The Organic Dairy Farmers of Australia cooperative has gone into voluntary administration, with market conditions in China cited as a key reason for the decision.

Worrells Solvency and Forensic Accountants was appointed as administrators of Organic Dairy Farmers of Australia (ODFA), based in North Geelong, Victoria, on 15 May, according to a statement from Worrells.

It read: “ODFA recruited farmers and their milk supply into the co-op as part of their vertical integration strategy. This growth strategy had a strong focus on exports to China through key customer partnerships. 

“The combination of a contracting Chinese market, delayed sales, and now the impact of Covid-19, saw the directors of ODFA take the prudent measure of appointing Worrells to facilitate a structured and transparent approach to work through the current business challenges.”

ODFA was formed in 2002 and is owned by more than 40 family farmers who supply fresh organic milk from three main dairy regions of Victoria, as well as central and north west Tasmania. The co-op produces the True Organic brand of milk, butter and cream, and also supplies yogurt and cheese.

Scott Andersen at Worrells added: “Our goal, together with the co-operative’s directors, management and members, is to ensure that this integral and unique business continues to deliver its exceptional produce to Australians, and to the international market.

“We understand the enormous value and potential for the co-op. We have a robust strategy to turnaround its predicament for long-term viability and success.”

Worrells said the administration process is still in its infancy, and “all relevant and known stakeholders have been notified of ODFA’s position, provided with all relevant information and had their questions responded to”.

One of those is Wattle Health Australia, the infant formula and baby-food producer that formed a three-way business venture in 2018 with ODFA and Niche Dairy – Corio Bay Dairy Group (CBDG). Wattle Health held 45%, while ODFA and Niche had 50% and 5%, respectively.

It was announced at the time that CBDG would design, construct and operate an organic milk spray drying facility in Geelong on land adjacent to ODFA’s existing processing operations. 

Construction is still ongoing, according to Wattle Health, which has been informed of the ODFA decision.

In April, Wattle Health said Shepparton Partners Collective (SPC) was assisting in securing a line of credit for AUD20m (US$12.8m) to complete the construction of the spray dryer facility at CBDG.

Wattle Health said in a statement today (22 May) that it will retain its 45% shareholding in CBDG after the completion of a proposed transaction with SPC. Namely SPC will take the 50% holding currently held by ODFA for a “nominal dollar amount”. 

Meanwhile, Worrells said ODFA continues to trade and its employees remain in place. A meeting with the co-op’s creditors is scheduled for 27 May.