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January 9, 2020

Bega Cheese informs the market of bushfire-related business interruption

Australian dairy company Bega Cheese has issued an update to the country's stock exchange about the impact on its business from raging bushfires.

By Leonie Barrie

Australian dairy company Bega Cheese has issued an update to the country’s stock exchange about the impact on its business from raging bushfires.

The statement points to business interruption at its sites in New South Wales as a result of the impact the fires have had on its employees but suggests the situation has now improved.

On Monday (6 January) Bega told the Australian Securities Exchange (ASX), on which it is listed, that the fires had not directly impacted its sites in Bega Valley, New South Wales, which remained fully operational, but said they had impacted a number of its employees and dairy farm suppliers in the region.

But in the update issued today (9 January), Bega said that while there has been minimal direct impact to its overall milk supply or its ongoing operations, the majority of its employees had now returned to work and its two factories in Bega had “recommenced production”.

Acting chairman Max Roberts said: “We have been working closely with our farmers providing and connecting generators to enable daily milking and also supplying feed for cattle.”

The company’s statement said the remaining road access restriction will be lifted in the next two days, and full milk supply will resume. The total volume of milk unable to be collected is expected to reach 900,000 litres out of an overall annual milk intake across the company of circa one billion litres. 

But it added that two suppliers have decided to “dry their herds off” earlier than planned because of the fires and this may reduce milk supply by up to a further one million litres. 

It said these milk losses will have no material overall impact on Bega’s operations.

Bega said the bushfires have affected farm operations and infrastructure including the destruction of fencing and power lines, burnt out paddocks and restricted road access, but no dairy sheds have been lost. 

A Bega Cheese crisis management team, along with “a significant number of volunteers” are working with farmers to provide generators, feed, fencing and other assistance to repair farms and keep milk flowing.

Bega said it expects that some of the costs of this assistance will be covered by business interruption insurance.

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