New Zealand's largest family owned dairy business, Crafar Farms, has been put into receivership by its banks Westpac, Rabobank and PGG Wrightson Finance.
The banks are owed around NZ$200 million and put KordaMentha partners Michael Stiassny and Brendon Gibson in as receivers early on Monday afternoon after Crafar Farms breached covenants on its loans.
The group owns 22 farms with 20,000 cows across the North Island's Central Plateau, the Manawatu and the Waikato. Crafar Farms (CraFarms) has around 200 workers and is supplying tens of thousands of litres of milk each day to Fonterra.
CraFarms' banks have been working for almost a week with the Ministry of Agriculture and Forestry, Federated Farmers and Fonterra to ease the Crafars out of their business. This follows multiple convictions for environmental lapses and animal neglect in recent years and the revelation last Monday from interest.co.nz of animal neglect on one of its large farms in the King Country near Benneydale.
Agriculture Minister David Carter ordered an inquiry into animal neglect into CraFarms last week and said the Crafar family, including its leader Allan Crafar, needed to be out of the industry. The revelations about animal neglect have shocked the dairy industry and raised questions about the sustainability of large herd dairying in the wake of the explosive debt-funded growth of the last decade. See my call here for an inquiry.
Korda Mentha's Stiassny said the initial priority was working with existing management to assess the situation and address the financial and operational problems.
Stiassny told a news teleconference from Allan Crafar's farm at Reporoa that the immediate priority was ensuring the safety of animal and staff over the next 24 hours, particularly as much of the North Island central plateau was now covered in snow. Getting feed and shelter for animals was a big issue.
Stiassny said the receivers would also work closely with the ongoing investigation of animal welfare on CraFarms' properties.
"We will be working with MAF to ensure this investigation is completed as soon as possible. If any issues are identified then we will look to address them to ensure full compliance with responsible farming practises," said Stiassny.
"We will be doing our best to ensure it is business as usual for the farms as we work to assess the situation," he said.
Crafar Farms was trying to sell its properties as a single group and owner Allan Crafar has said it is unlikely his family will be left with anything after the sale. Chinese interests were thought to be potential buyers of the group, interest.co.nz reported last month.
Stiassny said there were other unsecured creditors, including vets and feed suppliers, who were owed money by CraFarms. He said no decision had been made yet on whether CraFarms would be sold as one group or broken up and sold in bits, "but there is no fire sale."