour, chemicals and transport) in continuing to push up the cost of goods in FY24... have adversely impacted profits and cash flows."

BGF was to be taken over by Megmilk Snow Brand Co., a Japanese dairy giant, with a $1.7 billion market capitalization on Sept. 6. However, the latter turned down its offer on Sept. 20.